You must have heard many people saying that bitcoin is a great store of value. Bitcoin was introduced as a medium of exchange, but bitcoin features make it a great investment opportunity or a store of value. A store of value is any currency or asset that preserves its value for a long time and can be exchanged for goods and services without fading in its worth. On the other hand, fiat currencies are the worst store of value because there occurs a situation of inflation that declines the value of a currency, but this is not the case of Bitcoin. Brexit Trader is the website that can allow you to trade different cryptocurrencies that are also good as a store of value.
Let us learn how bitcoin is a store of value.
Durability means the asset must not be easily destroyable to preserve its value in the future. Like gold is highly durable, bitcoin is also a durable crypto asset. It is assumed that the computing standards of Bitcoin and its technology won’t change in the future and, therefore, will maintain the usage of bitcoin. It is a crypto asset that cannot be degraded or break apart due to less usage or passage of bitcoin. Bitcoin will always be useful to the finance and tech sector, making it a great store of value.
Countless features make bitcoin a great store of value, but out of all, scarcity is an important characteristic. An asset must be easy to obtain, more in quantity to be a great store of value, and this is an important thing about bitcoin. In the economy, we have understood that if the supply increases with less demand, it makes the asset or currency a poor store of value. Comparatively, if the supply of an asset is fixed or limited and its demand increases, it will preserve the value of the asset.
The supply of bitcoin is fixed, unlike fiat currencies and gold. There will only be 21 million bitcoins that could ever exist, and the last bitcoin will be mined till 2140. Bitcoin is a liquid asset that has a finite supply which increases its demand and value.
Fungible means value that is uniform and interchangeable. An asset or a good can only be considered an ideal store of value whose value is mutually exchangeable. A currency must be fungible to be exchanged for the purchase of goods. With fungibility, the goods can be exchanged internationally or at multiple locations. Bitcoin is more fungible than gold because the worth of one bitcoin will be the same as the worth of another bitcoin. It is software that means pure, unlike gold, where there can be impurities. Fungibility is another feature that makes bitcoin a great store of value.
Bitcoin is a digital asset that can be easily and for free as well. No vault is required to store digital currencies, and only a digital wallet is required to store your coins. You can either choose a hardware-based wallet or a web-based wallet. A wallet is a software that can be easily installed on your computer, desktop, or mobile device to keep your digital coins safe.
You can either choose a paper wallet that prints the private keys on paper. Each bitcoin holder must learn safety methods to ensure the safety of bitcoins. Once you get familiar with all methods or tips for storing your coins, there aren’t any limitations on storing bitcoins. You can make countless transactions and can store a huge amount of bitcoins in your bitcoin wallet.
An ideal store of value is easy to verify but impossible to duplicate or counterfeit. It is important for a store of value to easily and fast verify the transaction to make the exchange process fast. It must use technologies or different ways to secure the network and transactions and be difficult to counterfeit. Verification of bitcoin transactions is done by miners using computing power, and a big network of computers validates all transactions.
Bitcoin transactions are recorded on the blockchain, which uses the proof of work consensus method instead of trust. No one can create fake bitcoin or duplicate it because it uses cryptographic principles and is dependent on thousands of computers. Bitcoin’s supply can never be manipulated, and the transactions are easily verified.