Store of Value
economics · beginner
One of the three classical functions of money: holding purchasing power across time.
Gold has been the canonical store of value for millennia, largely because its supply grows ~1.5% per year and you can't print it. The bitcoin claim is that a digital asset with a hard cap, no issuer, and verifiable scarcity can serve the same role with better portability and divisibility. Whether it works is an empirical question playing out in real time.
A useful frame: store of value isn't a property of an asset, it's an emergent property of *demand for it as a savings vehicle*. Gold became the store of value because enough people decided it was, and that consensus reinforced itself across centuries. Bitcoin is in the middle of trying to become one — and the case rests on durability, portability, divisibility, fungibility, and most of all, verifiable scarcity.
The melting-ice-cube argument: in a high-inflation regime, holding cash isn't neutral; it's a steady loss. Real interest rates determine whether savers are penalized for saving. When they go deeply negative — as they did from 2020 to 2023 — the demand for alternative stores of value spikes. Whether Bitcoin captures that demand long-term is the empirical question.