The reason why Bitcoin (BTC) and Ethereum (ETH) are considered the new gold and silver
Why is Bitcoin and Ethereum considered the new gold and silver?
What are the advantages and disadvantages of these currencies? There are a few things that set them apart. For starters, they have scarcity. Scarcity is one of the most important factors in appreciating a precious metal. Another important factor is its price. The latter is the main reason why people are attracted to these currencies. This post will tell you why bitcoin and Ethereum cryptos are considered new gold and silver.
Bitcoin and Ethereum are digital currencies based on blockchain technology. Each coin has a limited supply that increases linearly every four years. The number of bitcoins in circulation is approaching 21 million. Since the number of bitcoins in circulation is limited, creating a digital scarcity that protects the coin from inflation. But does scarcity in itself keep Bitcoin and Ethereum valuable? It should.
The term "scarcity" has been used in several contexts. The original meaning focuses on the physical scarcity of resources. Legal restrictions on radio frequencies limited the initial growth of communication networks. However, in the early 2000s, the growing demand for digital services led to public auctions of radio spectrum usage rights. The rise of the internet led to several new digital services, including bitcoin.
The digital versions of gold and silver are gaining ground as institutional investors realize their value. Bitcoin is already over its previous high, and the digital silver, Ethereum, is rising above it. While both are digital currencies, they differ in their utility. Bitcoin is used as money in traditional transactions. At the same time, Ethereum is primarily an industrial crypto asset used as a gas for cryptocurrency transactions. Although both have similar uses, bitcoin is better suited for industrial applications.
Gold is a limited supply as a physical metal, and its value is derived from this finite supply. There are approximately 171,000 metric tons of gold on earth. After that point, there will be no more gold. Ethereum is gaining ground on bitcoin in terms of market cap. However, its underpinnings and centralization are different from Bitcoin, and investors should make their own decision.
With Bitcoin (BTC) now trading above its previous record, the narrative about Bitcoin and Ethereum as a bar of new gold and silver has gained traction among institutional investors. Some even see Ethereum as the digital equivalent of silver and Litecoin as the new digital gold. Wang's theory is based on the idea that cryptocurrencies are either precious or industrial, a distinction that some community members may contest.
However, it is important to remember that neither one is a pure currency. While both have the potential to become investment vehicles, their value is highly dependent on market sentiment, and Bitcoin's price is subject to fluctuations. However, as the biggest cryptocurrency globally, bitcoin has a global acceptance that its rivals don't enjoy. It is perhaps the best cryptocurrency to invest in for new investors.
If you've been following the cryptocurrency markets, you've probably noticed a trend: a spike in Bitcoin's value. The price of a single bitcoin has risen from 33 cents to more than double the price of one ounce of gold, and if you invested $100 in bitcoin in 2011, it would be worth over $840,000 today. Bitcoin is not a fiat currency, and unlike gold, it cannot be inflated. It can experience massive rallies with great payoffs for investors.
While it's true that Bitcoin and Ethereum are gaining in popularity, there are certain factors that you must consider before putting money into them. Crypto users can use bitcoin-future.live to know about these currencies more. One of these is how regulated they are and whether a reliable and reputable company backs them.
Suppose you're thinking about buying Bitcoin or Ethereum. In that case, it's important to remember that it's still a relatively new market, and the value of the currency you buy is not guaranteed. Furthermore, you should consider the community, vision, and purpose of the cryptocurrency before investing.
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