bitcoininthevp wrote: ↑Sat Aug 21, 2021 10:40 am
I think gold and bitcoin are stores of value.
A few random thoughts -
I agree, they are both stores of value, but there are big differences. A store of value is only a store of value to the degree that there is a ready buyer or market of buyers willing to recognize the value i.e. pay for it i.e. allow you to realize the value when you want.
Gold has proven its market for millenia and as such its value is relatively stable. Gold is too mature to be subject to big swings in value over short periods of time, and as such it is not an attractive target for speculation. Gold cannot be accused of having any new fad value.
Bitcoin definitely looks to be a store of value, but the issue is clouded by the novelty, and the big swings in value of short periods is a magnet for speculation. So I might postulate that Bitcoin is both a store of value AND a vehicle for speculation and it is difficult to tell how much of each feature is built into its pricing. Just the fact that Bitcoin saw a 50% drop in value over a short period this year speaks to it's speculative element.
A stable store of value moves mostly sideways or up in modest, methodical movement. If it ever moves down, it is very limited movement but over a long time span, the chart is low incline upward.
Once Bitcoin reaches maturity, presumably the volatility will level and the speculation value will also level. At that point it will be a much clearer store of value. There are other issues too, such as sensitivity to regulation or even threatened regulation.
A feature of both gold and Bitcoin is fungibility. Elsewhere in this thread people have mentioned art and real estate, both of which are physical assets that store value, but neither are very liquid or fungible.
Of course for practical purposes both of these assets are denominated in US dollars, and it is important to think about whether change in Bitcoin or Gold value is more rooted in change in US dollar value than change in either of the two assets. Right now this is something to consider given the loose monetary policy in response to the pandemic.
Personally I'm a fan of both, but I try to stay cognizant of the differences in their features. So I haven't been willing to leave one in favor of the other, rather I maintain exposure to both.
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