Store of Value is used to describe assets that retain financial value over a long period of time. A store of value includes assets or commodities whose value can be stored, redeemed and traded. In addition, store of value assets are assets that have managed to remain at the same or higher values over time.

Assets with perpetual or permanent lives, such as gold and silver, are considered to be stores of value. Assets that may deteriorate and become worthless over time are defined as weak stores of value. For instance, a perishable product such as milk is not suitable as a store of value. Milk loses its value over time due to expiration date and perishability and eventually becomes worthless. Therefore, it cannot be considered a store of value. In other words, milk is a poor store of value.

An asset that is considered a good store of value should be able to be sold at or above the value at which it was purchased. In other words, an asset that is considered a good store of value enables its owner to sell it at a future time for more than the value at which it was purchased. Usually, the store of value is related to the asset's market price and buying power. In some cases, it is related to its liquidity.

Most fiat money has a diminishing buying power over time, caused by inflation, which is caused by a rapid increase in the circulating supply of the currency. But most economists still consider fiat money to be a store of value. However, whether fiat currencies are a good store of value is a matter of debate.

What Is the Importance of a Store of Value?

A store of value is a financial instrument, such as an asset, currency or commodity, that you can maintain its purchasing power, exchange or convert in the future. The asset used as a store of value should provide a constant or increasing value because it is important to minimize the risk of losing value in order to maintain purchasing power.

The purpose of a store of value is to focus on maintaining price and avoiding loss of value by minimizing risk. Therefore, financial instruments that are accepted by many investors, such as gold, can be used as store of value if they can maintain their value for a long period of time and do not carry a large risk of depreciation.

What Are Examples of Store of Value?

The most common examples of stores of value are:

• Money and Currency
• Precious metals
• Cryptocurrency
• Agricultural property
• Collection

Money and Currency

Money can be considered a store of value because it is used for investing and saving. Money carries value between transactions and is often used as a medium of exchange because it allows people to hold a valuable resource without losing value. Money can be used to own various goods and items. As a result, money should be a reliable store of value so that the public can engage in transactions and save.

As a store of value, money has several advantages:

• As a store of value, money has the advantage of buying power. This is one of the most important advantages of money and the main reason why people often save money to make larger buyings in the future.
• The durability of money, its ability to withstand repeated use without falling in value, is another advantage.
• Money is universal. This means that money can be spent, stored, and exchanged without loss of value. At the same time, anyone can access money, earn it and use it to buy a product.

Currency is a medium of exchange printed for use in a particular country or region. Considered as a store of value, the most important advantage of currency is that it can be easily converted into another currency. Thus, it can be spent very quickly, unlike other stores of value, such as financial instruments, which take time to exchange. As a result, a stable currency is important for a healthy economy.

Precious Metals

Precious metals are considered another way to facilitate buying and selling transactions and were used significantly before the concept of money came into widespread use. The most valuable metals are gold, silver, and platinum. These precious metals are also important for storing value because they are perpetual and permanent. At the same time, these precious metals are of great value because they are rare.

Considered a store of value, precious metals have several advantages:

• Precious metals retain their value quite well. For instance, gold, one of the most important precious metals, rarely loses value.
• Compared to other stores of value, such as money, precious metals are not affected by inflation.
• Another advantage of precious metals as a store of value is their ease of transportation. In other words, the transfer of precious metals is simply the physical transfer of precious metals from one location to another.
• Precious metals can be easily divided during the process.

Cryptocurrency

Cryptocurrencies refer to a digital payment system that does not need any third-party intervention to verify transactions.

Considering cryptoassets as a store of value has several advantages:

• Cryptocurrencies have an immutable monetary supply. In other words, they do not change over time. Since it is more difficult to increase the supply of cryptocurrencies than a regular currency, they retain their value more easily.
• Cryptocurrencies have a limited supply. The scarce availability of cryptocurrencies ensures that their value remains intact.
• The use of cryptocurrencies allows for reliable transactions. All transactions with cryptocurrencies use transparency, self-regulation and accountability.
• Cryptocurrencies do not have an owner. Decentralization allows for secure and verified transactions through distributed networks instead of transactions carried out by a single authority.

Agricultural Property

Recently, agricultural properties have become an increasingly popular store of value. Agricultural land carries an economic value as it is extremely important for food production. Compared to other stores of value, agricultural property values require maintenance and therefore care must be taken to preserve their value. If agricultural properties are not adequately cared for, their value may decline, which may result in them no longer being considered an effective store of value.

There are several advantages to recognizing agricultural property as a store of value:

• Agricultural property, if properly maintained, has the potential to have great value, as food products and fresh produce are in demand. This is the best way to ensure that agricultural property is stable and protected without the risk of loss of value.
• As the demand for food products and fresh produce is constantly increasing, the physical supply of arable farmland is decreasing and significantly limited. The limited supply is what allows agricultural property and land to be considered a store of value.

Collection

Collectibles are a store of value that, like agricultural property, has become popular over time. Collectibles can include items ranging from watches to special edition coins. Collectible items tend to always have a fixed value or an increasing value. Collections are therefore considered stores of value.

There are several advantages to considering collections as stores of value:

• The main advantage of collectibles as stores of value is that collectibles have a limited supply.
• The main characteristic of collectibles is their rarity.
• Collectibles also tend to be desirable.