Gold and Bitcoin are both hot commodities at the moment, but which should you invest in? The answer, as with any form of difficult financial decision, is “it depends”. Gold is a commodity that is physical, that you can hold in your hands, and that actually has real-world uses. It is valuable because we have decided that it looks pretty and we can use it to make jewelry with. It is also valuable because it is a good conductor and it can be used in the world of electronics.

Bitcoin, on the other hand, is relatively new and it is entirely virtual. It has value because we have decided, collectively, that a bitcoin is worth a certain amount of money. If we were to be cynical about it, that is all any currency is. People come together to agree that a unit of currency has a specific value which can be used to trade. If that agreement falls apart for political reasons or because there is a crisis, then the currency is worthless. Only a barter system would work – but not everyone has skills that can be easily bartered. Would you sell space on your web server for carrots and chicken?

Bitcoin Pile

Bitcoin is gaining value because it is popular right now and people are just starting to accept its worth. There are some who are predicting that this is a bubble and that it will lose all of its value and become a currency that is worth far less in the long term. Gold, on the other hand, is a bit of a safe-haven. It gains value far more slowly, but if you plot the trends over years and years, it is gaining value.

So, the question of what you should invest in really depends on if you want to make some money in the short term, or if you are looking for something that you can buy and forget about. Gold is a safe long-term bet. Bitcoin probably will (of course, this is just speculation and should not be taken as financial advice) make significant gains in the short term, but could be a riskier long-term investment.

The distributed ledger technology is a good bet. The idea of a cryptocurrency is a clever one – but just as the first companies to launch in the dotcom era failed – only to be replaced by massive companies later on – Bitcoin could be doomed just because it was the first to the market.

It is sensible to diversify your portfolio. If you invest in both gold and Bitcoin, and watch your investments with a cool head while reading the news and tracking what is going on, then you should be safe whatever you invest in. Don’t buy out of greed, and don’t sell out of fear, and whatever you decide to trade should be a comparatively safe bet. Invest only what you can afford to put at risk, and good luck!

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