Why is Bitcoin considered a Store of Value?
If you read my previous article, you might be wondering why an electronic cash payment system became a highly appreciated store of value globally and got the name “digital gold”. My goal today is to help you understand why Bitcoin is relevant from a long-term gain perspective.
The one article that explains this comprehensively is “The Bullish Case for Bitcoin” by Vijay Boyapati. I’ll be summarizing the key points below, but if you are interested in reading more, I’ll strongly suggest you spend some time reading through the original publication.
Long story short, there are8 key attributes that an asset needs to possess to be considered a store of value.In below’s chart, I’m listing down all these attributes, their description, and how Bitcoin can be scored in each of these categories, and why.
Now let’s take a look at how Bitcoin compares to Gold and Fiat Currency (government-issued money, which is the daily currency we are using, such as USD), as store of value based on the same attributes:
Clearly, Bitcoin outperforms the other assets in most of these attributes, thus explaining why it’s positioned as a highly attractive store of value.
Therefore, even though current global adoption is still at its infant stage and it will take more time until this new form of asset becomes more mainstream, the gradual evolution of Bitcoin is undeniable, and we already have major companies and institutions at the vanguard of the Finance and Investment space that have understood this and are leading the way in Bitcoin adoption.
As usual, I will still need to highlight the risks of Bitcoin and the fact that nobody really knows what will happen in the short term. However, this article provides a long-term perspective of why it is a good idea to be well informed about the underlying fundamentals, and be able to make choices accordingly.
Please be reminded that everything stated above is only applicable to Bitcoin, it is definitely NOT for any other cryptocurrencies.