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varunprasad | 4 years ago
I'm curious why you wouldn't compare it to the direct measure, which is the value of the Argentine Peso.
Because if El Salvador had bought Argentine Peso instead and let's assume they bought them in September, when they first started buying Bitcoin (if I assume they bought the Peso gradually over the past 4 months like they did Bitcoin the Peso would look better since its value has only dropped over that period), they would have bought $88mm USD of Peso on September 1 at a price of 97.71 Peso per dollar, giving them a 8.598 billion Peso holding.
At today's price of 104.50 Peso per USD, that holding would now be worth $82.28mm USD.
Compare that to their BTC holdings of $60mm spending the same amount of USD to buy Bitcoin. Clearly $82.28 > ~$60mm, so they would have done a lot better with the Argentine Peso instead.
Of course, BTC is highly volatile and for all you know it may rise by 50% making their holdings more valuable than the Peso. However, what it does show is that BTC appears to be a poor currency, that specifically does not protect from inflation or currency risks.
It might be a great investment, as a lot of people appear to be treating it, but that in fact makes it a poor currency. An investment should appreciate over time. Whereas a good currency should depreciate over time (although slowly) because if it appreciates over time then that greatly reduces the incentive to spend/invest the resources that currency represents in actual productive endeavors, which damages the real economy, and means a country does not build as much infrastructure, grow as much food, or employ as many people, as it would with a slowly but consistently depreciating currency.
conanbatt|4 years ago
thebradbain|4 years ago