As gold prices break new highs, many Bitcoiners are seeking ways to get exposure to the precious metal, but have been met with some hurdles along the way.
Although physical gold is accessible in the form of jewelry, gold bars and coins, many industry executives are concerned about aspects like its quality, liquidity when selling, and buying at a premium above spot prices.
On the other hand, gold advocates are confident that the precious metal is much easier to buy than Bitcoin (BTC), given the complexities of storing private keys and a steep learning curve for new crypto investors.
Both Bitcoin and gold are available in the form of tokenized assets, exchange-traded funds (ETFs) and other equity instruments, but the question of owning these assets in the physical form exposes some differences.
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“Buying Bitcoin is significantly easier and faster than buying physical gold,” Ross Shemeliak, co-founder of the tokenization platform Stobox, told Cointelegraph.
He referred to Bitcoin’s instant and 24/7 availability, no need for vaults, while gold is associated with additional costs like transportation, storage, verification and resale.
Adam Lowe, chief of product at the self-custody firm CompoSecure, agreed that buying physical gold is subject to many challenges and additional costs.
“The first is maintaining quality, assuring the purity is accurate,” Lowe said, adding that investors have to rely on the reputation of dealers and the supply chain when buying physical gold.
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“Selling liquidity is also an issue as you have to find a buyer and will most likely pay a discount relative to the market price per ounce,” he continued, adding that self-custodied Bitcoin has none of these issues.
As well as limited liquidity, retail investors in physical gold face widened spreads, Shemeliak said, as they often have to buy at a premium above the market price of gold.
Gold advocate: Bitcoin self-custody is not easy
Unlike crypto investors, traditional finance (TradFi) investors and analysts are not so excited about self-custody opportunities offered by Bitcoin.
“Bitcoin could be very easy to buy if you have everything set up already, but if you don’t, it’s very difficult,” Rafi Farber, publisher of the gold-focused marketplace service End Game Investor, told Cointelegraph.
Farber, who has emerged as one of the biggest Bitcoin critics, referred to challenges for investors around Bitcoin self-custody, which requires holders to safely store the private key or risk losing access to the coins entirely.
While dealing with a self-custodial wallet, users have to “remember a string of random words or copy it down and put it in a safe, then copy and paste a gibberish code,” Farber said. “And if you lose any of the codes or the power goes out for whatever reason you’re screwed,” he added.
Farber’s concerns over the challenges of self-custody are not without reason. Trezor, one of the most prominent self-custody wallet providers, admits that usability remains one of the key issues faced by self-custodial wallets.
While some have tried to offer simplified self-custody options, others insist that holding a private key is the only way to actually own a cryptocurrency, which requires onboarding and a learning curve — but doesn’t come without its own costs, too.
Is Bitcoin a direct competitor to gold?
On the other hand, physical gold is “very easy to buy,” Farber said, suggesting options like coins or jewelry shops.
“Yes, buying a gold coin at a jewelry or coin shop is easy — but that doesn’t mean you’ve made a sound investment,” Stobox’s Shemeliak countered:
“Without verified origin, proper assay, secure storage, and a liquid resale market, you’ve likely bought a souvenir, not a serious store of value.”
“In contrast, digital assets like Bitcoin or tokenized gold offer transparency, liquidity and verifiability,” he added.
Shemeliak doesn’t see Bitcoin and gold as direct competitors either.
“Gold will always have historical value — but Bitcoin is building financial infrastructure for the next 100 years,” he stated.
At the time of publication, the price of spot gold stood at $3,327, up nearly 27% year-to-date (YTD) as it continues breaking new highs, according to TradingView.
The picture is less appealing for Bitcoin, which reached new highs around $110,000 in December 2024. Bitcoin is down 10% YTD, trading at $84,525 at publication, according to CoinGecko.
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