I met with family to answer questions about Bitcoin and helped them understand inflationary dollars vs deflationary bitcoin.
Once we established the basics of inflation, Bitcoin, etc, I showed them this tweet and chart from Jack Mallers: (I pulled out the text and 1 chart onto a slide)
https://x.com/jackmallers/status/1742313137926263249
While this is a place to start the conversation, everyone involved was a bit puzzled by "Things got cheaper in bitcoin".
Luckily, I had some real world examples ready for them.
I pulled up these tables on my next slide:
$35000 Car
| Year | BTC EOY | Cost of Car |
|---|---|---|
| 2018 | $3,000 | 11.6 |
| 2019 | $7,000 | 5.0 |
| 2020 | $27,000 | 1.29 |
| 2021 | $47,000 | 0.74 |
| 2022 | $16,000 | 2.25 |
| 2023 | $44,000 | 0.81 |
| 2024 | $100,000 (est) | 0.36 |
| 2028 | $250,000 (est) | 0.14 |
$300,000 House
| Year | BTC EOY | Cost of House |
|---|---|---|
| 2018 | $3,000 | 100 |
| 2019 | $7,000 | 42.8 |
| 2020 | $27,000 | 11.1 |
| 2021 | $47,000 | 6.3 |
| 2022 | $16,000 | 18.8 |
| 2023 | $44,000 | 6.8 |
| 2024 | $100,000 (est) | 3 |
| 2028 | $250,000 (est) | 1.3 |
After letting them them look at the data and process for a moment, then I started to explain:
- If you bought a $35,000 car in 2018, it would cost you $35,000
- If you bought a $35,000 car in 2023, it would cost you $35,000 (but due to inflation, you'd have to work more than you did in 2018)
- If you bought $35,000 of bitcoin in 2018, you would have had 11.6 bitcoin
- If you then used some of that bitcoin in 2023 to buy a $35,000 car, you would have a car and still have 10.79 bitcoin.
Of course, we never know what the future holds, but if you believe that bitcoin will continue to appreciate in value over time, this can be a useful exercise to help people understand where bitcoin has been and where it could be heading.