Bitcoin vs gold coins

Bitcoin vs gold coins – which is the better buy?

Over the past five years, cryptocurrencies have grown in both value and popularity, as people around the world scramble to cash in on huge profits. Some have made a lot of money. Others have lost a lot of money. If nothing else, cryptocurrencies have proven to be highly volatile and unpredictable.

Bitcoin are not gold coins

Bitcoin are often depicted as shiny gold coins. Even their name suggests a physical coin. But don’t be fooled. All cryptocurrencies are ‘virtual’; they exist only in electronic format. Unlike gold bullion coins – which are a tangible commodity you can hold in your hand – Bitcoin have no actual value. The only way to make money trading in cryptocurrencies is to sell for more than you paid. And this is by no means a given.

Bitcoin that’s worth thousands of pounds today might be worth only hundreds tomorrow. With no guarantee that the value will go up again. In 2018, the value of Bitcoin was just over $3 000. By November 2021 it had shot up to over $65 000. But less than a month later the value was down to $46 500. Which means that if you bought and sold at the right time, you could have made a fortune. But you could just as easily have been left with just over half your original investment

Banned in some countries

Since they are not regulated in any way, cryptocurrencies are attractive to those engaged in illicit activities, such as money laundering and tax evasion. For this reason, some governments (notably China, Egypt and most of the Arab States) have banned them completely.

Other countries have imposed banking bans and other rules regarding the sale and use of cryptocurrencies. Some allow them as ‘financial assets’ but forbid their use as payment for goods or services. Although legal in the UK, profits made on cryptocurrencies are subject to capital gains tax.

Future of Bitcoin vs gold coins

While some economists believe cryptocurrencies are the way of the future, others are convinced the whole system is a bubble that’s about to burst. According to CoinMarketCap there are now in excess of 8 600 different cryptocurrencies in circulation … with a new one being added every 15 minutes or so. Are these new kids on the ‘block’ even genuine? How would you know when you buy them? And what happens when you try to sell them?

Gold has stood the test of time

Gold coins, on the other hand, have been used to transfer wealth throughout human history and form the basis of the world’s monetary system. Before the gold standard was abandoned, countries couldn’t simply print paper money. Every pound or dollar had to be backed up by an equal amount of gold. Although the gold standard has fallen away, many countries continue to hold considerable gold reserves, to help stabilise the value of their currencies.

Buying gold bullion coins is a safe hedge against inflation, especially during times of political instability. Yes, the gold price does fluctuate. But over the years, it has shown steady growth that outpaces inflation. It’s five times less risky than buying Bitcoin. So if you’re risk-averse, gold bullion coins are a better buy.

If you are a British tax payer, and you buy gold Briannia coins, you have the added advantage of paying no tax. Because they are classified as legal tender, there is no VAT or capital gains tax payable.

Gold is always in demand

In addition to its monetary value, gold also has other uses that guarantee it will always be in demand. Jewellery is an obvious example, as are ornaments and the embellishment of high-end decor items such as gold taps and cutlery. Gold is also used in dentistry and electronics. Ironically, the computers that ‘mine’ Bitcoin rely on gold in their circuit boards and CPUs!

Adding to the preciousness of gold is the fact that there is a finite amount of it. Once all the gold on Earth is mined, there is no way of getting more.  All these factors make the gold price much more stable and predictable. And the price of gold Britannias is directly linked to the current gold price.

Which are easier to trade: Bitcoin vs gold coins?

Both Bitcoin and gold bullion coins are easy to trade (buy and sell). You can buy and sell Bitcoin online through any number of established brokers. Look out for one that is well known and offers competitive fees. You may also want the option to pay in pounds using a British debit/credit card. Some websites offer the opportunity to buy and sell cryptocurrencies direct from an individual through a peer-to-peer system. This may be extremely risky!

The price for a single Bitcoin is currently under £32 000. But you can buy fractional coins from as little as £40. Taking the risks into account, buying fractions is a good starting point until you feel more confident.

How much do gold bullion coins cost?

At around £1 400, a full 1 oz gold Britannia coin is much more affordable than one Bitcoin. However, the smallest fractional coin – one-tenth of an ounce – will cost around £200. If you buy direct from the Royal Mint, they will always buy coins back from you, usually at around 98% of the prevailing spot price of gold. You will never be in the position of not being able to find a buyer for your gold bullion coins.

When it comes to selling Bitcoin, if the market is particularly volatile at the time, you may not be able to get the price you want. If everyone suddenly wants to sell at the same time, you may not be able to find a buyer at all.

Tangible evidence of wealth

Apart from being valuable and a good hedge against inflation, gold bullion coins such as the Britannia are a joy to own. They have attractive and historically interesting designs, with intricate patterns that are fascinating to look at. Real gold doesn’t tarnish or lose its lustre. You can store your coins at home for years without any kind of maintenance being necessary.

Many people give gold coins to family members to mark important events like weddings and 21st birthdays. You can also easily pass them on to the next generation without paying any taxes or completing any paperwork. Most important, they are real, tangible evidence of wealth.

Learn more about buying gold bullion coins.

Disclaimer: This is an opinion piece only, and is not intended to be used as a substitute for professional  investment advice.

Leave a Reply

Your email address will not be published.