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{{Short description|Property that money is useful later}}
{{Short description|Property that money is useful later}}


A '''store of value''' is any commodity or [[asset]] that would normally retain [[purchasing power]] into the future and is the function of the asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.<ref>{{Cite web |title=Store of Value |url=https://corporatefinanceinstitute.com/resources/valuation/store-of-value/ |access-date=2025-01-10 |website=Corporate Finance Institute |language=en-US}}</ref>
A '''store of value''' is any commodity or [[asset]] that would normally retain [[purchasing power]] into the future and is the function of the asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.<ref>{{Cite web |title=Store of Value |url=https://corporatefinanceinstitute.com/resources/valuation/store-of-value/ |access-date=2025-01-10 |website=Corporate Finance Institute |language=en-US |archive-date=2024-09-22 |archive-url=https://web.archive.org/web/20240922094512/https://corporatefinanceinstitute.com/resources/valuation/store-of-value/ |url-status=live }}</ref>


The most common store of value in modern times has been [[money]], [[currency]], or a [[commodity]] like a [[precious metal]] or [[financial capital]]. The point of any store of value is [[risk management]] due to a stable demand for the underlying asset.<ref name ="Essentials">{{cite book |title=Essentials of Economics |last=Mankiw |first=N. Gregory |year=2012 |publisher=Cengage Learning |isbn=978-1133418948 |page=437 |url=https://books.google.com/books?id=sSY9AAAAQBAJ |accessdate=2 January 2017}}</ref>
The most common store of value in modern times has been [[money]], [[currency]], or a [[commodity]] like a [[precious metal]] or [[financial capital]]. The point of any store of value is [[risk management]] due to a stable demand for the underlying asset.<ref name ="Essentials">{{cite book |title=Essentials of Economics |last=Mankiw |first=N. Gregory |year=2012 |publisher=Cengage Learning |isbn=978-1133418948 |page=437 |url=https://books.google.com/books?id=sSY9AAAAQBAJ |accessdate=2 January 2017 |archive-date=5 November 2022 |archive-url=https://web.archive.org/web/20221105145200/https://books.google.com/books?id=sSY9AAAAQBAJ |url-status=live }}</ref>


==Money as a store of value==
==Money as a store of value==
[[File:Currency, Money,before Euro.jpg|thumb|Various bills and coins]]
[[File:Currency, Money,before Euro.jpg|thumb|Various bills and coins]]
[[Monetary economics]] is the branch of economics which analyses the functions of money. Storage of value is one of the three generally accepted [[Money#Functions|functions of money]].<ref name="esoec">{{cite book |title=Essentials of Economics |last=Mankiw |first=N. Gregory |year=2012 |publisher=Cengage Learning |isbn=978-1133418948 |page=437 |url=https://books.google.com/books?id=sSY9AAAAQBAJ |accessdate=2 January 2017}}</ref>  The other functions are the [[medium of exchange]], which is used as an intermediary to avoid the inconveniences of the [[coincidence of wants]], and the [[unit of account]], which allows the value of various goods, services, assets and liabilities to be rendered in multiples of the same unit. Money is well-suited to storing value because of its [[purchasing power]].<ref name="papc">{{cite book |title=Economics: Private and Public Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580181 |page=264 |url=https://books.google.com/books?id=yIbH4R77OtMC |accessdate=2 January 2017}}</ref>  It is also useful because of its durability.<ref name="funofec">{{cite book |title=Fundamentals of Economics |last=Boyes |first=William |author2=Michael Melvin |year=2011 |publisher=Cengage Learning |isbn=978-1133172994 |page=295 |url=https://books.google.com/books?id=qe08AAAAQBAJ |accessdate=3 January 2017}}</ref>
[[Monetary economics]] is the branch of economics which analyses the functions of money. Storage of value is one of the three generally accepted [[Money#Functions|functions of money]].<ref name="esoec">{{cite book |title=Essentials of Economics |last=Mankiw |first=N. Gregory |year=2012 |publisher=Cengage Learning |isbn=978-1133418948 |page=437 |url=https://books.google.com/books?id=sSY9AAAAQBAJ |accessdate=2 January 2017 |archive-date=5 November 2022 |archive-url=https://web.archive.org/web/20221105145200/https://books.google.com/books?id=sSY9AAAAQBAJ |url-status=live }}</ref>  The other functions are the [[medium of exchange]], which is used as an intermediary to avoid the inconveniences of the [[coincidence of wants]], and the [[unit of account]], which allows the value of various goods, services, assets and liabilities to be rendered in multiples of the same unit. Money is well-suited to storing value because of its [[purchasing power]].<ref name="papc">{{cite book |title=Economics: Private and Public Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580181 |page=264 |url=https://books.google.com/books?id=yIbH4R77OtMC |accessdate=2 January 2017 |archive-date=7 December 2024 |archive-url=https://web.archive.org/web/20241207200155/https://books.google.com/books?id=yIbH4R77OtMC |url-status=live }}</ref>  It is also useful because of its durability.<ref name="funofec">{{cite book |title=Fundamentals of Economics |last=Boyes |first=William |author2=Michael Melvin |year=2011 |publisher=Cengage Learning |isbn=978-1133172994 |page=295 |url=https://books.google.com/books?id=qe08AAAAQBAJ |accessdate=3 January 2017 |archive-date=5 November 2022 |archive-url=https://web.archive.org/web/20221105145723/https://books.google.com/books?id=qe08AAAAQBAJ |url-status=live }}</ref>


Because of its function as a store of value, large quantities of money are [[Hoarding (economics)|hoarded]].<ref name="primon">{{cite book |title=Primitive Money: In its Ethnological, Historical and Economic Aspects, Edition 2 |last=Einzig |first=Paul |year=2014 |publisher=Elsevier |isbn=9781483157153 |page=425 |url=https://play.google.com/store/books/details?id=RhejBQAAQBAJ |accessdate=3 January 2017}}</ref>  Money's usefulness as a store of value declines if there are significant changes in the general level of [[price]]s.<ref name="mea">{{cite book |title=Macro Economic Analysis |last=Currie |first=David A. |year=1981 |publisher=Nirali Prakashan |isbn=9380064195 |page=2.14 |url=https://books.google.com/books?id=01G0yTCZpB4C |accessdate=3 January 2017}}</ref>  So if inflation rises, purchasing power declines and a cost is placed on those holding money.<ref name="mpap">{{cite book |title=Macroeconomics: Public and Private Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580198 |page=264 |url=https://books.google.com/books?id=Byk5B7BJkr4C |accessdate=3 January 2017}}</ref>
Because of its function as a store of value, large quantities of money are [[Hoarding (economics)|hoarded]].<ref name="primon">{{cite book |title=Primitive Money: In its Ethnological, Historical and Economic Aspects, Edition 2 |last=Einzig |first=Paul |year=2014 |publisher=Elsevier |isbn=9781483157153 |page=425 |url=https://play.google.com/store/books/details?id=RhejBQAAQBAJ |accessdate=3 January 2017 |archive-date=5 November 2022 |archive-url=https://web.archive.org/web/20221105145802/https://play.google.com/store/books/details?id=RhejBQAAQBAJ |url-status=live }}</ref>  Money's usefulness as a store of value declines if there are significant changes in the general level of [[price]]s.<ref name="mea">{{cite book |title=Macro Economic Analysis |last=Currie |first=David A. |year=1981 |publisher=Nirali Prakashan |isbn=9380064195 |page=2.14 |url=https://books.google.com/books?id=01G0yTCZpB4C |accessdate=3 January 2017 |archive-date=5 November 2022 |archive-url=https://web.archive.org/web/20221105145725/https://books.google.com/books?id=01G0yTCZpB4C |url-status=live }}</ref>  So if inflation rises, purchasing power declines and a cost is placed on those holding money.<ref name="mpap">{{cite book |title=Macroeconomics: Public and Private Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580198 |page=264 |url=https://books.google.com/books?id=Byk5B7BJkr4C |accessdate=3 January 2017 |archive-date=5 November 2022 |archive-url=https://web.archive.org/web/20221105145724/https://books.google.com/books?id=Byk5B7BJkr4C |url-status=live }}</ref>


Workers who are paid in a currency which is experiencing high [[inflation]] will prefer to spend their income quickly instead of [[saving]] it.<ref name="funofec"/>  When a currency loses its store of value, or more accurately when a currency is perceived to lose its future purchasing power, it fails to function as money.  This causes people to use currencies from other countries as a [[Currency substitution|substitute]].<ref name="funofec"/>
Workers who are paid in a currency which is experiencing high [[inflation]] will prefer to spend their income quickly instead of [[saving]] it.<ref name="funofec"/>  When a currency loses its store of value, or more accurately when a currency is perceived to lose its future purchasing power, it fails to function as money.  This causes people to use currencies from other countries as a [[Currency substitution|substitute]].<ref name="funofec"/>


According to the Cambridge cash-balance theory, which is represented by the [[Cambridge equation]], money's ability to store value is more important than its function as a [[medium of exchange]].<ref name="ecam">{{cite book |title=Economic Concepts and Methods |date=2008 |publisher=FK Publications |isbn=978-8188597185 |page=297 |url=https://books.google.com/books?id=DyrqBToCDgQC |accessdate=4 January 2017 }}{{Dead link|date=May 2024 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>  Cambridge claims that the [[demand for money]] is derived from its ability to store value.  This is contrary to [[Irving Fisher|Fisher]] economists' belief that demand arises because money is needed for exchange.<ref name="amtp">{{cite book |title=Advanced Monitory Theory & Policies |last=Reddy |first=R. Jayaprakash |year=2004 |publisher=APH Publishing |isbn=8176486124 |page=50 |url=https://books.google.com/books?id=qem_6XaNkF4C |accessdate=4 January 2017}}</ref>
According to the Cambridge cash-balance theory, which is represented by the [[Cambridge equation]], money's ability to store value is more important than its function as a [[medium of exchange]].<ref name="ecam">{{cite book |title=Economic Concepts and Methods |date=2008 |publisher=FK Publications |isbn=978-8188597185 |page=297 |url=https://books.google.com/books?id=DyrqBToCDgQC |accessdate=4 January 2017 }}{{Dead link|date=May 2024 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>  Cambridge claims that the [[demand for money]] is derived from its ability to store value.  This is contrary to [[Irving Fisher|Fisher]] economists' belief that demand arises because money is needed for exchange.<ref name="amtp">{{cite book |title=Advanced Monitory Theory & Policies |last=Reddy |first=R. Jayaprakash |year=2004 |publisher=APH Publishing |isbn=8176486124 |page=50 |url=https://books.google.com/books?id=qem_6XaNkF4C |accessdate=4 January 2017 |archive-date=5 November 2022 |archive-url=https://web.archive.org/web/20221105145722/https://books.google.com/books?id=qem_6XaNkF4C |url-status=live }}</ref>


While most money can be hoarded, [[demurrage money]] is a type of money which is deliberately designed to not be used as a store of value.
While most money can be hoarded, [[demurrage money]] is a type of money which is deliberately designed to not be used as a store of value.
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* [[Commodity|Commodities]] (especially through [[financial assets]]), such as [[natural gas]] or [[soybean]]<ref>{{Britannica URL|money/investing-in-gold|Gold-plated investing strategy? Shiny metal and your portfolio}}</ref>
* [[Commodity|Commodities]] (especially through [[financial assets]]), such as [[natural gas]] or [[soybean]]<ref>{{Britannica URL|money/investing-in-gold|Gold-plated investing strategy? Shiny metal and your portfolio}}</ref>
* [[Gold as an investment#Investment_vehicles|Physical gold]] or other [[Precious metal|precious metals]], such as [[gold coin|gold coins]], [[platinum as an investment|platinum]] or [[silver as an investment|silver]] [[Bullion|bullions]]<ref>{{Britannica URL|money/what-are-commodities|What are commodities?}}</ref>
* [[Gold as an investment#Investment_vehicles|Physical gold]] or other [[Precious metal|precious metals]], such as [[gold coin|gold coins]], [[platinum as an investment|platinum]] or [[silver as an investment|silver]] [[Bullion|bullions]]<ref>{{Britannica URL|money/what-are-commodities|What are commodities?}}</ref>
* [[Collectible]]s or [[Work of art|artworks]], e.g. [[gemstone]]s, [[antiques]], [[coin collecting|coins]], [[paintings]], [[investment wine|wines]]<ref>{{Britannica URL|money/how-to-invest-in-collectibles|How to invest in art and collectibles: From pastime to portfolio}}</ref><ref>{{Britannica URL|money/investment-types|Investment types}}</ref><ref>{{cite web|url=https://corporatefinanceinstitute.com/resources/valuation/store-of-value/|title=Store of value|publisher=Corporate Finance Institute|access-date=August 1, 2024|quote=A store of value is an asset, currency, or commodity that maintains its value over a long period. An item would be considered a store of value if its value is either stable or increases over time but doesn’t depreciate.}}</ref>
* [[Collectible]]s or [[Work of art|artworks]], e.g. [[gemstone]]s, [[antiques]], [[coin collecting|coins]], [[paintings]], [[investment wine|wines]]<ref>{{Britannica URL|money/how-to-invest-in-collectibles|How to invest in art and collectibles: From pastime to portfolio}}</ref><ref>{{Britannica URL|money/investment-types|Investment types}}</ref><ref>{{cite web|url=https://corporatefinanceinstitute.com/resources/valuation/store-of-value/|title=Store of value|publisher=Corporate Finance Institute|access-date=August 1, 2024|quote=A store of value is an asset, currency, or commodity that maintains its value over a long period. An item would be considered a store of value if its value is either stable or increases over time but doesn’t depreciate.|archive-date=September 22, 2024|archive-url=https://web.archive.org/web/20240922094512/https://corporatefinanceinstitute.com/resources/valuation/store-of-value/|url-status=live}}</ref>


In addition, [[currency]] can take many alternative forms, such as [[cryptocurrency]], [[livestock]] (e.g. some [[List of currencies in Africa#Pre-colonial era|pre-colonial African currencies]]),<ref name=currency>{{Britannica URL|money/currency|Currency}}</ref> [[labor voucher]]s, [[gift economy]] relationships or  [[stored-value card]]s (value is recorded directly on [[computer chips]] of the cards).<ref>{{Britannica URL|money/Credit-and-money|Credit and money}}</ref>
In addition, [[currency]] can take many alternative forms, such as [[cryptocurrency]], [[livestock]] (e.g. some [[List of currencies in Africa#Pre-colonial era|pre-colonial African currencies]]),<ref name=currency>{{Britannica URL|money/currency|Currency}}</ref> [[labor voucher]]s, [[gift economy]] relationships or  [[stored-value card]]s (value is recorded directly on [[computer chips]] of the cards).<ref>{{Britannica URL|money/Credit-and-money|Credit and money}}</ref>
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As stores of value, gold and precious metals are generally favored to industrial commodities, because of their demand and rarity in nature, which reduces the risk of [[devaluation]] associated with increased production and supply.
As stores of value, gold and precious metals are generally favored to industrial commodities, because of their demand and rarity in nature, which reduces the risk of [[devaluation]] associated with increased production and supply.


[[Cryptocurrency|Cryptocurrency's]] role as a store of value is currently a matter of debate.<ref>{{Cite web|url=https://www.cnbc.com/2020/12/17/mark-cuban-bitcoin-is-a-store-of-value-that-is-more-religion.html|title=Mark Cuban: Bitcoin is 'more religion than solution' and won't help in 'doomsday scenarios'|publisher=[[CNBC]]|date=17 December 2020}}</ref><ref>{{Cite news|url=https://www.ft.com/content/625fbd5a-d90c-434f-998d-5e0eeb4c0f71 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/625fbd5a-d90c-434f-998d-5e0eeb4c0f71 |archive-date=2022-12-10 |url-access=subscription|title=Bitcoin has ambitions for gold's role|newspaper=Financial Times|date=10 January 2021|last1=Davies|first1=Gavyn}}</ref><ref>{{Cite news|url=https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|title=What is Bitcoin Really Worth? Don't Even Ask|newspaper=The New York Times|date=15 December 2017|last1=Shiller|first1=Robert J.}}</ref><ref>{{Cite web|url=https://www.cnbc.com/2018/01/16/skeptics-say-bitcoin-has-no-value-heres-why-theyre-wrong.html|title=As bitcoin's price plunges, skeptics say the cryptocurrency has no value. Here's one argument for why they're wrong|publisher=[[CNBC]]|date=16 January 2018}}</ref> The [[Internal Revenue Service]] has issued guidance on "virtual currencies" that refers to them as "a medium of exchange, a unit of account, and/or a store of value."<ref>{{Cite web|url=https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21|title=Internal Revenue Bulletin: 2014-16 &#124; Internal Revenue Service}}</ref> The cryptocurrency [[Bitcoin]] is often compared by advocates to [[gold]].<ref>{{Cite web|url=https://www.cnbc.com/2021/02/04/tom-lee-on-bitcoins-price-and-why-its-better-than-gold.html|title=Tom Lee gives the long-term bullish case for bitcoin and why it's better than gold|publisher=[[CNBC]]|date=4 February 2021}}</ref><ref>{{Cite web|url=https://www.cnbc.com/2021/01/05/jpmorgan-bitcoin-price-could-rise-to-146k-as-it-competes-with-gold.html|title=JPMorgan says bitcoin could rise to $146,000 long term as it competes with gold|publisher=[[CNBC]]|date=5 January 2021}}</ref> In their role as a store of value, cryptocurrencies often elicit concern, due to their extreme [[volatility (finance)|volatility]],<ref>{{Cite news|url=https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|title=What is Bitcoin Really Worth? Don't Even Ask|newspaper=The New York Times|date=15 December 2017|last1=Shiller|first1=Robert J.}}</ref> or due to concerns about the emergence of regulation and contradictory handling by governments.<ref>{{Cite web|url=https://www.theregreview.org/2020/08/31/feinstein-werbach-does-regulation-chill-cryptocurrency-trading/|title=Does Regulation Chill Cryptocurrency Trading? |work=The Regulatory Review|date=31 August 2020}}</ref> Note that the Bitcoin blockchain ledger is unalterable and that Bitcoin cannot be taken from someone, except by force, known as the 'five-dollar wrench attack'.<ref>{{Cite web |last=Kamau |first=Rufas |title=How To Send And Receive Bitcoin Privately |url=https://www.forbes.com/sites/rufaskamau/2022/10/24/how-to-send--and-receive-bitcoin-privately/ |access-date=2022-11-05 |website=Forbes |language=en}}</ref>
[[Cryptocurrency|Cryptocurrency's]] role as a store of value is currently a matter of debate.<ref>{{Cite web|url=https://www.cnbc.com/2020/12/17/mark-cuban-bitcoin-is-a-store-of-value-that-is-more-religion.html|title=Mark Cuban: Bitcoin is 'more religion than solution' and won't help in 'doomsday scenarios'|publisher=[[CNBC]]|date=17 December 2020|access-date=12 February 2021|archive-date=8 October 2024|archive-url=https://web.archive.org/web/20241008073053/https://www.cnbc.com/2020/12/17/mark-cuban-bitcoin-is-a-store-of-value-that-is-more-religion.html|url-status=live}}</ref><ref>{{Cite news|url=https://www.ft.com/content/625fbd5a-d90c-434f-998d-5e0eeb4c0f71 |archive-url=https://ghostarchive.org/archive/20221210/https://www.ft.com/content/625fbd5a-d90c-434f-998d-5e0eeb4c0f71 |archive-date=2022-12-10 |url-access=subscription|title=Bitcoin has ambitions for gold's role|newspaper=Financial Times|date=10 January 2021|last1=Davies|first1=Gavyn}}</ref><ref>{{Cite news|url=https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|title=What is Bitcoin Really Worth? Don't Even Ask|newspaper=The New York Times|date=15 December 2017|last1=Shiller|first1=Robert J.|archive-date=16 November 2024|access-date=12 February 2021|archive-url=https://web.archive.org/web/20241116235425/https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|url-status=live}}</ref><ref>{{Cite web|url=https://www.cnbc.com/2018/01/16/skeptics-say-bitcoin-has-no-value-heres-why-theyre-wrong.html|title=As bitcoin's price plunges, skeptics say the cryptocurrency has no value. Here's one argument for why they're wrong|publisher=[[CNBC]]|date=16 January 2018|access-date=12 February 2021|archive-date=24 September 2023|archive-url=https://web.archive.org/web/20230924083347/https://www.cnbc.com/2018/01/16/skeptics-say-bitcoin-has-no-value-heres-why-theyre-wrong.html|url-status=live}}</ref> The [[Internal Revenue Service]] has issued guidance on "virtual currencies" that refers to them as "a medium of exchange, a unit of account, and/or a store of value."<ref>{{Cite web|url=https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21|title=Internal Revenue Bulletin: 2014-16 &#124; Internal Revenue Service|access-date=2021-02-12|archive-date=2024-12-31|archive-url=https://web.archive.org/web/20241231035725/https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21|url-status=live}}</ref> The cryptocurrency [[Bitcoin]] is often compared by advocates to [[gold]].<ref>{{Cite web|url=https://www.cnbc.com/2021/02/04/tom-lee-on-bitcoins-price-and-why-its-better-than-gold.html|title=Tom Lee gives the long-term bullish case for bitcoin and why it's better than gold|publisher=[[CNBC]]|date=4 February 2021|access-date=12 February 2021|archive-date=3 December 2023|archive-url=https://web.archive.org/web/20231203085323/https://www.cnbc.com/2021/02/04/tom-lee-on-bitcoins-price-and-why-its-better-than-gold.html|url-status=live}}</ref><ref>{{Cite web|url=https://www.cnbc.com/2021/01/05/jpmorgan-bitcoin-price-could-rise-to-146k-as-it-competes-with-gold.html|title=JPMorgan says bitcoin could rise to $146,000 long term as it competes with gold|publisher=[[CNBC]]|date=5 January 2021|access-date=12 February 2021|archive-date=31 December 2024|archive-url=https://web.archive.org/web/20241231231540/https://www.cnbc.com/2021/01/05/jpmorgan-bitcoin-price-could-rise-to-146k-as-it-competes-with-gold.html|url-status=live}}</ref> In their role as a store of value, cryptocurrencies often elicit concern, due to their extreme [[volatility (finance)|volatility]],<ref>{{Cite news|url=https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|title=What is Bitcoin Really Worth? Don't Even Ask|newspaper=The New York Times|date=15 December 2017|last1=Shiller|first1=Robert J.|archive-date=16 November 2024|access-date=12 February 2021|archive-url=https://web.archive.org/web/20241116235425/https://www.nytimes.com/2017/12/15/business/bitcoin-investing.html|url-status=live}}</ref> or due to concerns about the emergence of regulation and contradictory handling by governments.<ref>{{Cite web|url=https://www.theregreview.org/2020/08/31/feinstein-werbach-does-regulation-chill-cryptocurrency-trading/|title=Does Regulation Chill Cryptocurrency Trading?|work=The Regulatory Review|date=31 August 2020|access-date=13 February 2021|archive-date=12 September 2024|archive-url=https://web.archive.org/web/20240912030254/https://www.theregreview.org/2020/08/31/feinstein-werbach-does-regulation-chill-cryptocurrency-trading/|url-status=live}}</ref> Note that the Bitcoin blockchain ledger is unalterable and that Bitcoin cannot be taken from someone, except by force, known as the 'five-dollar wrench attack'.<ref>{{Cite web |last=Kamau |first=Rufas |title=How To Send And Receive Bitcoin Privately |url=https://www.forbes.com/sites/rufaskamau/2022/10/24/how-to-send--and-receive-bitcoin-privately/ |access-date=2022-11-05 |website=Forbes |language=en |archive-date=2024-11-12 |archive-url=https://web.archive.org/web/20241112054517/https://www.forbes.com/sites/rufaskamau/2022/10/24/how-to-send--and-receive-bitcoin-privately/ |url-status=live }}</ref>


==See also==
==See also==
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==External links==
==External links==
* {{cite web |url= http://www.egwald.ca/ubcstudent/aboriginal/exchanges.php |work= First Nations Studies |title= Linguistic and Commodity Exchanges |first= Elmer G. |last= Wiens |date= 2005 |quote= Examines the structural differences between barter and monetary commodity exchanges and oral and written linguistic exchanges }}
* {{cite web |url= http://www.egwald.ca/ubcstudent/aboriginal/exchanges.php |work= First Nations Studies |title= Linguistic and Commodity Exchanges |first= Elmer G. |last= Wiens |date= 2005 |quote= Examines the structural differences between barter and monetary commodity exchanges and oral and written linguistic exchanges |access-date= 2007-10-09 |archive-date= 2017-07-10 |archive-url= https://web.archive.org/web/20170710173616/http://www.egwald.ca/ubcstudent/aboriginal/exchanges.php |url-status= live }}


{{Economics}}
{{Economics}}

Latest revision as of 18:25, 22 October 2025

Template:Short description

A store of value is any commodity or asset that would normally retain purchasing power into the future and is the function of the asset that can be saved, retrieved and exchanged at a later time, and be predictably useful when retrieved.[1]

The most common store of value in modern times has been money, currency, or a commodity like a precious metal or financial capital. The point of any store of value is risk management due to a stable demand for the underlying asset.[2]

Money as a store of value

File:Currency, Money,before Euro.jpg
Various bills and coins

Monetary economics is the branch of economics which analyses the functions of money. Storage of value is one of the three generally accepted functions of money.[3] The other functions are the medium of exchange, which is used as an intermediary to avoid the inconveniences of the coincidence of wants, and the unit of account, which allows the value of various goods, services, assets and liabilities to be rendered in multiples of the same unit. Money is well-suited to storing value because of its purchasing power.[4] It is also useful because of its durability.[5]

Because of its function as a store of value, large quantities of money are hoarded.[6] Money's usefulness as a store of value declines if there are significant changes in the general level of prices.[7] So if inflation rises, purchasing power declines and a cost is placed on those holding money.[8]

Workers who are paid in a currency which is experiencing high inflation will prefer to spend their income quickly instead of saving it.[5] When a currency loses its store of value, or more accurately when a currency is perceived to lose its future purchasing power, it fails to function as money. This causes people to use currencies from other countries as a substitute.[5]

According to the Cambridge cash-balance theory, which is represented by the Cambridge equation, money's ability to store value is more important than its function as a medium of exchange.[9] Cambridge claims that the demand for money is derived from its ability to store value. This is contrary to Fisher economists' belief that demand arises because money is needed for exchange.[10]

While most money can be hoarded, demurrage money is a type of money which is deliberately designed to not be used as a store of value.

Other stores of value

File:Bond of National Loan issued by Polish National Government 1863.png
Polish National Government bond, 1863
File:Gold-295936.jpg
Commodities such as gold and other precious metals have historically been good stores of value

The term cash is often used to indicate both currency, which is usually represented by paper money or coins in industrialized countries,[11] and sums deposited and payable almost immediately on order.

Apart from cash, legal tender issued on the fiat of a sovereign government,[12][13] examples of assets used as potential stores of value are:

In addition, currency can take many alternative forms, such as cryptocurrency, livestock (e.g. some pre-colonial African currencies),[11] labor vouchers, gift economy relationships or stored-value cards (value is recorded directly on computer chips of the cards).[20]

While the above-mentioned assets may be inconvenient to trade daily or store, and may vary in value quite significantly, they are expected to rarely lose all value. It need not be a capital asset at all, merely have economic value that is not believed to disappear even in the worst situation.

The disadvantage for land, houses and property as a store for value is that it may take time to find a buyer for those assets.[8]

As stores of value, gold and precious metals are generally favored to industrial commodities, because of their demand and rarity in nature, which reduces the risk of devaluation associated with increased production and supply.

Cryptocurrency's role as a store of value is currently a matter of debate.[21][22][23][24] The Internal Revenue Service has issued guidance on "virtual currencies" that refers to them as "a medium of exchange, a unit of account, and/or a store of value."[25] The cryptocurrency Bitcoin is often compared by advocates to gold.[26][27] In their role as a store of value, cryptocurrencies often elicit concern, due to their extreme volatility,[28] or due to concerns about the emergence of regulation and contradictory handling by governments.[29] Note that the Bitcoin blockchain ledger is unalterable and that Bitcoin cannot be taken from someone, except by force, known as the 'five-dollar wrench attack'.[30]

See also

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References

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External links

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