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Borderless, convenient, and fast—these are just some of the many perks of using Bitcoin (BTC). This cryptocurrency has been topping the charts in terms of market capitalization, making it one of the best options to unlock new financial opportunities. What makes Bitcoin even more popular among many investors, traders, and crypto enthusiasts worldwide is its potential to be a store of value.
Since Bitcoin has only been around for a little over 12 years, many folks are still skeptical about its power to actually retain value. Can Bitcoin match gold and other commodities? More importantly, is it really something worth considering? Let’s find out.
What is a store of value?
Before we dig a little deeper, let’s first define what a store of value is. A store of value can be a currency, asset, or commodity that can be kept or stored and retrieved after a significant amount of time without losing its value.
Let’s take gold, for example. This precious metal is considered the best commodity for storing value because of many factors. Gold is a metal and it won’t perish over time, which allows for prolonged shelf life. It’s also an interest-bearing asset and can generate income while maintaining its value. Gold and other precious metals keep their worth, making them a vluable asset and a good store of value.
Another example of a store of value is salt. This preservative and flavoring can be stored for a long time and retrieved without expiring and losing valuable properties and purpose. When it comes to barter, goods like salt retain their worth, allowing them to be exchanged for other goods and services and an excellent store of value.
Bitcoin and its distinctive features
When it comes to digital assets, Bitcoin is in the mainstream. Apart from its ultimately efficient and fast transaction processes, its highly volatile nature is what sets it apart from thousands of other cryptocurrencies in today’s market. But just how volatile is Bitcoin?
Back in 2009, when it was first introduced to the world by the mysterious Satoshi Nakamoto, BTC was selling at 0 USD—yup, it was practically worth nothing. After almost a year, Bitcoin reached the 1 USD mark when early adopters began buying and selling it. More and more years later, Bitcoin started to rise in value as lots of exchanges began to emerge. This paved the way for people to buy Bitcoin with credit cards easily, as well as with other payment methods like gift cards, cash, bank transfers, online wallets, and a lot more.
Fast forward to today when there are already millions of BTC in circulation. At the time of writing (November 29, 2021), Bitcoin is selling at over 57,000 USD. It was only last October when BTC reached another all-time high (ATH) of over 66,000 USD. In a nutshell, that’s how volatile Bitcoin can be.
More importantly, is it really something worth considering? Let’s find out whether you should buy bitcoin.
Is Bitcoin a good store of value?
Now that we’ve learned more about Bitcoin, let’s go over its other features and know if this digital currency can be considered an excellent store of value.
- Divisible – For an asset to be considered a good store of value, it must have the capacity to be easily divided. Precious metals like gold can be divided into small quantities and use ounces and grams for measurement.
Bitcoin, on the other hand, is also a highly divisible asset. It can be divided into small units, making it perfect for micropayments. Bitcoin is divisible by up to eight decimal places (0.00000001 BTC), called a Satoshi (SAT)—its smallest unit of value.
- Scarce – Bitcoin is a highly scarce asset with a maximum supply of 21 million BTC. At the time of writing, over 18 million BTC has already been mined. This maximum cap is what makes its price move from time to time.
- Volatile – Remember what we told you earlier about how volatile Bitcoin is? Its price can dramatically change over time with no assurance of whether it’ll go up or down. So far, with BTC, its price started at zero, but now, we can see that the trend is still climbing up, despite the declines in between.
Read also: How is Bitcoin Creating Financial Literacy?
This means that if you’re among the early adopters of BTC who bought fractions of it when it was selling for almost nothing, your crypto investment has already multiplied by now. However, if you bought BTC when it was trading at a higher price, you might have experienced some dips and dumps along the way.
- Portable – It might really be cool to have some real BTC coins jingling in your pockets or purse, but that isn’t how Bitcoin works. Bitcoin is a digital currency that works solely with technology like the Internet and a computer or smartphone. It uses a crypto wallet, where you can store, send, receive, track, and manage your Bitcoin transactions and funds.
Simply put, if you have a crypto wallet installed on your phone, you can access your BTC anywhere and anytime you want—no need for complicated vaults or bulky wallets.
- Secure – Since BTC is technologically-powered, it can’t be easily hacked or snatched away from you. It uses a highly secure technology that is nearly impossible to be compromised. Its network is also accessible to every BTC user, which paves the way for highly secure and transparent transactions.
Apart from a crypto wallet that can be installed on your gadgets, you can also opt for offline crypto storage which is a hardware wallet. You can think of it as an external drive where you store movies, photos, and other important digital documents. But if you’re going to use this type of storage, make sure to keep your private keys safe because once you lose them, your wallet and your funds will be gone forever.
Is BTC worth considering?
From what we’ve learned earlier, we can see that Bitcoin is undeniably full of outstanding features. But are those features suitable enough to make it an ultimate safe-haven asset? If you can remember, Bitcoin is a highly volatile cryptocurrency, which means your funds can either shoot up or go down very quickly. If this is the case, carefully watching the market movements will help you decide your next steps.
When it comes to lifespan, there are still over 2.1 million BTC left to be mined and the market could still go on as long as people are using it. Its market demand is also steadily increasing, especially now that more businesses, industries, and governments are trying to get their hands on it.
With thousands of crypto exchanges and marketplaces emerging today, Bitcoin is now much easier to convert. This means turning your fiat money into BTC and vice versa shouldn’t be a problem.
Remember, a good store of value must be easy to exchange and have a limited supply. There must also be sufficient demand and it shouldn’t be perishable or depreciate over short periods. Now, is Bitcoin worth considering for an excellent store of value? Consider your trading, savings, or investment needs and study if it best matches your long-term plan. Is Bitcoin worth considering? We’ll leave the decision up to you!
*The content of this article is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.