Do I buy crypto or gold? A popular question for any modern day survivalist. Recent trends in the cryptocurrency (crypto) markets have now brought this topic to the attention of the public at large.
This technology is a monumental advancement and has the potential to shift the way our financial systems work. To those prepping for potential disaster the question of whether to buy crypto or gold is becoming more and more relevant.
Which option would be more useful for emergency preparedness? This article will delve deeper into whether or not this technology has a place in your preparations, and we will compare this new technology to the historically successful gold.
A simplified explanation of cryptocurrencies is that they are a type of money or investment that runs off of math problems. Tons of computers around the world are constantly solving these problems, which is used to verify transactions of this money.
This also creates a tiny bit of currency for the owners of these computers to compensate them for the hardware and electricity usage. All of these computers verify every single transaction that occurs, so there is essentially a globally maintained ledger that makes sure that everyone is on the same page with where all of the money is.
The most common forms of cryptocurrency are Bitcoin, Litecoin, and Ethereum. Each of these has their own distinct advantages, but for the purpose of emergency preparedness, those differences are irrelevant. The most important consideration for a cryptocurrency is if people are willing to recognize that it has value. If you are investing in crypto, make sure that it is widely accepted and universal. Startup currencies carry extra risks that should be avoided.
This form of money has some unique advantages which should be recognized, but there are also some potential pitfalls to having it as part of your emergency preparations. Here are three significant advantages, as well as some disadvantages that should be considered before putting crypto in your emergency plans:
1. The value of crypto ignores fiat (unbacked) currency fluctuations – The universality of cryptocurrency means that the inherent value of this digital asset will be unaffected by inflation or deflation. A scenario involving economic collapse or runaway inflation would prove crypto to be an ideal currency to have.
2. It is incredibly mobile – You only need your crypto addresses to have full access to funds, or to make a payment. These strings of numbers are short enough, so while memorization is difficult, it is not out of the question.
3. It is unseizable if properly protected – Unlike a bank account, these assets cannot realistically be broken into or confiscated. Scenarios involving corruption or tyrannical governments seizing assets, such as in Zimbabwe in the 1980’s, are mitigated through ownership of crypto.
1. The price of each currency can be volatile – There is no guarantee that the cost of a crypto could remain stable on a day-by-day, or even on an hourly basis. Large quantities of dollars put into crypto could be virtually wiped out without any warning due to market fluctuations.
2. Internet access and electricity are required for use – This renders crypto totally useless in situations where there are power outages. Even sporadic electric production can hamper trade and poses a huge threat to the reliability of this type of currency.
3. Not everyone accepts crypto – Especially in an emergency situation, people may not see the value in having what is essentially a bit of data on a hard drive. Currency which most people do not want to accept is rather useless, especially when you need it most.
Gold has long been a recognized source of wealth and was used for eons as a way to barter for other goods. Entire empires were built upon this lustrous commodity. While there is still always the potential for market volatility with gold, it has historically been a fairly stable financial resource. As with crypto, gold has positives and negatives that must be considered before putting it in your preparations:
1. Gold has always been considered valuable – This translates to it being a secure bet for emergency preparedness. Many people would question what a Bitcoin is, but everyone knows that gold is valuable.
2. Metal is a tangible good – Being able to grasp it in your hand is reassuring, especially when times get tough. It is a lot easier to put faith in something that you can hold over imaginary money. This also means that it does not rely on the internet to be used.
3. Scarcity as a benefit – Since there is a limited supply of gold on earth, it will always be in limited supply. This is barring an asteroid made of gold crashing into the planet, or scientific advancements making mining in space possible, of course.
1. It is hard to split gold – A single troy ounce of gold is very valuable, so what you are willing to spend it on must be big as well. This can be mitigated by having small denominations of gold, or coins which are only partially comprised of gold. Other precious metals, like silver, are much more easily divisible.
2. During extreme events people may not want gold, only consumables and utility goods – Much like crypto, there must be a desire to accept the commodity. A brick of gold is not going to be very useful in a scenario where everyone is starving!
3. Theft is a possibility – While it is satisfying to handle a gold coin, it is also tempting for thieves to go after. An expensive item like gold is valuable, but also very pilferable. Take great care to ensure that thieves do not plunder your hoard.
Final Thoughts on Crypto or Gold
The likely safest action to take is to diversify. An emergency fund can have all types of money and should include barter-able commodities such as toilet paper, tools, and other consumables. There are a number of scenarios where either crypto or gold is the best choice. There is no guarantee that any specific event will occur which would favor one over the other. It is important to remember that most types of disasters would not render the Dollar or Euro useless.
If crypto or gold are not ideal or realistic for your preparations, there exist many other currencies and commodities that can be used to barter. Some examples include silver, bullets, cigarettes, alcohol, medical supplies, tools, toothpaste, and entertainment. Having a portfolio of different investments in your financial disaster preparations could go a long way to ensure your survival.
So, if you are interested in picking up some Bitcoin, Litecoin or Ethereum I would recommend using the team over at CoinBase. I bought my cryptocurrencies with them and then transferred the currencies to separate hardware wallets each with a secure private key.
If you buy $100 (£75) of digital currency or more, then we both earn $10 (£7) of free Bitcoin. Enjoy!
What financial preparations do you have? Let us know in the comments below if you think investing in crypto is a wise decision or not.