There is one big difference between gold and Bitcoin as an investment – gold has been a treasured commodity for a very long time, while Bitcoin does not have the same track record.
This is according to Wayne McCurrie, a senior portfolio manager at Ashburton Investments.
Speaking on BusinessDay TV, McCurrie said gold is ultimately a Bitcoin, because there is limited supply and strong demand.
Gold and Bitcoin are also similar because they are independent currencies which no government can control, which you can carry around, and get value for it in any territory.
However, McCurrie said gold has been around for a long time, has been traded with extensively, and has had recognised value for 5,000 years.
Gold has therefore established itself, while Bitcoin is yet to do the same.
The victim of its own success
McCurrie said if Bitcoin becomes truly successful, and becomes really big, it will be the victim of its own success – as it will become legislated.
“Governments will never tolerate a separate monetary system outside of the formal banking system, so it will almost become illegal if it truly becomes big,” he said.
The reason why it is popular now and that prices are going up is because of China’s exchange controls, he said.
“One way of getting your capital out of China is to buy Bitcoin, which makes exporting money easy,” said McCurrie.
He warned that there is a dynamic involved in Bitcoin which can change quite quickly.