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Bitcoin Focused Wealth (Should I store wealth in Bitcoin )

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From the time it was created till now, Bitcoin has been established as a digital currency with the capacity to change people’s lives and affect the way they live. This has seen its applications in so many different ways; it can for instance, be used as a form of payment system for transactions between two parties globally, can be used to send money from one place to another around the world and also traded In exchange for other cryptocurrency. This also begins to make one consider if it can be a store of wealth, like a safe haven for storing up wealth for the future. Most often at times when it comes to a safe haven for storing wealth for the future, precious metals like gold, silver and diamond comes to one’s mind. However, these have been known over the years to serve as a safe haven for individual’s wealth especially during fluctuations in traditional markets like the stock markets.
In order to one to fully decide on whether bitcoin can evidentially be used as a store of wealth for the future, or simply a store of value, there is great need to first understand what a store of value really means and is. In this article, we will attempt to look at Bitcoin Focused wealth; in a bid to answer the question of “if one should store wealth in Bitcoin for the future”. Let’s begin by first understanding “what really a store of value means”.

What really is a store of value?
A store of value refers to an asset of worth that people consider valuable and are willing to pay for it. For instance, from pristine times, gold has always been considered as veritable store of value due to its universality and finiteness; it is globally accepted by all and one can readily get someone to purchase it at any time in exchange for huge sum of money. Although one cannot duly consider gold as a form of money, it can be still be said to be a highly durable asset of value.
On the other hand, cryptocurrencies are fast becoming a topic of debate by individuals and investors in consideration of whether they can be readily used as a medium of exchange or a store of value, for some years now. For instance, Bitcoin being a digital money, since inception has been used for peer-to-peer electronic transactions, including transactions of very large volumes. It has also been particularly efficient in fostering electronic monetary transaction transfers from one place to another around the world between people. However, the fact that Bitcoin is only just virtual money (it is not yet cash yet), worries a lot of people and makes them not fully accept it as a means of payment system as many fear that their money could eventually be lost due to its volatile nature.

What really makes a good store of value?
To be able to grasp fully what makes a product be considered as a good store of value, we will have to first explore what makes a product a poor store of value. One of the properties that makes a product a good store of value is that it has be highly durable so that it can be preserved for a long time.
For instance when we consider foods like mangos and apples, they are highly valuable and useful to humans as a source of nutrition. However during food scarcity, one cannot consider them as good store of value as they can’t last for a very long time. They will be worthless should one choose to keep them in a safe for several years. This makes them a poor store of value.
On the other hand, consider another food by-product that is valuable and also durable like pasta. This can be said to be a good store of valuable food as one can readily and cheaply produce it from available resources. However, anyone can flood the market with it as it can last for a very long time, making them be in high circulation. This does not make it a good store of value. It then means that for something to stand out a s good store of value, it must be durable and also very scarce.

When it comes to fiat currency like dollars and euros as a good way to store up wealth for a very long time, one would have to see if they can retain their value for long. However, the purchasing power of these currencies tends to drop as their price declines as more units of them, just like Pasta are being produced. This makes them a poor store of value as even if one was to store them up for a long time, they would drastically reduce in value, in terms of their purchasing power.

The case for Bitcoin as a store of value
From the early days of inception, Bitcoin has been considered by many as the new “digital gold” as many have echoed the narrative of it being one of the soundest assets best known to man. This has made them believe that Bitcoin is the best way to store up wealth as it has not been devalued over time. Although best known for its high volatility, Bitcoin remains in a class of its own as the best performing asset despite its volatile nature. Some reasons why many hails Bitcoin as a safe store of wealth for the future are;

Its Scarce nature; it is limited in supply as its supply cannot exceed 21 million tokens according to the Bitcoin protocol and design.
It is highly decentralized as it is not under the control of any federal government and not subject to the manipulative whims of central any bank authority.
It is considered by many to have the propertied of good money as it is scarce, durable, portable, divisible and also indestructible by biological or natural factors.
It is highly uncorrelated with other assets so that changes or fluctuations in these assets does not determine its rise or decline. For instance, from inception despite its high volatile nature, it has been on a steady rise.
It has high fungibility, meaning its units are indistinguishable. For instance 1 BTC will always be worth 1 BTC. This is important as the same applies for stocks ad cash as well. It therefore means that it does not matter which particular unit you are holding, it’ll always hold an equal value to any other of the same kind.
In closing, Bitcoin has a lot of features in favor of its and most of these features are similar to that which precious metals like gold share, in making it good store of value. While one continues to use it as a system of payment, only time however will tell if one can store up wealth for the future with it. This heavily depends on individuals’ decision and discretion, having considered the case in favor of it.

 

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