A store of value is a type of asset that maintains its value over time, that is, over time, the value of this asset not only does not decrease, but is also expected to increase.
In the past, only valuable metals such as gold, silver, etc. were introduced as a store of value asset, but in today’s era, due to the upward trend of the price of Bitcoin and the increase in its value in the cryptocurrency market, there have been discussions around the purchase of Bitcoin for store of value.
In the rest of this article, we will finally answer this frequently asked question by examining various analyzes and opinions of economists and relevant experts around whether buying Bitcoin is suitable for storing value or not.
let’s explore together:
- The first group: opponents
- The second group: agree
- Advantages of Bitcoin as a suitable option for storing value
- Can Bitcoin considered as a store of value?
What do economic analysts and experts think about buying Bitcoin as a store of value?
Experts and analysts of the world of cryptocurrencies adopt one of the following two positions in response to this question and are divided into two groups:
The first group: opponents
This group is against this issue for their own reasons, which we will introduce a little later, and they consider Bitcoin as a special and valuable digital currency, which will eventually lose its title of “king of digital currencies”.
According to these people, although Bitcoin mining is a great way to make money and the majority of investments in this market are made on BTC, none of these things mean that Bitcoin is suitable for storing value.
Bitcoin as a digital asset has performed reasonably well so far, but its relatively short lifespan makes it not a good option for a store of value.
The next obstacle is the price of Bitcoin, which has a relatively wide range of fluctuations.
Examining the data and the history of the price of Bitcoin shows that although this cryptocurrency has grown significantly at some points in time, it has experienced a significant fall at the same time.
This issue violates one of the important principles and features of the store of value asset that we mentioned a little earlier. (No decrease in value over time and its increase)
The next claim of experts of the first group is that BTC is an old technology. According to them, even though Bitcoin is the founder and initiator of the era of digital currencies, it has many defects and deficiencies, which have provided a platform for the emergence of newer currencies to cover Bitcoin’s deficiencies with their supply.
As such, they predict that BTC will soon lose its position as the king of digital currencies as currencies emerge that try to improve upon Bitcoin’s shortcomings.
However, on the other side of the coin, there are groups that not only disagree with these people’s beliefs, but also believe that BTC is suitable for storing value, citing reasons.
The second group: agree
Along with the detractors, many economic analysts consider BTC to be a good option for storing value.
Like the first group, they also give reasons for their statements and claims, which we will introduce in the next section under the title “Bitcoin’s advantages as a suitable asset for storing value”.
Advantages of Bitcoin as a suitable option for storing value
A group that believes Bitcoin is suitable for storing value. They point to the benefits that we introduce below as the reasons for this belief.
Before stating these advantages, it is desirable to take a short look at the characteristics of value storage and see what characteristics a suitable asset for value storage should have.
Knowing these features will also help you understand the advantages of BTC.
Features of store of value
- It is permanent.
- It is rare.
- It is difficult and expensive to produce.
Now let’s explore advantages of bitcoin together
Scarcity
Bitcoin is scarce, because its number is limited to a certain amount and cannot be exceeded under any circumstances.
21 million bitcoins, because this currency is coded under a strict rule. The limited number of this cryptocurrency has made some people unable to have even one full Bitcoin, so it goes without saying that there is always a demand to buy Bitcoin.
The higher the demand, the higher the price of Bitcoin.
Hard production
We said a little earlier that one of the characteristics of a store of value is that it is difficult and expensive to produce, like Bitcoin.
To mine Bitcoin, miners must solve cryptographic puzzles using the computing power of their devices. For successfully solving these puzzles, miners are rewarded with a certain number of BTC.
Solving these puzzles is not an easy task and requires time and energy, so it can be said that BTC is difficult to produce.
Easy to carry
You can store billions of dollars in Bitcoin on a palm-sized hardware device and take it with you wherever you go.
While this issue does not apply to BTC’s competitor in the field of store of value, i.e. gold, and moving gold in large volumes not only requires a lot of effort and cost, but also has a high risk.
Divisibility
Bitcoin can be divided into smaller units while retaining value, like gold. Splitting BTC into smaller units called satoshis makes transactions easier for users and investors.
Can Bitcoin considered as a store of value?
As you have read, there are different opinions about choosing BTC as a store of value, and it is entirely up to you whether you accept or not.
In your decision, keep in mind that not only BTC as a store of value has a series of disadvantages, and other stores of value such as gold also have disadvantages, which we just mentioned a few moments ago as hard to carry.
Elon Musk (CEO of Tesla) believes that paper money will disappear one day and digital currency will definitely perform much better than paper money in transferring value.
We also believe that the decentralization of BTC and its lack of dependence on a specific institution or authority makes Bitcoin a suitable option for storing value.