Funny you chose gold as an example, when Gold is down 40% this year.
If you care about USD at the end of the day, then Gold has been a _terrible_ store of value this past year. After peaking at $1,800, Gold is currently trading at ~$1250.
If BTC follows the route that Gold has followed, we'll see a lot of sad investors.
The price going up or down is not success or failure of gold, it's the nature of supply and demand. Gold is used to store value as a hedge against inflation, so people investing in lots of gold would probably expect gold goes up when things are rough in the economy and goes down as things get better.
That's the investment function of gold and other precious metals. That's why big financial organisations keep gold.
Gold is dropping probably for its own flaws. It's heavy and expensive to handle, and you have to trust same banks you trust your other money to. Bitcoin has almost all positive qualities of gold and none of the negative ones. Plus some bonus uber-cool features.
Today 90% of economy is worldwide, instant, over the internet. Internet did not exist 30 years ago. Gold can't fly through the wire. New digital economy needs reliable digital money. USD and EUR are highly unreliable digital money and we all know it.
And as long as BTC decides to change its price by 100% every two weeks, it is a far more unreliable "storage of value" than USD (which is changing its value by approximately 3% a _year_).
Don't mistake the forest for the trees. When BTC learns to be less volatile, THEN we can start talking about replacing USD or EUR.
Until then, understand one thing. People want STABILITY in their currencies, at least if they are going to spend it.
> Until then, understand one thing. People want STABILITY in their currencies, at least if they are going to spend it.
Agreed. People are less likely to spend as the price climbs quickly. This can be mitigated with a viable options market, it would provide a hedge against bad movement and it would increase liquidity significantly which would lead to more stable growth.
See where the puck is going. Bitcoin goes to more and more hands. It can stabilize only when everyone who might want it, knows about it and has some of it. By that time BTC price will be 1000x higher than today, that's why many are rushing in to get it while it does not cost millions.
Secondly, only very recent investors may worry about volatility. Everyone who bought in 1 or more ago don't care about volatility. All fluctuations are well above their nice profit and they can spend 1% of their stash comfortably, knowing that the remaining 99% are growing in value faster that the stash is being depleted. Today's investors would have to wait another month or year before they also get 10x return and won't worry about volatility.
"Store of value" works pretty well when your value not only stays the same, but increases over time. 10% jumps do not matter if you have 10x more than a year ago.
If you care about USD at the end of the day, then Gold has been a _terrible_ store of value this past year. After peaking at $1,800, Gold is currently trading at ~$1250.
If BTC follows the route that Gold has followed, we'll see a lot of sad investors.