Bitcoin and the Question of Value

Introduction

Since the very dawn of civilization, humans have sought to secure their future through the turmoil of time, ups and downs of the economy. For this purpose, different civilizations devised and discovered different modes of assets and currencies. The advent of blockchain technology in 2008 and the subsequent introduction of Bitcoin ($BTC) changed the game drastically when people came to know that value can be stored in something that has no physical existence. This digital currency started its journey from being equivalent to zero dollar and reached an all-time high of $126,000 in 2025. Yet the question lingers whether Bitcoin ($BTC) is or is not a store of value.

What is Store of Value?

Something is a store of value if it does not lose its worth or purchasing power with the passage of time, the supply of which is finite, and that does not degrade no matter how long it is stored. Now, we are in a position to determine whether or not a given thing is a store of value.

Examples from Real Life

White sugar is in high demand now-a-days. However, if the demand rises suddenly, its supply runs short and the price can jump significantly. But it will be a temporary process as more cultivation of sugarcane and increased industrial production can meet the demand easily and bring the price down. You cannot hold sugar bags for long as the stock will soon degrade though the prices may increase. Also, the supply is infinite because production is easy. Similarly, you cannot store fiat currency for long time. Although it does not degrade, its supply is infinite. The government can print new money to deprive your wealth of much of its purchasing power.

A Case for Bitcoin as a Store of Value

1. Finite Supply

Bitcoin is often referred to as digital gold because it shares the element of scarcity with the real gold. Unlike sugar and fiat currency, if the demand or gold or Bitcoin increases, there is no way to flood the market with new supply and bring the price down. There can be no more than 21 million $BTC, ever. Mining of new coins is almost as difficult as mining new gold supply.

In the beginning, mining one block of Bitcoin meant gaining 50 new coins. But the efficiency of the mining system ensures that after approximately every four years, every newly mined block yields less and less gains. The first halving in 2012 reduced the per-block mining rewards from 50 to 25. The reward fell to 12.5 $BTC in 2016, 6.25 $BTC in 2020, and 3.125 $BTC in the latest halving event in April 2024. Moreover, it does not matter how many people are involved in the mining activity. The mining reward remains constant during the inter-halving periods no matter how many people all over the world join the mining activity. This is due the requirement for more and more computing power (hash rate) when more systems join the network.

2. Decentralized Asset

When the government of a country decides to start quantitative easing, it starts printing new money. As a result, your savings lose value and purchasing power. This is not possible in the case of Bitcoin. The network is programmed to have only 21 million coins.

Every miner on the blockchain is like the government on their own. If you decide to make new software exactly similar to Bitcoin’s, only you can run it, but no one else will join it as it will be marked as “forked” or copied. It will get rejected by the network run by cryptographic rules and protocol. The bigger this network grows, the more secure Bitcoin’s system gets. In short, decentralized nature of Bitcoin saves it from falling prey to inflation.

3. Bitcoin as Good Money

Analysts agree that good money should be fungible, portable and divisible. Taking the example of gold or fiat currency, a $100 bill or an ounce of gold is fungible. Fungibility refers to mutual interchangeability and replaceability. The currency note may lose value over time, but so would be the case with the other bill you are replacing it with. One $BTC is replaceable with the other $BTC in the same way. But there is only one problem here. There are some tainted or flagged Bitcoins which were once used in a criminal activity. Complying with anti-money laundering law, institutions refuse to accept such coins, which lose fungibility.

Bitcoin is more portable than any other currency as you can carry $BTC worth trillions of dollars in a cold wallet as tiny as a USB. Finally, one $BTC can be divided into 100,000,000 satoshis, as a dollar can be split into 100 cents, so Bitcoin is even more divisible than gold and fiat currency.

A Case against Bitcoin as a Store of Value

1. Digital Cash

Many critics of Bitcoin believe that Satoshi designed Bitcoin to be spent, as shown in the white paper. Hoarding coins can harm adoption because if Bitcoin is not used as digital cash, its value relies on speculation. In 2017, there was a disagreement about Bitcoin’s transaction fees and block size. This led to a fork, creating Bitcoin Cash, which has bigger blocks and cheaper fees. The original Bitcoin network implemented SegWit and later the Lightning Network to allow faster, low-fee transactions off the main chain.

2. Valueless in Essence

Gold has stood the test of times and maintained its value for ages. Its indestructibility and resistance to corrosion make it a robust choice in various fields like dentistry, aerospace, medicine, electronics, etc. On the other hand, Bitcoin has no such use in real life, making it essentially valueless. But advocates of Bitcoin assert that value emanates from agreement of the members of a community. For if the agreement is excluded, fiat currency is also reduced to a piece of paper. Agreement on Bitcoin’s value and its widespread adoption is sufficient to prove that it is an asset class on its own.

3. Volatility and Correlation

Since the advent of Bitcoin, it has not seen any economic depression. Critics argue that its movement is correlated with the movement of stocks. The real test for $BTC will be in the event of an all-out crash in markets. If it remains stable in such a situation, its critics will be silenced.

Conclusion

Bitcoin’s 17-year history has so far steadied the asset and helped it stand its ground firmly despite skepticism, regulatory pressure, and extreme volatility. Over time, it has evolved from a niche experiment into a globally recognized digital asset, increasingly compared to gold for its scarcity and resistance to inflation. While its decentralized nature and fixed supply strengthen the argument for Bitcoin as a store of value, its future performance is still tied to broader adoption. There is no absolute guarantee that Bitcoin will maintain its value indefinitely. Nevertheless, based on its track record to date, Bitcoin has convincingly demonstrated the characteristics of a store of value.