BTC Developer Shares Why Bitcoin Can Be A Store Of Value Investment Class Such As Land Property
Bitcoin developer, writer, and influencer, Jimmy Song recently spoke about the different issues around Bitcoin, one of them being Bitcoin being stored as a store of value. Just because Bitcoin is volatile, it is not to be written off as a legitimate currency.
He drew parallels between Bitcoin, real estate and stocks. Real estate and stocks are the usual ways to store value and he thinks Bitcoin is quite similar to them. Bitcoin’s volatility underscores the challenge of establishing the trust needed for a widely useful currency, but the proliferation of cryptocurrencies also shows that traditional, government-backed currencies don’t address everyone’s needs.
Volatility was always prevalent in tradeable assets. Considering that the common people are already quite used to saving money by investing in stocks and real estate, there is no reason why they should not use Bitcoin as well.
In a sense, we’re going back to the time before we had anonymous money, transferrable by physical processes. That is exciting because each method of storing and transferring value solves different kinds of problems.
Cryptocurrencies are especially useful for those living in financially-challenged countries where locals have to face hyperinflation every year, making it impossible for them to purchase daily necessities with depreciated money. It’s not like cryptocurrencies don’t face inflation, and that their price might also plunge, but people would have secured more money holding cryptocurrencies than holding fiat currencies in these regions, as the current annual inflation rate for Bitcoin is only around 3.8%.
As mathematician George Box said,
“All models are wrong, some are useful.”
We have set out to construct a framework for pricing bitcoin but it is important to understand the variables. From our thinking, it seems possible that bitcoin could eventually increase in price by orders of magnitude, but it all depends on bitcoin's level of adoption.