Store of Value

The store of value function represents money's ability to preserve purchasing power across time. This function allows individuals to defer consumption, accumulate wealth, and plan for the future.

Time Preference and Saving

Humans naturally prefer present consumption to future consumption, but survival and prosperity require deferring gratification. Money that reliably stores value enables individuals to save today's earnings for tomorrow's needs. This capacity for delayed consumption is fundamental to capital accumulation and economic progress.

When money fails as a store of value, the incentive to save vanishes. Individuals rush to convert depreciating currency into real goods, land, or alternative stores of value. This behavior disrupts economic calculation and undermines long-term planning.

Gold's Excellence

Gold has served as humanity's premier store of value for millennia due to its exceptional durability and scarcity. Gold does not corrode, decay, or degrade over centuries. Its supply increases slowly and predictably through mining, making sudden debasement impossible without physical adulteration.

These properties give gold purchasing power stability across generations. An ounce of gold buys roughly the same basket of goods today as it did centuries ago, making it an ideal vehicle for intergenerational wealth transfer.

Fiat Currency's Failure

Fiat currency, by contrast, systematically fails as a store of value due to inflation. Governments with monopoly money creation powers consistently expand supply to fund expenditures, eroding purchasing power. The U.S. dollar has lost over 95% of its value since the Federal Reserve's creation in 1913.

This decline is not accidental but inherent to fiat systems. Without the constraint of commodity backing, political pressures inevitably drive money printing. What functions adequately as a medium of exchange proves disastrous as a long-term store of value.

Digital Solutions

Bitcoin represents an attempt to recreate gold's store of value properties in digital form through programmatic scarcity - a fixed supply cap of 21 million coins enforced by cryptographic protocol rather than physical limitations.