See More

Twitter Survey: Bitcoin is Primarily Bought as a Store of Value

3 mins
Updated by Dani Polo
Join our Trading Community on Telegram
Should Bitcoin be thought of as digital gold or digital cash? It is time to set the record straight.
Initially, Bitcoin was invented as a digital form of money. The idea behind the nascent project was simple but fascinating. The decentralized system allowed any amount of value to be transmitted to any part of the world in a peer-to-peer transaction with no intermediaries or regulators involved. In other words, Bitcoin was created as a peer-to-peer electronic cash system with the primary function serving as a better way to send and receive money. However, a lot of water has flowed under that bridge since the early days of digital currency. Now, Bitcoin supporters are referring to it as digital gold and are promoting it as a store of value. The survey conducted by Bitcoin developer and educator Jimmy Song among his Twitter followers is the most recent evidence that the Bitcoin community sees it that way.

What is a Store of Value?

Before we dive into Bitcoin features, functions and intended use, let us figure out, what a store of value (SoV) is. Basically, it is an asset with a value that is non-depreciating over time and retains its purchasing power into the future. It means that you can buy and store for an indefinite time, and when you retrieve it, it is as valuable as it was when you saved it. Precious metals and Treasury bonds are classic examples of an SoV within a traditional financial system. However, virtually any physical asset with long or perpetual shelf life and a base level of demand can be considered an SoV under certain circumstances. You buy it, you store it, and when you take it out from the closet, fireproof safe or cold wallet, it is as valuable as before. In the developed world, a local currency used to be a store of value until the central banks opted for helicopter money scenarios to save banks and traditional financial institutions derailed by the financial crisis. These inflationary monetary policies eroded trust towards fiat money and forced people to look for better options. In many instances, gold, silver, real estate, and fine art are regarded as an investment instrument that can preserve wealth. Vault

Does Bitcoin Fit the Definition?

On one hand, Bitcoin can be regarded as a perfect SoV due to its scarcity and anti-inflationary characteristics. BTC has a limited supply, which means that the total amount of coins ever issued won’t exceed 21 million. While the practical considerations behind the idea of limited supply are not explicit, the psychological effect of the decision makes the coin more competitive against fiat currencies where central banks have the power to bloat the money supply at will. The skyrocketing popularity of Bitcoin in countries with hyperinflation and demonetization proves the point. Thus, Bitcoin was wildly popular in Zimbabwe at the end of 2017 amid a shortage of fiat currency caused by the armed power takeover. Meanwhile, Venezuela saw a spike of BTC transactions amid deepening economic crises and hyperinflation. The country is ranked second by daily trading volumes on the LocalBitcoins platform. Also, Bitcoin is a relatively stable asset with positive long-term price potential. One might argue that over-80 percent price collapse from the all-time high proves otherwise. However, in the long view, Bitcoin is doing reasonably well. Remember the Bitcoin pizza story? Despite violent short-term price fluctuations, Bitcoin is still over 20,000 percent more expensive than nine years ago. bitcoin gold

Key Counter-Arguments to Bitcoin as SoV

There are too much uncertainty and too little trust in anything related to Bitcoin and digital money as a whole, at least at its current stage of evolution. It is too risky to consider it a part of a long-term investment portfolio as the system, and the concept of virtual money is still new and fluid. Bitcoin was envisioned as a medium of exchange, peer-to-peer electronic cash system. Then, the community changed the focus and it somehow transformed into digital gold. God knows what will happen in 10-20 years from now—or if it will still be around. The intrinsic value of Bitcoin depends on its ability to gain legitimacy and eventually mass adoption. Consequently, Bitcoin needs a viable use case that has the potential to attract large-scale market operators. Being a unique asset where the value of storage and medium of exchange aspects are inherently interlinked, Bitcoin can function as both. This is just another reminder that our world is a bit more complicated than just combinations of black and white. Do you support the idea that Bitcoin’s primary aim is to serve as a long-term store of value? Would you put money in Bitcoin with an investment horizon of 10-20 years? Let us know what you think in the comments below!
Top crypto platforms in the US | March 2024

Trusted

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

Tanya-Chepkova.png
Tanya Chepkova
Tanya started as a financial news feed translator and worked as a financial analyst, news editor and content creator in various Russian and Foreign media outlets. She came to the cryptocurrency industry in 2016.
READ FULL BIO
Sponsored
Sponsored