A useful currency should be an efficient medium of exchange, a unit of account, and a stable store of value
; digital currencies excel at the first, but fail as a store of value
or unit of account.
Gold, a traditional safe store of value
during times of political and economic uncertainty, has lost out to the dollar this year, with the metal having fallen more than 10 percent from a peak in April against the backdrop of a U.S.-China trade tussle.
Viable monies provide a reliable means of payment, unit of account, and store of value
. But conventional cryptocurrencies, such as Bitcoin, trade at wildly fluctuating prices, which means that their purchasing power -- their command over goods and services -- is highly unstable.
These digital currencies fare poorly on all three measures critical for the wider acceptance of any currency--be it a medium of exchange, a store of value
or a unit of account.
Summary: Bitcoin has failed as a currency measured by standard benchmarks, and is neither a store of value
nor a useful …
Pakistanis used property as a store of value
. And it
If cryptocurrencies are to replace money, then they have to fulfil money's three core functions: as medium of exchange, a measure of value and a store of value
And now we have something that is a far better store of value
, in that it's much easier to transmit and send and buy and sell than gold is.
But bitcoin is touted as a store of value
even though, with a few minor exceptions, you can't exchange it for items of value.
Many enthusiasts have started to promote the idea of (https://www.wsj.com/articles/bitcoin-can-be-a-competitive-store-of-value-1505231277) Bitcoin as a store of value
Yet Dutch tulips, for instance, crashed because they were not able to supplant gold as a medium of exchange or a store of value
. The history of stock, bond, currency, commodity and property markets is replete with a succession of periodic boom bust cycles, manias and bubbles and crashes, across the centuries.