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
Chaka secures $1.5M pre-seed round to power digital investments and wealth management opportunities across Africa
Chaka CEO, Tosin Osibodu at a press briefing (Image & Press Release: Chaka)
Chaka is thrilled to announce its $1.5M pre-seed funding round led by Breyer Capital, a global venture firm focused on catalyzing growth in high-impact companies like Spotify, Facebook, and now, Chaka. Other participants in the round are 4DX Ventures, Golden Palm Investments, Future Africa, Seedstars, and Musha Ventures.
Chaka is a technology solutions company on a mission to enable every business and person in Africa to access borderless digital investment and wealth management opportunities. The team combines investment expertise and best-in-class technology to provide reliable digital Investing, trading and wealth management solutions that are easy-to-use and easy-to-integrate.
Their mission is to enable digital border-less investing for African businesses and individuals. They’re powering the digital investment landscape in Africa through partnerships with asset managers, financial technology firms, and regulators with whom we have a shared mission. We achieve this by providing trading solutions that are easy to use and easy to integrate.
With this capital, they will focus on the goals to build a roster of formidable partners and accelerate expansion to other markets within West Africa. This investment also enables them to hire top talent and integrate more advanced functionalities into our investment and wealth management solutions.
Jim Breyer, CEO of Breyer Capital, shared his view on this investment and it illustrates their shared vision: “We are proud to align ourselves with a company that is leveling the investment playing field for Nigerians (and Africans at large). We’re confident in the value Chaka provides through its digital tools, and we look forward to playing our part in supporting Tosin, Bo, Olaolu, and the Chaka team.”
This is a significant milestone for Chaka and could not have come this far without their users, partners, early investors, and a talented, achieving team of Champions.
They see digital investments as a means to boost economic transformation in Africa, and we’re very keen to bring this vision to life.
elmenus, Egypt’s Leading Food App Secures $10M Pre-Series C from Fawry, Luxor Capital and Marakez
Co-Founders (Image: elmenus)
elmenus and Fawry to co-develop innovative solutions for restaurants and customers
Luxor Capital’s first investment in the MENA region, previous investments include the biggest food ordering platforms globally, such as Zomato, Deliveryhero and Glovo
elmenus, Egypt’s biggest food discovery and ordering platform, has secured new funding from three new investors, based in the MENA region and North America. Fawry Group, the renowned digital transformation and e-payment platform is leading the investment from Egypt. The investment follows Fawry’s new strategy to take minority stakes in fast-growing, Egyptian, technology businesses. As well as investing, Fawry will work closely with elmenus to develop innovative solutions to benefit restaurants and consumers. Also investing is Marakez, a leading Egyptian real estate developer.
Ashraf Sabry, CEO of Fawry, said: “Fawry is looking forward to its journey with elmenus, working closely with the executive team and entering many ventures together. By this investment, we show our desire to not only be a payment catalyst but to be a strategic partner to elmenus, its customers, restaurants and their riders. The Egyptian food space has high growth potential, with technology disrupting the status quo, as customers’ needs in food service provision rapidly change.”
From North America, investment has also been received from New York-based hedge fund, Luxor Capital Group, which has $11 billion of assets under management. elmenus is its first investment in the MENA region testament to its’ growth track record and market opportunity in Egypt. Luxor has a long history of successfully investing in food technology companies around the world.
Amir Allam, CEO of elmenus, commented: “Attracting new investment from Fawry, Luxor Capital and Marakez – following the endorsement of industry veteran, David Buttress, earlier this year – validates elmenus’ unique strategy. We are accelerating the adoption of online ordering by users, while enabling restaurants with new verticals – to help them scale. This funding demonstrates the investors’ strong belief in our position in Egypt, and our capability to dominate the market.”
elmenus, which now has over 1.5 million monthly users, is the most comprehensive platform for restaurant information and food discovery in Egypt, and its aim is to personalize food recommendations at a dish level. elmenus continues to expand rapidly, and today’s announcement follows the investment and board appointment of David Buttress – the former CEO of global food ordering firm, JustEat – announced earlier this year.
By the end of 2021, elmenus expects to empower 12,000 restaurants with new data and tool offerings to help them scale their businesses, across 20 Egyptian cities. Its cutting-edge digital solutions will also drive its existing database of several million users, to switch to online ordering.
MarketForce secures $2M Pre-Series A round, plans to launch in Nigeria and scale up RejaReja in East Africa
MarketForce Co-founders, Tesh Mbaabu (Left) and Mesongo Sibuti (Right) (Image & Release: MarketForce)
Kenyan-based MarketForce, a B2B platform for retail distribution of consumer goods and digital financial services in Africa, announces a $2 million Pre-Series A round, bringing total funding to-date to $2.5 million. With this fresh round of funding, MarketForce has brought on V8 Capital, Future Africa, Greenhouse Capital, Launch Africa, Rebel Fund, Remapped Ventures, and a couple of strategic angel investors as new investors. They joined Y Combinator and existing investor P1 Ventures, who also participated in the oversubscribed round.
In sub-Saharan Africa, approximately 90% of household retail transactions are in cash, and delivered through a network of about 100 million MSMEs, with 42 million in Nigeria alone. Retail payments on the continent are expected to top $2.1 trillion by 2025, and MarketForce aims to digitize a large portion of these offline transactions.
Co-founded in 2018 by Tesh Mbaabu and Mesongo Sibuti, MarketForce uniquely combines a field sales automation SaaS solution with it’s “RejaReja” B2B marketplace to digitize how informal retail merchants buy and sell FMCGs and digital financial services. RejaReja helps these corner shops, commonly referred to as ‘dukas’ in Kenya, get better service, assortment, and access to new revenue opportunities, outfitting them with the technology and support they need to transform themselves from simple FMCG outlets to comprehensive financial service hubs for the continent’s last-mile communities. Currently available in Kenya, RejaReja offers informal retailers next-day delivery for hundreds of SKUs from the leading FMCG brands.
Last month, MarketForce announced the strategic acquisition of Digiduka, which was formed and funded during the inaugural cohort of the Antler programme in Nairobi. This was a huge fintech step forward as RejaReja now provides a wallet that allows retailers to collect mobile money and bank payments via mobile app, WhatsApp bot or USSD shortcode, eliminating the high mobile money transaction fees and enabling merchants accept digital payments, access working credit and earn more by acting as distribution agents for popular financial services such as airtime, bills, utilities, and even insurance.
With this round of funding, MarketForce plans to launch in Nigeria and to scale up RejaReja to more towns in East Africa.
“We are seeing significant demand for our radically improved way for companies to distribute their goods and services in Africa, and we’re thrilled to get a boost from returning and new investors at this crucial time,” said Tesh Mbaabu, Co-founder and CEO of MarketForce. “The combination of our technology with the offline distribution network that we are building is essential to creating maximum output and impact in African retail distribution. Our goal is to create income growth opportunities for a million retailers and independent sales agents across Africa within the next five years.”
“Our clients and partners understand MarketForce’s power to increase sales performance and productivity across markets and industries,” said Co-founder and CTO Mesongo. “We are building the operating system for retail distribution in Africa, and we have the right combination of technology and team to make our Pan-African vision a reality.”
Today, MarketForce clients are able to gain access to both our software and the RejaReja marketplace, which has garnered over 15,000 retail customers, processing thousands of orders daily, and we are experiencing double digit revenue growth month over month. The MarketForce SaaS product on the other hand has garnered over 10,000 monthly active users, with over 300,000 transactions worth over 500 Million USD processed to date through the platform in 3 key markets; Kenya, Uganda and Tanzania. Clients and partners include Safaricom, Pepsi, Grain Industries, Fort Beverages, Madison Insurance, Platinum Credit, Momentum Credit, Letshego, Pezesha and Lami.
“We are proud to back MarketForce to build the future of retail in Africa and help catalyze the digitization of the African retail market, which is highly informal, fragmented and undigitized, but holds a lot of untapped potential to improve incomes and enable millions of African retailers to grow their businesses. MarketForce sits in a place that enables them to generate a lot of value and empower every single participant in the massive retail industry,” said Adenike Sheriff, Principal at Future Africa.
“We are excited to strengthen our partnership with MarketForce,” said Mikael Hajjar, Managing Partner at P1 Ventures. “MarketForce is one of the fastest-growing African leaders in sales and distribution automation technology. We’ve witnessed the pain point that MarketForce’s product addresses and how its customers realize major productivity gains over substitutes.”
“I have known Mesongo and Tesh for over two years and MarketForce has proven that they know how to leverage the entire retail supply chain as a gateway for digital payments. Their organic as well as acquisition-driven growth & expansion strategy thus far has proven that their understanding of unit economics and marginal customer acquisition costs is solid. As a pan-African fintech company, they are very well positioned to tap into the $700 billion that gets transacted in this space every year,” said Zachariah George, Managing Partner at Launch Africa.