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Author Topic: Purchasing power of Bitcoin  (Read 2142 times)
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November 26, 2013, 09:01:32 AM
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I have a question. If the BTC/USD exchange rate continues to increase, by what factor does the actual purchasing power of BTC increase?

For example, Max Keiser predicts that 1 bitcoin will be worth at least $100,000 USD. Assuming this is true and BTC/USD = 100,000, is that 1 bitcoin going to yield the current purchasing power of $100,000, or is it only going to yield the future purchasing power of $100,000 of a completely devalued USD (so maybe only equal to a current purchasing power of $10,000)?

I'm confused about this because common sense seems to tell me that as bitcoin continues to rise (assuming it does, for the purposes of this thread), then the actual purchasing power of it decreases ... so if 1 btc = $1billion USD then you're not actually going to take your 1 btc and get a billion dollars worth of goods at the current value of a billion dollars USD, since USD would be worth less as bitcoin is worth more.
However in the case of commodities such as diamonds and so on, they can be worth tens of millions of dollars without really affecting the value of a US dollar.

If my instincts are correct and the purchasing power does decrease as the exchange rate increases, is there a way to calculate what the present-day purchasing power will be for any future exchange rate? Likewise, if this is incorrect, can you please explain why?
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November 26, 2013, 09:55:32 AM
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When the market cap of BTC is within roughly an order-of-magnitude of the dollar, then the dollar's value will start to be affected by BTC's rise, i.e. hyperinflation will begin. Could happen before or after that level, since expectations is what supports an asset's value.

I highly doubt we will reach that "singularity".

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November 26, 2013, 03:32:19 PM
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This all depends both on USD and bitcoins, if bitcoins continue to rise . And as of now USD's purchasing power is diminishing, so you can accurately say that its purchasing power will remain Same if and only it rises the same percentage that USD fails. But Bitcoin coin at the moment is rising more than USD is falling. So, in my opinion it is increasing its purchasing power
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