Over the last few years, many have claimed that bitcoin core (BTC) has turned into, or will soon become, a store of value (SoV). Proponents of the BTC-based SoV theory seem to think that money can somehow store value and if it’s held long enough, the price will be higher or predictably useful when spent at a later date. This is an economic fallacy however because money cannot store value and, as innovative as bitcoin is, it will never be immune to market influences.
Menger Stomps the SoV Fallacy
There are a ton of people who believe that BTC is a store of value and that if they keep hodling someday they might be super wealthy and protected from the world’s turbulent economy. Except this couldn’t be further from the truth. BTC is not an SoV currently, and never will be due to the fact that money itself cannot be an SoV. The idea that money cannot serve as a store of value has been written about by many economists over the years including Carl Menger, Murray Rothbard, and Ludwig von Mises. Carl Menger (1840-1921) was the founder of the Austrian school of economics proper. Menger was one of the first economists to explain in detail about the relationship of value and money to market prices. Menger writes in Principles of Economics:
Value is … nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs … and in consequence carry over to economic goods as the … causes of the satisfaction of our needs.
Claim and Ownership
A good way to understand that money is not a store of value is by picturing a television set worth the spot price of 1 BTC ($5,700 at press time). Now if someone was to smash the TV screen into a thousand pieces with a sledgehammer then no one would be able to watch the device’s picture. After that, nobody could watch a television show on that set as the sledgehammer quite…