Friday, June 2, 2023

Store of Value

by Hideo Nakamura
Store of Value

Store of Value – Definition and Examples

A store of value is an asset that maintains its purchasing power over time. It can be held as a financial instrument or commodity and serves as a reliable measure of value for goods, services, and other transactions. The concept has been around since ancient times when it was used to preserve wealth in the form of coins, jewelry, land, etc. In modern times, stores of value are typically represented by cash (or its equivalent) but can also include stocks and bonds, precious metals such as gold or silver, cryptocurrencies like Bitcoin or Ethereum, real estate investments such as property assets or fine art pieces.

The primary purpose of any store of value is to provide security from inflationary risks while allowing investors to maintain their purchasing power over extended periods without sacrificing returns due to market volatility changes. For example: if an investor owns $10 worth of gold today but prices double in five years’ time then they still own the same amount ($10) despite the increase in price; thus preserving their buying power against inflationary pressures. Similarly with cryptocurrency – if you hold 1 BTC now worth $11k but 5 years later it’s worth $55K then your original purchase remains at its initial purchasing level whilst simultaneously increasing relative to fiat currencies due to market forces beyond your control (i.e., supply & demand).

In summary then: A store-of-value is something that retains its purchasing power over time so you don’t have worry about your money losing value due to inflationary pressure caused by macroeconomic factors outside your control; this makes them popular amongst long-term investors who want steady returns with no risk associated with short-term fluctuations in price/market sentiment etc

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