Most people and financial products experienced the impacts of the COVID-19 pandemic in different ways. This pandemic significantly affected various economic sectors, whether it's the commodities, stocks, or cryptocurrency market. Also, people in multiple industries felt the impact of the pandemic. For instance, most investors lost significantly when most company operations shut down or slowed down. So, if you are starting in investment, you might find it interesting to visit an investment education firm such as Immediate Coraldex.
The impacts of this pandemic prompted many people to rethink conventional investments. Unsurprisingly, many individuals began trading and investing in cryptocurrencies like Bitcoin during the pandemic. The increasing number of people investing in Bitcoin projects, including mining, and their environmental impacts prompted some governments to take strict actions against the cryptocurrency.
Bitcoin as a Store of Value
The store of value concept has remained significant in human civilization. As technology advances and the world evolves, people have consistently wondered what makes any asset reliable as a store of value. Bitcoin has also sparked this debate since its value has increased since its inception.
For people to consider any asset a store of value, it must maintain its purchasing power for an extended duration and readily exchange it with something else. Precious metals, fiat currency, property, and real estate are examples of assets that serve as stores of value. Moreover, any store-of-value item must be portable, durable, divisible, verifiable, scarce, and fungible.
Bitcoin presents an alternative to conventional stores of value. This cryptocurrency is decentralized with global accessibility and digital scarcity. Here are other reasons Bitcoin serves as a store of value in the post-pandemic world.
Durability
Bitcoin is a durable digital asset. That's because it's not subject to physical tear, wear, and degradation. This cryptocurrency exists, provided its supporting network operates. Thus, you can invest in it as a store of value.
Portability
People have used gold as a store of value, yet it's expensive and cumbersome to store and transport. Bitcoin is easy to access or carry. People hold it digitally, meaning they can access it via mobile devices. Thus, it's a more convenient store of value.
Scarcity
Satoshi Nakamoto created Bitcoin, which has a limit of 21 million coins that miners can ever generate. Thus, its scarcity makes it an ideal store of value.
Other attributes that make Bitcoin a good store of value include censorship resistance, verifiability, utility, and liquidity.
Bitcoin as a Currency
National governments produce fiat currencies. The value of a fiat currency is from its general acceptance as a form of money. Thus, the U.S. dollar coins and bills are helpful as currency because people accept and use them as money in the economy.
A currency serves three primary purposes. It works as an exchange medium, a unit of account, and a store of value. This article has shown how Bitcoin works as a store of value. Satoshi Nakamoto created Bitcoin as a digital peer-to-peer payment system. Also, people accept payment for items and services in this cryptocurrency. Therefore, Bitcoin can work as a currency since people take it as a payment for items and services in this cryptocurrency.
As a unit of account, Bitcoin can help you calculate your net worth if you calculate the assets you can acquire in exchange for the crypto in your digital wallet. However, Bitcoin has yet to fully achieve this functionality since most accounting systems can only accommodate two decimal points in their pricing systems.
Conclusion
Bitcoin serves as a currency and a store of value in the post-pandemic world. However, using this cryptocurrency for these purposes requires understanding its operations. Also, remember that only some merchants accept Bitcoin payments, and its value fluctuates rapidly.
