Is Bitcoin a Store of Value? Experts on BTC as Digital Gold

Published on by Cointele | Published on

It's hard to tell who was the first to coin - pun intended - Bitcoin as "Digital gold," underlining the idea that Bitcoin is a good store of value.

For thousands of years of human history, people have used precious metals - namely copper, silver and gold - to fulfill the main functions of money: a unit of account, a medium of exchange and a store of value.

"The definition of a store of value is a bit circular: Something is a store of value if everybody believes it will still be valuable for a long time."Gold is considered the ultimate store of value because it has been considered valuable for most of human history in most places, so there is a strong widespread belief that gold will remain valuable in the future no matter how politics might feasibly change.

"I've always maintained that Satoshi originally intended Bitcoin to be used for payments, not store of value.

"Since its creation in 2008, Bitcoin has been in the process of becoming a digital commodity. By definition, a store of value can be a commodity that's not perishable or subject to depreciation over time versus main reference assets, like national currencies or currency baskets."

"There is typically a base level of demand in which a store of value's price is not expected to drop below a certain level, with the possible exception of structural changes to the local or global economy. Essentially, stores of value are items in which the value does not decay over time, but can in fact also increase."

"And, even discounting the eventual further appreciation of BTC against various national fiat currencies, its features will make it attractive as a store of value to an increasing amount of people."

"I am skeptical that a 'good store of value' can be defined in the abstract. Whether Bitcoin meets the standard depends on what you're actually trying to accomplish through buying or hodling. What are your object-level goals, what properties are required to satisfy those goals, and does BTC have those properties? What are your other options, and how do the affordances of those options compare to BTC with respect to accomplishing your goals? In other words, what are your store-of-value priorities and which tradeoffs are you willing to make? Therein lies the answer."Of course, it is possible to generalize about Bitcoin's suitability as a store of value.

In my opinion, storing value is such a broad use case, pursued with so many different motivations and objectives, in so many different situations with idiosyncratically constrained local optima, that it's impossible to establish BTC as a 'good store of value' in any universal or definitive sense.

"A more precise question: 'Does BTC share the properties of gold that have made gold attractive as a store of value?' Here, again, the answer depends on a specific context.

x