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Is #Bitcoin a good store of value? Store of value can be ranked according to the six following properties:

- Scarcity: yes, Bitcoin has hard-coded scarcity.

- Stability: stability increases after each cycles but overall, Bitcoin isn’t a stable asset. You can’t buy bitcoin at any time and expect its value to remain around the same level relative to an index tracking inflation.

- Durability: yes, although hack and key mismanagement presents a risk of loss.

- Portability: great portability.

- Divisibility: yes, but currently fixed and hard-coded. May require to be updated as prices keep on rising.

- Acceptability: good but not as good as fiat currencies within a country of acceptance. Also this property is being challenged by AML/KYC procedures.

LogicallyMinded 1y ago

Let’s rank #Bitcoin, #Goldback, #Cash and #Monero to determine which one is the best store of value.

Scarcity: The supply of the store of value should be limited to maintain its value. For example, gold, Bitcoin, or other commodities with restricted supplies.

Bitcoin -> 3/3

Goldback -> 2/3

Cash -> 1/3

Monero -> 2.5/3

Stability: A store of value should maintain its value over time, ideally with low inflation or deflation. For example, assets like gold, real estate, or certain types of bonds can serve as stable stores of value.

Bitcoin -> 1.5/3

Goldback -> 2.5/3

Cash -> 1.5/3

Monero -> 1.5/3

Durability: A store of value should have a long lifespan to ensure its worth doesn't diminish over time. Precious metals like gold and silver, as well as digital assets like cryptocurrencies, typically possess this characteristic.

Bitcoin -> 2.5/3

Goldback -> 2.5/3

Cash -> 2/3

Monero -> 2.5/3

Portability: The store of value should be easily transferable from one person to another or from one location to another. For example, physical assets like gold or silver can be transported, while digital assets like cryptocurrencies can be sent through a blockchain network.

Bitcoin -> 2.5/3

Goldback -> 1.5/3

Cash -> 1.5/3

Monero -> 3/3

Divisibility: The store of value should be divisible into smaller units for practical use. For example, gold can be melted down, refined, and minted into smaller coins or bars, while cryptocurrencies can be divided into smaller fractions.

Bitcoin -> 3/3

Goldback -> 1.5/3

Cash -> 2/3

Monero -> 3/3

Acceptability: The store of value should be easily recognizable and accepted by others. For instance, gold, silver, and fiat currency are universally recognized and accepted.

Bitcoin -> 2/3

Goldback -> 1.5/3

Cash -> 2.5/3

Monero -> 1.5/3

Total #StoreOfValue ranking:

🥇 Bitcoin -> 14.5/18

🥈 Monero -> 14/18

🥉 Goldback -> 11.5/18

4th Cash -> 10.5/18

Do you agree? Let me know if you think I got it wrong.

#SoV #BTC #XMR #golbacks

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Discussion

tuco 1y ago

I beg to differ:

On scarcity… currently monero has less supply

https://monero.stackexchange.com/questions/1516/comparison-of-monero-and-bitcoin-money-supply-and-block-reward-schedules

LogicallyMinded 1y ago

I think this is a fair point. I just didn’t consider the current supply but rather looked at the supply of the long term and well as its predictability.

tuco 1y ago

And definitely on stability: how can be that cash, btc and monero have the same ratio. I think the order would be Bitcoin (supposed to be deflationary), monero and cash.

When talking of store of value I think we should compare with food or clothes.

LogicallyMinded 1y ago

Stability is seen as tracking inflation. Cryptos don’t do that very well as they have huge variation during bull and bear market cycles which last one to three years. If you buy the top of the market you can expect to be underwater for at least two years. Cash is stable on the short-mid term but always lose value in the long term. So far the goldbacks have been rising with inflation quite nicely. Only during covid their prices became irrational.m for a little bit.

tuco 1y ago

And there one point missing… privacy

LogicallyMinded 1y ago

I don’t think privacy is typically a property for a store of value (not that it’s not an important property especially for medium of exchanges). However, I considered privacy in the “acceptability” property as we can see that non-private coins can make them less fungible and less likely to be universally accepted.