What if You Priced Everything in BTC?

Most people price everything in U.S. dollars ($USD). Your retirement accounts may have $100k. Your house is worth $300k. And a “10.75 fluid ounce can of Campbell’s condensed tomato soup is $0.85.” As a thought experiment, let’s price everything in Bitcoin (BTC). What happens? The answer is that everything gets cheaper. This is both bad (if you own any assets other than BTC) and great (if you own BTC).

Your Retirement on BTC

Let’s say your Roth IRA had $100k in it 5 years ago. You’re a savvy investor and have it mostly in VTI (Vanguard Total Market Index ETF). The market has done really well over the last 5 years. Even if you added nothing to it, your IRA would be about $235k now. That’s awesome! Had you not invested in VTI, you’d still have…. $100k.

Now, let’s measure that in BTC. That $100k in October of 2016 would’ve been about 153 BTC, because Bitcoin was about $650/BTC. In October of 2021, with the price of BTC around $60k, that $235k would be only 3.9 BTC. By measuring your IRA in dollars (invested in VTI) you more than doubled your money. When you measure it in BTC, your retirement went down from 153 BTC down to 3.8 BTC in only 5 years.

Let’s flip it. If you’re pricing things in Bitcoin, then in Oct of 2016, you’d invest all of that $100k into BTC. In your IRA, you’d then own 153 BTC. Five years later, you still only have 153 BTC in your retirement account. The number of BTC didn’t go up (just like the number of shares of VTI doesn’t go up). But your purchasing power as measured in USD went from $100k to $9.5 million by owning BTC.

Houses in BTC

Once you start measuring everything in Bitcoin, you find that all your assets are losing value (purchasing power) over time. And the good news is that everything is losing value in BTC, including the price of homes. Real estate is cheaper, cars are more affordable, and food doesn’t cost more, but less overtime when you’re pricing in Bitcoin.

In 2016, the average sales price of a home in the United States was $360k. Let’s say that you put a 10% down payment on the house to buy it. That’s $36k of your savings to buy a house. There are other costs (taxes, insurance, closing costs, etc.) but we’ll ignore those for now. Real estate prices went up quite a bit during the pandemic of 2020 and 2021. So, that $360k house is now worth about $440k. Congratulations, your equity jumped up $80k in 5 short years of owning a home. And if you didn’t buy that home, it would now take a 10% down payment of $44k to buy it which is $8k more than you had to pay in 2016.

Now, let’s price that house in Bitcoin. We said Bitcoin was about $650/BTC in October 2016, so a down payment of $36k would’ve cost you about 55 BTC. In October of 2021, Bitcoin is about $60k/BTC, but, since you waited, you now have to pay $44k to buy this house. It went up in USD price, remember? Well, that $44k down payment would cost 0.74 BTC. The exact same house, which went up in USD price by $80k in 5 years, went from costing 55 BTC down to less than 1 BTC to buy.

The world looks quite different when you start to price everything in BTC. Yes, in the U.S., we spend U.S. dollars (USD) to buy everything. You can easily convert Bitcoin into USD to buy whatever you want. Let everybody else continue to price things in USD. If you start pricing everything in Bitcoin, you’ll see that everything gets cheaper over time. The logical conclusion is to move as much of your net worth (savings, retirement accounts, investment accounts) into Bitcoin and wait. In 5 years, you just may be able to afford a lot more than you would otherwise.