Definition:
A store of value describes an asset that maintains its value over a long period of time. In other words, the asset can be stored, retrieved, and exchanged at a later date. Precious metals (gold, silver, etc.) and real estate are good stores of value since they do not degrade. On the other hand, perishable items (like milk and other foodstuffs) are poor stores of value since they can decay over time.
Explanation:
To be considered a store of value, the asset must be able to be sold or exchanged at a later date for a similar or higher price than it was initially bought. To put it another way, the item must retain its purchasing power, and it must also have liquidity.
Fiat currency is a primary example of a store of value. While currencies can decline in value due to inflation, their purchasing power remains mostly stable (or changes at a very slow rate). Additionally, fiat is also one of the most liquid financial instruments in existence.
Bitcoin is considered to be a store of value due to its liquidity and limited supply. However, because of its volatility and price instability, some argue that it is not a proper store of value.
← Back to Dictionary
