There appears to be regular competition between gold maximalists and their blockchain counterparts. The one side has its impenetrable record of history to its name. The other has technological innovation, progress, and huge gains to offer. But with great gains comes great responsibility. If you lack the latter, you are in for a grim surprise, even permanent loss.
Many have wondered how the domains of gold and crypto might intersect with each other. Is there any common ground? Does it have to be one over the other? Not necessarily if you take a closer look.
The industry’s experts always considered gold a safe-haven asset that withstood the test of time and rightly so. It is the usual pick for conservative investors who are patient and resilient towards the emotionality of the financial markets. While glancing at the bitcoin-initiated blockchain industry, it shows a sheer endless potential for novel application and invention. The booming NFT market alone is a potential ‘gold mine’ (pun intended). But with gold, there simply can’t be quite as steep and hefty changes, extensions, and surprises, for better and for worse.
Why not do both?
Exactly. Why, indeed? You can trade both gold and crypto on Foreign Exchange. Reliable platforms like the international Forex broker OctaFX allow you to participate in several markets, staying in touch with national fiat currencies and the famous yellow metal or the most established cryptocurrencies on the market.
The currency pair XAUUSD (gold and U.S. dollar) is a popular option for traders who want to apply their know-how of market dynamics and specifically have gold involved in the profit equation.
As already mentioned, gold as a store of value is quite resilient, but it can be like a sponge concerning the market’s trust in fiat currencies. If it goes down, capital flows into gold, weakening fiat in turn. When fiat regains market trust, gold is usually squeezed again.
The synergy of both worlds: Gold existing on the blockchain
Some might be unaware that companies use the blockchain to make gold an accessible asset to crypto investors while simultaneously providing an entry point for traditional investors to access the blockchain. One such company is Paxos Gold, which issues special stablecoins on the Ethereum network called PAXG. One PAXG equals one fine ounce of gold, which the token holder can physically redeem in many places worldwide. You can even earn interest on your ‘blockchain gold’, so to speak. Many platforms offer this as an incentive to keep your gold stablecoins as liquidity on their networks.
Don’t get caught up in this unnecessary stand-off between these two asset classes and their communities. Both have their strengths and can amplify a wisely diversified portfolio. If you settle on one monolithic asset, you restrict your mobility to act as an investor. Gold proved its use case and keeps storing value long-term as an inflation hedge. It’s just the way it is. On the other hand, cryptocurrencies allow multiplying initial investments, draw significant profits, and move the new capital to more static and resilient assets. Another approach is buying back those cryptocurrencies once they hit a substantial low again.
In any case, stay educated and widen your horizon on these markets. Remain flexible and open-minded. As always, calculate your cost-benefit ratio to be as balanced as it gets without missing opportunities.
And another note: Cryptocurrencies and their futures—as opposed to more conservative futures trading—are available during weekends as well. More and more brokers tend to provide this option to their clients. The earlier mentioned fintech player OctaFX just recently introduced this, as well. It started on the first weekend of February.