Advantage #1 | No middlemen
No matter how gold is purchased, stored, sold, or used, its owners must regularly come into contact, either directly or indirectly, with a range of third-party service providers. This represents significant cost and hassle on the part of the gold holder.
Think about it - let's say you buy some gold through your brokerage account. Where is that gold? The truth is that some entity, somewhere, is being paid to hold an equivalent of the gold you own. Previously, that gold had been refined and later minted by somebody. Furthermore, following a certain schedule, this custody arrangement must be audited by an independent service. This, plus regular insurance payments, are costly for the investor.
Bitcoin, as an alternative asset, can very easily be held and transacted without the involvement of any middlemen. While plenty of excellent crypto custody services exist, it is also perfectly fine for your wallet to remain at all times under your control, at no cost to you. Bitcoin transactions never require auditing as they are recorded on an immutable and public distributed ledger. Advantage #2 | Liquidity and 24/7 access
Owners of gold only have access to their assets within the limits set by brokers and custodians. Conversely, Bitcoin users have 24/7 access to their coin, 365 days a year. All it takes is internet access to make a payment or transfer, and exchanges operate at all hours.
What's more, with each passing year, Bitcoin trading volumes increase and exchange fees go down. Just as the network becomes more secure with a growing network of users, it also becomes more and more easy to liquidate large amounts of Bitcoin. Advantage #3 | Very cheap to store and trade
As we have already discussed in another blog post
, Bitcoin, unlike gold, can be stored for free. For larger sums, of course, it is worth investing in a hardware wallet. However, this one-time purchase (roughly 100 GBP) represents only a very minor expense.
All Bitcoin transactions occur on a peer-to-peer network. This means that you can agree to carry out a trade of virtually any amount directly with any counterparty for a minimal network fee. In comparison, gold transactions just don't make sense. Peer-to-peer gold transaction involves meeting in person or through a trusted third party and are only possible when units are large. Advantage #4 | Transparency and compliance
The distributed ledger behind Bitcoin removes the need to trust the party with which you are transacting. Fraud on the Bitcoin network cannot occur — the consensus algorithm will not allow it.
This high degree of transparency also contributes to the automation of compliance within various regulatory frameworks. This even applies AML and ATF laws. The Bitcoin network — contrary to what is often implied by the media — is not anonymous: malicious actors can easily be identified and tracked by 'looking up' their wallet addresses. Advantage #5 | Seamless integration with DeFi
Bitcoin is an essential part of decentralized finance (DeFi). This is a major advantage for anyone interested in achieving the next level diversification in their investment portfolios.
Two key applications of DeFi are loan issuance and tokenization: On the one hand, holders of Bitcoin can earn a fixed income (interest rates generally range from 12-24%) by lending out their tokens. On the other, with Bitcoin, it is easy to participate in ICOs and STOs, purchase NFTs, or invest in staking coins. These things offer returns that have far out-performed traditional investments of late.