Are currencies a "store of value"?

[hugeblack]

A quick history of currencies and paper money shows that money began as a deposit of a certain value of gold/silver and then turned into a representation of the promises of those who issue it.
Looking at the US dollar, it has lost more than 90% of its value, making all paper currencies a bad example of a "store of value." "I do not want to mention the scenario that happened in the state of Venezuela or Germany after the war."

By 2009, Bitcoin had emerged. Since then, it has gained a lot of value against paper currencies as well as a lack of volatility.

I know that the future of bitcoin is booming, especially with the limited number of currencies and the technology its support, but the question is whether "paper" or "crypto" currencies really serve as a "store of value".
In other words, does bitcoin serve as a substitute for gold, real estate and fixed assets in being a stock of value?

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[butka]

Yes, Bitcoin does serve as a store of value (similar to gold). No doubt about that. Being a store of value is currently its main economic function.

Paper money not so much, as you have already shown with your first image: it loses value every day. The reason why paper money has lost so much of its value is more or less clear: by cutting its connection to gold, it has gotten virtually unlimited supply. The whole economy is built around fractional reserves and debt, (ab)using the fact that the central bank can print money out of thin air.

[davis196]

Yes, Bitcoin does serve as a store of value (similar to gold). No doubt about that. Being a store of value is currently its main economic function.

Paper money not so much, as you have already shown with your first image: it loses value every day. The reason why paper money has lost so much of its value is more or less clear: by cutting its connection to gold, it has gotten virtually unlimited supply. The whole economy is built around fractional reserves and debt, (ab)using the fact that the central bank can print money out of thin air.

Every asset,that can be sold at a higher price in the future is a store of value.But the "higher price" means that the money that you will get after selling that asset had decreased their value at that time.
Gold and real estate are a permanent store of value,because they have stable prices(unless there's a price bubble funded by cheap loans/printed money).Cryptocurrencies aren't a permanent store of value,because of their insane price volatility.They are a temporary store of value.

[butka]

Gold and real estate are a permanent store of value,because they have stable prices(unless there's a price bubble funded by cheap loans/printed money).Cryptocurrencies aren't a permanent store of value,because of their insane price volatility.They are a temporary store of value.

Look how similar gold and bitcoin are (if we disregard the x-axis/time and count only market psychology):


source: https://preview.redd.it/5t92r1c860b11.jpg?width=640&auto=webp&s=329d08ada82c04aa2fb1f8b7f0abc292b09acef2

which tells us that, historically, gold also had (and still has) ups and downs and that ultimately Bitcoin behaves very much like gold.

[sandra_x]

Bitcoin has proven to have a dual role as a cirrency and as an asset class.That is why there is so much interest from the investment cycles to create financial products or derivatives off it. Unlike fiats or bank notes, bitcoin like gold has some value it holds (the cryptographic data it holds and the amount of power spent in securing such data).Richard Nixon taking fiat off the Gold Standard in 1971 dealt a near-fatal blow to fiats as an asset in general.

[Beerwizzard]

Looking at the US dollar, it has lost more than 90% of its value, making all paper currencies a bad example of a "store of value." "I do not want to mention the scenario that happened in the state of Venezuela or Germany after the war."

BTC that dropped from 20k to 4k is a way better example. Sure.
Fiat money are not designed to be a deflationary currency. Inflation stimulates export which is pushing the economic growth of the country. Without a good monetary policy, the economy will stagnate and currency will lose its value much faster then it will do the same during inflation.

[Lucius]

Bitcoin is for me personally store of value, but also a currency. It is much easier to store fiat money or gold compared to cryptocurrency, just because crypto is relatively new and it is not easy to people to understand it, and taking care of coin security. What most stands out when it comes to bitcoin is limited supply, something fiat or gold simply do not have.

But as we all already know, bitcoin has one major disadvantage, it is completely dependent on the Internet and electric energy. Any situation that prevents one of the above makes it entirely worthless.

Gold unlike bitcoin or fiat has a long and proven history as store of value for long term, and if something bad is happen in this world (no electricity / no Internet), people will use gold as a means of payment / trading. That does not mean people should ignore bitcoin, but to invest more wisely taking into account all possible scenarios that may occur in the next 10 to 20 years.

[dothebeats]

In a way, yes, currencies are "stores of value" but not reliable at all times. Ever since the gold standard was removed and the world introduced the fiat money system, currencies have since become poor stores of value and are just reliant on having a strong government to maintain their value. Gold and bitcoin, however, defies all that, and are still excellent stores of value and currencies at the same time depending on the situation. While the three are being traded in different currencies and are, at times, volatile on their own accord, only the two proved to be great in keeping that value over time (gold and bitcoin) while the USD keeps on devaluing every year, until such time that banks and governments would conspire yet again to reverse the ill-effects of a weak dollar.

[avikz]

In other words, does bitcoin serve as a substitute for gold, real estate and fixed assets in being a stock of value?

NOPE and it will never serve as a substitute of the thing you've mentioned! The problem with your argument is that you are trying to benchmark bitcoin or cryptos with the existing set of rules and definitions which are ongoing since ages. Think cryptos as a new technology which can't be compared or benchmarked with the existing set of rules and definitions.

[The Sceptical Chymist]

In other words, does bitcoin serve as a substitute for gold, real estate and fixed assets in being a stock of value?

A substitute?  I don't think so.  All of above (except 'fixed assets', which is a vague term) have pros and cons, as does bitcoin.  Bitcoin is also only 10 years old and I think it's a much riskier investment than gold, real estate, and certain stocks--and you don't have to take my word for that; just look at how much volatility btc has seen since its inception, and that should tell you how risky it is.

As to whether it's a store of value, I do think it is but I've always been unclear on what the exact definition of that is.  The way I see it, any store of value has to not only keep its value but keep up with inflation over the long term.  Those other assets you mentioned do tend to fit that description, and over the last 10 years bitcoin has as well--but who knows what the price will be in another 10 years.  Since bitcoin isn't as well-established as the other things, it's entirely possible it could become obsolete by then.  It doesn't look like that's going to be the case, but nobody here can say with 100% certainty if it's still going to even be around in that time frame.  Therefore, it's "store of value" function hasn't proven itself yet.

Regular fiat currencies definitely are NOT stores of value.  They lose value to inflation if you don't spend them, and so they aren't storing any value whatsoever.

[gentlemand]

For many people in the world the dollar is a superb store of value compared to the alternatives they have. It's portable, universal and stable. You're not going to care all that much about 2-5% inflation when your other choices are total ruin.

As for BTC, it's still a bet. Anyone treating it as the go to for their future is a fool. Gold and property aren't in the bag either though they are a stronger bet than most.

[UNOE]

But as we all already know, bitcoin has one major disadvantage, it is completely dependent on the Internet and electric energy. Any situation that prevents one of the above makes it entirely worthless.

I do not agree that Bitcoin is "completely" dependent on the Internet connection.

Check out Blockstream project. And take a look at their Satellite Network Coverage.

Blockstream Satellite broadcasts the Bitcoin blockchain to the entire planet via satellite, reducing Bitcoin’s dependency on internet access.

And technology for offline transactions is still developing.

Bitcoin is for me personally store of value, but also a currency.

For me too.

Fiat money are not designed to be a deflationary currency.

Bitcoin is technically an inflationary currency too, but it have at least stable and predictable inflation rate, unlike fiat money.

[n0ne]

Currencies were true store of value. As of now bitcoin is more into the value generation, but it hasn't gained similar to the dollar or other currencies used around. Right now bitcoin valuation is through trust and every people won't agree to it. Users who have benefitted through bitcoin and other cryptocurrencies will consider it a store of value.

[Muzika]

That is the characteristics of a good currency, which are the durability, portability, limited supply and ofcourse you can store value in it and you can all see it in bitcoin and other cryptocurrency over the years it will be known with its value.

[Kakmakr]

I think we need more time to say for certain that Bitcoin will be a better store of value than fiat currencies or Gold. Yes, up until this date, the Bitcoin price average has gone up every year, but we had a huge decline in the price and also a more stable price in 2018 and so far in 2019.

If we can end this year on a price higher than $4000, then we will be well on our way to say that Bitcoin is maintaining their role as a Store of value.  I think Bitcoin is a excellent Store of value and also a brilliant payment/currency and we are having the best of both worlds. 

[awawo]

Yes any currency that can be traded on the world exchange is a store of value because it been calculated with other currency base on it value in the market, and the value is subject to change base on it demands and supply, that is why if you buy bitcoin today you are also an investor because when it price rise your bitcoin value increase.

[rizkyhiw]

indeed it is very far from the form of both and from its character, money is very strong with values like that with a fairly strong value but when there is a decrease not only a few percent to be reduced globally, to discuss Bitcoin then it is profitable but by imagining a decline in concept the market is free and can go up or down at any time, yes you have to prepare mentally to replace everything, but I suggest to travel anywhere because this is a very good investment if managed very well.

[MakeMoneyBtc]

In other words, does bitcoin serve as a substitute for gold, real estate and fixed assets in being a stock of value?

Short answer is yes, but there are a few thing that should be taken in consideration when choosing the best store of value. I always thought and said that bitcoin cannot be compared to gold, or even real estate since the difference of volatility between them is too high right now. When you think about gold its almost impossible to see a 50% price crash during a short period of time(a few days) while that could happen anytime with bitcoin, and we have seen this in 2017.

[Crypdon]

Bitcoin is deflationary so it will increase in value, all these other currencies are inflationary so they will lose their value. Bitcoin will permanently decrease in value if it is hardforked into an inflationary currency - which will never happen

[marcelocoin]

taking into account the price of bitcoin since its creation, which made hold from 2010 to 2017, high Historical, yes was a remarkable value reserve, but lately many scammers projects have taken investors, I hope to improve the market by 2020!