Gold vs Bitcoin. Or Gold vs Digital Gold. Either way, these two commodities are seen as a store of value because they are finite and liquid. Many also consider both Gold and Bitcoin an inflation hedge.
Gold is one of our oldest currencies, while Bitcoin is one of our newest.
We’ve looked at long term crypto currencies predictions based on macro trends, but now let’s compare gold and bitcoin based on their historical performance.
Note: None of this is investment advice. It is for entertainment purposes. The calculations made are using August 1, 2012 – August 1, 2022
Gold vs Bitcoin 10 Years
To preface, comparing bitcoin to gold on a 10 year timeline is unfair. Bitcoin is not even 14 years old. So of course it saw a meteoric rise going from worthless to a half trillion dollar marketcap. No matter how bullish you are on BTC, you can’t expect this 10 year performance to repeat. But, that being said. Let’s have some fun and dream.
If you invested $1000 into Gold 10 years ago you would now have 1107.40.
Roughly a 10% return over 10 years. Not the best actually, but that’s because Gold was quite high in 2012, dipped for about 8 years and is now returning to new highs.
If you invested $1000 into Bitcoin 10 years ago you would now have $2,495,905.88.
That’s a mind blowing 249,490% ROI. But then again, if you were acquiring Bitcoin in 2012, you were on some good stuff. As stated, this return that was seen from the “birth of an asset” is almost impossible to happen again.
To get the same return on BTC over the next 10 years, the price of BTC would have to hit over 5.7 Billion a coin. Sorry, just not happening.
But that doesn’t mean there’s still not plenty of room for upside! BTC is still so new. Major money like hedge funds, pension funds and more are just now starting to move into it. This could greatly increase demand over the coming decade.
Further Reading: The Best Crypto IRAs
Gold vs Bitcoin 5 Years
This 5 year comparison is still relatively skewed for gold vs bitcoin given BTC’s relative youth. However, in 2017 BTC was starting to become more of a household name, with its first major publicized bull run and coinbase giving the regular investor access.
If you invested $1000 in Gold 5 years ago you would have $1397.99
That’s a 39.7% ROI over 5 years for holding your money in a relatively safe asset. Not bad!
If you invested $1000 in Bitcoin 5 years ago you would have $8585.17
That’s a 858.5% return on your investment. Quite excellent. Again, a little skewed because August 2017, was just before the first major publicized BTC boom. I don’t think we can predict returns that high over the next 5 years. To get the same returns it would call for $200k+ per BTC. Not completely out of the question, but seems a bit bullish.
Related Article: Alto Crypto IRA Review
Gold vs Bitcoin 1 Year
This one year comparison is where BTC starts to get put in it’s place. For all the amazing returns, it is extremely cyclical and volatile. Far less stable than gold (at this point in time). We’re currently in a down market. But let’s take a look.
If you invested $1000 in Gold 1 year ago you would have $977.68
This past year has been rough across the board for the economy. That said, gold did it’s job as a store of value and held relatively even (-1.3%) despite most other sectors dropping rapidly.
If you invested $1000 in Bitcoin 1 year ago you would have $585.42
You’re looking at almost a 50% drop in your investment. That’s rough. But we’ve seen draw down like this with BTC before. It’s a massive roller coaster ride, that over the long run has trended dramatically upwards.
For that, if you’re thinking long term, perhaps its best to buy, hold and wait and see.
Capital Gains Tax
If you’re investing long term into an asset, you are thinking number will go up. Gains are great, but if you’re in the US they are also subject to a capital gains tax.
Outside of your active trading, you may want to hold Gold, BTC, ETH or other cryptos for teh very long term. Betting on them for your retirement.
If that’s the case, you can save yourself the 20% capital gains tax if you invest using a Roth IRA. These tax advantageous funds are available for both crypto and gold.
The only “downside” to these IRAs is that you have to be over 59.5 and have held for at least 5 years to withdraw the assets without a penalty. These IRA rules “force” people to save for retirement by incentivizing them with the no capital gains tax break.
Crypto Roth IRA
My favorite crypto roth IRA option is Alto Crypto IRA. You can get started with as little as $10 and can buy, hold and trade any coin available on Coinbase. Furthermore, the only fees you pay are a 1% trading fee.
My second favorite option is iTrustcapital, which also only has a 1% trading fee, but it offers a few less coins and a higher minimum investment.
What’s cool about a Gold IRA is you can own a vault, with actual gold bars in it that you can go and visit. My favorite option for Gold IRAs is Augustra Precious Metals. They are known to be industry leaders and have tons of information on how to get started.
Conclusion Gold vs Bitcoin
In the end, both Gold and bitcoin are interesting and unique financial opportunities. Gold has been around since, I guess forever, and Bitcoin is new. Right now, Bitcoin presents a lot more risk but so much more upside.
Gold is a safe store of value. As the crypto market matures, Bitcoin will also likely plateau and become a safe store of value and live up to its name as Digital Gold. But we have a few more roller coaster rides before that.
If you want to get in now and wait it out, an IRA option is excellent for long term investments.
Thanks for reading our Gold v Bitcoin comparison and have a good day!
Further Reading: iTrustCapital Review