Ever since the birth of Bitcoin ten years ago, it has been established as a digital currency that has the potential to change the way we live. The digital asset can be used as a form of payment in order to send money across the globe, trade other cryptos and so much more.
But there’s another use for Bitcoin, it could be used as a store of value.
Store of Value
Now you may not know what I mean when we use the term ‘store of value’ so let me explain.
A store of value is worth what people are willing to pay for it. If we take a look at gold, it has always been considered a store of value because it is very valuable and not unlimited. You can be sure that there will someone out there that would be very willing to pay you a lot for your gold (if you have any).
But gold isn’t money, it has a lot of value and so it is more of an asset than actually currency i.e. you can’t go and buy your groceries with a bar of gold.
For cryptocurrencies, the debate about whether they were created as a store of value or a medium of exchange is something that doesn’t seem to end.
At the end of the day, Bitcoin isn’t cash. It isn’t money. It’s a protocol that can’t be used in the majority of shops around the world. But the potential is there.
Gold or BTC?
People typically go to invest in gold to protect their wealth against inflation. Gold isn’t easy to liquidate trough and finding a place to keep it safe is just another thing you need to think of. In the crypto space, people are trying to use digital currency to fix this issue. Blockchain technology is always getting improved and cryptocurrencies are so much easier to secure than gold.
But you can’t hack gold.
In third-world countries like Zimbabwe and Venezuela, cryptocurrencies have a lot of potentials to help those in need. In places where the locals experience hyperinflation on a yearly basis is the perfect example of where cryptocurrencies would thrive.
Of course, Bitcoin sill faces inflation but people would have more secured money holding crypto than fiat. The yearly inflation rate for Bitcoin is just under four percent.