Is Bitcoin a good store of value like gold?

In my opinion, no. I mean, I think Bitcoin is a “store of value”, but I think that when you mention gold, you cannot view the two as being interchangeable in terms of what they are and how they function for investors. Usually, when investors talk about gold as being a store of value, it’s done within the context of finding ways to protect US Dollar-denominated wealth from inflation and the devaluation of the US Dollar. There’s a fairly well-established relationship between the “value” of gold relative to the supply of US Dollars, and there’s a well-established price-action pattern of gold’s outperformance during periods of intense inflation. As a person who has owned gold for 20 years and held Bitcoin for 12 years, my experience with owning Bitcoin is not comparable to my experience with owning gold. While Bitcoin has dramatically outperformed gold, that performance in itself isn’t what is being considered when we wonder if Bitcoin is a “store of value”. When Russia invaded Ukraine, gold’s price surged as the uncertainty caused panic and a retreat to a store of value. Bitcoin’s price plummeted by over 50%. In the years that followed during the inflation crisis, gold only continued to climb, and while Bitcoin also made significant gains, it bounced around manically. The line gets smoother the more you zoom out, but that doesn’t erase the wild swings that Bitcoin holders experienced during that time. “Wild swings” are what Bitcoin holders have always experienced, and it’s precisely these swings that make Bitcoin a poor store of value. They make Bitcoin an amazing betting opportunity, but huge swings in value are not what people expect when they search for “stores of value”. 

MB bottom-line: I apologize for the nuance of the answer, but I just want to be clear. I love Bitcoin and it’s been the best-performing investment of my lifetime. I don’t think that anything else that I do in the investing world will match the relative or absolute returns that I've received thanks to my position in Bitcoin. But I’m an early adopter. I’m just a lucky idiot. I was able to “invest” in Bitcoin when buying a coin was as expensive as getting a Big Mac meal. If I mortgaged my home and put all of that into Bitcoin at today’s price, would I be able to write a blurb in a future column 12 years from now with the same feeling? I don’t know. That’s part of what makes it difficult to discuss Bitcoin as a store of value. How could something that has generated more value for me than any other investment (combined) not be an effective store of value? For me, it’s the volatility. I could feel relatively confident mortgaging my home to buy land. People do it all the time. I could also feel relatively confident mortgaging my home to buy gold or other precious metals. It’s less common for retail traders to do this, but professional ones do versions of this all the time. Yet, even as someone who has made a dumb amount of money from Bitcoin, I would not feel even a fraction of the same confidence with Bitcoin. Is this true for all people? Probably not. And my take could be influenced by my age and stage of life as I’m looking to lower my risk and increase my financial certainty. Do what is right for you. But think twice before you consider Bitcoin as a store of value. I use the PSE (and dividend-generating stocks in particular) to grow a portion of my realized Bitcoin profit in relative safety. But it’s instructive (to me at least) that I feel compelled to pull value out of Bitcoin to “lock it in” and protect it from Bitcoin exposure.

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