Why you should measure profit in fiat

[nrd525]

If you have a majority of your cost of living expenses in another currency than Bitcoin - then you should measure your profits and losses in that currency.

A lot of people are saying that it is BTC profit or loss that matters. This is illogical.

1. They are bulls without logic. The kind of person who thinks BTC will hit $1,000 or $100,000.  They funnel the bubbles and don't understand the bear markets.  They defy the existing market value and claim to have their own special knowledge about how much it is really worth. They use BTC to measure their worth in a bear market because they are in denial that they are losing money.  Do they do the same in a bull market?

2. You cannot eat BTC. If most of your expenses are in fiat - then your ability to pay for most of your food, housing, health, necessities, and luxuries depends on the fiat value you can get.

3. Even the things you can buy with BTC - almost all of them are linked to the fiat value.  Some of the BTC prices are slightly sticky and take time to change, but mostly BTC prices follow fiat value.

[msweb]

That's all true if we are talking about money that is sooner or later needed to pay something with. Of course it's highly speculative to hold any BTC if it's about storing wealth because of the unknown future value compared to fiat. It's like with any other asset. There are no guarantees in any market. I don't get what you are trying to say here. You shouldn't focus on the 'problems' that are the same within each other asset. You should rather focus on it's specialties against everything else. Bitcoin has a huge potential (in several ways) and that's why people are willing to invest in it (speculate on it).

[J.Jade]

I think it's not very intelligent measuring BTC "profits" or "losses" in fiat in longer term because of inflation.

The possibility that Bitcoin becomes a dominant currency should not be ruled out, too.

The only reason BTC profits and losses are measured in fiat by most people is the current dominance of fraudulent fiat monetary systems which only work because of mass indoctrination and coercion by governments. Anyone using his or her free mind would not accept and use fiat money.

[MonadTran]

If you have a majority of your cost of living expenses in another currency than Bitcoin - then you should measure your profits and losses in that currency.

Yes - if you happen to know the future value of that currency, at the moment you are planning to spend it. Say, if you are planning to retire in 30 years somewhere in the Caribbean, and Bitcoin is a part of your retirement portfolio, it makes perfect sense to measure your profits in future value of East Caribbean dollar, if it is still around at that time. The thing is, you don't know it. You can probably assume East Caribbean dollar is still around, and its value would be 50% of what it is now. But that's just as illogical as assuming Bitcoin would be the world reserve currency in 30 years. East Carribean dollar is pegged to the US dollar. The US, in its present form, is very unlikely to survive for another 30 years. Hyperinflation is very likely to happen in the nearest 10 years. You don't know a thing about the future.

bulls without logic. The kind of person who thinks BTC will hit $1,000 or $100,000.

It's not that difficult to imagine $100,000,000 bills in circulation, in 30 years' time frame. As long as Bitcoin does not disappear completely, $100,000 / bitcoin does not seem that far-fetched. Maybe not $100,000 in the present value of the dollar.

[CurbsideProphet]

Speaking strictly from a US perspective, yes, you should measure profit (realized gains) in fiat if nothing more than more tax purposes.