The past year has shown how volatile the economy is and there really is no end in sight.
People are rightly worried about their financial future and are looking for ways to keep their money safe.
At the same time, cryptocurrency is booming and has become a way for speculators to invest and make a lot of money.
It’s only natural that people would go from buying Bitcoin on a whim to make some extra cash to think about if it can help them protect their dollars.
Of course, there are a lot of ways to use bitcoin these days and this is merely one of them.
In this article, we will go over some of the reasons that people are looking at bitcoin as a good way to store value.
What is a store of value?
A store of value can be just about anything. It is something of value that you buy or exchange in the hope that it will retain its value over the time that you plan to keep it.
It can fluctuate, however, so some value stores are better than others.
Of course, this is not easy to know since if it has value then others are also buying it or selling it and this can affect the value at the time you decide to buy or sell it.
Gold is an example of a store of value as it has been considered one of the best ways to invest when trying to protect your money.
It has an agreed-upon value all over the world and is easy to liquidate into cash when you want to access your money again.
These days, people are looking at cryptocurrency for the same reason.
It has scarcity
Just like gold, bitcoin has a finite amount. Unlike gold, however, we know exactly how much bitcoin is left to mine.
Gold needs to be found so we have no idea how much there is under the earth’s crust.
Bitcoin is capped at 21 million coins so we know that one day there will be none left to mine.
This scarcity also gives it value as the less there is left the more value the remaining coins will have.
It’s portable
Unless it is explicitly illegal to buy or trade bitcoin in the country in question, you can access it anywhere in the world.
The value is the same whether you are in the USA or Uruguay.
Finding a trading partner is done in seconds so it can easily be liquidated.
This gives it value because it has a lot of real-world applications since it can be used anywhere.
International transactions are done with bitcoin happen in a matter of minutes instead of days and are very inexpensive since there is no middleman taking a commission for the exchange.
It can be volatile
One knock against bitcoin is that it is volatile and there is no guarantee that it will hold its value while you own them as a storage system.
This is the same as some stocks, however so it does depend on your level of acceptable risk.
If you plan to hold onto the coin’s long-term then this should provide some stability.
*This article has been contributed on behalf of Paxful.
However, the information provided herein is not and is not intended to be, investment, financial, or other advice.
(Image by QuoteInspector.com)
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