People often talk about the price potential of BTC or gold, in terms of US dollars or euro. In my opinion this does not make sense because the value of euros and dollars can be destroyed by central banks printing them to infinity.
So it only makes sense to debate the value of BTC or gold, in terms of an other store of value with a limited availability (BTC expressed in gold, or gold expressed in BTC. Or even in silver)
Fiat currency is not a store of value as we all know. Currency is not money because any currency in history got inflated to 0.
There is an estimated 208 000 tonnes (208 000 000 kgs) of gold available on planet earth. This has been mined throughout history and we can assume that this is not lost. But let's estimate it at 210 000 tonnes to make it easy.
The amount of bitcoin that will ever be available, is capped at 21 million coins. So for each coin that is available, there is 10 kgs of gold available (210 million divided by 21 million = 10)
So in terms of value 1 BTC is worth 10kgs of gold. But given that 10kgs of gold costs 650 000 dollars today and 1 BTC costs 30 000, BTC must be undervalued and still has a potential to 20x from here. So why would people buy gold as a hedge against inflation, when they can buy BTC that is undervalued by a factor of at least 20? I guess the answer lies in confidence and previous experience.
Is any of the above wrong?
A few side notes:
- I think this is only true when BTC reaches mass adoption like gold does now. But I think this has a good chance of happening because CBDC's will lose their value just like fiat currency. People will run to real stores of value like precious metals or BTC. BTC is more accessible than gold and so I expect more people to chose BTC over time.
- Given the fact that many coins are lost and thus not available for trading, maybe the real amount of BTC that will ever be in circulation is more like 15 million. This makes BTC more rare and increases its value in gold significantly.
I totally agree with you! Nearly none of those who talk about
BTC or alt price fluctuations consider fiat (predominantly EUR-USD) price fluctuations, while main world's fiats are actually at a high risk of heavy inflation now. So it's really a problem of modern economy - to find something which can be considered a stable value. Gold is really an eternal value due to its high corrosion resistance - it never disappears under Earth conditions, and also gold is impossible to be acquired by easy ways. Most other materials (both metal and non-metal) experience either one of these problems, or both, and thus can't be used as a stable value. So it's a great idea to evaluate BTC in gold.
Also, I think that it's time to create the brand new, non-material value scale in order to evaluate economic processes. Since the value of all the things lies within psychology, the new economy scale unit would be not USD, not BTC, not any other currency, but something like "unified psychological unit of feeling happy". It wouldn't have direct relation with money scale: joy of a billionaire is not 1000 times more than joy of a millionaire, it may be even 1000 times less, while world's dominant capitalist propaganda tells us that "the more money - the more happiness, do your best to get money!", implying that there is a direct relation between these two factors (which is actually a false statement). I assume, the real psychological evaluation of "numbers" in a wallet is a kind of complex multifactorial logarithmic-hyperbolic-parabolic-sinusoidal (whatever, but not straightline) function of those "numbers". We need to ditch currency-backed economy approach, since this approach is actually a fiction, a fairytale created by the world's richest people in order to control the behavior of the others.
