The Store of Value Framework
Understand the concept of scarcity and resource production
The Store of Value Framework explains how the concept of scarcity is misunderstood, and how human time is the only truly scarce resource. The framework highlights the importance of understanding the opportunity cost of producing goods and services.
- Human time is the only truly scarce resource
- The opportunity cost of producing goods and services is the real cost
- Technological advancements can increase resource production
- Understand the concept of scarcityRecognize that scarcity is not about the absolute quantity of resources, but about the human time required to produce themPro tipThis understanding is crucial for making informed investment decisionsWarningIgnoring this aspect can lead to poor resource allocation
- Analyze the opportunity cost of productionConsider the opportunity cost of producing goods and servicesPro tipThis analysis can help identify the most valuable resourcesWarningBut it requires a deep understanding of economic principles
The oil industry
The oil industry has seen significant increases in production and reserves over the years, despite concerns about scarcity
OutcomeInvestors who understood the Store of Value Framework were better equipped to navigate the oil market
Misunderstanding scarcity
Failing to recognize that human time is the only truly scarce resource can lead to poor investment decisions
The framework is based on the work of economist Julian Simon, who argued that human time is the only truly scarce resource.
Source · BOOK
The Bitcoin Standard