The Correlation Between Gold and Bitcoin
The digital age embraces new technology and adapts to it very quickly. Nowadays, investors have an opportunity to diversify their portfolio with digital assets and not just physical ones. However, while digital assets have risen in fame in the last few years, their volatility and unpredictability have investors question whether or not these types of investments are actually safe. On the other hand, gold has always been a “safe bet” among investors.
The main reason is that gold is an excellent hedge against inflation, global instability and economic crisis. As for Bitcoin, many people have claimed that it’s the digital gold, but so far, Bitcoin was unable to provide the same level of investment security as gold. Many people still wonder if Bitcoin and gold are correlated. When comparing prices, the Bitcoin price is certainly very volatile, while gold pretty much retains its price with slight variations. Here’s more insight into the correlation between gold and Bitcoin.
Difference of investment
As mentioned before, investors have an opportunity to opt for digital assets instead of just physical ones. The rise of Bitcoin’s price in 2017 that was alongside a price increase in gold made people believe these two assets are correlated. However, people who invested in Bitcoin did so mainly because this digital asset was unregulated by governments and they intended to reap the benefits of that situation.
On the other hand, people investing in gold were looking for a safe investment to secure their funds, as gold is usually used for that. In other words, the cryptocurrency market was explored by investors who were speculating on the outcome, while gold was sought after by investors looking to secure their funds. Simply put, there was no direct correlation other than the investors’ interest in both assets during the same period.
Different assets
The difference between the assets upholds their lack of correlation. Gold is a physical asset, which means its use and properties are much more flexible than Bitcoin which is purely a digital asset. Gold has inherent value, it can be used in various industries and has cultural value as well. That means that gold is, and will always be highly sought after and on high demand. That’s why the gold price has remained steady throughout the years compared to Bitcoin prices that experience extreme volatility. For instance, Bitcoin reached its top price of $17.900 on December 22, 2017.
On the 5th of February, 2018, the price of Bitcoin fell to $6.200, which is more than 50% decrease in less than two months. The price of gold is determined by the global economic situation and demand, whereas digital assets are unregulated and their prices are uncertain at best. For example, gold prices go up whenever there are fluctuations in the stock market. Investors prefer an asset that can secure their funds or even yield a profit as opposed to an asset that’s too risky.
Market dynamics
The gold market is more mature and well-developed, as well as regulated. On the other hand, the crypto market is fairly new and still in the process of adjusting. The increased popularity of digital assets also leads to the adoption of more cryptocurrencies. Aside from Bitcoin, there are over a thousand different currencies on the market. However, not all currencies are sought after or have the potential to become investments. That’s why the crypto market still cannot correlate with gold, but that doesn’t mean digital assets won’t experience more stability in the future.
Even though the idea behind Bitcoin and blockchain technology was originally to be unregulated by officials and decentralized from a banking system, it seems that it does require a bit of regulation in order to stabilize and operate on an optimal level. The lack of security and safety does force investors to tread carefully when investing in cryptocurrencies, whereas gold can provide certain security even in the worst of scenarios.
Relationship between assets
So far, experts have been arguing about the existing or nonexistent correlation between gold and Bitcoin. Regardless of the current situation, there’s undeniably a relationship between the two. Both assets are considered hedges against inflation and global economic difficulties. However, gold is still perceived as a more stable investment than digital assets.
The fact of the matter is that whenever cryptocurrency value decreases, gold prices go up, as investors return to their “safe haven” investment. The main reason is digital asset volatility. Increased volatility means greater risks and investors would prefer not to risk it, making investments that are meant to secure their funds. With that in mind, when the digital currency market stabilizes, the relationship between these two assets may improve and there may even be more correlation between them as well.
Whether there’s a correlation between gold and Bitcoin is still debatable. Where one party sees a correlation, others see coincidence. That’s why it’s difficult to determine the relationship between these two assets. As for now, gold is considered a less risky and a more flexible investment, whereas Bitcoin, although perceived as a hedge, is considered too volatile to overtake gold. From an investor’s point of view, gold and digital assets are two very different assets.
Open your free digital wallet here to store your cryptocurrencies in a safe place.
Italian Startup Helperbit will participate to the World Humanitarian Summit
Italian startup Helperbit has announced its participation to the Innovation Marketplace at the World Humanitarian Summit, event held by the United Nations on May 23 in Istanbul, Turkey.
What is World Humanitarian Summit
This event focuses on the daily problems that people all around the workd face everyday.
To do so, representatives of the government, local communities, international and humanitarian organizations are working together for a common goal: eliminate crisis and sufferings.The World Humanitarian Summit provides a great opportunity for worldwide leaders to help humanity in its difficult journey.
Innovation Marketplace
This particular event will show innovation, products and services that aims at improving people life. And now it also opened up to blockchain-related projects.
Among those startups, there will be Helperbit that use the distributed ledger to solve problems related to inefficiency, opacity and inadequate administration of the funds when disasters happen.
So, through the distributed ledger, Helperbit wants to make the flow of donations visible and transparent, so that the redistribution of money would be solved.
Helperbit is a natural disaster management platform that wants to help stricken people with a simple peer-to-peer donation system.
In fact, have you ever wondered what happens to the donated money? And what if it never reaches its final destination?
During the past few years, when a disaster event occurred, often someone talked about the fact that the money was gone and never reached the poor people affected.
How Helperbit Works
Open your free digital wallet here to store your cryptocurrencies in a safe place.
AirBnB wants to use the blockchain
AirBnB replies…
Open your free digital wallet here to store your cryptocurrencies in a safe place.
An Internet of Blockchains
The blockchain is a hard concept to wrap one’s head around because it describes a system for which no analog exists today, and it runs counter to everything we know about how trust works. In today’s world, trust can only be assigned or transmitted by an individual or organization. The idea that one could safely send money from point A to point B, and have that transaction fascilitated by potentially millions of agents without you knowing who those agents are, what motives they might have vis-a-vis your money, whether they are nefarious or not, is an anathoma. But that is exactly what the blockchain helps enable.
With the blockchain, trust stems not from the reputation of an actor or collection of actors, or from a process or set of controls that abstracts power and authority away from individuals. Nor does trust get transmitted through a graph of friends, or from an external auditor who can vouch for a claim. Instead, we place trust in a design pattern. But what does that mean, to trust in a design pattern? To answer that, let’s look at another decentralized system we have all grown to trust so much that it has transcended the need for trust entirely, and just is: the Internet. The Internet has no governing body or centralized authority. There is no mastermind responsible for making sure some secret collection of computers are plugged in and working. There is no facility that if compromised could “take down the Internet.” No, the Internet works because of a design pattern that dictates that data should move the same way between networks, as it does within networks. So if a network wants to take advantage of the access and opportunity afforded by the Internet, all it has to do is connect, and in so doing it begins contributing it’s own resources to the benefit of the whole, further decentralizing it, making it faster, and making it more resilient.
We take all of this for granted without knowing how this system works. But if you look back to your own history, assuming you were around when the Internet had it’s tipping point, I bet you will find a moment where you had to take a leap of faith. A moment when you had to drop AOL for a generic Internet Service Provider who provided no information services of their own. Of course, the later you made this leap of faith the easier the choice was to make because you were entering an increasingly useful and utilitarian landscape of services – companies like CNet, Excite, Yahoo!, Excite, and others. And the more companies that began building their businesses ontop of this infrastructure, the less and less people cared about the fundamentals of how it worked. The proof was in the pudding.
The blockchain today is operating in a time not that dissimilar to the Internet in the 1990’s. Consumers are baffled and confused by how a decentralized finance system could even function, while a growing number of people led by technologists, futurists and entreprenuers see the potential for ideas and companies that heretofore had been impossible due to the economics of a centralized system. But slowly, as more and more people take their own personal leap of faith, more and more people will stop caring about how it works, and just accept that it does. By then we will no longer be talking about “a blockchain,” but rather an Internet of Blockchains. And no longer will our computers simply connect to the Internet, they will contribute their computing cycles to an untold number of micro-economies that will power far more than even they are aware of.
Open your free digital wallet here to store your cryptocurrencies in a safe place.