A somewhat practical guide to living on a hard money standard in a debasing fiat world.
Firstly, let me say, I do not know how long this will end up being. It could be very short, or it could be an entire essay. We shall see.
1. The "why?"
2. Choosing a hard money Unit of Account (UoA)
3. Stability out of instability
4. Shifting your mindset
5. Practical advice and how I do it
1. The "why?": All governments debase fiat currency. This is a fact. You work day after day, hour after hour, and you feel like you can never get ahead. You see your friends turning to socialist and communist policies such as rent control and public takeover of private property. You believe in the idea that what you work for is rightfully yours, and therefore you are labeled selfish. I disagree, and you are not alone.
This is an admittedly incomplete guide as to how I do my best to live my life on #Monero, but these concepts can be applied to other things such as #Bitcoin. I've explained bits and pieces of this before on podcasts and in ephemeral chats that disappear over time, but I figure I should actually write them down in a slightly more permanent way, so here it is, filtered by at least some forethought, though admittedly not much.
2. Choosing a hard money Unit of Account (UoA): This is a personal choice, but from what I can tell, the best contenders are #Monero, #Bitcoin, and #Gold.
Monero prides itself and strives to be peer-to-peer, uncensorable, private digital cash. The Monero community believe fiercely that the right to privacy in your financial dealings is a fundamental human right. An outsider is unable to tell who sent a Monero transaction, who received that Monero transaction, or how much that Monero transaction was for. The only people who have the right to know that information according to the Monero community are the sender and the receiver. The Monero community is openly defiant of state power and control and believe Monero is a tool like any other that can cause great harm or great good depending on the human behind the input device.
Bitcoin these days is commonly referred to as "digital gold". It was the very first cryptocurrency, and we all owe a great debt of gratitude to Satoshi Nakamoto for what he/she/they accomplished. Bitcoin was released as a scathing response to the 2008 great financial crisis. Satoshi embedded a now famous headline into the Genesis block of the network, "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”. What an absolute legend.
Gold has been hard money for thousands of years, retaining its purchasing power, and was only dealt a final killing blow in 1971 when then US President Richard Nixon declared "I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold or other reserve assets, except in amounts and conditions determined to be in the interest of monetary stability and in the best interests of the United States.". In case you haven't been keeping count, this temporary government program has been in effect for 55 years, showing that there really is nothing more permanent than a temporary government program.
As mentioned above, I have chosen Monero to fill this role in my life.
3. Stability out of instability: I will be the first one to admit, living on a hard money standard when everybody else is living on a flexible fiat standard is hard work. If you are not prepared for hard work, stop reading now and go do something else. Depending on the recklessness of your government, this could be literal years of hard work.
If you look at a price chart on any trading service, what you will find is that the prices of Monero, Bitcoin, and Gold can fluctuate wildly, or at least they look like they do. More on that later. The way I have found to combat this problem is by using a simple moving average of the prices instead of the day-to-day fluctuation in the market prices. You have a choice to make. How comfortable are you with instability? If you choose a shorter term moving average, you will be closer to the current market price at any given time, but your net worth will also experience more fluctuation when measured in your failing fiat currency. Choosing a longer-term moving average will keep your net worth more stable when measured in your failing fiat currency at the expense of most of the time underestimating your actual net worth, sometimes by quite a bit.
4. Shifting your mindset: Here's where things get tough. You have to abandon accounting your net worth in the fiat currency that you've used all your life. And that is hard. You have to put yourself in a headspace something like "my fiat currency is worthless, and I want nothing to do with it, if at all possible." you have to take the simple moving average you decided on above and start mentally pricing items from your fiat currency into the hard money you've chosen to use. as an example, instead of "my internet bill is 50 US dollars per month" your thought will need to become "my internet bill is 144 millinero (0.144 Monero) per month". This is where that moving average from earlier comes in. The market price of the hard money can fluctuate wildly in your failing fiat currency and you need to be able to price items you see directly in your new hard money without having to break out a calculator for everything. You don't have to get the pricing perfect by any means, but eventually you should be able to look at a price in your local fiat currency and have a decent idea of exactly what that item would cost in your hard money unit of account. Since your fiat currency is failing against the hard money unit of account you've chosen, what you'll often find is that you can get items at a "discount" from what you would have expected to pay by using the simple moving average. As an example, as of writing, I would expect to pay ~86 millinero for 2 two topping pizzas delivered to my home, but as of now, I would actually pay ~51.7 millinero instead. That is a "discount' from what I would have anticipated to be paying as determined by the simple moving average. However, the opposite can sometimes be the case and you might end up having to pay a "premium" above what you would have expected based on the simple moving average. This happens when your hard money unit of account is being undervalued as compared to the simple moving average in your failing fiat currency and is generally short-lived since your fiat currency is failing. during this "premium" it is best to delay non-essential consumption, if at all possible, until this reverts to normal. You should of course be fiat cost averaging into your hard money currency at all times from your failing currency, but at these times it is best to put any extra you might be able to get ahold of in quickly because you will obtain more units of the hard money and therefore be more wealthy later on down the road.
5. Practical advice and how I do it:
5A: Consume Media: Find podcasts, books, music, etc. to listen to about your chosen unit of account or similar hard monies. The Monero community, the Bitcoin community, and the Gold community have their differences, but deep down we are all striving for the same thing. We want to live in a world where our work is valued in a currency that cannot be debased by other human beings. Therefore, it's fine to listen to content from the other camps. Because the general rules apply even if specifics may not.
I've chosen Monero personally, but I still listen to Bitcoin podcasts and read Bitcoin books because while they may be about Bitcoin, so much of what they have to say is completely applicable to Monero. I also listen to podcasts about gold and silver for that exact same reason.
5B: Redenominate your life: Denominate your life as much as possible in the unit of account you've chosen and encourage others of similar viewpoints to do the same. If you can do so, find companies who take your currency for bill payments and start using them (example: Cloaked Wireless accepts both Monero and Bitcoin for cellphone bills)
For me #XMRBazaar has been fantastic. They have tons of items directly priced in Monero, where I don't have to concern myself with converting from Fiat.
5C: Determine your CAGR (compound annual growth rate): You are using the simple moving average to calculate your net worth, which is going to most of the time be below your actual net worth, and your fiat currency is failing against the hard money you've chosen. This means if you spent nothing from your hard money stack that your net worth in your local fiat currency would actually continue to grow. You could also treat this as a "dividend" and spend that much fiat in the full knowledge that as long as you spend less than that amount, the fiat value of your stack would stay the exact same or possibly grow. Here's a quick example for illustration purposes: monero's 6 month simple moving average is $352 US Dollars and the CAGR is 15%. So 15% divided by 12 months is 15/12 = 1.25%/month. If your hard money stack was worth 1,000 US dollars your "dividend" would be 1000*0.0125 = $12.50 US Dollars/month. If you spent nothing, your hard money would now be worth $1,012.50 or if you wished you could spend that $12.50 on something and your hard money stack would still be worth $1,000 US Dollars. Your stack of hard money would decrease slightly, but the fiat value of that stack would stay the exact same.
5D: Live the gift card life: You will not be able to find everything you want priced directly in your hard money of choice. Deal with it. Therefore, you will need to find merchants who are willing to accept the hard money you have chosen for gift cards denominated in your local currency in order to get some of the things you need. Here in the US, I am able to spend Monero to buy an Instacart gift card, for example, and then buy my groceries using that, so I have paid for my groceries using Monero indirectly.
After all is said and done, what you will find is that your life as denominated in the hard money currency you've chosen will get easier over time. In 2023 I was having to pay 1.2 Monero per month for my groceries and today that has fallen to 0.511 or -57.4% in 3 years. And that's against the US dollar, which is supposedly a stable currency. I can't imagine what it would be like for something like the Argentinian peso or Mexican peso. If the US dollar really is the cleanest dirty shirt, then that's still an extremely dirty shirt.