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Is Bitcoin A Better Investment Than Gold?

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Over the past few years, gold has proved to be a safe haven commodity for investors. However, the recent pandemic seems to be a positive turning point for its fierce competitor bitcoin. the reputation of the digital asset as a safe commodity waxed stronger during the economic meltdown and the value and adoption have been on the rise since then. The result has been a greater interest in digital assets and more people choosing to buy bitcoin. The rise in the price and market capitalization is a strong indicator.

But does that mean that bitcoin is a better investment than gold? Let’s compare the two tradable assets to help you decide what could make the better investment between the two.

Comparing the two safe-haven assets

Safe-haven investments involve assets that maintain their value, increase in value, or outperform other assets during financial crises. For so long, gold has been perceived as the ultimate safe-haven asset because it has always outperformed other assets when financial markets crumble.

Although gold didn’t seem to meet investors’ expectations during the COVID-19 crisis, it still managed to outperform equities and some commodities.

While bitcoin’s performance at the beginning of the crisis was quite low, dropping from $9,700 to $4,891 in March 2020. It rebounded quite strongly about 6 months later in the last quarter of 2020, trading above $11,000 in October.

Bitcoin yielded a cumulative return of +44.64% between March 24, 2020, to May 6, 2020, surpassing every form of investment during the pandemic. Interestingly, the digital asset continued on a bull run to hit $20k in December and is currently trading at about $56,000.

If you were fortunate to buy bitcoin before the crisis, your portfolio would be up by approximately 447.3% today, making it the most lucrative form of investment to date.

Gold is stored in a vault and managed by a custodian. As a physical asset you can also store it in the bank or even in your home. However, storing gold in a vault offers flexibility and it’s much safer than storing the precious metal in your home. Bitcoin on the other hand requires a wallet to store the asset. You have to possess a bitcoin wallet before you buy BTC. You cannot keep bitcoin in a wallet the way you put your cash in a wallet because it is a digital asset. A bitcoin wallet is a software program that has a unique key. Once you purchase BTC and store it in the wallet, the private key guarantees your ownership of the asset and must be kept safe. Unlike in a vault where gold is managed by a custodian, you are fully in charge of your asset with your private keys in the case of bitcoin, and you can also make transactions at any point in time, peer-to-peer.

Which asset has shown value increase over time?

Gold has survived the test of time and is no doubt a good investment option. Its value has grown consistently over centuries and it is a trusted store of value. Bitcoin shares some similarities with gold and has even been dubbed gold 2.0 by many. Although it will always have unstable prices because of its volatile nature, it has, however, proved to be a good investment option with a consistent increase in value even during economic downturns when even gold has not quite performed to expectations.

Which has served longer?

Unlike bitcoin, gold has been around for centuries. It is an attractive, durable and multi-purpose resource that has stood the test of time. Aside from its good return on investment, it has other unique features. It is a scarce resource and thus has a limited supply. Bitcoin was developed in 2008. It is still a  relatively new technology, nonetheless, it has shown great potential since being created. Long term its prospects look bright as even countries like China are now looking to introduce their own versions of digital currencies.

Which can be used for other investments?

You can decide to use bitcoin to buy other cryptocurrencies. If you have bitcoin and you don’t wish to hold the asset anymore, you can buy other crypto assets directly with bitcoin. However, gold is not as flexible in that same regard and it’s an asset that is not easily liquid especially for the retail investor or trader.

Which is more safe and transparent?

The method of trading gold is old and trading the asset is quite cumbersome. Before buying gold, you need to weigh it, track, and test to confirm if the gold is pure. It is easy to deceive those who do not have machines that can detect whether the metal is really gold or counterfeit metal.

Bitcoin on the other hand is tough to alter or corrupt. It is cryptographically secure, easily trackable and cannot be double spent. Despite being powered by a decentralised and trustless network, bitcoin traders and investors ought to exercise extra caution since the world of cyber can be infested with cybercriminals and hackers.

Which of the two is more scarce?

Both bitcoin and gold are rare assets. However, unlike gold, bitcoin has a limited issuance with only 21 million to be mined into existence. All this was predetermined in the initial bitcoin code and cannot be altered. There is no accurate way to evaluate the amount of gold that can be mined. Even if we exhaust the gold on earth, gold can be mined in asteroids. Some companies are already looking into the mining of gold in space and on other planets. In future this could significantly affect the supply and demand mechanics in the gold markets.

Which of the two is more volatile?

For any investment option, you need to consider the history of the price. Bitcoin is a very volatile asset, its price was at its peak in 2017 before the fall to $3000 in the following year. Recently, the bullish run took bitcoin past the $41000 mark in January 2021 and it continues to be on the rise as the bull market rally continues almost unabated.

Gold is also volatile because the price of gold can be influenced by other market forces. Gold however, is the more stable of the two and the average and conservative investor would likely choose gold as the safer trade. But even with its high volatility, bitcoin has always shown a consistent and more rewarding price increase over time.

Which of the two can be converted to cash easily?

Gold and bitcoin are both liquid investment options and they can be converted to money anytime. Gold however is not as easily convertible to local currency compared to say bitcoin which can be exchanged peer-to-peer. Converting gold to local currency is time consuming and the process is riddled with regulatory constraints. To convert your digital currency to local currency, all you need is to use exchanges like Remitano where you can buy or sell bitcoin.

Conclusion

Any asset that is considered a good investment must also be a good store of value or be a hedge against the volatility of other assets. Bitcoin is stored digitally and thus eliminates the risks associated with physical stores of wealth such as gold. All you need to store your bitcoin is a cryptocurrency wallet. Bitcoin is portable, divisible and easily exchangeable and transferrable. It’s the ideal medium of exchange for cross-border transactions and it gives users complete privacy and at the same time full transparency since all transaction records are publicly available on an immutable blockchain or distributed ledger.

All things considered, it appears that bitcoin is inherently superior to gold in many ways even though like any other innovation, it comes with its own specific shortcomings which cannot be ignored if you want to consider investing in the digital asset. At the current rate, it is not beyond feasible that if the cryptocurrency market continues to increase in market cap, it may some day in the future rival gold in demand and adoption.

Written by Heath Muchena 

 

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Dream VC applications: A peek behind the scenes

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Dream VC breaking down the numbers and representation in its programs

A year ago, Dream VC quietly launched its first inaugural cohort applications with the hopes of closing the investing knowledge gap for check-writers and ecosystem builders across the continent. Fast forward one year later, they have received an overwhelming amount of interest from people curious about investing and contributing to the African startup ecosystem. Across two cohorts alone, they have processed more than 2000 applicants from 30 African countries. With fellows dialing in five continents and multiple time zones.

That being said, they’d like to share some interesting findings they have extracted and learned from the whirlwind that Dream VC has been in from last year to now.

Cohorts

By the end of 2022, Dream VC will have 2 cohorts under its belt with 3 programs run. There has been an increase in total applications despite the difference in price point between the 2021 program and this year.

Raw Aggregation of Dream VC Applications 2021 vs 2022

Breakdown Of The 2021 Cohort

For its inaugural cohort, they received a total of 1002 applications and had an intake of 31 fellows, with an acceptance rate of 3%. The average age of its fellows was 25, with most being in their mid-twenties to late twenties. And exploring VC as a new career pivot after a few years of full-time work experience. After 4 months of rigorous and community-driven engagements, a total of 19 Fellows graduated from the program with an issued certification.

When looking at the specific demographics of Dream VC’s inaugural fellows, findings show that 90% of the fellows were homegrown. Which they classified as having been born, raised, and educated on the continent. They also had 12 African countries represented and 16 different Nationalities in total.

List of countries represented by Dream VC 2021 Applicants

Although its initial intake consisted of 33% women, the final certified graduating fellows consisted of 60% women. Meaning that all of the female fellows who joined the fellowship finished the program.

This is a strong indication of the perseverance of its female fellows in particular. And they are committed to making a strong push to convert more women into its talent pipeline. Especially given that only 15% of the 2021 applicants identified as female. At Dream VC, they urge more women to apply for its programs and also reapply for future cohorts if they were not accepted initially.

Breakdown Of The 2022 Application Cycle

For 2022, Dream VC opened its applications on March 8th and had then remained open for over a month and a half until its final deadline on May 1st. In total, they received a total of 1,375 applications for its Launch into VC (“LIVC”) and Investor Accelerator (“IA”) programs.

Aggregate breakdown of 2022 Applicants across “LIVC” and “IA” programs

Around 81% of the total applications were for our Launch into VC fellowship, and the remaining 19% were for the Investor Accelerator. We received a total number of 1,113 applications for Launch into VC, and 262 for Investor Accelerator.

Gender Breakdown

Aggregate breakdown of 2022 Applicants, by Gender, across the “LIVC” and “IA” programs and in total

Out of the total applications for 2022, 31% of the applicants identified as female. When taking a closer look at the gender breakdown for each program, Investor Accelerator had a higher percentage of female applicants with 37% of total Investor Accelerator applicants, while Launch into VC had 29%.

Nationality Breakdown

Aggregate breakdown of 2022 Applicants, by Nationality, across the “LIVC” and “IA” programs and in total

When reviewing the nationalities of the applicants, it was found that for 2022, Dream VC has exponentially expanded its reach of applicants in both nationality and location. However, most of the applicants are still overwhelmingly from the continent and diaspora, which accounts for 86% of the total applicants. The remaining 14% hail from non-African countries such as India, Singapore, and Germany with non-African backgrounds.

Aggregate breakdown of 2022 Applicants, by Nationality. Important Note: 25 Other Countries Represent the Other 10.36% Not Shown On Graph.

When looking more closely at each program, 87% of the applicants for Launch into VC applicants were homegrown or African diaspora, compared to 83% of the Investor Accelerator applicants. This year saw 30 different African countries across the continent represented. With a majority of the applicants coming from Nigeria (43.7%), followed by Kenya (10%), Rwanda and South Africa (3.9% each respectively), Ghana (3.6%), Uganda (3.2%),  Zimbabwe (2.9%), and Tanzania (2.3%).

List of countries represented by Dream VC 2022 Applicants

Interestingly, the country represented the most by the diaspora applicants was Cameroon, followed by Nigeria, across both programs.

Across the different African regions, West Africa took the lead in applicants with over half of the applicants hailing from the region (58%)East Africa contributed to another quarter with approximately 29% of applicants coming from the area, followed by Southern Africa (6%)Central Africa (4%), and finally North Africa (2%). Dream VC’s footprint can still be solidified further, particularly in the ecosystems in North Africa, and its team will be traveling actively to Egypt, Morocco, and Tunisia to build relationships there.

Locations Breakdown

List of non-African countries represented by Dream VC 2022 Applicants.

When looking at the locations of applicants applying from outside the continent (including diaspora and non-Africans), over 50% of them applied from the United States and the United Kingdom. Dream VC also saw an increase of Indian and Singaporean applicants from Asia. And a spread of interesting European countries including Belgium, Belarus, Germany, France, Finland, and Sweden.

Closing Remarks & Reflections

Since launching Dream VC in 2021, the team has been endlessly grateful for the overwhelming interest from the African & International community. As well as the selfless support that has been extended by various ecosystem partners and connections in our network.

Its application cycles have revealed several interesting insights into where the strong interest can be found in various startup ecosystems. As well as certain areas we are endeavoring to have better reach in (ex: North Africa and Arabophone countries).

They also strongly encourage more female applicants to apply AND reapply to its programs. As they are strongly committed to building out the opportunity and talent pipeline for black women in particular focused on investing in Africa.

 

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Base10 Partners Led By Adeyemi Ajao Becomes First Black-Led VC Firm To Cross $1 Billion AUM With New Fund

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Base10 Partners co-Founder and CEO, Adeyemi Ajao (Source Adeyemi Ajao Image: Base10)

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BluePeak Private Capital Announces Its Second Investment in ieng

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BluePeak Private Capital Founder and Managing Director, Walid Cherif 

BluePeak Private Capital, an alternative asset management firm with a strong focus on impact in Africa today announced its investment in ieng. A pan-African provider of engineering and construction, operations and maintenance. And hybrid power solutions to Africa’s burgeoning telecom sector.

The $20 million growth capital supports ieng’s geographic expansion plan across the continent. Enabling the company to provide innovative and cost-effective solutions to a broader range of clients and industries. Solidifying its position as a leading provider of end-to-end infrastructure services and cutting-edge solutions. In addition, the investment advances ieng’s strategy to meet growing consumer demand for telecom infrastructure services, boosting connectivity for last-mile access and deepening the firms’ footprint by providing catalytic capital for new contracts with blue-chip clients.

Rami Matar, Partner at BluePeak Private Capital, commented: “Through reliable services and a strong track record, ieng has managed to position itself as a preeminent service provider to blue-chip telecom clients in Africa. Competing head-to-head with global service providers. We are excited to support ieng and fund its growth plans as development in telecommunications narrows the gap in Africa’s digital divide and is a critical enabler of economic development, productivity, and inclusive growth.”

Rami Shibley, Founder, and CEO of ieng said: “We are excited to start this long-term partnership with BluePeak t support ieng’s continuous growth and development. The investment provides critical capital, enabling ieng to meet the increasing demand for reliable telecom services, improved connectivity, and more efficient power solutions”.

Established in 2007 in Ghana, ieng gradually expanded its operations and is today a prominent service provider to
blue-chip tower companies and mobile network operators across Africa. Over the years, the company has developed
an extensive track record and currently maintains a portfolio of more than 23,000 towers on behalf of clients in
growing economies across the continent including Nigeria, Ghana, Kenya, Uganda, the Democratic Republic of
Congo, and beyond. Further, ieng has established an in-house hybrid power solution to reduce carbon emissions of
telecom towers through transformative means.

The telecommunications sector is poised for onward growth in Africa, on the back of:

(i) growing mobile penetration.

(ii) increasing number of internet users.

(iii) the rollout of 4G and 5G towers to improve and expand the quality of connectivity.

ieng is well-positioned to leverage its competitive geographic reach and long-term relationships with
clients to capitalize on the market opportunity and further scale its operations.

The investment is aligned with the Fund’s impact agenda and will support ieng in strengthening mobile and internet connectivity and promoting evolutionary hybrid power solutions. BluePeak’s $20 million investment promotes UN’s Sustainable Development Goal 3 Good Health and Well-being. Goal 5 Gender Equality, Goal 7 Affordable and Clean Energy, Goal 8 Decent Work and Economic Growth, and Goal 9 Industry Innovation and Infrastructure.

 

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