This article expands on a central point from our article What problem does Bitcoin solve?
Properties of a Good Store of Value
A good store of value should have several important properties in order to be effective and reliable. The most important characteristics are:
I. Longevity and Security: A good store of value should not spoil or be easily destroyed. It must retain its value over long periods of time.
II. Mobility: The store of value should be easily transportable and compact, so that it can be stored and moved easily.
III. Fungibility: One unit of the store of value should be equivalent to another unit of the same asset and interchangeable.
IV. Verifiability: The store of value must be easily identifiable and verifiable as authentic.
V. Divisibility: A good store of value should be easily divisible into smaller units so that it can be used flexibly in different transactions.
VI. Scarcity: The store of value should be limited in supply and resistant to counterfeiting. It should represent a rare asset that does not exist in abundance.
VII. Trust and Acceptance: A good store of value should be recognized and accepted by society as valuable.
VIII. Storable: A good store of value should be simple and space-saving to store.
IX. Securable: A good store of value should be as easy as possible to protect against theft and loss.
I. Longevity and Security of Bitcoin
To make a statement about the longevity and security of the Bitcoin network, the technological, economic, and societal foundations must be examined.
Technological Longevity:
Bitcoin is based on blockchain technology, a transparent, decentralized, and tamper-proof public ledger in which every transaction is cryptographically linked to all previous blocks (sums of transactions). Every transaction is stored permanently, and the network is secured by thousands of nodes.
The entire blockchain (all transactions since the start of the Bitcoin protocol) is replicated on each of the currently more than 65,000 known nodes distributed across 145 countries worldwide [1]. As long as a single copy of the blockchain still exists on any one node, all users can agree on this copy again and continue to replicate and use the network.
A high degree of longevity can therefore be assumed for the Bitcoin network, and thus for every bitcoin.
Resilience to Technological Progress
Bitcoin is continuously being developed further. It is open source, so developers worldwide continuously work on improvements without jeopardizing the core of its security and scarcity. Bitcoin uses a one-way hashing algorithm (SHA-256). Should high-performance computers ever be able to break this algorithm, miners and users can opt for stronger encryption and update the network.
Scarcity of Bitcoin
There will never be more than 21 million bitcoin. This fixed limit is written into the code and is enforced by a global network of miners and nodes that secure Bitcoin’s consensus mechanism. This fixed rule cannot be changed by any miner or user. A change to the Bitcoin protocol can only happen if both the majority of miners (over 50% of the hash power) and the majority of users agree to the change. However, this is considered extremely unlikely, since an increase in the supply of bitcoin would reduce the value of every single bitcoin, which would provide no benefit to any user. The scarcity of Bitcoin is therefore secured.
Decentralization and Independence of Bitcoin
Due to the described worldwide distribution (across more than 140 countries) of the Bitcoin blockchain, no central institution can control, manipulate, or shut down Bitcoin. Its decentralized structure makes it resilient to political and economic influences. No government can prevent Bitcoin transactions, reverse them, or confiscate balances.
Security Through Energy Expenditure
The proof-of-work system anchors Bitcoin in the physical world through the consumption of real energy. This high security standard has not been broken in over a decade. Proof-of-work is a mechanism in which miners solve complex mathematical problems in order to add new blocks to the blockchain. This process requires considerable computing power and therefore energy.
This energy consumption ensures that manipulating the network is costly. The investments in hardware and electricity make attacks expensive and uneconomical.
To change or manipulate the blockchain, an attacker would have to control more than 50% of the total mining power. This would require immense amounts of energy and resources, which is practically impossible. Furthermore, no entity is currently able to accumulate enough energy to sustainably attack the network, nor would it be economically viable.
Conclusion
Bitcoin’s longevity is ensured by continuous development and the global participation of a strong, decentralized network. Its security results from robust cryptographic mechanisms and the energy expenditure that makes manipulation uneconomical and laborious. These properties make Bitcoin one of the safest and most durable stores of value in history.
II. Mobility of Bitcoin
Bitcoin is a groundbreaking financial instrument in terms of mobility.
Easy and Borderless to Transport
Unlike gold or cash, Bitcoin is purely digital. You can carry the key (private key) that gives you access to your bitcoin with you anywhere in the world in the form of 12 or 24 words, or send it worldwide within seconds over the internet or other networks.
Bitcoin transactions are independent of countries and international banks. There are no restrictions from currency controls or international transfer fees.
Fast Transferability and High Accessibility
Bitcoin transactions can be confirmed worldwide within minutes, regardless of distance. By comparison, conventional bank transfers often take days, especially for international transfers.
The Bitcoin network is accessible around the clock. There are no restrictions due to business hours.
Low Transport Costs
Bitcoin transaction costs are often lower than in traditional financial systems, especially for large amounts or international transfers.
No banks or payment providers are needed to process transactions, which reduces additional costs.
Independent of Storage Space
Bitcoin can store values ranging from a few cents to billions of euros without requiring any more space or weight. A single private key is enough to move large assets.
No storage like that needed for gold or cash is required, which greatly simplifies transport and security.
Flexibility of Denomination
Bitcoin is divisible down to eight decimal places (satoshis), so even the smallest amounts can be sent without any problem.
Conclusion
Bitcoin is more mobile than any other store of value. It combines digital flexibility with global reach, low fees, and speed. This makes it the ideal solution for a connected, global economy in which borders and physical limitations are overcome.
III. Fungibility and Divisibility of Bitcoin
The fungibility of Bitcoin is an essential aspect of its use as money. Fungibility means that every unit of an asset is equivalent to every other unit.
Equivalence of Every Unit
Bitcoin is divisible into satoshis, where 1 bitcoin equals 100,000,000 satoshis. Every satoshi is technically equivalent and can be used regardless of its origin or history.
In an ideally fungible system, there is no difference in value between two equally sized units of the same asset.
Digital and Global Fungibility
Bitcoin is entirely digital, which means there are no differences between units used in different countries or regions.
Unlike gold coins or cash, there are no visible differences between different bitcoins.
Challenges to Bitcoin's Fungibility
While Bitcoin is fundamentally fungible, there are some challenges:
Every transaction is publicly visible, which can lead to certain Bitcoin addresses being flagged as „problematic“ (e.g., in the case of stolen or illegally obtained coins). Such bitcoins might, in practice, be less readily accepted.
In addition, some companies offer services to trace the history of bitcoins, which could potentially impair fungibility.
Conclusion
Bitcoin’s fungibility is strong, but not perfect. While every unit is technically identical, its history could affect its practical value. The Bitcoin community is actively working on improvements to further strengthen fungibility and make Bitcoin an even better monetary system.
IV. Verifiability of Bitcoin
The verifiability of Bitcoin as a store of value is one of its outstanding properties and an important reason why it functions as a digital monetary system.
Full Transparency of the Blockchain
Bitcoin transactions are stored in a public, decentralized blockchain. Anyone can view and verify the entire transaction history.
Once a transaction has been confirmed by miners and included in a block, it is permanent and tamper-proof. This ensures absolute traceability.
Verifiability of Authenticity and Ownership
Every Bitcoin transaction requires a signature with a private key linked to a Bitcoin address. Only the owner of the private key can carry out a valid transaction, which clearly proves ownership.
These signatures are mathematically verifiable and can be checked instantly, without the need for a third party.
Easy Access to Verification
Anyone can run a Bitcoin node and independently validate transactions. This ensures that not only banks or authorities, but also individuals, can verify the authenticity of the network.
Public block explorers offer intuitive interfaces for easily looking up transactions and addresses.
Security Through Decentralized Validation
Thousands of nodes worldwide validate every transaction, which secures authenticity through the sheer number of participants.
Since no central authority is needed, there is no dependency on a single organization vouching for authenticity.
Conclusion
Bitcoin is characterized by a highly verifiable and transparent system that requires no central authority to secure the authenticity and ownership of value. The combination of a public blockchain, cryptographic security, and decentralized validation offers unparalleled verifiability as a store of value in the digital world.
V. Divisibility of Bitcoin
The divisibility of Bitcoin is one of its outstanding properties, making it an extremely flexible and future-proof store of value and means of payment.
Fine Granularity
Bitcoin is divisible into 100,000,000 satoshis per bitcoin. The smallest unit, 1 satoshi, equals 0.00000001 BTC, which enables the use of Bitcoin for microtransactions and the smallest value transfers.
Future Extensibility
Due to its already very high granularity, Bitcoin is already equipped for mass adoption. If necessary, Bitcoin could be given even more decimal places through protocol changes, further increasing divisibility without changing the overall volume of the money supply.
Conclusion
Divisibility makes Bitcoin flexible and allows precise adaptation to transaction requirements, from the smallest fraction to large sums.
This makes it suitable both as a store of value for large fortunes and for smaller transactions.
VI. Scarcity of Bitcoin
The scarcity of Bitcoin is one of its outstanding properties, making it an ideal store of value.
Absolute Limit on Supply
The Bitcoin blockchain is programmed so that there will never be more than 21 million bitcoin. This absolute ceiling is firmly anchored in the code and protected by the network’s decentralized consensus.
Changing this limit would require a global social consensus, which is extremely unlikely given the decentralized nature of the network and its economic incentives.
Decentralized Issuance Through Mining
New bitcoin is created solely through proof-of-work mining, with the amount of newly created bitcoin halved roughly every four years as part of the halving mechanism. This results in increasingly scarce availability.
The last bitcoin is expected to be mined around the year 2140, which ensures the long-term predictability of the supply distribution.
Resistance to Counterfeiting
Bitcoin is protected by strong cryptographic algorithms. Any attempt to create new bitcoin without mining or to manipulate transactions would require immense computing power and is practically impossible.
Thousands of independent nodes verify the validity of every transaction and ensure that no bitcoin is spent twice.
Scarcity Compared to Other Assets
Bitcoin is the scarcest economic good, since its supply is mathematically fixed. By comparison, the money supply of traditional currencies can be increased without limit, and even gold’s supply can expand through additional mining or hidden reserves, as well as through securities and warrants. The total supply of bitcoin, by contrast, is always verifiable.
Conclusion
Bitcoin is a finite, rare, and counterfeit-resistant asset that, due to its programmatic scarcity, decentralized structure, and cryptographic integrity, represents an unprecedented store of value. The limit of 21 million units makes Bitcoin an asset whose scarcity fosters long-term economic stability and appreciation in value.
VII. Trust and Acceptance of Bitcoin
Trust in and acceptance of Bitcoin as a store of value continue to develop steadily and are decisive factors for its long-term success.
Decentralization Creates Trust
Bitcoin is based on an open, decentralized network in which no central authority dictates the rules. Trust results from the transparency of the protocol and the security guaranteed by cryptographic principles.
Unlike fiat currencies, whose value is influenced by government intervention, Bitcoin is protected by its algorithm and is independent of political decisions.
Growing Social Acceptance
More and more companies, investment funds, and even governments recognize Bitcoin as a store of value or means of payment. Major companies such as Tesla, MicroStrategy, and Fidelity have added bitcoin to their balance sheets.
Providers such as PayPal, Square, and numerous crypto payment solutions make it possible to use bitcoin in everyday life.
Trust Through the Network Effect
Millions of people worldwide own bitcoin, while a dedicated developer community continuously improves the network.
The strength of the network grows with the number of participating miners and nodes that secure and validate the blockchain.
Bitcoin as “Digital Gold”
In recent years, Bitcoin has increasingly established itself as digital gold. This trust is based on its scarcity (a maximum of 21 million BTC) and its resistance to inflation.
In times of economic uncertainty and high inflation, investors seek alternative stores of value, with Bitcoin increasingly seen as a hedge.
Challenges to Acceptance
The price of Bitcoin still fluctuates significantly, which limits its acceptance as a store of value and means of payment in the short term. This volatility is rooted in Bitcoin’s still very low market capitalization. The higher the acceptance of Bitcoin as a store of value and the more people use it, the less the bitcoin price will fluctuate, until it eventually aligns with the average volatility range of the global economy.
Compared to gold, Bitcoin is also still a very young store of value and accordingly does not yet have such an extensive track record.
In some countries, regulations remain unclear, which can affect trust.
Conclusion
Bitcoin is gaining increasing trust through its decentralized structure, algorithmic scarcity, and growing acceptance in society. These properties make it a promising store of value that benefits from technological progress and a global network effect. While challenges remain, the trends point toward continuously growing recognition.
VIII. Storability of Bitcoin
The storability of Bitcoin is one of its outstanding properties that sets it apart from physical stores of value such as gold or cash.
Space-Saving and Intangible
Bitcoin exists purely digitally and requires almost no physical space for storage, unlike precious metals or cash, which take up space and must be kept secure.
Flexible and Versatile Storage Methods
The bitcoin key can be safely stored in hardware wallets. These are offline devices that store the bitcoin key in isolation, thereby preventing outside access.
Applications on computers or smartphones, known as software wallets, offer convenient access to bitcoin but come with higher security risks.
Bitcoin can also be conveniently stored with third-party providers such as crypto exchanges or banks. However, it should be noted that the bitcoin is then held by these central entities. Even though you remain the legal owner of the bitcoin, you are dependent on these entities granting you access to it. -> Learn more about hardware wallets here.
Security Against Physical Theft and Damage
Bitcoin is not vulnerable to physical damage such as fire, water, or theft, as long as the access credentials are kept secure.
Backups of private keys or seed phrases make it possible to recover lost wallets, as long as they are kept safe.
Relocation
The private key representing bitcoin can be carried on small devices or even memorized (by storing the 24-word seed phrase).
This makes storage extremely mobile and independent of traditional storage methods.
Long-Term Durability
Bitcoin loses no substance or quality over time or due to external influences, which makes it ideal for long-term storage.
Conclusion
The storability of Bitcoin is revolutionary, as it is intangible, secure, and space-saving, while also being easily accessible and mobile. These properties make Bitcoin a versatile and durable store of value that bypasses the traditional challenges of physical asset storage.
IX. Securability of Bitcoin
In terms of securability, Bitcoin stands out through a unique combination of digital technology, cryptographic security, and flexible protection mechanisms.
Cryptographic Security
Bitcoin is based on public-key cryptography. Only whoever holds the private key can control the associated bitcoin.
Transactions are cryptographically secured and cannot be manipulated or reversed.
Various Methods of Protection
Private keys can be stored entirely offline, for example on hardware wallets or in paper wallets, which offers protection against hackers.
For everyday transactions, online wallets are used, secured by two-factor authentication or biometric protection measures.
Multisignature Wallets
Increased security through multiple keys: multisignature solutions require several keys to authorize transactions, which significantly reduces the risk of theft. This method is often used by companies or for larger amounts.
Recoverability Through Seed Phrases
Bitcoin wallets use a seed phrase (a combination of 12 to 24 words) that allows the wallet to be restored if the device is lost. Seed phrases must be kept secure and protected from unauthorized access.
Protection Against Theft and Loss
Unlike cash or gold, Bitcoin is not tied to a physical object. The key or the seed phrase is enough to retain access, even if someone moves or travels.
In addition to the seed phrase, an extra passphrase can be used as an additional layer of security.
Protection Against Unauthorized Access via External Tools
Devices such as Ledger or Trezor offer specially designed security solutions against malware and physical attacks.
For particularly long-term security, time-lock functions can be used to prevent bitcoin from being spent before a certain point in time.
Conclusion
Thanks to its digital nature and cryptographic security, Bitcoin can be excellently protected against theft and loss. Users have full control over their security measures, ranging from simple wallet backups to advanced multisignature solutions. What matters most is following the right security practices to ensure the highest level of protection.
Sources
[1] Reachable Bitcoin Nodes by Country, BTC Nodes (https://btcnodes.io/)
