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.
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
ILLA, an African asset-light FMCG Logistics Company Raises $2M Investment Round
ILLA Team (Image: Supplied)
Cairo-based FMCG Logistics company ILLA secures a $2M investment round to boost its growth in the market and diversify its offering to the FMCG value chain. The round was co-led by Watheeq Financial Services and Golden Palm Investments. The round saw participation from Loftyinc Capital Management, Kepple Africa Fund, Cubit Ventures, AUC Angels, Oqal Angel Network and FLat6Labs Cairo doubling down on its investment in ILLA for the third time
Founded in 2019 by Mahmoud Elzomor, Alaa Jarkas, Ahmed Sakr, and Hossam Saraya, and shortly joined by a well versed management team with Mohamed Emera as Director of Growth, Mohamed Kamal as CFO, and Khaled Elzomor as Commercial Director ILLA aims to optimize post-production supply chain activities for FMCG brands, starting with middle-mile delivery services, being the most fragmented part of the value chain.
By focusing exclusively on the FMCG market, ILLA was able to capture the business and trust of over 65 clients in its portfolio, with household names to the likes of Coca-Cola, P&G, Danone, Nestle, Juhayna, and Pepsico.
Since 2019, ILLA has been delivering on its core promise of moving goods with efficiency on behalf of FMCG brands, spanning over 5,000,000 KM and completing over 250,000
transactions, across 27 governorates in Egypt leveraging its tech platform to power delivery
Before ILLA, FMCG brands had to rely on a variety of owned and outsourced assets to manage their delivery operations, and that adds to the pain of a fragmented logistics cycle, which gave way to the value offering of ILLA to those brands; a streamlined value chain with visibility, control and growth potential for each individual brand, with ILLA acting as an asset-light logistics company, leveraging its tech platform and operational intelligence to deliver an unparalleled experience to FMCG brands.
“ILLA will use the funds to fuel its expansion and growth in Egypt and disrupt the traditional route to-market for FMCG companies and SMEs, while building more around its tech platform to deliver more value to its clients and drivers alike”, says Mahmoud ElZomor, Co-Founder and CEO of ILLA
“Mahmoud and the team are tailor-made for ILLA, bringing decades of diversified experience to help drive efficiency into the $15 trillion global FMCG market. With the onset of covid, the global supply chain management industry is suitable for modernization, and ILLA is uniquely positioned as an end-to-end execution platform. In addition, ILLA’s smart logistics solutions also play a crucial role in providing a full stack of operational solutions that will disrupt the sector, and will change the behavior for all stakeholders within the FMCG market,” said Khaled Zaidan of Watheeq Financial Services.
“Middle-mile logistics is one of the most underinvested segments of the global supply chain market. ILLA has identified this massive opportunity in MENA and is offering a full-stack B2B supply chain management platform enabling FMCG brands to reach retailers directly at the lowest cost per case. Mahmoud and team are utilizing the trucking logistics shared economy and tech automation to innovate within a large and fast-growing market.” – AJ Okereke, Partner, Golden Palm
Fawry Invest in Sudanese Classifieds and Marketplace Platform alsoug, Marking First Overseas Venture
Fawry CEO Eng. Ashraf Sabry (Image: Supplied)
Fawry establishes strategic partnership with Sudanese consumer platform with an eye to scaling up technology platform beyond Egypt.
Fawry (the “Company”, FWRY.CA on the Egyptian Exchange), Egypt’s leading provider of e- payments solutions and digital banking services, announced today that it has finalized an investment in alsoug.com, Sudan’s largest online classifieds platform and marketplace, to help build out alsoug’s new fintech platform, Cashi. Fawry has acquired a strategic minority stake in the alsoug.com/Cashi holding company, marking the Company’s first venture capital investment outside of its Egyptian home market. The investment comes as part of Sudan’s first announced venture capital funding round.
Fawry played a leading role in ensuring the success of the USD 5m round, with the Company’s presence catalyzing involvement from other strategic Western VC players. As a strategic investor in alsoug, Fawry intends to leverage its long track record with white label technology solutions to help the platform expand in scale, enhancing the platform’s merchant acquisition operation, refining its go-to-market approach, and providing valuable insights that inform high-level strategy across all segments of the business.
Founded in 2016 by a world-class team of technology entrepreneurs, alsoug is now Sudan’s leading consumer internet platform and its largest digital marketplace. Alsoug is one of Sudan’s most downloaded apps on the Google Play app store with two million downloads and is a platform where sellers can list everything from real estate and cars to services and commodities.
Despite the political and economic headwinds experienced by Sudan as it goes through a transformative political transition, the platform has grown rapidly since 2016, reflecting alsoug’s highly skilled team of in-house developers, comprehensive coverage by its on-the-ground teams, as well as Sudan’s promising economic fundamentals. Moving forward, and building on the strategic partnership with Fawry, alsoug will significantly expand its service offering by building a new payments network capable of serving customers across Sudan, one of the largest countries on the African continent.
“We’re delighted to be kicking off our partnership with alsoug, one of Sudan’s most exciting prospects and a Sudanese leader in tech innovation. This is our first investment foray outside of Egypt in our thirteen years of operation, and we’re confident that our story with alsoug and Cashi will be a special one. Fawry’s investment in alsoug delivers on our plans to venture into underserved international markets by leveraging our technology and teaming up with strong local players. This investment will provide us the opportunity to strategically expand our footprint into Africa and transfer the experience we’ve gained in the dynamic Egyptian market to neighboring Sudan, an economy with major potential across several sectors and with a significant pool of entrepreneurial talent. Meanwhile, Fawry’s strategic partnership with alsoug leaves it ideally placed to help guide the platform’s rollout of a countrywide payments system, a feat which Fawry has already managed through a scalable, robust, and best-in-class technology platform.” said: Fawry CEO Eng. Ashraf Sabry
“This investment marks a significant milestone not just for alsoug, but for the nascent tech space in Sudan as a whole, which has until today been essentially shut out of the global capital markets. I hope this investment is the first of many and that the huge potential of the tech sector in Sudan is fully realized in the coming years. We are looking forward to working with Fawry, and our new strategic shareholders, to continue our expansion from the classifieds and marketplace space into payments. We will build a payments platform that will deliver financial inclusion to all Sudanese.” said Alsoug co-founder and CEO Tarneem (Nina) Saeed
ReelFruit Secures $3 Million Series A Funding To Expand Production with New Factory
ReelFruit CEO/Founder; Affiong Williams (Image: Supplied)
ReelFruit, a premium dried fruit company known for its high quality nutritious snacks, today announced a Series A investment of $3M. Alitheia IDF led the round and invested $2M while other investors included Samata Capital and Flying Doctor Healthcare Investment Company. The New Practice advised ReelFruit on the transaction. With the capital, ReelFruit will scale its dried fruit production, develop new products, and increase exports by 10 x to 15 MT in the first year.
Key to its expansion plans, ReelFruit will acquire a new factory in Ogun State to increase its monthly dried fruit production from 6 MT to 30 MT. The factory will hire over 200 people in its first year. With its greater supply of dried fruit, ReelFruit will continue to innovate new products for the local and international markets.
As part of its efforts to secure high quality raw materials, it plans to deepen its existing work with Nigerian fruit farmers. The company will form an agro-extension services program for 250 registered mango and pineapple producers. The program will boost fruit yields and help support a steady supply of high quality raw material for the factory.
To meet strong demand for its dried fruit snacks, ReelFruit will diversify its local and international sales channels. The company will launch an e-commerce channel for direct US sales by 4Q21. ReelFruit will also unlock more B2B opportunities including white-labelling and co-packing to support the national drive toward import substitution. Local buyers will be able to buy dried fruit locally thereby reducing dependence on imports. Reelfruit is already on track to double last year’s revenues by November 2021.
“This investment takes ReelFruit to the next level. We can meet increased demand for our products and tackle one of our biggest challenges – raw material supply. We’re thrilled that this will unleash a greater impact on our value chain by increasing farmer incomes and creating up to 300 decent jobs for Nigerians,” Affiong Williams, ReelFruit CEO/Founder.
“Alitheia IDF is proud to support ReelFruit’s ongoing efforts to boost food production in Nigeria and positively impact communities through deliberate partnerships with local farmers, distributors, and retailers. The investment will strengthen the company to unlock further growth, upskill farmers and improve economic outcomes for thousands of women who play a significant role in the production of ReelFruit’s products,” said Tokunboh Ishmael, Alitheia IDF co-founder.
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