Great question. Keep asking these! It’s what helps with conviction over the long-term
The key is to study money some more…
How I think through this:
- money solves the double coincidence of wants problem
- many things can be used as money, most things are very bad at money
- a good money is: Divisible / Durable / Fungible / Portable / Scarce / Verifiable
- good money has 3 functions: store-of-value / medium-of-exchange / unit-of-account
- people will use money in different scenarios for 1 of the last 3 functions
What you’re thinking through, it’s important to identify which function you’re fulfilling
As Bitcoin increases its market cap, driven by value moving into BTC, and purchasing power increasing, as supply is outstripped by demand, the SOV function is altering (hence we see its exchange rate alter)
Whilst, you can price things in whatever you want. Chairs. People. Coal. Grain. Gold. USD. Eur. BTC. Etc. Long-term I believe everything will be priced in BTC, which is UOA function. The supply of all those UOA moneys I just mentioned can change, but BTC will change the least (think stock-to-flow ratio), hence makes a good UOA
Point being everything is in flux the whole time. Modern fiat has lulled us into the false sense that prices can be constant
In short - I try my hardest to measure my net wealth in BTC terms (ie SOV) but on a daily basis pricing things in BTC remains hard
Lastly BTC will only have 21 million, this is like a truthful measuring stick of value, unlike anything we’ve ever seen. Just because you price in SATS, this doesn’t change that fact
Hard to explain in one note!
🙏🏻
Hope that makes sense
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Replies (2)
Q1 -. The Apple that used to cost 10k sats, if btc doubles in purchasing power, will now cost 5k sats (whatever the usd price will depend on usd inflation)
Thank you for this well laid out explanation!
I appreciate it.
The loop is almost closed 😎