How Things Get "Cheaper in Bitcoin" \ stacker news ~Personal

964 sats \ 4 comments \ @hodlpleb 11 Jan Personal_Finance

I met with family to answer questions about Bitcoin and helped them understand inflationary dollars vs deflationary bitcoin.

Once we established the basics of inflation, Bitcoin, etc, I showed them this tweet and chart from Jack Mallers: (I pulled out the text and 1 chart onto a slide) https://x.com/jackmallers/status/1742313137926263249

While this is a place to start the conversation, everyone involved was a bit puzzled by "Things got cheaper in bitcoin".

Luckily, I had some real world examples ready for them.

I pulled up these tables on my next slide:

$35000 Car

Year	BTC EOY	Cost of Car
2018	$3,000	11.6
2019	$7,000	5.0
2020	$27,000	1.29
2021	$47,000	0.74
2022	$16,000	2.25
2023	$44,000	0.81
2024	$100,000 (est)	0.36
2028	$250,000 (est)	0.14

$300,000 House

Year	BTC EOY	Cost of House
2018	$3,000	100
2019	$7,000	42.8
2020	$27,000	11.1
2021	$47,000	6.3
2022	$16,000	18.8
2023	$44,000	6.8
2024	$100,000 (est)	3
2028	$250,000 (est)	1.3

After letting them them look at the data and process for a moment, then I started to explain:

If you bought a $35,000 car in 2018, it would cost you $35,000
If you bought a $35,000 car in 2023, it would cost you $35,000 (but due to inflation, you'd have to work more than you did in 2018)
If you bought $35,000 of bitcoin in 2018, you would have had 11.6 bitcoin
If you then used some of that bitcoin in 2023 to buy a $35,000 car, you would have a car and still have 10.79 bitcoin.

Of course, we never know what the future holds, but if you believe that bitcoin will continue to appreciate in value over time, this can be a useful exercise to help people understand where bitcoin has been and where it could be heading.

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40 sats \ 0 replies \ @0xbitcoiner 11 Jan

10 sats \ 2 replies \ @Voldemort 11 Jan

I just had a similar post yesterday (that didn't get any traction) but I was thinking about it differently.

In terms of saving money/store of value - I am with you 100%. In terms of buying a house (as you have laid out in the table), I think of it the opposite way.

If I bought a home in 2018 with 100 bitcoin, the house would be worth maybe 400-500k in 2023. The bitcoin I used to buy it would be worth $4.4M. Of course the difference becomes less dramatic if I were to buy a home with bitcoin in 2023 (assuming cost of a house in 2023 is 10 bitcoin again it would still be a big loss by 2028 with btc at $250k), but I would still not make that deal.

0 sats \ 1 reply \ @hodlpleb OP 11 Jan

The tables I made are definitely over simplified - can't get the same house for $300k today that you'd get 5 years ago, etc. Plus then you're paying rent or whatever in the meantime.

10 sats \ 0 replies \ @Voldemort 11 Jan

Totally, but the principle applies. If the thing you buy something with gains value faster than the thing you bought then you are effectively losing money.

I would not make a big purchase with bitcoin today. In your example about buying bitcoin in 2018 and then buying a car in 2023, that 0.81 bitcoin used in 2023 to buy a car would be worth ~200k in 2028. Obviously one is far better off holding bitcoin than holding dollars, but it would poor financial decision to buy a car with bitcoin right now.

As a very real example, I bought SOL at $20. I sold 25 of them at like $35 to buy concert tickets. Of course I still made money with my SOL and so I effectively paid $500 for $800 tickets, but the opportunity cost of buying those tickets was a couple thousand dollars.

That is the math. Your argument is the $500 for $800 tickets. That is undoubtedly a great deal. My argument is the if i had the 25 SOL they would be worth $2500 now. Not such a great deal.