Store Of Value Of Bitcoin
The phrase "store of value" is frequently used in the realm of cryptography.
In this context, it refers specifically to Bitcoin. Bitcoin, unlike most other currency, may be kept for a long time without depreciating in value. Many people appear to take this at face value without investigating what it means for Bitcoin to be a store of value and why this would distinguish it from other cryptocurrencies.
I think I've made my position on this matter crystal clear.
Bitcoin is in no way a safe investment. The niches Bitcoin fills as the ultimate truth table and random number generator and as a store of value are two of my favorite ways to talk about it. Bitcoin is not a currency that stores value; rather, it creates wealth. When its value legitimately doubles each year, why label it as a "store of value"? No, it's obviously multiplying the value, not storing it. Rare metals don't behave this way. What's the point of drawing parallels between Bitcoin and PMs? This is completely absurd. We may safely say that Gold 2.0 is bogus.
Because its value relative to the US dollar (USD) might fall by as much as 80%, it is not a reliable store of value.
There are many voices out there that argue this. Even while they're right, they're wrong about why they're right, which is horrible (maybe even worse, as they'll never learn why their logic fails them when extrapolating).
In a flash of insight yesterday, I realized that the gambling industry is the most apt analogy for Bitcoin (poker in particular). If winning a single hand of poker is entirely dependent on luck, winning a million hands is entirely dependent on ability, and the resulting average hourly salary is significantly higher (I was making approximately $20/h over a decade ago).
As I've been discussing recently, this is related to the idea of lowering entry barriers to allow more people to enter certain fields. In the world of professional gambling, everybody who buys and holds Bitcoin automatically becomes a winner. All that's needed is the discipline to HODL over the long haul. This may not seem like a skill to some, but anyone who has tried it through a whole market cycle can attest to its importance.
Similar to poker, holding Bitcoin for a short period of time is a complete gamble, but holding it for a long period of time requires expertise and is certain to yield a profit. Bitcoin has been shown to be valuable multiple times over, thus it follows that it creates value. We get an exponential return on our investment. There is a guaranteed profit at the end of each four-year period. This is the economy of plenty, and we hope you enjoy your stay. Bitcoin is the drug that gets people hooked on others.
It's worth 21M tokens.
Many people incorrectly attribute Bitcoin's constantly rising worth and store of value status to its scarcity. There is no denying the fact that this is empty rhetoric (as Litecoin does exactly the same thing, just with a different algorithm and difficultly level). Bitcoin's worth comes from the network's steadily improving security and scalability. Today, trust has become the most valuable commodity but is in extremely short supply.
This is why many believe Bitcoin is a good store of wealth whereas other projects without a limited quantity aren't. This is false once again. To the extent that resources are misallocated, inflation need simply reduce the value of an investment. In the long run, fiat currency depreciates because its owners steal from the rest of us to line their own pockets (what a surprise).
The continually falling value of fiat has rendered the phrase "store-of-value" meaningless in practical terms.
If fiat currency weren't losing value, we couldn't talk about it being a "store of value."
To put it another way, "not leaking value like other awful privately owned currencies" is what we mean when we talk about a currency being a "store of value" in this case.
PMs are also useless as a means of value storage.
No longer are precious metals used as money. They are worthless as a medium of exchange at this point. I don't understand how this could have transpired. Fictitious order caused it to occur.
The advancement of technology is to blame. Crypto is preferable to PMs as a MoE (and fiat currency) because it is both digital and decentralized, making value transfers impossible via PMs. The solution lies in self-governance within a setting free from the threat of imperial power.
Many advocates of individual freedom and other groups share the view that the value of precious metals is being artificially suppressed by derivatives. Of course, while this is true to some extent, it is also important to note that PMs have lost a great deal of value as a result of the emergence of superior solutions made possible by technological advancements.
Technology, interestingly enough, also generates need for PMs on the manufacturing floor. Both gold and silver are used in modern technological devices. Isn't that something? Though they are now worthless as a medium of exchange, PMs have garnered a following as a commodity and a means of protection against dishonest paper money.
Money in circulation versus crypto
Many people mistakenly believe that cryptocurrency competes with gold and silver, when in fact it is an improvement on those traditional "stores of wealth." This is false once more, but it does have some kernels of truth. The role of PMs as a medium of trade has already been eroded by technology, and now their role as a store of wealth is threatened by crypto.
The reason this is irrelevant has been covered earlier. It's common knowledge that cryptography and private messages get along swimmingly. Each contributes to the whole. There's a mutual benefit between them. In cryptography, long-term security is prioritized over short-term gains, and vice versa. Precious metals like gold and silver serve as reliable alternative back-ups to the current monetary system. Assume they will be extinguished by systems built on a solid foundation of redundancy. Stupid reasoning.
Thus, it makes little difference that gold is no longer accepted as a means of trade and is expected to lose its narrative as a store of value. Absolutely not.
Its production usage and its robust hedging use will both rise. safe havens in terms of financial investments. The ethos of cryptography highly values failsafes.
Most maximalists and gold bugs use the term "store of value" as a meaningless jargon to justify their own destructive tribalism. Convincing oneself that Bitcoin is a store of value while alternative solutions are not requires extensive mental gymnastics; imposing competition on open-source cooperative networks requires the same kind of deception and projection that characterizes the economic model of legacy capitalism.
All crypto networks work together and do not try to outdo one another. Each network will either be self-sufficient (while also bolstering the others) or will collapse owing to the catastrophic failure of a highly experimental asset. Similar logistics prevent crypto networks from competing with gold and silver.
Because fiat currencies don't, the term "store of value" is even necessary. The irony is that there is no rule dictating that fiat currencies must devalue over time. A centralized debt-based society that values stability likely to work out that way. When fiat currencies switch models, what will happen? How realistic is that? Maybe. Although, it's possible that this isn't the case. I believe that this is highly dependent on the severity of the existing system's collapse and the nature of the crypto solutions available at that moment.