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Crypto-savvy investors often liken bitcoin to digital gold.
Heres a deeper dive into the similarities, withinsight from crypto experts.
Why Has Bitcoin Emerged as a Store of Value?
Gold was introduced as a form of currency around 550 B.C., according toGold.org.
Yet, gold tends to be heavy, bulky and difficult to trade.
In the 1830s, the U.S. began linking gold with cash on a de facto basis.
In the 1900s, the U.S. legally adopted the gold standard, where cash represented gold stores.
However, gold holds inherent value for investors.
Likewise, bitcoin was introduced as a form of alternate currency.
Scarcity
Part of bitcoins value stems from its limited availability.
Like gold, bitcoin is scarce, said CK Zheng, co-founder and CIO ofZX Squared Capital.
A Hedge Against Inflation
Bitcoins scarcity makes it less susceptible to inflationary pressures.
The fixed supply means its value wont be diluted by inflationary pressures like traditional fiat currencies, Xu said.
Bitcoins decentralized nature mirrors golds role as a hedge against centralized financial systems and government interventions, Xu explained.
Bitcoins status as a store of value hinges on more than just its limited supply its built on trust.
Security
Bitcoins security, initially a concern for investors, has been proven over the years.
Wayn said, Blockchain technology provides robust security and transparency and can seamlessly cross borders.
Xu added, Bitcoin has over a decade of proven security.
With the largest web connection of miners and nodes, bitcoin is a fortress compared to most altcoins.
Its faced all kinds of challenges and still stands strong.
All investments carry risk and volatility, particularly in an emerging asset class like bitcoin, Wayn said.
Over the past year, clearer regulatory frameworks and institutional adoption have improved trust and protections for users.
Additionally, bitcoins decentralized web link, scarcity and increasing acceptance as a legitimate asset contribute to its appeal.
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