Bitcoin is having quite the year: it just broke $8000 in valuation, and more people are now searching online for how to buy the cryptocurrency than gold.
Some experts think Bitcoin might be unstoppable. But others, like Goldman Sachs (NYSE: GS), think the $8000 cap may be the last big figure attached to the cryptocurrency in a while. Analysts have raised the alarm advising against traders betting "on a surge past that price." In October, Bitcoin surged past both the $5000 and $6000 benchmarks. Given this, Goldman's analysts maintain optimism that while the currency will pause at around $8000, it will eventually continue to grow.
According to Goldman, gold will forever trump cryptocurrencies in the realm of money. Goldman affiliates believe that "fear and wealth are the core drivers of bullion." They have faith in gold's staying power as a durable property with strong intrinsic value. Historically, investors have tended to increase the amount of gold in their portfolio with increased social, economic or political uncertainty. The price of gold is also correlated to growing income levels, and so gold looks towards the emerging Chinese market with hope.
Nonetheless, Bitcoin's performance in 2017 has been "phenomenal," going from roughly $1000 to over $8000. Gold, by contrast, has only appreciated 11% this year.
When compared directly, gold has the advantage in certain categories, whereas Bitcoin wins in others. While Bitcoin's blockchain technology renders it less easily hacked than a central bank or government, it is still comparatively more vulnerable than gold. On the other hand, Bitcoin is far more portable than heavy gold, as there are no fees involved and all transactions are digital. Gold is subject to high taxes and requires a high level of security to transport. As for intrinsic value, Bitcoin and all cryptocurrencies have none, as it is quite simple to create new cryptocurrencies, suggesting zero control over supply and no rarity-induced intrinsic value for cryptocurrencies as a class. Bitcoin's own value is (within scale) determined by its capped total supply. Yet gold's scarcity is much more tangible, as there is a limited supply on Earth. Finally, gold is far less volatile than Bitcoin, going by the latter's progress in 2017 alone.