4:50
expert
August 15, 2022
back to overview

bitcoin as a store of value

Throughout history humans have had different ways of storing their wealth - how we got to Bitcoin as a store of value is a mark of man’s constant progression to try and improve. Before the idea of coinage had even occurred, you could be considered rich by the amount of food or other resources you had stockpiled. Before this, even, when we were nomadic tribes, you could even go as far to say the idea of wealth - having an abundance of something - didn’t exist until we decided to settle and start stockpiling; we were as rich as whatever we could carry with us. There was no form of coin money, as we know it today, until relatively recently in our history. We first used rare objects as currency and to store our wealth.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

gold

Precious metals arose as the most valuable commodities, with gold & silver eventually becoming internationally accepted as the standard economic unit of account. Gold became the store of value we still know it as for a number of reasons:

Non-perishable; gold decays at such a slow rate it’s fair to call it non-perishable.  
Easier to transport; before gold there were various other bulkier forms of currency like livestock.  
Scarcity; there is a finite amount of gold, as well as adding value this removes the problem of inflation.
Mystique; gold’s rarity, history and natural glow gave society reason to hold it as something special.

bitcoin

Today, precious metals are still a sought after asset for anyone’s portfolio. Of course, we have fiat currency which was created as a more sustainable means of powering the modern economy, but still we see gold as a highly valuable store of wealth - mostly so people can avoid inflation rates on fiat currency. Bitcoin takes the four points listed above and adds several other reasons why it can be considered as the new sought after store of value:

• Bitcoin, of course, exists only digitally so it’s impervious to any type of perishing;
• It’s stored digitally and it takes between 10-45 minutes to send any amount of Bitcoin with only a few clicks of a mouse, making it extraordinarily portable;
• No one truly knows the max supply of gold, but there will only ever be 21 million Bitcoin, and even less in the circulating supply, making it a scarce resource;
• Bitcoin still seems cultish and mysterious to those who know little about it. Though they know it is valuable they aren’t sure why. There is an undefinable mystique around Bitcoin; another attribute it shares with gold - although the potential price growth is much more significant than gold.

how far off are we?

There are enough parallels between the two to adequately state Bitcoin could become the new gold store of wealth. The reality of worldwide Bitcoin stores of value is still a long way off, especially with crypto prices being so volatile, but along with blockchain technology there are signs that are pointing to that notion.  

For example, Goldman Sachs released a report stating that Bitcoin already had a 20% dominance over the ‘store of value’ market, the lion’s share currently being take up by gold and oil. An intrinsic attribute Bitcoin boasts that gold and oil can’t, is its fungibility: meaning it’s interchangeable with other Bitcoin and there is no chance of a counterfeit. Gold and oil are fungible, but not supremely like Bitcoin; there are different purities of oil and gold, for example, so changing 1 gallon of oil for another won’t always be valued the same after it’s tested - which is why we don’t often see them being used as mediums of exchange.

As well as fungibility, Bitcoin offers a store of value with qualities gold and oil simply can’t compete with such as blockchain technology, divisibility and decentralisation. Many argue that Bitcoin’s technology is durable enough to confidently exist forever; blockchain negates any single point of failure in the system and is an undeniably strong technology, but that’s something that only time will tell.

the future

So Bitcoin has some of the same fundamental features of traditional stores of wealth like gold or oil, and several modern qualities that could make it an even more robust option; its fungibility and divisibility mean it could even replace fiat currency (though that’s another article entirely). Just as fiat currency was introduced to replenish a dying financial infrastructure, cryptocurrency offers a new form of economy not based on centralisation and Bitcoin is at the helm.

When we eventually see more crypto adoption and the markets becoming less volatile, we may see Bitcoin as the digital gold of the first crypto era; it’s likely that in the future Bitcoin will have the same natural glow and allure as gold does. The concept of something digitally finite and scarce is yet to be fully understood by the world, though we know gold and diamonds are valuable for the same reason. It’s only a matter of time before the connection is made and Bitcoin becomes the preferred store of value.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

bitcoin as a store of value

Throughout history humans have had different ways of storing their wealth - how we got to Bitcoin as a store of value is a mark of man’s constant progression to try and improve. Before the idea of coinage had even occurred, you could be considered rich by the amount of food or other resources you had stockpiled. Before this, even, when we were nomadic tribes, you could even go as far to say the idea of wealth - having an abundance of something - didn’t exist until we decided to settle and start stockpiling; we were as rich as whatever we could carry with us. There was no form of coin money, as we know it today, until relatively recently in our history. We first used rare objects as currency and to store our wealth.

gold

Precious metals arose as the most valuable commodities, with gold & silver eventually becoming internationally accepted as the standard economic unit of account. Gold became the store of value we still know it as for a number of reasons:

Non-perishable; gold decays at such a slow rate it’s fair to call it non-perishable.  
Easier to transport; before gold there were various other bulkier forms of currency like livestock.  
Scarcity; there is a finite amount of gold, as well as adding value this removes the problem of inflation.
Mystique; gold’s rarity, history and natural glow gave society reason to hold it as something special.

bitcoin

Today, precious metals are still a sought after asset for anyone’s portfolio. Of course, we have fiat currency which was created as a more sustainable means of powering the modern economy, but still we see gold as a highly valuable store of wealth - mostly so people can avoid inflation rates on fiat currency. Bitcoin takes the four points listed above and adds several other reasons why it can be considered as the new sought after store of value:

• Bitcoin, of course, exists only digitally so it’s impervious to any type of perishing;
• It’s stored digitally and it takes between 10-45 minutes to send any amount of Bitcoin with only a few clicks of a mouse, making it extraordinarily portable;
• No one truly knows the max supply of gold, but there will only ever be 21 million Bitcoin, and even less in the circulating supply, making it a scarce resource;
• Bitcoin still seems cultish and mysterious to those who know little about it. Though they know it is valuable they aren’t sure why. There is an undefinable mystique around Bitcoin; another attribute it shares with gold - although the potential price growth is much more significant than gold.

how far off are we?

There are enough parallels between the two to adequately state Bitcoin could become the new gold store of wealth. The reality of worldwide Bitcoin stores of value is still a long way off, especially with crypto prices being so volatile, but along with blockchain technology there are signs that are pointing to that notion.  

For example, Goldman Sachs released a report stating that Bitcoin already had a 20% dominance over the ‘store of value’ market, the lion’s share currently being take up by gold and oil. An intrinsic attribute Bitcoin boasts that gold and oil can’t, is its fungibility: meaning it’s interchangeable with other Bitcoin and there is no chance of a counterfeit. Gold and oil are fungible, but not supremely like Bitcoin; there are different purities of oil and gold, for example, so changing 1 gallon of oil for another won’t always be valued the same after it’s tested - which is why we don’t often see them being used as mediums of exchange.

As well as fungibility, Bitcoin offers a store of value with qualities gold and oil simply can’t compete with such as blockchain technology, divisibility and decentralisation. Many argue that Bitcoin’s technology is durable enough to confidently exist forever; blockchain negates any single point of failure in the system and is an undeniably strong technology, but that’s something that only time will tell.

the future

So Bitcoin has some of the same fundamental features of traditional stores of wealth like gold or oil, and several modern qualities that could make it an even more robust option; its fungibility and divisibility mean it could even replace fiat currency (though that’s another article entirely). Just as fiat currency was introduced to replenish a dying financial infrastructure, cryptocurrency offers a new form of economy not based on centralisation and Bitcoin is at the helm.

When we eventually see more crypto adoption and the markets becoming less volatile, we may see Bitcoin as the digital gold of the first crypto era; it’s likely that in the future Bitcoin will have the same natural glow and allure as gold does. The concept of something digitally finite and scarce is yet to be fully understood by the world, though we know gold and diamonds are valuable for the same reason. It’s only a matter of time before the connection is made and Bitcoin becomes the preferred store of value.

*The content hereby presented is for informational purposes only. Nothing of this content that is available to you shall be considered as financial, legal or tax advice. Please, keep in mind that trading cryptocurrencies pose a considerable risk of loss.

back to overview
previous article

there are no older articles

next article

there are no new articles

novice
3:30
is bitcoin the future of money in developing countries?
beginner
2:45
common bitcoin scams and how to avoid them
novice
4:15
what is dogecoin?
expert
4:50
bitcoin as a store of value
expert
5:00
what is cardano?
expert
5:00
what is XRP?
novice
3:00
is it worth getting paid in bitcoin for your services?
novice
4:15
how long is a bear market?
novice
4:45
the June 2022 crash - what it means for bitcoin’s future
novice
4:00
what is ethereum 2.0?
beginner
1:00
what is etherscan and how to use it
beginner
1:30
what is a ponzi scheme?
novice
1:40
what are DApps?
expert
1:45
what is BAYC?
novice
1:35
what is a memecoin?
beginner
1:00
what is a cryptocurrency wallet?
novice
1:30
what are the different types of tokens?
beginner
1:05
what is the difference between a ‘coin’ and a ‘token’?
beginner
0:55
what is a node?
novice
1:10
what is day trading?
novice
1:15
what is swing trading?
beginner
0:55
how to pay taxes on your crypto gains
novice
1:20
what is an IEO/ICO/IDO?
novice
1:30
how crypto gains value
beginner
0:50
what is a fiat digital wallet? And how to create one.
novice
1:10
what is staking?
novice
4:51
what is a DAO?
beginner
1:01
what is the $MXXR token?
novice
1:19
what are peer-to-peer payments?
beginner
1:02
what is the difference between total supply and circulating supply?
expert
1:12
what happens to bitcoin after all 21 million are mined?
novice
0:58
how does bitcoin work?
novice
1:12
what are gas fees?
novice
1:00
what is a smart contract?
beginner
0:49
what is dollar cost averaging?
novice
3:06
what is web3?
beginner
0:47
what is passive income?
novice
0:52
what is leverage trading?
expert
4:12
which is better, proof of work or proof of stake?
beginner
0:53
how do i read candlestick charts?
novice
4:26
what are the advantages and disadvantages of CEXs and DEXs?
beginner
0:43
what to consider when choosing a crypto exchange
novice
0:51
what makes a coin deflationary?
novice
4:58
what are the advantages and disadvantages of the metaverse?
beginner
0:59
what is technical analysis?
beginner
5:02
what is maxxer?
expert
0:52
what is ethereum?
novice
4:14
what is social trading?
expert
1:11
what is the difference between CEXs and DEXs?
novice
5:07
is crypto the future?
beginner
1:09
what is the difference between a bull market and a bear market?
beginner
2:48
how to start investing in crypto easy?
beginner
1:03
what is fiat currency?
beginner
0:58
what is a stablecoin?
beginner
0:54
what is the metaverse?
beginner
0:59
what is an altcoin?
expert
0:55
what is the difference between proof of work and proof of stake?
beginner
0:52
is bitcoin safe?
beginner
1:19
what is bitcoin mining?
novice
1:06
what is bitcoin?
beginner
1:25
how do i buy crypto?
novice
1:24
what is decentralisation, and why is it a good thing?
novice
0:53
what are NFTs?
beginner
1:24
why is crypto becoming bigger?
novice
1:22
what is the blockchain?
back to overview
expert
4:50
August 15, 2022
get the latest news
We compile the most exciting updates into a newsletter for you, things are moving fast, you don't want to miss out!
sign up now
enter the beta today
Join the first community driven crypto exchange with social trading at its core.
create account

stay up to date
with maxxer

subscribed
‍succesfully!

subscribed
‍succesfully!

error icon
Oops.. looks like there's something
wrong with your information.

stay up to date
with maxxer

subscribed
‍succesfully!

subscribed
‍succesfully!

error icon
Oops.. looks like there's something
wrong with your information.

stay up to date with maxxer

subscribed
succesfully!

error icon
Oops.. looks like there's something
wrong with your information.