824 sats \ 2 replies \ @Undisciplined 4 Sep 2023 \ on: When will BTC become a good unit of account? bitcoin
I don't think that's the issue with using Bitcoin as a unit of account.
I've actually been meaning to write my own post about Bitcoin as a unit of account, because I think that's the next big hurdle on the path to becoming money.
It's difficult to use Bitcoin as a unit of account, because most goods and services are priced in fiat. In order to use Bitcoin as a unit of account, you need to be able to define your income and expenditures in Bitcoin.
Superficially, it would be simple for an entrepreneur to price their services in Bitcoin, but if they want to earn a profit, then they need to generate revenues that exceed their costs. In order to define their costs in Bitcoin, they need to find other entrepreneurs who provides the resources they need and also price them in Bitcoin.
I'm very curious about how the people who really live on a Bitcoin standard navigate this unit of account issue. Are they converting fiat prices into Bitcoin prices or have they managed to define their prices in Bitcoin terms?
Would be interested in that as well. And I 100% agree that unit of account is the primary hurdle to Bitcoin’s adoption as money.
There’s definitely a chicken and egg problem. I’ve read somewhere that in a Bitcoin economy, businesses will simply update their prices when the value of Bitcoin changes. The problem is that’s just not realistic for anything but goods and services that can be bought today.
I haven’t read Graeber but I understand that he advocated a debt theory of money. To gain adoption as a unit of account, we need people to price their debts in BTC (and any other type of long-dated contract, like wages).
I think the unit of account problem is one of simple competition. When two parties sign a contract, it is in their interest to choose the least risky unit of account that’s available. This means a unit of account whose future value is as certain as possible. Much of international trade is done in dollars for this reason. To gain adoption as money, bitcoin needs a unit of account that is undeniably superior to any alternative.
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I can see why Bitcoin denominated debts would be important, since that would also mean well defined Bitcoin denominated payments. Now the lender has a steady defined stream of Bitcoin and the borrow has some consistent Bitcoin costs. It'll be figuring out interest rates on Bitcoin debts that will be very difficult at first.
I'm trying to take some baby steps towards unit of account thinking. For instance, on Fountain, I have a fairly predictable small Bitcoin income and I've preset how much I'm going to stream back to podcasts that have their LN stuff set up.
I've generally been an advocate for dollar-cost-averaging as a strategy for stacking sats. However, this conversation has me thinking about how buying the same amount of Bitcoin every week would provide a defined Bitcoin income.
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