Cryptocurrency is an innovative solution that has gained the attention of many investors. Venture capitalists who have been seeking high returns were restricted in the stock exchange or commodity markets. However, with the advent of cryptocurrency, they have the opportunity to venture into a third avenue. Cryptocurrency not only promises high returns but also offers confidentiality and security features.
On the other hand, when we speak of risks, even long-term investors show cynical behavior. For them, if you cannot see it or touch it, it is not worth pursuing. Perhaps this is the reason that they have resorted to divesting their extra assets into the bullion market.
Background of Cryptocurrency
Cryptocurrency is a relatively new concept and provides an innovative investment solution. This digital currency has changed the dynamics of the market — a place where it is difficult to identify the trade, buyers, and suppliers. Becoming well-versed with the technical terminologies is important for the investor before jumping into the arena of cryptocurrency.
Bitcoin and Litecoin have been in the spotlight in the financial industry, whether we talk about market capitalization or the value of the coin. However, it has not received the government’s approval in many countries because cryptocurrency can neither be centralized nor regulated. Nevertheless, the primary reason of the existence of any cryptocurrency has been its “Blockchain technology.” At this juncture, a definitive question does arise: Is it still early, or is it too late to trade in cryptocurrency?
Background of Bullions
Contrastingly, when we speak about risk or value at risk (VaR), individuals with substantial net-worth find it easy to invest in gold or silver Bullion. Diversification of the portfolio is a sign of a prudent investor. The risk is minimized and devoid of volatility to market conditions. Even if the market crashes, there still would be some value in gold.
Crypto versus Bullion
Firstly, cryptocurrency cannot be subjected to forgery. Each token, such as Bitcoin or Litecoin, has a key and digital wallet. However, a bullion bar is vulnerable to forgery, and it is susceptible to adulteration. Furthermore, the quality grading of gold determines the value. For example, 24-carat gold will be more expensive than 18-carat gold, but 24-carat gold will be soft as opposed to an 18-carat one.
One can fake or conduct a fraudulent trading activity in a bullion exchange market, whereas cryptos are fully secure because of their genetic characteristic of blockchain technology.
Monetary policy does not have any impact on any of the cryptocurrency and is not regulated by any government. On the other hand, the bullion exchange has to comply with the Global Precious Metal code issued by the London Bullion Market Association (LBMA).
Anonymity is another feature of transactions with cryptocurrencies. The transaction, buyer, and seller assure complete anonymity throughout the process. Every transaction is encrypted into a hexadecimal alphanumeric digit. Hence, no one can find out who are the buyers and suppliers and what kind of transactions are taking place. Conversely, the bullion market is regulated, and both the parties’ identity and the legality of the transaction have to follow codes stipulated by LBMA.
If you want your transaction to be executed quickly, cryptocurrency is the best platform with complete authentication and validity. However, in a bullion market, the exchange depends on numerous factors, which can be time-consuming in nature.
Unlike theft and burglary, it is nearly impossible for cryptocurrency to be stolen. While you can trade in the bullion market online, if you are adamant about keeping bullion bars in your possession, you would need a safe or a vault with security measures and the risk of theft.
Although crypto is fraud-proof, keep in mind that the aspect of anonymity in crypto trading can be abused. The bullion market, on the other hand, has a regulated and transparent process.
The only element that lends towards bullion, as opposed to crypto, is that of risk. The historical trend of cryptocurrency, especially Bitcoin, has been a target of volatility. For people who are in a money-making industry, crypto provides a leveled playfield. Some experts think the market of Bitcoin is a financial bubble. Against all the odds, the value of bullion, especially gold, is also susceptible to unpredictability, but the value of gold will still hold its worth.
A question that all the investors are asking themselves is: Is cryptocurrency a booming market with a financial bubble, and is it better to have the savings vested in gold or silver?
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