What makes a store of value in crypto
Bitcoin is often called digital gold, and stablecoins are offered as a safe place to keep money. Both claims are about one property: keeping purchasing power over time. This page says what that property takes and how to check a coin against it. It ranks nothing.
A store of value is an asset that keeps its purchasing power: what you put away today buys about as much when you take it out. In crypto, three things decide how well a coin does that: a supply rule that no one can quietly change, a price that does not fall further than you can wait out, and custody you control or can trust. Every coin gives up some of one of the three. Knowing which one is the point of checking.
What a store of value is
Money does three jobs. It pays for things, it measures prices, and it carries value from one day to another. The third job is the store of value: an asset that, put away today, still buys about as much later.
No asset does this perfectly. Cash loses value to inflation: in the twelve months to June 2022, consumer prices in the United States rose by 9.1 per cent, the fastest rise in four decades. Being a store of value is a matter of degree, and of how long you hold.
What it takes: six properties
| Property | What it means | What to check |
|---|---|---|
| A supply rule | how many units can exist, and how fast new ones appear | who can create more, and whether the rule can change |
| Durability | the asset does not decay or vanish by itself | what happens to it if a company or a network stops |
| Verifiability | anyone can check that a unit is real | whether you can check it yourself or have to be told |
| Liquidity | it can be sold quickly, near its price | how far a large sale moves the price |
| Stability over your horizon | its price does not fall further than you can wait out | its worst falls in the past, and how long they lasted |
| Custody | who holds it, and who can freeze or seize it | whether you hold the keys, and what the holder may do |
Cryptocurrencies score well on some of these and poorly on others. Bitcoin has a strict supply rule and is easy to verify, but its price swings hard. A dollar stablecoin holds a steady price, but it depends on an issuer that holds the reserve and can freeze tokens at any address. Each is a different trade.
What gives a cryptocurrency value
A share pays dividends and a bond pays interest, and their value can be worked out from those payments. Most cryptocurrencies pay their holders nothing. Their price is what buyers will pay, and that demand rests on use: paying fees on a network, settling trades, posting collateral, holding something scarce that many others accept.
So the question whether crypto has intrinsic value gets two answers. In the sense used for shares and bonds, most of it has none: there is no stream of payments to value. A token that is a claim on assets, such as a stablecoin or a gold token, is worth what those assets are worth, as far as you can claim them; see the kinds of asset-backed tokens.
Bitcoin is not a claim on anything, and nothing backs it. Its value rests on demand and on a supply rule that the network enforces: the rules allow no more than 21 million bitcoin, and the number of new coins halves every 210,000 blocks, about every four years.
Fixed, capped and growing supply
The supply rule is the property crypto talks about most, because it is written in code and anyone can read it. Three kinds are common.
- A fixed cap. Bitcoin has a known maximum, reached on a known schedule. No one can issue more unless the network accepts new rules.
- No cap, with a burn. Ether has no maximum. New ether goes to the validators who secure the network, and since August 2021 part of every transaction fee is destroyed. Whether the supply of ether grows or shrinks depends on how busy the network is.
- Supply on demand. A stablecoin has as many units as customers have bought from its issuer. Its supply says nothing about its value; the reserve does.
A fixed supply protects against one thing: dilution by an issuer. It does not hold the price. A coin with a fixed supply can lose most of its price when demand falls.
Is crypto a hedge against inflation?
Not reliably, over the periods people usually mean. In 2022 consumer prices in the United States rose faster than at any time in four decades, and bitcoin lost about 60 per cent of its dollar price over the year. Over other periods, from other starting dates, the result was the opposite. A hedge that works only from some starting dates is a bet on the starting date.
Stablecoins answer a different question. A dollar stablecoin does not protect against the inflation of the dollar: it keeps a dollar price and loses purchasing power along with the dollar. It protects against the inflation of another currency. In Argentina, where consumer prices rose by 211 per cent in 2023, stablecoins made up most of the country’s crypto transactions in 2024: people used them to hold dollars.
How to check a coin yourself
- 01
Read the supply rule
Who can create new units, how many, and how fast. Then find out who can change that rule, and how.
- 02
Look at the worst falls
Find the largest fall in its price and how long the price took to come back. Ask whether you could have waited it out with money you might need.
- 03
Find out who holds it
Your own wallet, an exchange, or an issuer with a reserve. Each one decides what can happen to your coins without you.
- 04
Check how easily it sells
A store of value that you cannot sell near its price when you need to is worth less than its quote.
A store of value is a promise about purchasing power. In crypto, read who keeps the promise: a rule in code, an issuer with a reserve, or no one at all.
Common questions
What is the best store of value in crypto?
There is no single answer. It depends on how long you hold, how far the price may fall before you need the money, and whom you are prepared to trust. This page names the properties to check; it does not rank coins.
Does cryptocurrency have intrinsic value?
Not in the sense that shares and bonds do: most cryptocurrencies pay their holders nothing, so there is no stream of payments to value. A token that is a claim on assets is worth what those assets are worth, as far as you can claim them.
What backs bitcoin?
Nothing: bitcoin is not a claim on any asset. Its value rests on demand, and its supply follows rules that the network enforces, with a limit of 21 million coins.
Is crypto a unit of account?
Rarely. Goods, wages and contracts are priced in national currencies almost everywhere, and on blockchains prices are mostly quoted in dollars or dollar stablecoins. A price that can move by several per cent in a day is hard to keep accounts in.
Is a stablecoin a store of value?
In its own currency, for as long as its issuer holds the reserve: a dollar stablecoin keeps a dollar price. It loses purchasing power at the rate the dollar does.
How Assetrix does it
ASTRX is meant as a complement to the stablecoin. A stablecoin holds its face value and loses purchasing power along with it. In Assetrix the cost of entry is tied to a figure that rises, while the collateral stays real and reclaimable at any time. The founders of Assetrix call this class of asset a ratchet: a coin with a rising issuance price. The definition covers the mint price only, not the market price.
The figures of the mint price are ceilings on the cost of entry. They say how fast entry may grow dearer, and nothing about what a holder will receive. Assetrix pays no interest and distributes nothing. What rises by rule is the cost of entry, not what a holder receives.
Read next
A ratchet is not a stablecoin — and not its opposite
People hear “the price only rises” and file the idea under stablecoin, or under its opposite.
Can a token only go up?
A design question with a negative answer, and what the answer leaves you.
Asset-backed tokens: the kinds, with examples
Stablecoins, Treasury fund tokens, gold tokens, wrapped bitcoin and baskets: what stands behind each kind, who holds it, and who can redeem.
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