A Store of Value is Relative
If you are in the US, gold may be a practical store of value for you. You earn enough money that buying a half or a full ounce of gold is feasible given your salary and savings.
But, for many places around the world, gold is not the most common store of value, USD is. No matter where in the world you go, when a national fiat currency starts inflating a black market emerges for USD.
This is the case for two reasons:
- USD has held its value better than most other currencies over time.
- USD is a recognized and accepted medium of exchange
When you are saving your wealth, you still want to be able to access it and make purchases. Gold is clunky, hard to transact with, not divisible, and not accepted as payment. If you make $2000 USD per year and have $2000 in savings, buying gold does not give you the flexibility to transact. If you need to access it, you have to hold on to a lot of the inflating fiat that you don't want to spend. As a result, it is not used as a store of value for most people around the world. (Just to make this clear, I think gold is a good store of value, but that most people do not own gold or use it as a store of value).
Not a single country on earth has sound money, and as a result, gold is a good thing to own to protect yourself from governments inflating away your wealth. Gold is a good store of value relative to fiat currency.
Compared to the USD, and Gold, BTC is obviously a better store of value. The relative benefits of BTC as a store of value greatly outweigh the transaction fees.
Bitcoin is scarce, which is an important part of being a good store of value. But scarcity alone doesn’t do it. You have to have scarcity and steady or increasing demand to keep the value.
In a world where you use fiat to transact, having un-inflatable money is very valuable. Compared to gold or USD it is absolutely worth the fees to use BTC as a store of value. But, in a world where you could use a plethora of other non-inflationary coins with lower fees as a medium of exchange, you would not need to seek out a separate store of value.
This is a fundamental difference between physical and digital money. In physical money, there is a trade-off between a good store of value and a good medium of exchange. This is our experience from the past so it is a trade off we have come to expect, but it is not the case with digital money. Cryptocurrency can have both the properties of a great store of value and a great medium of exchange.
If the USD was more scarce than gold, and that was provable and guaranteed, very few people would use gold as a store of value. They would transact in USD and store wealth in USD.
If people use a non-inflationary, secure, and low-fee cryptocurrency as a medium of exchange, they will not need to search out a separate store of value.
There is obviously risk involved with storing all your wealth in any one asset, so it makes sense to hold many, and not put all your eggs in one basket. But unless large security issues emerge, it seems clear to me that a scarce and transactable money is a better store of value than a simply scarce money--that in the future the best medium of exchange is also likely to be the best long-term store of value.
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