pull down to refresh

Liabilities being denominated differently than assets can be a bit of a headache, but nothing you cannot plan for; this is a situation you will often have in international trade too. There are best practices, but these mostly focus on a scenario where you planned on being one of the NPCs in Darth's fav meme.

Generally though, choose a base accounting currency. If you're operating a registered entity, the choice is already made for you and you have to comply with what is coming from your state/country. If you're a law abiding citizen, much the same: accounting rules are a thing. If you're a sovereign/disobedient small business or solopreneur you can make your own choices. I've personally been running sats denominated for a couple of years now. Just a (way too complicated) spreadsheet where I track P&L in base sats and book FX gains/losses every time something gets paid / I pay something. It works for me because I've been working internationally, so I'd had those FX risks regardless.

But be careful, the volatility makes it hard to denominate longer term contracts in sats. Maybe for you it isn't a problem but your counterparty may feel different about that; this is something to be aware of. Personally I favor shorter term sat denominated contracts to derisk, after getting confronted with too heavy AR backfill from clients that were willing to make me wait for the fiat exchange rate to come down a bit for them.

1 sat \ 0 replies \ @Fenix 1h
If you're a sovereign

The main scenario

P&L in base sats and book FX gains/losses every time something gets paid / I pay something.

You went into a lot of detail and I appreciate you being so open, so I have a few more questions to dig deeper. Do you keep fiat for necessary operations and record them at fair value in sats in that complicated spreadsheet of yours, or do you convert all fiat into sats to avoid having to deal with that accounting and keep your flow "pure"?

it hard to denominate longer term contracts in sats.

Dealing with clients who I assume aren't bitcoiners makes the contract itself feel like an investment to them; it's very complicated, and I'll keep that tip in mind in case I have to deal with it.

reply