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Cryptocurrencies The new store of value?


Despite the fact that the authoritative voices that regard some cryptocurrencies as a valid store of value have not stopped growing since the birth of bitcoin a little over a decade ago, institutions still view these digital assets with distrust, in part because the Decentralization, which is its hallmark, is a full-fledged challenge to the current status quo (to get an idea of ​​the importance for the states of the minting of currency, it is enough to verify that it was one of the first measures of the Continental Congress, head of the rebels Americans, it was create your own currency), in which they monopolize the so-called economic sovereignty (one might wonder if such sovereignty can be public or on the contrary it must be private and individual to be valid), but partly also with legitimate arguments, since cryptocurrencies are extremely volatile, and For now, savings based only on cryptocurrencies can be quite risky.

What do we understand as a store of value?

It is very simple, and intuitively, who else and who less we all know what a store of value is; an asset that maintains its value over time. For example, for an Argentine or a Venezuelan an asset of highly demanded value is the dollar, which despite having a rather difficult year allows them to maintain the value of their work, for which those who can exchange their fiat currency for dollars as soon as possible, despite the burdens of the solidarity dollar (legally bought) or the Dolar blue (purchased illegally). And like the dollar, any hard currency, or precious metals like gold and silver, and even stocks, can function as a store of value, but fiat currency has the advantage that it is already a liquid asset.

With this in mind, are bitcoin and other cryptocurrencies a store of value?

Arguments for and against bitcoin as a store of value

The main argument for considering that bitcoin (and other cryptocurrencies) is not a store of value is its extremely high volatility, since the characteristic of a store of value is to protect the equity, the sharp and rapid growth that bitcoin experiences in a Recurring cannot be a reason to consider it a reserve of value, even more so when in a few months it can go from twenty thousand to three thousand dollars. With these movements bitcoin and others cryptocurrencies Rather, they seem like an instrument to speculate on online trading platforms or to buy cheap, waiting for it to rise to earn good dividends, although assuming the high risk of operating with such volatile assets, even more so in the case of trading that allows operating in both directions and where the risky, leverage is used as lever so that open positions are more ambitious for better … and for worse; That is, the profitability will be higher if the operations close favorably for the trader, but as just mentioned, they are very volatile assets that in a short time can drastically change their direction and therefore losses can easily become fast and high. , because as with the benefits, these are multiplied by the level of leverage with which it has been operated.

Returning to the beginning of the paragraph, this opinion is by no means unanimous, since many others do consider that bitcoin and other cryptocurrencies are a store of value, in fact not a few investors (and not precisely small ones) are using them more and more as hedging against current uncertainty, that is, the main reason for buying cryptocurrencies en masse is not speculation, it is protection against phenomena such as inflation.

Dollar and euro soar their money supply, the big cryptocurrencies do not

Another of the most important points for those supporters of cryptocurrencies is the fact that they either have a predefined number of units of themselves (there will never be more than twenty-one million bitcoins, and in fact several million have already been lost forever) or they experience slow inflation as in the case of ethereum (which since its update to ethereum 2.0 can no longer be mined, it has been validated by a participation protocol), a relative scarcity that will help preserve its value once continue to fill your role as money, the role for which you were created.

Contrary to this opinion, those who defend that only fiat currency is money consider this very scarcity the reason why cryptocurrencies are not and will not be money, without taking into account (perhaps) that most can be subdivided into much smaller subunits of themselves, just as the dollar can be subdivided into cents, for example.

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