Historically, people have converted their fiat to gold and recently to oil to escape the woes of inflation. But the recent crisis between Russia and Ukraine hints that the world might be ready for a new "store of value". AND WHEN IT COMES TO THE "STORE OF VALUE", I THINK YOU HAVE SOME WRONG OPINION ABOUT IT.
Broadly speaking, a store of value is any object that retains purchasing power into the future, and can be readily exchanged for something else. In other words:
1. A store of value should be worth the same or more over time.
2. A store of value must be exchangeable with something else (like gold, or dollars).
This creates some constraints on good stores of value. A good store of value should not have a very short lifespan, like flowers or milk. It should also be reasonably liquid, which is a measure of how easy or difficult it is to exchange. For example, it’s much easier and faster to exchange a bar of gold for money, than it is to exchange a house for money. Put another way, gold is more ‘liquid’ than real estate. If no one will exchange your store of value for something else of value, then your store of value is effectively worthless. Finally, stores of value should be relatively scarce, or hard to obtain. Air is vitally important, yet its abundance makes it worthless as a store of value.
AND HERE ARE SOME ARGUMENT FOR BITCOIN IS A STORE OF VALUE, FOR YOUR INFORMATION:
There is no denying the newness of Bitcoin, but that newness can also be considered a strength. To give an example, 14 years ago, the first smartphone was released (iPhone). A mere 14 years later, smartphones are ubiquitous around the world. Smartphones allowed people to do old things (browsing the Internet, taking pictures, communicating) in new, better ways. Bitcoin is doing that, but for money and finance. Bitcoin, like many new and disruptive things, is volatile, but if you zoom out it has only gone up -- massively. Indeed, it is the best performing liquid asset in the last decade.
As mentioned, critics of Bitcoin point out that it is artificially scarce, so it is worthless. Yet, plenty of stores of value are artificially scarce. In fact, fiat currency, one of the primary stores of value, is artificially scarce! Governments can always print more, and they often do, but in general they don’t because they want the currency to be relatively scarce. Yet while central banks can reduce the scarcity of fiat currencies at will, Bitcoin’s scarcity is set in stone. There are only 21 million possible bitcoins, and a not insignificant portion of that is lost forever.
It is true that Bitcoin’s technology is not as cutting-edge as other cryptocurrencies, but this can also be seen as a benefit. While newer technologies are likely to have flaws and exploits, Bitcoin is hands down the most battle-tested decentralized network in the world. It has functioned, without downtime, 24/7 since launching in 2009.
Bitcoin is a reasonably liquid asset, and its liquidity is improving by huge percentages every year. Bitcoin is already much easier to transact with than gold, though less easy than fiat currency. Every year more businesses start accepting bitcoin as a viable payment method, which means Bitcoin is developing greater utility. It is currently used for international remittance, and recently has been accepted by some governments as a form of legal tender.
Another important factor contributing to Bitcoin's potential as a store of value derives from its decentralized and purely digital nature. Because Bitcoin is simultaneously everywhere and nowhere, it's difficult to seize or steal yet trivially easy to "take with you." This empowers people to store value independently of third parties, whether they be banks or nation-states, and it eliminates the associated third-party risks. For example, people storing fiat in the bank run the risk that the bank will default or otherwise restrict access to their funds. The same goes for certificates representing gold held in a centralized vault. And while it's true that all of the stores of value discussed in this article can also be stored independently from third parties, the fact that they are physical objects makes storing and moving them inherently more difficult than Bitcoin. While the other stores of value require heavy duty security and are risky or costly to move, Bitcoin - whether it be $100 worth or $100 million dollars worth - can be stored and accessed with little more than a memorized password (and with shared wallets, the single-point-of-failure risk can be mitigated).