What is a store of value?

If you hold money for several years, will you be able to buy with it what you can buy today? That is the question behind a store of value. The goal isn’t for a number in your account to stay the same, but for your purchasing power to be preserved.

Say you’re saving up to renovate a house. If materials and labor get more expensive in the meantime, the same amount covers a smaller part of the job. A store of value aims to carry your financial capacity from today into tomorrow. Gold has historically been used for this purpose, which doesn’t mean its price stays stable.

Why it matters

In crypto, the debate is mainly about Bitcoin. Its supporters base this use case on its limited supply, capped at 21 million coins under the network’s rules, and on the ability to hold and transfer it without a central issuer. That’s also where the comparison with “digital gold” comes from.

Scarcity alone, however, isn’t enough. An object can be unique and still be something nobody wants. For something to work as a store of value, it needs lasting demand, trust, the ability to be stored securely and sufficient liquidity, meaning it can be exchanged without much difficulty. We think it’s crucial to separate the features that support a claim from a guaranteed outcome.

What to watch out for

Bitcoin is subject to large price swings. If you need the money during a downturn, the theory of preserving value over the long term doesn’t cover your immediate need. Your time horizon changes the discussion substantially.

Also, a stablecoin that tracks the dollar aims for a stable nominal value in dollars, not stable purchasing power. It remains exposed to inflation in its reference currency and to its own risks. For someone who pays their expenses in euros, the euro-dollar exchange rate matters as well.