What is one potential disadvantage of currency as a store of value?

The potential disadvantage of currency as a store of value lies in its susceptibility to inflation. When inflation occurs, the purchasing power of currency diminishes over time; this means that the same amount of money will buy fewer goods and services in the future than it does today. As a result, individuals holding cash or currency savings can find that their wealth decreases in real terms, making it less effective as a long-term store of value.

In contrast, things like assets or investments may maintain their value or even appreciate over time, offering protection against inflation. This characteristic of currency highlights the inherent risk associated with storing value in a medium that can lose real purchasing power due to inflationary pressures in the economy. While currency has advantages such as transportability, universal acceptance, and representing direct purchasing power, its vulnerability to inflation is a critical consideration for anyone looking to preserve value over time.