Gold
Pros:
- Proven store of value – Gold has proven to be a good store of value for the past thousands of years. Lindy effect states that gold will continue to be a good store of value in the near future.
- Real use cases – Gold can be made into jewelry or put into electronics.
Bitcoin only has 12 years of track record when compared to gold and has not real industrial use case since everything is digital and only exists as 0’s and 1’s.
Cons:
- Clunky – Gold is hard to move around. How will you carry all your gold when world war III happens and you converted all your assets into gold?
- Hard to verify – There are so many controversies of fake gold floating around – making verification one of the biggest disadvantages of using gold.
Bitcoin is oftentimes described as digital gold, and one of the main advantages of being digital is that you can bring with you vast sums of money with you by memorizing your seed codes.
Since bitcoin is a public ledger technology, there’s also a very quick and easy way to verify each transaction and wallet balance.
Cash (USD)
Pros:
- Liquid – Cash can be exchanged for goods and services instantly, providing you with instant liquidity for purchases of any kind.
- Fungible – One dollar is exactly the same as another dollar. And there are no traces on your transactions when you use cold hard cash.
Bitcoin is liquid, but might not be as liquid as cash yet. The number of real world establishments accepting bitcoin payments are still limited. You’d also find it challenging to pay your friends in bitcoin.
Cons:
- Lose purchasing power – Subject to money printing and inflation. The things you can buy with 100 dollars 20 years ago is not the same as the things you can buy today.
Bitcoin is a disinflationary asset, meaning that its supply will go down every 4 years up to a point where there won’t be any new supply coming to the market anymore.
Stocks
Pros:
- Betting on capitalism and ingenuity – You’re betting on the ingenuity of entrepreneurs and innovators when you choose to invest in the stock market. That’s a good thing because this means you’re inherently bullish human beings.
With bitcoin, you are also betting on human ingenuity. Some of the brightest engineers are devoting countless time and energy in improving the bitcoin network.
Cons:
- Stock prices artificially inflated by money printing – The P/E ratio of a lot of stocks are ridiculously high right now with all the money chasing yield and pushing asset prices higher.
With that pros and cons laid out, you see that each asset has its own pros and cons and how they compare with Bitcoin. The advice here is to get off zero. Start by buying a few hundred dollars worth of bitcoin and get your hands dirty. Learn about the bitcoin ecosystem, the network, the blockchain, the bitcoinomics. Once you’ve done your own research, increase your portfolio allocation to 5-10% or an amount you’d be okay to lose.
You’d either thank me later for the asymmetric and surprising results in the future.
