Bitcoin, the pioneer of digital currencies, is set to achieve a milestone that will solidify its position as a scarce asset surpassing even the revered gold. As Bitcoin approaches block height 840,000, its annual inflation rate will be halved, dropping from 1.7% to 0.85%. In contrast, gold's annual supply sees a modest increase of 1-2% yearly, subject to technological advancements and economic dynamics.
The Evolution of Bitcoin Halving Events
Bitcoin has undergone three halving events thus far:
1. November 28, 2012: Block subsidy reduced from 50 BTC to 25 BTC per block.
2. July 9, 2016: Second halving decreased block subsidy from 25 BTC to 12.5 BTC per block.
3. May 20, 2020: Third halving slashed block subsidy from 12.5 BTC to 6.25 BTC per block.
Anticipating the Fourth Bitcoin Halving
The upcoming fourth halving is expected to occur on April 20, 2024 EDT. This event will further reduce the new Bitcoin supply per block from 6.25 to 3.125 BTC. As Bitcoin progresses through this phase – comprising 210,000 blocks or approximately 4 years – its total supply will witness a marginal increase of 164,250 BTC, nearing the ultimate cap of 21 million Bitcoins.
Comparing Bitcoin and Gold as Stores of Value
Gold has long been associated with retaining value over time, symbolized by the concept of a "fine man's suit" ratio. Despite its historical relevance, gold presents challenges such as cumbersome verification processes and storage logistics, which have hindered its utility as a medium of exchange.
Bitcoin's Journey to Mainstream Acceptance
Initially viewed as a speculative asset, Bitcoin has progressively emerged as a reliable store of value. With a market cap exceeding $1.4 trillion as of March 13, 2024, Bitcoin's ascent showcases its potential to rival gold's market capitalization.
Bitcoin's Monetary Attributes in the Digital Realm
Bitcoin's digital nature imbues it with unique monetary qualities:
Scarcity: With a fixed supply of 21 million coins, Bitcoin is shielded from inflationary pressures that afflict traditional currencies and precious metals.
Durability: As a digital entity secured by proof of work, Bitcoin ensures long-term value preservation and resistance to tampering.
Immutability: Transactions on the Bitcoin blockchain are virtually irreversible, bolstering trust and integrity in the decentralized network.
Embracing Bitcoin's Future Amid Halving
As Bitcoin's scarcity surpasses that of gold post-halving, it beckons a paradigm shift in the perception of digital assets vis-à-vis traditional stores of value. The impending halving underscores Bitcoin's resilience and attractiveness as a hedge against inflation, steering investors towards its promising trajectory.
With the halving event on the horizon, Bitcoin stands poised to outshine gold, marking a pivotal moment in the realm of digital finance.
Frequently Asked Questions
What are some of the benefits of a gold IRA
It is best to put your retirement money in an Individual Retirement Account (IRA). It is tax-deferred until it's withdrawn. You are in complete control of how much you take out each fiscal year. And there are many different types of IRAs. Some are better suited for college students. Others are made for investors seeking higher returns. Roth IRAs permit individuals to contribute after the age 59 1/2. Any earnings earned at retirement are subject to tax. However, once they begin withdrawing funds, these earnings are not taxed again. This type account may make sense if it is your intention to retire early.
Because it allows you money to be invested in multiple asset classes, a ‘gold IRA' is similar to any other IRAs. Unlike a regular IRA, you don't have to worry about paying taxes on your gains while you wait to access them. People who want to invest their money rather than spend it make gold IRA accounts a great option.
Another advantage to owning gold via an IRA is the ease of automatic withdraws. You won't have the hassle of making deposits each month. To make sure you don't miss any payments, you can also set up direct deductions.
Finally, gold is one the most secure investment options available. Its value is stable because it's not tied with any one country. Even in times of economic turmoil, gold prices tend not to fluctuate. Gold is a good option for protecting your savings from inflation.
Can I keep physical gold in an IRA?
Gold is money, not just paper currency or coinage. People have used gold as a currency for thousands of centuries to preserve their wealth and keep it safe from inflation. Investors today use gold to diversify their portfolios because gold is more resilient to financial turmoil.
Many Americans are now more inclined to invest in precious metals like gold and silver than stocks or bonds. Although owning gold does not guarantee that you will make money investing in it, there are many reasons to consider adding gold into your retirement portfolio.
Another reason is that gold has historically outperformed other assets in financial panic periods. Gold prices rose nearly 100 percent between August 2011 and early 2013, while the S&P 500 fell 21 percent over the same period. During those turbulent market conditions, gold was among the few assets that outperformed stocks.
Another advantage of investing in gold is that it's one of the few assets with virtually zero counterparty risk. Your shares will still be yours even if your stock portfolio drops. However, if you have gold, your value will rise even if the company that you invested in defaults on its loans.
Finally, the liquidity that gold provides is unmatched. This allows you to sell your gold whenever you want, unlike many other investments. You can buy gold in small amounts because it is so liquid. This allows you take advantage of the short-term fluctuations that occur in the gold markets.
What is the benefit of a gold IRA?
The benefits of a gold IRA are many. It is an investment vehicle that can diversify your portfolio. You can control how much money is deposited into each account as well as when it's withdrawn.
You can also rollover funds from other retirement accounts to a gold IRA. If you are planning to retire early, this makes it easy to transition.
The best thing is that investing in gold IRAs doesn't require any special skills. They are offered by most banks and brokerage companies. Withdrawals can be made instantly without the need to pay fees or penalties.
There are, however, some drawbacks. Gold is known for being volatile in the past. Understanding why you want to invest in gold is essential. Do you want safety or growth? Do you want to use it as an insurance strategy or for long-term growth? Only when you are clear about the facts will you be able take an informed decision.
If you plan on keeping your gold IRA alive for a while, you may want to consider purchasing more than 1 ounce of pure gold. One ounce won't be enough to meet all your needs. Depending on your plans for using your gold, you may need multiple ounces.
If you're planning to sell off your gold, you don't necessarily need a large amount. You can even manage with one ounce. These funds won't allow you to purchase anything else.
What precious metal is best for investing?
This question is dependent on the amount of risk you are willing and able to accept as well as the type of return you desire. Gold is a traditional haven investment. However, it is not always the most profitable. For example, if your goal is to make quick money, gold may not suit you. You should invest in silver if you have the patience and time.
If you don’t want to be rich fast, gold might be the right choice. However, silver might be a better option if you're looking for an investment that provides steady returns over long periods.
Statistics
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
External Links
cftc.gov
irs.gov
law.cornell.edu
- 7 U.S. Code SS7 – Designation of boards for trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement accounts
wsj.com
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- Want to Keep Gold in Your IRA at Home? It's Not Exactly Legal – WSJ
How To
Three ways to invest in gold for retirement
It is important to understand the role of gold in your retirement plan. If you have a 401(k) account at work, there are several ways you can invest in gold. You might also be interested to invest in gold outside the workplace. If you have an IRA (Individual Retirement Account), a custodial account could be opened at Fidelity Investments. You might also consider purchasing precious metals directly from a trusted dealer if they are not already yours.
These are three easy rules to remember if you invest in gold.
- Buy Gold with Cash – Avoid using credit cards or borrowing money to fund investments. Instead, put cash into your accounts. This will protect your against inflation and increase your purchasing power.
- Physical Gold Coins: You should own physical gold coins, not just a certificate. The reason is that it's much easier to sell physical gold coins than certificates. You don't have to store physical gold coins.
- Diversify your Portfolio. Also, diversify your wealth and invest in different assets. This will reduce your risk and give you more flexibility in times of market volatility.
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By: Bitcoin Magazine
Title: Bitcoin Halving: Redefining Scarcity in the Digital Era
Sourced From: bitcoinmagazine.com/sponsored/quality-money-bitcoin-to-become-scarcer-than-gold-post-halving
Published Date: Thu, 11 Apr 2024 15:55:35 GMT
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