Academics, financial market experts, researchers, and the general public have conflicting views on Bitcoin’s role as a store of value. Some critics worry that Bitcoin’s high volatility makes it a speculative asset, with significant negative impacts on global investments. Others also argue that Bitcoin exists and operates in an unregulated market, exposing investors and traders to various risks, including theft, fraud, and inflation. Meanwhile, the market demand for Bitcoin is steadily growing, with several leading cryptocurrency exchanges such as bitcoin smarterreporting an increase in daily trading volumes.
However, cryptocurrency enthusiasts applaud Bitcoin as a safer, more reliable, and more efficient asset than traditional assets. The growing adoption of Bitcoin in major economic sectors indicates its important role as a means of payment and a store of value. However, some still have reservations about Bitcoin’s potential store of value. The following article explains why Bitcoin facilitates the global store of value.
The limited supply of Bitcoin is one of the main reasons why it will become the future store of value. Unlike traditional assets such as fiat currencies regulated by governments and central banks, Bitcoin does not have a central authority. Instead, the supply of Bitcoin is strictly dependent on its algorithm. Bitcoin protocols control the minting rate of new tokens, which eliminates the possibility of political or institutional influences.
Satoshi Nakamoto limited the supply of Bitcoin to just 21 million tokens. Currently, miners have generated about 19 million bitcoins that circulate in the market. Additionally, Bitcoin is also halving, cutting miner rewards in half every four years. These characteristics induce scarcity.
Decreasing supply and increasing demand allow Bitcoin to maintain more substantial purchasing power over time. The induced supply of Bitcoin makes it more scarce with significant future growth potential.
Thus, Bitcoin would eventually become a better store of value than fiat currencies and other traditional assets.
Financial transactions without third parties
Traditional systems, such as banks, often rely on third parties to complete cross-border transactions. While it works in most cases, including third parties in transactions exposes customers to various risks. It forces organizations, businesses, and members of the public to trust the government and financial institutions with their money and private information.
However, politicians, government-affiliated institutions, and financial service providers often change the rules to suit their agenda. That is why they can never maintain trust.
Bitcoin facilitates maximum transparency in all financial transactions without third parties. It is based on a proof-of-work mechanism with thousands of independent nodes to verify the authenticity of each transaction. Bitcoin’s underlying Blockchain technology validates transactional data in an immutable public ledger, accessible to all users of the platform.
That ensures the legitimacy of Bitcoin transactions and prevents double spending. Those attributes give Bitcoin a more significant competitive advantage over fiat currencies and other government-controlled investment avenues. Bitcoin’s enhanced transparency and transactional security make it a more valuable asset than conventional assets.
Centralized monetary systems give governments and institutions the absolute power to influence the value of money through inflation and other tactics. Such systems provide a strong incentive for politicians and regulators to manipulate markets for personal gain at the expense of the public.
Bitcoin operates on a decentralized platform powered by Blockchain technology. The network comprises thousands of nodes and miners in different parts of the world, independently verifying and validating transactions. Instead of a single entity, Bitcoin allows its users collective control of the network. The consensus rule makes Bitcoin highly resistant to manipulation by governments, corporations, or influential people. Therefore, it can resist inflation and other induced vulnerabilities better than fiat currencies.
In general, Bitcoin is a volatile asset with unique risks for investors and traders. However, it has inherent characteristics such as limited supply and decentralization, allowing it to maintain more substantial purchasing power over time. Experts believe that Bitcoin remains central to valuing storage globally.