Sovereign Nations are coming up with their own e-currencies to offset the adoption of Bitcoin (BTC) like crypto-assets.
International Financial bodies warn that large scale adoption of cryptocurrencies in domestic and international transactions is a threat to global financial stability.
Bitcoin like assets find adoption in domestic and cross border payments among niche groups and even in public. Stable coins have been trying to compete with fiat transactions.
Obvious, the competition between e-currencies from CBDCs Vs. Stable Coins and Bitcoin Like Assets is catching up.
Bitcoin (BTC) and the Store of Value
Money as a currency when hoarded under the mattress will not receive interest. People invest their money in banks and other Fintech companies for ROI. However, traditional investments do not yield sufficient returns to sustain the purchasing power of the value invested.
People tend to hold on to their money to perform their basic transactions and sometimes as a precaution to deal with unexpected huge expenses.
When people have more money than they normally need for their expenses they prefer to protect the value of their money for the future. Therefore, they invest in real estate, bonds, shares, commodities, gold, silver, bond, collectibles, gemstones, gift economy, labor notes, Livestock, fine wine, precious metals, real estate, stored value cards and more.
People are looking at different stores of value to protect their purchasing power. People store the value of their money in “store of value assets” to retrieve liquidity at a future time when they might need it.
What is a Store of Value Asset?
Store of Value Asset is an asset type which does not lose its value over time like fiat currency. Even under worse economic situations, it retains value.
Any asset that retains value (or) if the value increases over time without depreciating; and, can be liquidated without decrease in value it is known as an asset that provides sufficient store of value.
Bitcoin and a few other kinds of cryptocurrencies have been trending as a store of value over a decade. Bitcoin and Cryptocurrencies as a store of value is a young theory.
“If enough people agree Bitcoin is valuable, then it becomes valuable.”
Will Bitcoin (BTC) Survive as a Store of Value?
Bitcoin believers have to say that it is saving the world. Bitcoin skeptics have to say it is a speculative bubble.
Kevin Roose, in The Latecomer’s Guide to Crypto, The New York Times expressed: “It is an organized, technological movement, armed with powerful tools and hordes of wealthy true believers, whose goal is nothing less than a total economic and political revolution.”
Bitcoin and like assets are a small spot in the global economy. These assets do not have the stability like national currencies due to speculation, price manipulation, regulatory uncertainty, and media coverage. Despite uncertainty, high net worth clients are invested with crypto holdings. This is continuing despite high volatility seen in 2022. Will this trend continue? Why would it continue?
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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