Investors who have been carefully watching the volatility of Bitcoin saw the value of the digital currency surpass that of one ounce of gold yesterday.
A single Bitcoin was trading at $1,242 for a brief spell Friday, while gold was simultaneously valued at $1,241. Bitcoin has since fallen to $1,138 as of this writing, but the slight dip has not deterred some investors from dumping gold investments in favor of Bitcoin.
The fact that the digital currency managed to overtake gold momentarily was viewed by certain industry observers as psychologically important. It certainly was seen as a milestone by Erik Voorhees, who sold the gambling website SatoshiDice earlier this year for 126,315 BTC.
“It means Bitcoin is really becoming a ‘respectable asset,’” Voorhees told CoinDesk. “It’s playing in the big leagues – a share being worth more than a share of Google or Apple, and even more then an ounce of gold.”
At the start of 2013, a single ounce of gold was worth about $1,700. It hit its low point of the year in July, but by September was slightly better than $1,400.
Bitcoin, on the other hand, has seen a meteoric rise of late. In mid-November, the virtual currency hit an all-time high of $400. Now at November’s end, the value of a Bitcoin is almost three times more than the high it reached only about two weeks ago.
But before ridding yourself of all gold investments and backing Bitcoin, keep in mind that gold has been a long-standing and well-understood commodity. It does not have the potential to fall victim to hackers, bugs and a possible lack of support that the digital currency is susceptible to.
Even Voorhees, who has made a fortune thanks to Bitcoin, warns investors to look at the big picture when contemplating maximizing investment capital. He believes that the most prudent approach is to keep savings in gold, but to allocate the majority of spending money in Bitcoin.
Although Bitcoin has been gaining on gold and briefly passed the commodity in value, “it shouldn’t be taken as an indication that Bitcoin is better,” Voorhees said. “They’re just different, and a proper understanding of the monetary virtues of both gold and Bitcoin puts one ahead of just about everyone else on earth. [Gold] is very special, and cannot be replaced by Bitcoin for a very long time.”
That being said, investment always involves some degree of risk. And a number of investors who have been willing to accept that risk by gobbling up Bitcoin have received some rather handsome returns.