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If you could go back in time knowing what you know now, what would you do differently?<\/p>\n\n\n\n
Some people might buy a house sooner. Others might choose a different career path. Plenty would probably just tell their younger self to worry less.<\/p>\n\n\n\n
For many investors, they\u2019d give you two words: <\/p>\n\n\n\n
Buy bitcoin.<\/em><\/p>\n\n\n\n Back in July 2010, bitcoin<\/a> was trading at around $0.08. By November 2021, it had briefly climbed above $68,000. A \u00a31,000 punt in those very early days would, at the peak, have been worth many millions. Hindsight, as ever, is a wonderful thing.<\/p>\n\n\n\n Of course, most people did not have psychic abilities in 2010. Now, the question is less about what you should have bought back then and more about what you can do today.<\/p>\n\n\n\n Gold\u2019s journey has been very different to bitcoin, but still significant. In 1999, it was trading at roughly $275 per ounce. By August 2020, it had risen above $2,000 per ounce.<\/p>\n\n\n\n So if you\u2019d invested \u00a31,000 at the 1999 price, it would have been worth roughly \u00a37,000 at the 2020 peak, assuming you held it throughout. Not quite the same explosive trajectory as bitcoin, but still a valuable asset if you\u2019d held it within a diversified portfolio. <\/p>\n\n\n\n Thanks to its stratospheric trajectory, crypto has firmly earned its place in modern investment <\/a> conversations. But against the backdrop of gold\u2019s recent increase, many UK investors are asking themselves: should I invest in gold or cryptocurrency?<\/p>\n\n\n\n Welcome to Gold Versus<\/a><\/em><\/strong>, our series comparing gold with other popular assets and investment choices.<\/p>\n\n\n\n As always, the aim is not to tell you what to buy. Instead, we look at the facts, how each asset behaves and what the differences reveal about risk, value and security.<\/p>\n\n\n\n Crypto has been dubbed as \u2018digital gold<\/a>\u2019, which is why the comparison comes up every so often. But while they are sometimes mentioned in the same breath, they do very different jobs.<\/p>\n\n\n\n <\/p>\n\n\n\n Gold and cryptocurrency both sit slightly outside the traditional financial system; neither is issued by a commercial bank, and both attract attention when investor confidence starts to wobble.<\/p>\n\n\n\n They are also frequently discussed as potential inflation hedges. In fact, Bloomberg Intelligence<\/a> has noted that bitcoin and gold share several core attributes, including limited supply and store-of-value appeal, and has described bitcoin as \u2018maturing into a digital version of gold\u2019.<\/p>\n\n\n\n Some analysts argue that some of the same big economic forces which support gold, such as large-scale money printing by central banks, may also be helping to support bitcoin\u2019s longer-term rise<\/p>\n\n\n\n The Bloomberg report also notes that, over one 12-month period, bitcoin and gold showed a fairly strong relationship in how they moved, with a correlation of about 0.77. In simple terms, there have been stretches where the two assets have broadly moved in the same direction.\u00a0<\/p>\n\n\n\n However, Bloomberg notes that much of the wider crypto market still shows signs of speculative excess and rapid supply growth, particularly outside bitcoin.<\/p>\n\n\n\n Many people researching bitcoin or other cryptocurrencies are also looking at gold as part of the same broader question about protecting long-term value. It doesn\u2019t mean the two assets behave in the same way but the growing crossover in how they are discussed is exactly why we\u2019re exploring this topic.<\/p>\n\n\n\n A quick note: throughout this article we mainly reference bitcoin when discussing crypto, as it remains the largest and most established cryptocurrency. The wider crypto market is much broader, and other coins can behave very differently, often with even higher volatility.<\/p>\n\n\n\n <\/p>\n\n\n\n If you are already familiar with crypto, feel free to skim ahead. For everyone else, here is the short, plain-English version of how crypto works and how it came to be. <\/p>\n\n\n\n Cryptocurrency is money that exists purely in digital form. There are no coins to hold and no notes to put in your wallet. Instead, ownership is recorded on something called a blockchain, which is essentially a shared online ledger that tracks who owns what.<\/p>\n\n\n\n Unlike gold, crypto is not backed by a physical asset and it does not pay you interest or income simply for holding it. Its price is driven mainly by supply, demand and investor sentiment. One of its defining features is volatility. Prices can rise and fall quickly, sometimes within days.<\/p>\n\n\n\n Bitcoin, launched in 2009, was the first cryptocurrency and is still the biggest and best known.<\/p>\n\n\n\n A quick crypto timeline<\/p>\n\n\n\n Today there are thousands of cryptocurrencies, but bitcoin still dominates most of the attention and market value.<\/p>\n\n\n\n <\/p>\n\n\n\n Before we compare the two, it is worth grounding ourselves in what gold actually is as an investment.<\/p>\n\n\n\n Unlike digital assets, gold\u2019s supply is physical and naturally limited. It cannot be created at the press of a button. New gold only comes from mining, which tends to be a slow process.<\/p>\n\n\n\n When you invest in gold, it doesn\u2019t pay you interest or produce an income. Instead, its value moves with global demand, investor behaviour and wider economic conditions.<\/p>\n\n\n\n Gold is one of the oldest financial assets still in use today. Long before modern currencies existed, it was being used to store and transfer wealth, particularly during periods of financial volatility, and that shapes how investors still view it.<\/p>\n\n\n\n <\/p>\n\n\n\n Any investment carries risk, but it helps to understand both the level of risk and the type you are taking.<\/p>\n\n\n\n Crypto is known for (very) big price swings. Values can rise quickly but they can also fall incredibly sharply too, sometimes in very short periods.<\/p>\n\n\n\n Regulation around crypto is also still evolving in the UK and globally which can affect how platforms operate and how assets are treated.<\/p>\n\n\n\n There are practical risks to consider. Holding crypto usually means relying on exchanges, digital wallets and private keys. If access is lost or the wrong platform is used, recovering funds can be difficult. In contrast, money held in a UK bank account sits within the regulated banking system and is typically protected up to certain limits by the Financial Services Compensation Scheme (FSCS) if the bank fails. Most cryptocurrencies do not come with that kind of institutional safety net.<\/p>\n\n\n\n Crypto prices are also heavily influenced by market mood. News flow, hype and investor sentiment can move prices extremely quickly.<\/p>\n\n\n\n Gold however carries a different risk profile. Its price moves too and there can be long stretches where it goes sideways or falls, but the swings have historically been less extreme than crypto.<\/p>\n\n\n\n If you hold physical gold, storage<\/a> and security<\/a> need to be considered as there is always some risk of loss or theft if it is not properly protected. Gold also does not pay income, so any return depends on the price rising over time.<\/p>\n\n\n\n <\/p>\n\n\n\n Crypto currencies, particularly bitcoin, often trades in powerful bursts. Prices can accelerate quickly during strong runs, then reverse just as fast suddenly. Gold\u2019s pattern is steadier; it does rise and fall, and there have been long quiet stretches, but day-to-day moves have generally been less abrupt than those seen in crypto markets.<\/p>\n\n\n\n The forces behind the moves are also different. Gold reacts more to macro factors such as interest rates, inflation expectations and geopolitical tension. Crypto is more sensitive to sentiment, positioning and capital flowing into or out of the sector.<\/p>\n\n\n\n The two assets do not move in lockstep either. Sometimes they travel in the same direction. At other times, they diverge.<\/p>\n\n\n\n Two real-world snapshots which highlight the difference in price behaviour. Both assets move, but the scale and speed of those moves can look very different.<\/p>\n\n\n\n <\/p>\n\n\n\n Gold has a long track record here. Over many decades, it often attracts demand when inflation rises or confidence in paper currencies weakens. That is why it is commonly described as an inflation hedge, although the relationship does not play out perfectly in every short-term period.<\/p>\n\n\n\n Crypto\u2019s record is much shorter and less settled. Bitcoin\u2019s fixed supply is one reason supporters argue it could protect purchasing power over time. However, because it has only existed since 2009, its behaviour across sustained high-inflation environments is still being evaluated.<\/p>\n\n\n\n <\/p>\n\n\n\n Crypto is often praised for how quickly it can be traded and moved. Most major cryptocurrencies trade 24 hours a day, seven days a week, and transfers between wallets can happen within minutes.<\/p>\n\n\n\n However, access usually depends on digital platforms such as exchanges and wallets. That means usability can be affected by platform outages, withdrawal limits or counterparty risk. Converting crypto back into cash also relies on market liquidity at the time you sell.<\/p>\n\n\n\n Gold is also highly liquid, but the process looks different. There is a deep global market for gold, and buyers are widely available. However, if you hold physical gold, you do need to sell it to a dealer or platform and go through valuation and settlement.<\/p>\n\n\n\n Digital gold can typically be sold more quickly through an online provider. Physical gold may take a little longer because of verification and handling, but the underlying market is well established.<\/p>\n\n\n\n <\/p>\n\n\n\n The rules for gold bullion dealers, vault providers and trading standards are well understood, and the rules around buying, storing and selling gold are broadly settled in most major markets.<\/p>\n\n\n\n Crypto is newer and the rulebook is still taking shape. In the UK, crypto firms are already subject to anti-money laundering supervision and strict financial promotion rules, and in April 2023 the government has now published legislation to bring a much wider range of crypto activities into formal regulation<\/a>.<\/p>\n\n\n\n Under the upcoming regime, firms involved in activities such as operating trading platforms, safeguarding cryptoassets or issuing certain stablecoins will need FCA authorisation<\/a>. The broader framework is expected to come fully into force from October 2027<\/a>.<\/p>\n\n\n\n <\/p>\n\n\n\n In the UK, profits made from selling cryptocurrency are typically subject to Capital Gains Tax (CGT)<\/a>. HM Revenue and Customs (HMRC) treats crypto as an asset rather than currency, which means tax is usually assessed when you dispose of it, whether by selling for cash, swapping tokens or using it to pay for goods or services.<\/p>\n\n\n\n Gold can also be subject to CGT, but certain UK legal tender gold coins<\/a>, such as Britannias<\/a> and Sovereigns<\/a>, are exempt from Capital Gains Tax for UK residents because they are classed as currency.<\/p>\n\n\n\n Other forms of gold, including most bars and non-UK coins, may still be liable for CGT when sold at a profit.<\/p>\n\n\n\n As always, tax depends on individual circumstances and current HMRC rules, and investors should check the latest guidance or seek professional advice.<\/p>\n\n\n\n <\/p>\n\n\n\n Viewed side by side, gold and crypto tend to excel in different categories.<\/p>\n\n\n\n CRYPTO<\/strong> <\/p>\n\n\n\n GOLD<\/strong><\/p>\n\n\n\n For some investors, that means gold and crypto are not direct substitutes at all, but tools that serve very different purposes within the same broader strategy.<\/p>\n\n\n\n <\/p>\n\n\n\n This article is for general information only and does not constitute financial or investment advice. Individual circumstances vary, and readers should seek independent professional financial advice before making any financial decisions.<\/em><\/strong><\/p>\n\n\n\n Learn more about gold buying and selling: goldbank.co.uk<\/a><\/p>\n\n\n\nWhy investors compare gold and cryptocurrency<\/strong><\/h3>\n\n\n\n
Cryptocurrency explained<\/strong><\/h3>\n\n\n\n
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Gold as an asset (a quick refresher)<\/strong><\/h3>\n\n\n\n
Comparing gold and crypto on risk and security<\/strong><\/h3>\n\n\n\n
Comparing gold and crypto on price behaviour<\/strong><\/h3>\n\n\n\n
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<\/li>\n\n\n\nThe effect of inflation on cryptocurrencies vs. gold<\/strong><\/h3>\n\n\n\n
Which is more liquid, gold or crypto?<\/strong><\/h3>\n\n\n\n
Comparing gold and crypto currency regulations <\/strong><\/h3>\n\n\n\n
Tax considerations between crypto and gold<\/strong><\/h3>\n\n\n\n
Can gold and crypto sit side by side in a portfolio?<\/strong><\/h3>\n\n\n\n
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