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I’m revisiting my previous articles to remove references to “Store of Value,” a concept that has misled discussions in the precious metals and cryptocurrency communities. This article aims to dismantle that notion, offering a clearer perspective on money and value for future reference.
I’ve always had a problem with the idea of a “Store of Value” but it wasn’t until I started digging at each property conceptually and relative to one another that I realized there may be something completely wrong about it. Turns out I was right…
Why “Store of Value” Falls Apart
Money is defined by the characteristics which make it useful:
- Unit of Account
- Portability
- Divisibility
- Durability
- Fungability
- Medium of Exchange
- Relative Scarcity
- Store of Value… ?
What does Store of Value even mean? People claim that it means the asset stores value somehow like a battery. As if it’s a physical characteristic that can be extracted like energy from a battery. But does that even make sense?
Before we can understand if value can be stored, we have to determine what value actually is.
Value lives in the Mind
When you think “value”… think “evaluation”.
All life evaluates its surroundings and makes choices based on experience. Whether it’s the alligator sizing up an animal at the edge of the river, or a child discovering new food preferences, or an old lady comparing prices at a flea market all life uses its experience to push it toward or away from some thing. That evaluation lets us know the relative importance of the thing being evaluated. A child touching a hot stove learns the value of oven mitts. An adult getting into the crypto market for the first time learns the value of risk management. A person living under hyperinflation learns the value of gold.
Value lives inside our heads. It doesn’t exist in the stove. The stove doesn’t store value.
The child, the old lady, and the alligator store that value as experience.
And that’s the point.
You are the store of value- not the thing you’re interacting with. Your experience shapes your value judgements.
All Value Is Subjective and Ephemeral
Value isn’t a fixed property inherent to an object; it’s a perception tied to individual needs and often times societal trends. A sandwich might be priceless to a starving person but trivial after a meal- its physical form doesn’t change, only its perceived worth. Likewise, a rare vinyl record might fetch hundreds from a collector yet mean nothing to someone indifferent to music. In the 1990s, Pokémon cards soared in value due to hype, only to fade when interest waned. These shifts show value as a moving target, not something storable.
Claiming an asset like gold or bitcoin “stores” value is less about preservation and more about betting on sustained demand. Reread that last sentence if it didn’t sink in.
This means all value, all of it without exception, is subjective. Yes, you’ll have trends where many people share similar value judgements, but that really doesn’t mean anything about the asset itself. It simply means, for a time, a collection of people think a certain way about a thing. Trying to take the collective opinion and impose it onto an object doesn’t make any sense.
Historical Evidence of an Unstable Concept
History reveals the fragility of the concept of “store of value”. In the 16th century, Spain’s influx of New World gold and silver triggered inflation, slashing their purchasing power. In the 1920s, Weimar Germany’s hyperinflation turned marks into mere paper- some people used them as wallpaper. Even gold, a perennial favorite, hit $850 per ounce in 1980 only to drop to $300 by the 1990s, locking investors into decades of losses. Early economists like Adam Smith saw money as a wealth holder, and later thinkers like William Stanley Jevons formalized “Store of Value.” Yet these ideas overlooked value’s instability, driven by supply, demand, and human sentiment rather than any inherent stability.
Personally, I think the part of the reason people want “store of value” to exist in an asset is because they want there to be a magic bullet which can protect them against poverty.
No such value bullet exists and never will.
Breaking Down the “Store of Value” Myth
The concept leans on traits like durability, scarcity, and trustworthiness, but these don’t guarantee value retention:
- Durability: Gold endures, and bitcoin’s blockchain persists, but longevity doesn’t ensure worth. Obsolete, durable computers hold little value today.
- Scarcity: bitcoin’s 21 million coin cap or gold’s rarity can boost appeal, but if demand fades- as with Beanie Babies in the 1990s- scarcity alone won’t hold.
- Trustworthiness: Gold’s historical allure and bitcoin’s decentralized nature inspire confidence, but trust is fleeting, as seen with Confederate currency post-Civil War.
Value hinges on collective perception, not these attributes. It’s a social agreement, not a fixed trait.
bitcoin: A Modern Test Case
bitcoin maximalists highlight its absolute supply, decentralization, and digital resilience as “Store of Value” credentials. Yet these features don’t secure value and never have. The coin cap fuels scarcity hype, but only if people care- and many don’t- myself included. Decentralization resists tampering, but not sentiment shifts. Blockchain durability keeps it alive, not valuable. Price swings from $60,000 to $20,000 and back reflect perception, not storage. The “value battery” metaphor misleads; unlike energy, value isn’t a measurable substance to stash.
Consider the paradox of hoarding btc: if everyone treats it as a “store,” its circulation drops, potentially crashing its practical use and thus its value as a currency. Economic reality favors motion- trade, investment, adaptation- not stasis. We’re beginning to see it already with fewer and fewer people using the bitcoin blockchain itself- slowly compromising security over time.
When you hear maximalists touting store of value, especially those with enormous bags… assume they’re looking for the next round of buyers to pump their bags. Their “store of value”-coin relies on narrative to keep the price afloat.
Abandon “Store of Value”
Honestly, the term is unnecessary and misleading. Money’s core role- enabling trade and measurement- relies on practical traits, not on illusory promises of wealth preservation. “Store of Value” breeds false security, suggesting assets like gold or bitcoin are risk-free when they’re not and people not well versed in investing or trading get duped and lose money. Dropping the term would sharpen our focus on utility and risk, cutting through the clutter for novices and experts alike. Money works because it moves and measures, not because it sits still.
Better Approaches to Wealth Preservation
Forget storing value; focus on managing it. Diversification across multiple assets dilutes the risk of any single asset’s collapse. Gold as the life raft for wealth preservation. Crypto for the growth engine. Stocks as an income generator with dividends. And cash as a hedge against deflationary events and providing much need liquidity.
Contrast this with notion of “store of value” thinking: horde one asset and do nothing else with it. True wealth preservation isn’t about freezing value- it’s about steering it through shifting tides, leveraging utility and flexibility over blind hope.
Wealth preservation is a dynamic fortress- not a stockpile.
The Absolute End of “Store of Value”
The idea of “store of value” is a comforting fiction that crumbles under scrutiny. Value isn’t a tangible quality that assets can hoard- it’s a fleeting, subjective idea born from human perception and collective agreement. History exposes the truth: no asset can lock value in place. Durability, scarcity, and fungibility might prop up an asset’s allure, but they’re powerless against the shifting tides of demand and sentiment. Clinging to this myth feeds a futile hope for a wealth-preserving “magic bullet”- a hope that reality consistently shatters.
Rather than chasing an illusion, we should rethink how we approach wealth. Money thrives in motion, not stasis, serving as a tool for trade and measurement, not a vault for value. The practical path forward lies in managing risk through diversification- blending gold’s stability, crypto’s potential, stocks’ income, and cash’s flexibility- while staying nimble in an ever-changing economic landscape. By letting go of “store of value,” we strip away false security and embrace a clearer truth: wealth isn’t preserved by stockpiling assets but by navigating the dynamic currents of human behavior and market forces. Adapt, diversify, and move forward- that’s where real resilience lives.
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