Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Cryptocurrencies vs. Precious Metals: Which is the Better Investment?
Guest Post | Nov 9, 2020
Cryptocurrencies are the alleged future of money, while precious metals are a longtime stead in the investment space. With so much debate between the two, which is the better investment? We’re going to break down the pros and cons of each so you can make the best decision for you.
The Pros of Investing in Cryptocurrencies
Cryptocurrencies like Bitcoin, Ethereum, and others are supposedly on the up. These projects are so early in their development that enthusiasts argue it’s the best time to invest. After all, if Bitcoin ends up replacing fiat money, it should be worth significantly more than now, right?
Aside from simple value, cryptocurrencies aren’t controlled by any one entity. There’s no government or other group in control of these assets. To many, that’s a significant plus. What happens to their value is based purely on the money flowing in and out. A government can’t choose to print millions more, diluting its value.
There are also tons of ways to easily invest in digital assets, as well as various use cases. Most popular ones are available on exchanges like Coinbase and Binance - each of which are easily signed up for. Some are physically-backed, like Goldcoin, while others serve as entryways into new digital ecosystems like Ethereum.
These use cases represent a variety of incentives to invest within. Just choose the one you believe in most, and go from there. Some even provide other earning potential, especially proof-of-stake cryptocurrencies. With these, you can earn interest on your investment similar to a savings account.
The Cons of Investing in Cryptocurrencies
Of course, the world of cryptocurrencies is largely untested. If you’re not careful, many projects end up being scams, and you can lose your investment. Even then, some initially promising projects might be poorly managed, resulting in a failure years down the line. This happens more often than not in the crypto space.
That and the volatility of cryptocurrencies can be a turn off for many. Even projects like Bitcoin see drastic price fluctuations on a daily basis. Considering the market is on 24/7, a massive price drop can happen in your sleep. Some might be fans of the potential for short-term gains, but many are wary for good reason.
It’s important to note that storing cryptocurrencies can be confusing. If not done properly, you can lose your assets forever. Those not technically inclined will surely want to invest elsewhere at risk of losing their funds.
The Pros of Investing in Precious Metals
Precious metals are a tried and true investment method. Investors have been putting their funds in assets like gold, silver, platinum, and more for centuries. That longevity means precious metals are always a safe investment. This isn’t to mention their continued use case in things like automobile and jewelry production, of course.
Most precious metals have a decent rate of return as well, with silver being one of them. In fact, silver’s fluctuation is so varied that it’s recommended you start. It’s quite easy to buy silver, too, with many online platforms offering the asset.
Precious metals - especially gold - are also seen as a great way to hedge against financial recession. Gold holds its value for quite some time, to the point where it’s safe to do so for many.
Most precious metals come in various formats, too. Gold and silver can be purchased in bullion or coin format. Others usually offer the same.
The Cons of Investing in Precious Metals
While precious metals are certainly less risky than cryptocurrencies, there are some negatives to them. For example, purchasing coins and bullion might cost you a premium. That extra fee can vary based on where you buy from, but some might try to scam you.
It’s also somewhat expensive to store precious metals - especially gold bars. Purchasing the asset is only the start. All of these additional fees can really add up, especially if you’re new to the scene.
See: 6 Things to Consider Before You Make Investing Decisions
Each precious metal has its own volatility rate, as well. For those looking to profit in the short-term, they must be cautious about which to invest in. Otherwise, their investment will sit at a similar price for a while, especially with gold.
Of course, whatever you decide to invest in is up to you. There’s no right answer as to which is best. It all depends on your situation and what you can afford. A smart investment will almost always result in a profit, however.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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