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Store of value - bitcoin, USD or gold?
18 Jan 2022 (179 views)  

An asset is a store of value when investors buy and keep it for many years to protect the value of their savings. This is important when the economy suffers a high rate of inflation, which is what is happening now.

In the past, gold has performed this role. The US dollar is also considered to be a safe store of value, as it was expected to retain its value. It is kept as a reserve currency.

In recent years, bitcoin has replaced gold as the store of value. When bitcoin increased in value, gold dropped its price, as its role as a store of value diminished.

There will be two major trends in the future:

a) Many foreigners will move away from US dollar due to the large government debt (amount to 30 trillion USD) and the possible loss of US dollar as the reserve currency (with the CNY become an alternative).

b) Bitcoin will lose its dominance as the primary crypto currency, due to possible government restrictions (e.g. China has started to ban its citizens from trading and owning bitcoin) and the proliferation of alternative crypto currencies.

What will be the new store of value in the future?

I expect a return to gold. When investors reduce their confidence in bitcoin, they will move back to gold. 

This change may take a few years to occur. I shall watch the development with interest. 

Tan Kin Lian


Store of value - bitcoin, USD or gold?
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An asset is a store of value when investors buy and keep it for many years to protect the value of their savings. This is important when the economy suffers a high rate of inflation, which is what is happening now.

In the past, gold has performed this role. The US dollar is also considered to be a safe store of value, as it was expected to retain its value. It is kept as a reserve currency.

In recent years, bitcoin has replaced gold as the store of value. When bitcoin increased in value, gold dropped its price, as its role as a store of value diminished.

There will be two major trends in the future:

a) Many foreigners will move away from US dollar due to the large government debt (amount to 30 trillion USD) and the possible loss of US dollar as the reserve currency (with the CNY become an alternative).

b) Bitcoin will lose its dominance as the primary crypto currency, due to possible government restrictions (e.g. China has started to ban its citizens from trading and owning bitcoin) and the proliferation of alternative crypto currencies.

What will be the new store of value in the future?

I expect a return to gold. When investors reduce their confidence in bitcoin, they will move back to gold. 

This change may take a few years to occur. I shall watch the development with interest. 

Tan Kin Lian