{"id":6865,"date":"2022-09-28T18:39:35","date_gmt":"2022-09-28T18:39:35","guid":{"rendered":"http:\/\/ci02ac7505200025b4"},"modified":"2022-09-28T18:39:35","modified_gmt":"2022-09-28T18:39:35","slug":"how-to-denominate-in-bitcoin-terms","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/markets\/how-to-denominate-in-bitcoin-terms","title":{"rendered":"With Fiat Currencies Crumbling, It\u2019s Time To Denominate In Bitcoin Terms"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p><em>This is an opinion editorial by Stephan Livera, host of the \u201cStephan Livera Podcast\u201d and managing director of Swan Bitcoin International.<\/em><\/p>\n<p>Many fiat currencies are <a href=\"https:\/\/cointelegraph.com\/news\/bitcoin-british-pound-trading-volume-soars-1150-as-uk-s-currency-risks-dollar-parity\" target=\"_blank\" rel=\"noopener\">struggling to retain purchasing power in USD terms<\/a>. The macro conversation on finance Twitter is now turning to how the overall system is breaking, and the fact that you <a href=\"https:\/\/twitter.com\/search?q=taper%20a%20ponzi&amp;src=typed_query\" target=\"_blank\" rel=\"noopener\">can\u2019t taper a Ponzi<\/a>. <\/p>\n<p>Now is a great time to press the advantage that Bitcoin brings: not being a f<a href=\"https:\/\/bitcoinmagazine.com\/guides\/fiat-money\">iat currency<\/a> that can be printed on demand. It\u2019s time to denominate in bitcoin terms.<\/p>\n<h2>What\u2019s Going On In The World Of Fiat Currency Markets? <\/h2>\n<p>As you may be aware, many <a href=\"https:\/\/bitcoinmagazine.com\/guides\/fiat-money\">fiat currencies<\/a> are crashing against the USD. This doesn\u2019t necessarily mean the USD is \u201cgoing up\u201d either, it is also losing purchasing power, just at a reduced pace. <\/p>\n<p>Year to Date (YTD) for large fiat currencies vs USD: <\/p>\n<ul>\n<li><a href=\"https:\/\/finance.yahoo.com\/quote\/GBPUSD=X\/history\/\" target=\"_blank\" rel=\"noopener\">GBP<\/a> is down from $1.34 to $1.057 \u2014 a drop of 21%<\/li>\n<li><a href=\"https:\/\/finance.yahoo.com\/quote\/JPYUSD=X\/history\/\" target=\"_blank\" rel=\"noopener\">JPY<\/a> is down from 0.0087 to 0.0069 \u2014 a drop of 20%<\/li>\n<li><a href=\"https:\/\/finance.yahoo.com\/quote\/EURUSD%3DX\/history\/\" target=\"_blank\" rel=\"noopener\">EUR<\/a> is down from $1.13 to $0.97 \u2014 a drop of 15% <\/li>\n<\/ul>\n<p>The Bank of England is <a href=\"https:\/\/www.cnbc.com\/2022\/09\/28\/bank-of-england-delays-bond-sales-launches-temporary-purchase-program.html\" target=\"_blank\" rel=\"noopener\">now starting a new wave of bond purchases<\/a>, or in other words, the debasement continues. GBP holders and savers will continue to have their savings destroyed by the money printer over time. They are being sacrificed on the altar of \u201cfinancial stability.\u201d <\/p>\n<p>With fiat currencies devaluing this rapidly, it\u2019s not such a crazy idea that we should value things directly in sats or BTC terms. While nocoiners love to hate Bitcoin for not being at all-time high prices, the reality is that long-term Bitcoin users have dramatically profited, both in purchasing power and in freedom terms. <\/p>\n<p>The loss of confidence in fiat currencies is driving a fundamental shift in thinking. If our precoiner friends were scared of bitcoin because of volatility before, the difference in volatility between bitcoin and fiat coins is reduced, so it makes sense to start using bitcoin denominations. <\/p>\n<h2>What Does It Mean To Denominate In Bitcoin Terms? <\/h2>\n<p>It means to evaluate financial costs and benefits in Bitcoin or satoshi terms. This includes financially valuing our net worth in bitcoin\/sat terms. This is really what matters over the longer term for Bitcoin Maximalists after all. If you believe everything is going to be priced in sats someday, why not start now? <\/p>\n<p>I have personally denominated my net worth in bitcoin terms for a while now, but I\u2019ve struggled with the next part: day-to-day expenses. For me, this is mainly because of mental arithmetic. So my next step is to focus more on evaluating the bitcoin cost of revenue and expenditure of day-to-day items. If we are serious about bitcoin as better money, we should show it. <\/p>\n<h2>Practical Tips On Bitcoin Denomination<\/h2>\n<p>Start by keeping your finger on the pulse in terms of what the \u201csats per dollar\u201d price is. You can do this using Coinkite\u2019s BLOCKCLOCK (aka, <a href=\"https:\/\/thebitcoinmanual.com\/btc-culture\/glossary\/moscow-time\/\" target=\"_blank\" rel=\"noopener\">Moscow Time<\/a>) or perhaps on sites like <a href=\"http:\/\/bitbo.io\" target=\"_blank\" rel=\"noopener\">Bitbo.io<\/a> that list it. You can also use converter tools like <a href=\"http:\/\/bitkoin.io\" target=\"_blank\" rel=\"noopener\">bitkoin.io<\/a> or <a href=\"http:\/\/preev.com\" target=\"_blank\" rel=\"noopener\">preev.com<\/a>. Also, <a href=\"https:\/\/www.pricedinbitcoin21.com\/\" target=\"_blank\" rel=\"noopener\">pricedinbitcoin21.com<\/a> is a useful site showing all kinds of bitcoin-denominated prices.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/sats-denomination.png\" title=\"\"><\/figure>\n<p>On mental arithmetic, one tip is to start with sats per dollar. So, for example, if 1 BTC = $19,067, then the sats per dollar is about 5,200, so $10 is about 52,000 sats, $100 is about 520,000 sats and $1,000 is about 5.2 million sats. <\/p>\n<p>One other hurdle is just having to continually reset prices if we\u2019re actually <em>quoting <\/em>real world products\/services in bitcoin terms. But so be it, this is our proverbial cross to bear, and it benefits the user in the longer term to operate this way. <\/p>\n<p>Of course there may come a point where the bitcoin price for something set a few years\/cycles ago is no longer appropriate, but this just requires readjustment. And being fair, this is something that all fiat merchants are having to do <em>anyway<\/em>.<\/p>\n<h2>This Isn\u2019t New, We\u2019re Just Bringing It Back<\/h2>\n<p>In the earlier days of Bitcoin, it was more common to speak in terms of the BTC values for things. Perhaps it became more difficult due to the price rise and dealing with small fractions of a bitcoin in our heads. <\/p>\n<p>Remember though, that early services and games ranging from <a href=\"https:\/\/www.thepokerbank.com\/rooms\/sealswithclubs\/\" target=\"_blank\" rel=\"noopener\">SealsWithClubs<\/a>, to <a href=\"https:\/\/en.bitcoin.it\/wiki\/MPEx\" target=\"_blank\" rel=\"noopener\">MPOE<\/a>, to <a href=\"https:\/\/satoshidice.com\/\" target=\"_blank\" rel=\"noopener\">SatoshiDice<\/a> were bitcoin denominated! Some early exchanges on Bitcoin Talk forums were bitcoin denominated. So really, this is just bringing back what Bitcoiners <em>used <\/em>to do. <\/p>\n<p>Of course, there are some in the Bitcoin space who are already bitcoin-denominated even in terms of the service\/product they sell. Notably, the CoinJoin services are bitcoin-denominated (e.g., see the <a href=\"https:\/\/www.whirlpoolfees.com\/\" target=\"_blank\" rel=\"noopener\">Whirlpool fee calculator here<\/a>), and various individuals in the space are operating without fiat bank accounts, so they\u2019re obviously doing better at being bitcoin denominated. <\/p>\n<p>We should also note that the Lightning Network is helping here also. Various Lightning services, tipping and wallets are sat denominated. For example, <a href=\"https:\/\/getalby.com\/\" target=\"_blank\" rel=\"noopener\">Alby<\/a> and the <a href=\"https:\/\/bitcoinmagazine.com\/culture\/podcasting-2-0-will-bring-bitcoin-to-the-masses\">Podcasting 2.0<\/a> apps are sat denominated. People running routing nodes on the Lightning Network are setting their base fees and variable fees (ppm, or parts per million) in satoshi terms, which we can see by browsing Lightning nodes on explorers such as <a href=\"http:\/\/mempool.space\" target=\"_blank\" rel=\"noopener\">mempool.space<\/a>.<\/p>\n<h2>On The Question Of Amounts: Bitcoin Or Sats? <\/h2>\n<p>A long-time topic in Bitcoiner circles is the point of <em>unit bias<\/em>, which is believed to be behind some shitcoins pumping. The nocoiner coming in sees a very low price per unit and buys the shitcoin thinking, \u201cHey, it\u2019s coming off a low base so there\u2019s more upside.\u201d So the rationale goes that if we all spoke in terms of sats only (and not in BTC terms), that bitcoin could leverage this effect also. <\/p>\n<p>But this doesn\u2019t come for free, there is a trade off. There may well be high-net-worth investors (HNWI) who get into bitcoin, and because they want to buy \u201ca whole coin,\u201d they buy more than they otherwise would have. We could even argue that the amount HNWIs buy is higher, thus the impact HNWIs have is higher. And by now, most know the oft-quoted statistic about how \u201ceven if every millionaire on earth wanted a whole bitcoin, they couldn\u2019t get it.\u201d <\/p>\n<p>Remember that if you divided the number of sats by the number of people on earth, that number comes out to around 226,000 sats (see <a href=\"https:\/\/satoshisperperson.com\/\" target=\"_blank\" rel=\"noopener\">satsperperson<\/a>).<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/sats-per-person.png\" title=\"\"><\/figure>\n<p>But perhaps this unit bias question is neither here nor there. As long as there is an easy option or toggle to flip between BTC terms and sat terms in our apps and services, it probably doesn\u2019t matter that much. In practice, I think people will just refer to smaller value things in sat terms, and larger value items in BTC terms.<\/p>\n<h2>You Can\u2019t Fully Escape Doing Fiat Conversions<\/h2>\n<p>I understand one critique here might be that lots of our day-to-day life expenditures are still fiat denominated, and that we can\u2019t fully escape it (yet). Nocoiners may critique us also for still valuing bitcoin in USD terms, but the process has to <em>start somewhere<\/em>. <\/p>\n<p>Starting somewhere means we should try to think in bitcoin or sat terms <em>first<\/em>. So if we\u2019re talking about the price of things, list the bitcoin-terms price <em>first<\/em>. Or perhaps more provocatively, list the bitcoin price <em>only<\/em> and let the other person do a calculation. Let&#8217;s disrupt the network effect of fiat currency, and not let our lives be ruled by the fiat currencies.<\/p>\n<p><em>This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As fiat currencies crash against the USD, it makes sense to start using bitcoin denominations, even for day-to-day expenses.<\/p>\n","protected":false},"author":2807,"featured_media":4903,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[1953,1610,59,1314,1828],"class_list":{"0":"post-6865","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-british-pound","9":"tag-euro","10":"tag-opinion","11":"tag-u-s-dollar","12":"tag-yen"},"author_data":{"id":2807,"name":"Stephan Livera","nicename":"stephanlivera","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/stephan-livera-promo-image-96x96.png"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/bitcoin-fiat-walled-garden-breakthrough-top-photo.png","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/6865","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2807"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=6865"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/6865\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/4903"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=6865"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=6865"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=6865"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}