Why Bitcoin doesn't work well as a store of value.

[Abiky]

If it is about short term performances, I consider gold is a best candidate to make people more disappointed as gold price is mostly very boring with time, and its ROIs over past years usually are worse than Bitcoin ROIs. Gold has been only better than Bitcoin in recent years in ROIs while in most of years during a last ten years, gold has worse ROIs than Bitcoin has.

Gold maximalists like Peter Schiff would feel very happy as eventually after many years of tireless attacks against Bitcoin, they already had opportunities to convince many people that gold is better than Bitcoin as investment assets, but let's remember it is only in recent years, in this market cycle.

What will happen with gold and its ROIs in coming years in next Bitcoin market cycles, time will tell but I believe Bitcoin will return outperforming gold again.

Gold is now more volatile than ever due to rising geopolitical tensions. It has seen a sharp decline in prices, as a result of the FED leaving rates as is and the on-going US-Iran-Israel crisis. Before the war, Gold was soaring sky-high alongside Silver. It was nearing $6k an ounce. Now it's worth $4.5k an ounce (based on current spot market prices).

We're starting to see Gold behave more like Bitcoin recently. So I wouldn't say Gold is a "best candidate" as a store of value. Long-term speaking, Bitcoin should be able to outperform Gold. It might go as far as overcoming Gold's market cap. That's a big "IF" because Gold has been around for centuries, while Bitcoin is fairly new to the world. Only time will tell us if this becomes a reality or not.

[Iranus]

Gold is now more volatile than ever due to rising geopolitical tensions. It has seen a sharp decline in prices, as a result of the FED leaving rates as is and the on-going US-Iran-Israel crisis. Before the war, Gold was soaring sky-high alongside Silver. It was nearing $6k an ounce. Now it's worth $4.5k an ounce (based on current spot market prices).

As you said, gold price skyrocketed before the war. This means that the current correction in gold price is primarily due to profit taking, not war or interest rate. Because no asset can increase in a straight line.

We're starting to see Gold behave more like Bitcoin recently. So I wouldn't say Gold is a "best candidate" as a store of value. Long-term speaking, Bitcoin should be able to outperform Gold. It might go as far as overcoming Gold's market cap. That's a big "IF" because Gold has been around for centuries, while Bitcoin is fairly new to the world. Only time will tell us if this becomes a reality or not.

Gold has weathered countless global political and economic crises over the millennia. These are thing that Bitcoin has never experienced, so it would be a biased and unfair assessment to say that gold is no longer reliable based solely on the current situation.

Gold prices are correcting and may fall further, but I think we should not fantasize about Bitcoin surpassing gold. Gold's market capitalization is 23 times greater than Bitcoin's.

[JoyMarsha]

You forget to add that Bitcoin is not for everyone 🤷‍♀️

Maybe OP, doesn't remember to add that "Bitcoin is not for everyone''. People don't have to invest in what they don't know, and it's not mandatory to invest or think of hodling Bitcoin for long. Everything someone is doing about Bitcoin is a personal decision and it is for their own gain or loss, not someone else because everyone is investing with their own money individually.

It is easier for people to invest in what they know, than in what they don't know. Everyone on earth is investing their time and wealth in what they know and valued

[Dogedegen]

The main issue with paper Bitcoin for me is that we can't even estimate how many there are at any point in time, we can just randomly guess but there is no good way to measure this.

I've googled a bit about estimations, but indeed there are none.

But a point of departure could be the "paper BTC" without Proof of Reserves. According to this post they make up about 47% of all paper Bitcoin, or about 1.26 million BTC. So as a maximum value we can talk about ~5% of the total supply.

I guess the problem are the many BTC on smaller exchanges, swap services, etcetera. The big exchanges have mostly a PoR policy and independent audits. However, I don't know how good these audits are.

Thanks for looking into it, the research is missing still about some of these important aspects. Still even if it is a maximum 5% of the total supply, that may seem little but it should be viewed only in terms of the actual circulating supply but the supply that is really on exchanges and being traded. I don't know the number to that, but I think then the paper Bitcoin issue becomes huge. If you have 100 BTC that is actively traded, adding 100 paper BTC is huge even if the total supply is significantly larger than both numbers.

1. People often say bitcoin is a store of value, but in the same breath also tell you it is highly volatile.
Those are two contradictory things.

This is the argument of someone who confuses a zoomed-in chart with reality. You're measuring volatility on a 1-year candle and calling it a thesis. Gold was also volatile for decades after Nixon killed the gold standard in 1971. It dropped 65% from 1980 to 2000. TWENTY YEARS of drawdown. Nobody stood up and said "gold isn't a store of value."

It is amazing how extremely biased average people can be right? It tends to surprise us in many ways if we are looking for it. Perhaps the average person would have written such stuff about gold too if they were given even more free time and an internet where they can lie and spread misinformation as much as they can without consequences. Hey they can even find link minded people that will support them in their delusions, we've seen this with the flat earth movement. Gold has terrible periods in the history, and silver had even much worse ones and yet the same people that criticize Bitcoin don't bat an eye when it comes to these. Somehow Bitcoin is supposed to be perfect and in the absence of that they give a list of 100 criticism for it. Some will be paid agents as I have written in another thread about a Bitcoin Knots person, others will be delusional or otherwise harmed and are coping with their interactions online. Bitcoin is a fantastic store of value and it has had unprecedented performance. Could it be better? Yes it could and it will, but that does not change that it did something extraordinary and once in a lifetime already.

Bitcoin is volatile because it has low liquidity. Wait for a couple of decades when bitcoin will be the world's reserve asset, every bitcoin will buy more stuff than today, and this thread will have aged like dogshit wrapped in catshit.

To add to that, it is also in its price discovery phase. Huge value appreciation must come with huge volatility, it is simply impossible for it to be otherwise in something that has a free market. Because of that the volatility is both expected and natural. We can for sure want to see less volatile times and acknowledge their potential benefits, we have to be also patient and see how long the journey is going to take. Nobody can really know for sure. Further the times during which Bitcoin has existed have been some pretty turbulent times with many crises, so it is doing fantastic with all things being considered.

[goldkingcoiner]

Do you agree or disagree? I myself used to believe bitcoin was the greatest store of value ever created,
but after giving it a lot of thought I no longer believe that is the case, and here is why.


1. People often say bitcoin is a store of value, but in the same breath also tell you it is highly volatile.
Those are two contradictory things. A store of value has to be more or less stable in price. It cannot be both
highly volatile and a good store of value imo.

When something is very volatile, it tends to shake people out and cause them to panic and sell.
That is why most people will not be able to HODL bitcoin for long. Of course there are some hardcore HODLers
who are able to hold it for many years (I was one of them) but they are the exception not the rule.

HODLing and "never sell your bitcoins" are nice slogans but in reality it is easier said than done for most.

2. Bitcoin doesn't have a stable source of demand.

By that I mean there is little to no demand for bitcoin beyond speculation. For example, Apple has a strong stable source of
(non-speculative) demand because billions of people in the world are buying iPhones and Mac computers every day.
Only 10 to 20% of demand comes from people speculating on Apple stock while 80 to 90% is from commercial product sales.
That contributes to the price stability for Apple. Same thing for gold. The primary source of demand for gold is the commercial
market for jewelry and other products. Unlike bitcoin gold doesn't rely on the speculation market nearly as much and is
what helps makes gold such a good store of value.

3. It is easy to HODL it when prices were low.

In the early days of bitcoin there were many bitcoin OGs who bought it very cheaply. You can buy one bitcoin for a few dollars,
or even a hundred bitcoins for very little. Of course, it is easy for you to HODL it for many years even during extreme volatility,
because it cost you almost nothing. Even if the price goes to zero you aren't losing much.

But it is not so easy to HODL for those who bought in later when prices are much higher, because you now have a lot more to lose.
When the volatility hits you are more likely to hit the sell button. That is why the path from zero to $100K is a lot easier.

But the path from $100K to $200K will probably be much tougher and longer IMO, assuming it will get that high.


4. Bitcoin is too correlated to risk assets and the economy.

When the economy tanks so do risk assets such as bitcoin. Which shows that people do not generally view bitcoin as a flight to safety
or a good store of value when times are bad. To the contrary it is one of the first things that gets dumped. Again, this is tied
to the fact that bitcoin has no strong or stable source of demand outside of speculation. Without it bitcoin may be forever
destined and limited to the niche market.

1. Bitcoin used to be more volatile. The volatility comes from the early adoption and the fact that Bitcoin is not as distributed as it will be in the future. In the future, someone selling $1B worth of Bitcoin is not going to trigger a giant red candle, which in turn triggers panic because it will not be considered a massive sell.

2. Bitcoin is a solution for the problems of the old gen money. It will have an even higher demand, in time. As we an see by past numbers. It did not reach $120K just because of sheer dumb FOMO, there is a deeper reason why people want Bitcoin.

3. Hodling was always hard. It only becomes easy once you realize that not hodling cost you the chance to be wealthy or at least much wealthier than now.

4. What is not connected to the economy? Everything is. The only way you can have no risk is if there are no people and no economy.

[bitdoxer]

Perhaps a reset of the price to just a few dollars will give bitcoin a second spring. Most of us would love that, won't we?

[Curious T]

A store of value is an asset that retains the value of wealth over a period of time without losing its value. It is also always stated that Bitcoin is best held as a long-term asset. So with these two things in mind and with the 17-year history of Bitcoin, you can look at every 5-year interval and tell me it doesn't retain the value of wealth?
Gold is the most accepted store of value in the world right now, yet it is also volatile. An asset being volatile does not stop it from being a store of value, but how that asset behaves in the long term and how much that asset loses or gains in a sort term. Also, the ability of that asset to get back up after the value has dropped. That is what determines a store of value.

4. Bitcoin is too correlated to risk assets and the economy.

No asset is immune to the influence of the economy. Real estate, stable fiat currencies and gold are all stores of value, but they are also affected by the economy. The 2008 financial crisis was caused by the fall of a "store of value".

[Rabata]

A store of value is an asset that retains the value of wealth over a period of time without losing its value. It is also always stated that Bitcoin is best held as a long-term asset. So with these two things in mind and with the 17-year history of Bitcoin, you can look at every 5-year interval and tell me it doesn't retain the value of wealth?

Bitcoin should be considered a store of value because it is capable of holding the value of assets in the long term. Since its launch in 2009, the price of Bitcoin has increased continuously. Although its volatility is high, everyone who has stored Bitcoin in the long term has been able to increase their wealth through Bitcoin. Although Bitcoin does not play a role in wealth growth in the short term, it is possible to easily profit from holding Bitcoin in the long term. Everyone who has held Bitcoin so far has benefited. Bitcoin is a store of value because it is able to recover its value even if it loses value. If you observe the long-term price without considering the short-term volatility of Bitcoin, it must be considered a reliable store of value.

[BALIK]

If you observe the long-term price without considering the short-term volatility of Bitcoin, it must be considered a reliable store of value.

When it comes to storing value, it is alway a long term concept, and there is no such thing as short term value storage.

Even gold, which is considered stable, is not immune to strong fluctuation and cannot guarantee shortterm purchasing power, let alone bitcoin.

Bitcoin is not only a reliable store of value, but also the best store of value. If we look at the growth rate, it is easy to see that Bitcoin has been the best performing asset class over the past decade. With such performance, if it is not the best store of value, what asset truly deserves that title?

[RealNoblee]

Do you agree or disagree? I myself used to believe bitcoin was the greatest store of value ever created,
but after giving it a lot of thought I no longer believe that is the case, and here is why.


1. People often say bitcoin is a store of value, but in the same breath also tell you it is highly volatile.
Those are two contradictory things. A store of value has to be more or less stable in price. It cannot be both
highly volatile and a good store of value imo.

Yes, obviously Bitcoin as we know is widely seen as a digital store of value, as in the kind of (digital gold).
This is due to Bitcoin sealed supply of 21 million which made it scarce.

Moreover, Bitcoin as a store of value is formed from decentralized security, and accepted by many organizations .
We must also understand that, high price volatility is what makes Bitcoin a high risk store of value compared to other assets.

[KiaKia]

It works well for those who believe.

To be a successful Bitcoin holder you need to believe in the system.
Someone who don't like bitcoin can't be progressive at holding.
It takes more than wanting to make money when you want to become a Bitcoin holder, it's not going to be easy.

You can't expect someone who want to become a millionaire in 2027 to say that Bitcoin is a good store of value, because before that time gets here or even after, Bitcoin can lose alot of value.

If you are not a believer you won't have the patience to see the fruit get ripped.

[BitJannik]

It works well for those who believe.

To be a successful Bitcoin holder you need to believe in the system.
Someone who don't like bitcoin can't be progressive at holding.
It takes more than wanting to make money when you want to become a Bitcoin holder, it's not going to be easy.

You can't expect someone who want to become a millionaire in 2027 to say that Bitcoin is a good store of value, because before that time gets here or even after, Bitcoin can lose alot of value.

If you are not a believer you won't have the patience to see the fruit get ripped.

Belief helps, but I think understanding why bitcoin moves the way it does is even more important. A lot of people call it a poor store of value when they focus only on short periods, especially during big drops. But store of value usually makes more sense when viewed over a longer timeline, because short-term volatility is still part of how Bitcoin behaves.

For me, the difficult part is that many new holders enter with fast expectations, then lose confidence when the market does not match that timeline.

[Abiky]

When it comes to storing value, it is alway a long term concept, and there is no such thing as short term value storage.

Even gold, which is considered stable, is not immune to strong fluctuation and cannot guarantee shortterm purchasing power, let alone bitcoin.

Bitcoin is not only a reliable store of value, but also the best store of value. If we look at the growth rate, it is easy to see that Bitcoin has been the best performing asset class over the past decade. With such performance, if it is not the best store of value, what asset truly deserves that title?

While stores of value are a "long-term concept", today's generation want quick results. So if they see prices going down within the short-term, they will immediately get disappointed and panic sell. Such is the situation with the OP. He's frustrated about Bitcoin's short-term performance, probably out of desperation to make money fast. Both Bitcoin and Gold are a long-term thing, so only invest in it if you're willing to build true generational wealth. For quick returns (although with a higher risk), altcoins are a much better choice.

I'm confident that BTC will continue to rise towards new heights as institutional adoption increases. With "Wall Street", banks, and governments involved in Bitcoin, prices will be a lot higher in the future. Just you wait and see.

[Solokan]

Indeed, until now, BTC is still fluctuating and indeed, for those who are afraid of losses, not a few are unwilling to invest in BTC because they see the fluctuating BTC price. Indeed, not a few people put their money in BTC because they think that BTC is a store of value, but indeed your statement is also true because it is proven that not a few people put their money in BTC and then they sell it at a loss and not a few of them are disappointed because they invested in BTC, in my opinion, the fault is the person himself who does not store BTC for the long term and is not strong enough to resist temptation. Try to pay attention, is there anyone who loses investing in BTC for the long term? While BTC continues to create new ATHs, so in my opinion, BTC is still a store of value, even better than gold, as long as it is stored for the long term, but for those who are not strong enough to hold BTC for the long term, it is not suitable because they could experience losses due to BTC price fluctuations. But what is clear is that there are definitely risks and those who invest in BTC must be prepared for the risks and also in my opinion, only money that is ready to be lost is worth putting in BTC.

[DanWalker]

A store of value is an asset that retains the value of wealth over a period of time without losing its value. It is also always stated that Bitcoin is best held as a long-term asset. So with these two things in mind and with the 17-year history of Bitcoin, you can look at every 5-year interval and tell me it doesn't retain the value of wealth?
Gold is the most accepted store of value in the world right now, yet it is also volatile. An asset being volatile does not stop it from being a store of value, but how that asset behaves in the long term and how much that asset loses or gains in a sort term. Also, the ability of that asset to get back up after the value has dropped. That is what determines a store of value.

Thats right. Assets that retain their purchasing power or increase in value over time are considered stores of value. Therefore, not only Bitcoin or gold, but also some bluechip stock can be considered stores of value, despite their short term volatility.

A store of value and a safe haven are two different concept. It seems many people are confused about this.

4. Bitcoin is too correlated to risk assets and the economy.

No asset is immune to the influence of the economy. Real estate, stable fiat currencies and gold are all stores of value, but they are also affected by the economy. The 2008 financial crisis was caused by the fall of a "store of value".

The value of all assets depend on cash flow and liquidity in the economy, without exception, whether they are centralized or decentralized asset.

[BALIK]

While stores of value are a "long-term concept", today's generation want quick results. So if they see prices going down within the short-term, they will immediately get disappointed and panic sell. Such is the situation with the OP. He's frustrated about Bitcoin's short-term performance, probably out of desperation to make money fast. Both Bitcoin and Gold are a long-term thing, so only invest in it if you're willing to build true generational wealth. For quick returns (although with a higher risk), altcoins are a much better choice.

I'm confident that BTC will continue to rise towards new heights as institutional adoption increases. With "Wall Street", banks, and governments involved in Bitcoin, prices will be a lot higher in the future. Just you wait and see.

You are probably right, and please correct me if Im wrong. Because, if I'm not mistaken, OP used to be a fervent Bitcoin supporter on our forum. But then suddenly he did a complete 180 and started complaining about Bitcoin. So, if it was not for profit, I do not see any other logical reason why he would change his mind so quickly and turn his back on bitcoin

Its only a matter of time before Bitcoin grows and reaches new record high prices. There is nothing to doubt about that, but the problem is that many people will lack patience  .