As Darknet market enthusiasts, the use of crypto is commonplace. Many of us take it for granted on a daily basis and use it in a equivalent manner as the layman uses fiat currency. In this setting, it is easy for us to forget about the true value of cryptocurrencies outside of just a transactional currency. In this article we will examine the efficacy of bitcoin as a true store of value.

We're all familiar with the lore of the man who paid for a pizza delivery with bitcoin that would be equivalent to millions of dollars today. Its a sardonic yet cautionary tale that serves as an extreme example of bitcoin not being an ideal currency. In the black market trades, we've read many news articles of criminals who have been caught through blockchain analysis - the forensic tracing of the movement of bitcoin. This serves as another stark example that even in the illegal trades, bitcoin is not a good currency.

So if bitcoin is not best served as a currency, then what is its value?

Bitcoin is digital gold.

Bitcoin is ineffective to use for daily purchases. The fees to send BTC are high, the transactions are slow and - if you are engaging in transactions that require privacy - the blockchain is public. Bitcoin is an extremely effective storage unit of value and a decentralized hedge against fiat currency based inflation, tantamount to gold.

Would you go to the local corner store and pay for your coffee with a unit of gold? Of course not. You would save the gold because you know that its has a safely preserved long term value, especially in an economic climate where inflation is very high. Bitcoin belongs in an asset class similar to gold, precious metals or retirement vehicles.

Another important element of bitcoin is that its true value is not tied to a central banking system. If you live in a country with political and economic instability, currency devaluation is usually a common byproduct. In these situations, the safest methods of storing money are typically in offshore real estate in more stable economies and precious metal/gold asset classes. The latter is physically difficult to keep due to literal physical constraints and if you need to migrate locations can be a logistic nightmare. The former is typically very difficult from a regulatory standpoint. In this case, Bitcoin serves as a perfect hedge against unstable economies and a perfect unit of storing your money that is easily moved, safely kept and firmly separated from central banking.

Many people are fearful of bitcoin's volatility but the truth is, that like any asset class meant to be held long term, you cannot hold bitcoin and concern yourself with daily, weekly or monthly fluctuations. If you hold bitcoin today, you should be looking at a multi decade long maturity.

Bitcoin is a bad currency and we will later examine cryptocurrencies best served as units of daily trade. Bitcoin should be considered to be a digital asset class similar to gold and treated as such.