People say bitcoin is not a good store of value and gold is a great store of value because gold is:
- Durable: It is a precious metal
- Portable: Is is a physical object
- Has intrinsic value: Limited supply
- Holds its purchasing power well: Not very volatile
However, here are my thoughts on why Bitcoin is also a great store of value.
- Durable: Although bitcoin is not a physical object, bitcoin passes the durability test because of its reliability. Bitcoin has not been hacked, and rather, some of its users have not ben caution with their bitcoin (same situation as apple iCloud having never been hacked but user profiles get “hacked” because they have passwords like “Password” that are easily guessable).
- Portable: Obviously bitcoin is portable due to its technical nature.
- Has intrinsic value: Bitcoin also has a limited supply but unlike gold, we cannot create more bitcoin. Although currently it is not profitable, technically gold can be created in a lab.
- Holds its purchasing power well: Although bitcoin has been volatile in the past this is merely due to the market cap of bitcoin. As more money is invested into bitcoin it will become less volatile as it will take more money to make large movements (as it has done in the past when magnitudes less value was invested into bitcoin).
Some people have reservations with bitcoin being slow and unusable for everyday things, but that is okay, because even gold cannot be used for everyday things. At the end of the day, bitcoin is a great store of value because we know we can rely on the network. Bitcoin doesn’t have to be used on a daily basis in order for it to be successful and rather just store our money there until it needs to be converted to something easily usable.