Every investor’s style is a bit different; some people are traditional and stick to what they know while others can’t resist the draw of the newest market trends. Both strategies have their pros and cons, but it’s essential to know as much as possible about what’s in your portfolio. Gold has proven to be a safe haven for times of market trouble and has stood the test of time as far as its value.

Cryptocurrency, introduced in 2009, is still in its infancy; though it has gained popularity, especially since the pandemic, the digital currency still has a lot of unknowns. The key decision maker for investors lies in understanding your patience for risk and instability; start thinking about what your investment intentions are and take a realistic inventory of your capital. Digging up details on the precious metal and uncovering more about the cryptocurrency will help you better understand what works best for your investment style.

Is Cryptocurrency the Future or a Fad?

Even if you’re not an avid investor and don’t follow the market closely, it’s impossible to have not heard of digital currency. Popular types of cryptocurrency have made their way into the mainstream; Bitcoin, Dogecoin, and Ethereum are just a few big names that investors are buying into at an astonishing rate. The concept of digital currency can be hard to wrap your head around, but to put it simply, it’s a form of tender that is only accessible in electronic form. It makes sense that an asset of this variety has surged in demand; as the world continues to insist on moving everything online, it is inevitable that our currency would follow suit. However, there are a few reasons to be wary of building a portfolio based solely around cryptocurrency.

Cryptocurrency is an appealing asset as it seems to be evolving with technology as well as humanity; the fact that it is a peer-to-peer system aligns with consumer behavior. People have continually craved putting the power into their own hands and digital currency seems to allow for that freedom. However, despite its record-breaking highs, there is still risk associated with the investment. It takes a considerable amount of research to fully understand the process and then be able to predict possible trends. Time published an article outlining experts’ ideas on the future of digital currency and stated, “…that’s a big part of why every new Bitcoin high can be easily followed by big drops. It’s difficult to predict where things are headed long-term..” There are too many questions still looming in the asset’s atmosphere: When will it be regulated? When will broader institutions adopt it? What do spikes and swings mean for its longevity?

There just isn’t enough to go off when it comes to the credibility of cryptocurrency. Even considering the hugely successful year digital currency had in 2021, nothing can be guaranteed. The Time piece succinctly wraps up their feelings on the financial hot topic saying: “…it’s still a new and speculative investment, without much history on which to base predictions. No matter what a given expert thinks or says, no one really knows. That’s why it’s important to only invest what you’re prepared to lose, and stick to more conventional investments for long-term wealth building.”

That cryptographic proof comes in the form of transactions that are verified and recorded on a blockchain.

Forgoing Fool’s Gold: An Asset That’s Hard to Fake

The globe agrees on gold’s worth. The government-backed, highly regulated asset is used as a crisis commodity for that very reason: it is reliable and predictable. Cryptocurrencies are currently decentralized and not issued by reputable institutions. While this “power to the people” characteristic may be a major selling point for some investors, it simply isn’t secure. Gold has history on its side as it has pulled through in times of economic instability, time and time again. Cryptocurrency holds more intrigue and novelty, especially when it comes to investing ahead of trends. However, it is important to remember how many times (and how majorly) the stock market has crashed in the past and what that will mean for your portfolio.

Consider the utility of each kind of investment. If worst came to worst, where would you stand financially? Would your assets translate across different industries? Gold is recognized as a highly valuable, solid form of currency across the planet, and its even-keeled nature provides solace in times of uncertainty. When prices do vary as the economy changes, they aren’t ever shocking or volatile figures. Cryptocurrencies like Bitcoin have huge surges in price, especially as we all were stuck at home the past two years, but that means huge drops can follow.

Many experts are concerned with having an “established system” of trading, purchasing, and selling before they recommend any investments. Gold is almost impossible to steal and even more difficult to fake. Most purchases must be made through registered dealers and brokers, like LGX, and you cannot easily carry it across borders. It is hard to create counterfeit cryptocurrency, but the fact that it is unregulated and, in many ways, anonymous, make it feel a lot less bullet-proof.  Investopedia.com experts say, “if you’re looking for an asset that you can quickly move in and out of without losing value in a short time (like Bitcoin can), gold might be a better option. It is a much more liquid asset and can allow you to reallocate your portfolio quicker when the market fluctuates.”

Play the Financial Field While Staying Safe

As you might expect, London Gold Xchange stands with many experts in siding with gold first, cryptocurrency second. There’s too much to lose in an already volatile market and it is essential to protect your portfolio and build a safety net through investing in gold. You may dabble in digital currency, but (at least for the time being) you should think of crypto as an experimental investment that you only go for if you have capital you don’t mind losing. Time got it right when they advised investors to play it safe saying, “Market volatility is why investing experts recommend keeping any cryptocurrency investments to less than 5% of your total portfolio and never invest anything you’re not OK with losing.”

Contact our team today to get more information on how to round out your portfolio and protect your investments from future market crashes. We’ll give you an easily understandable breakdown of market trends and how to utilize our favorite precious metal to make sure your portfolio is as good as gold.