If Bitcoin prices rise faster than dollar inflation, this strategy would come out ahead, no? Is my math backwards? Show me the back of your napkin please. I accept that I may be retarded but I'd like you to show me how.
Three cases with $1000 initial investment at BTC price of $90,000:
## High BTC Growth (100% annual) vs 7% Inflation
After 9 months:
BTC is worth $2,226
Dollar purchasing power dropped to $943
Significantly ahead
## Equal Growth (Both 7% annual)
After 9 months:
BTC is worth $1,060
Dollar purchasing power dropped to $943
slightly ahead
## Low BTC Growth (3% annual) vs 7% Inflation
After 9 months:
BTC is worth $1,025
Dollar purchasing power dropped to $943
Barely ahead
I was assuming the second case. To clarify if $1000 buys you 1000 pounds of bread now, then in 6 months you will have $1060 worth of Bitcoin but the price of those 1000 pounds of bread will have gone up to $1060 too so you get the same amount of bread as before. Bread hasn't gotten cheaper for you as you were hoping.
This is of course for the ideal case of a stable currency. Bitcoin is fiction like Harry Potter or Santa Claus. It's not involved in any real world economic transactions involving bread or anything else you were thinking of using that credit card for. Dreams on the other hand can evaporate just like 7 year olds eventually realize Santa isn't real.
If you want to speculate on the dreams of nincompoops that are naive and miserable but have money to spare then go ahead.
I use a Bitcoin backed debit card to buy bread. And where possible, I send people Bitcoin directly p2p for transactions.
When you have a hard currency that can't be printed + societal technological advancement that leads to the reduction in cost in the means of production, you would expect prices to drop forever (see iPhone price vs feature set).
If you have a hard currency that can't be printed you'll have prices fluctuating with a fluctuating economy and that's really bad for any business. You really need stable prices. The central bank has some means (not great ones but better than Bitcoin) to put money into circulation or take it out of it.
As for technology, you'll get more for your money or it's less effort to earn the money in the first place, but you won't spend less. iPhones are a good example, you get more with every new model but the price doesn't go down.
It's disingenuous to brush under the rug "get more for your money". That's sort of the entire point. With phone technology the lede is sort of buried and obscured, but in the bread analogy from earlier, getting way more bread for the same price (bread tech improvement or whatever) is significant.
Nah it doesn't work for bread because people can eat only so much bread. With technological advances, unless you can consume more, the price will remain stable but the farmer has to work less. Effectively the price per hour of farmer labor went up.
Your point only holds if Bitcoin's price growth doesn't outpace inflation, over the long term, correct?
Yes, there's no reason to believe it would.
Btw if you believe Bitcoin is a good investment, better than say a savings account, then go ahead buy Bitcoin. Like buying shares, real estate etc. whatever. But what does that have to do with the credit card. When you invest you don't spend and if one day you need to spend you sell assets for fiat and then spend that. Important: You don't count on having fiat and how much until you actually sell. Your day-to-day expense budgeting involves just fiat you actually have.
Because you mentioned a credit card and everyday spending it seemed you were wanting to do your expense budgeting in Bitcoin and were hoping that prices in Bitcoin would go down thanks to just fiat inflation. But if the fiat price of Bitcoin rises just thanks to inflation then Bitcoin prices of goods and services will just remain stable. So no free lunch.
I thought it was clear that I think the price of Bitcoin will far outpace "just inflation". By an order of magnitude or more over a medium term timeframe.
Agreed, if I thought it was just going to TRACK inflation then I would just invest in a more stable asset that does that very boring thing.
I'm not "investing". Bitcoin isn't about _making_ money, for me - I believe Bitcoin will **be** the money. What I think I'm doing is acquiring the market good which will replace the current money, because it is clearly a better solution to the problem. And the best money always wins.
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