What Makes a True Store of Value?

An asset deserves the “store of value” label when it can preserve or increase its worth over extended periods. Unlike assets that lose value rapidly, a genuine store of value gives you the confidence that what you hold today will be worth the same—or more—when you decide to sell it down the road.

The Classic Examples and Their Shortcomings

Fiat Money: Convenient but Eroding

Most government-issued currencies face a persistent problem: purchasing power decline through inflation. When central banks increase the circulating supply of money, each unit buys less over time. Yet economists still regard fiat as a store of value, mainly because inflation typically moves slowly and money remains the most liquid financial instrument available. The controversy here is real though—hyperinflation episodes prove that currency-based wealth can evaporate quickly under extreme conditions.

Precious Metals: The Time-Tested Standard

Gold, silver, and similar metals have maintained their appeal as stores of value for centuries. Their scarcity (fixed supply) and physical durability mean they don’t deteriorate when stored properly. This combination has made them reliable wealth preservers across generations.

Bitcoin: A Digital Reimagining with Trade-offs

Bitcoin is often called “digital gold” because it shares two critical properties: scarcity and indestructibility. Its fixed maximum supply of 21 million coins eliminates the inflation problem plaguing fiat currencies. Plus, Bitcoin’s cryptographic design prevents double spending—each coin can only be spent once, making it a genuine digital asset.

However, Bitcoin’s volatility creates friction in its store of value narrative. While the asset tends to appreciate over long cycles, its dramatic price swings make short-term stability questionable. This tension between long-term value growth and near-term volatility remains the central debate: Is something truly a store of value if its price can halve in months, even if it recovers years later?

The answer depends on your time horizon and risk tolerance.