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Bitcoin

Bitcoin Derives its Value from Store of Value

Although adversaries of bitcoin and other cryptocurrencies argue over the intrinsic value of all cryptos, bitcoin which is the world’s largest cryptocurrency by market cap is regarded as a store of value by many crypto enthusiasts and investors.

In a time period of about 10 years, bitcoin has developed a repute by becoming popular among people all around the world. The global peer to peer payment system, bitcoin, has not successfully evolved into a medium of exchange, used in daily life for buying and selling goods, but it is often regarded as digital gold due to its capability of acting as a store of value.

Bitcoin, unlike fiat currencies, has a finite supply of 21 million and once all the 21 million bitcoins are minted successfully, no more new bitcoins will be created. As fiat that can be printed as much as wished loses value over time due to inflation, the fixed supply of the programmed cryptocurrency bitcoin is well safeguarded from inflation.

READ ALSO: Less than 3 Million Bitcoin are Left to be Mined

Moreover, the decentralized traits of bitcoin also ensure that the price of bitcoin isn’t controlled or manipulated by any single authority. This further strengthens bitcoin and protects its price from dropping low or rising high due to personal benefits, something that is very common in fiat currencies controlled by financial institutes.

Technically, bitcoin’s design makes it a good store of value. As the price of bitcoin is only dependent on the fundamentals of supply and demand, one thing can be assured: bitcoin’s price can’t be manipulated easily. Therefore, this explains why bitcoin well-protected against factors impacting its price is considered a store of value.

Bitcoin is often criticized for being extremely volatile and experiencing drastic price changes. Talking to BlockPublisher about the future of bitcoin CEO and founder of Aximetria Alexey Ermakov said:

Bitcoin is volatile like any other financial or derivative financial instrument, but it is still not without all those shortcomings in limiting productivity. Therefore, it is already finding use as an alternative to saving money in those countries where the national currency is more volatile than BTC, or as a means of transferring value when it comes to large cross-border transactions. Nevertheless, there is no way to stop the progress, as well as the development of bitcoin in all monetary qualities.

Let’s see how does bitcoin manage its upcoming challenges to move ahead of store of value and become a medium of exchange and a unit of account.

READ ALSO: Will Bitcoin Derive its Value from its Use as a Medium of Exchange?

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Hassaan Malik

Co-founder of BlockPublisher, Hassaan is a technologist at heart with a keen interest in blockchain, cryptos and traditional financial markets. Email: hassaan@blockpublisher.com, hassaanmalek@gmail.com

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