Bitcoin as a unit of account

[johnarb]

I am a bitcoin bull but I think bitcoin is many years away from truely being a unit of account (or a widely used medium of exchange for the matter). And that’s ok!

If you're waiting for an official announcement from some governing body for bitcoin to be certified as unit of account, it may never happen

It's a state of mind. You just flip the switch and you see the whole world much differently, for example, price inflation loses significance

I did not create this website https://www.pricedinbitcoin21.com/landing nor the video on the OP

I am all for crypto. But I just can't see Bitcoin going on forever. Think of this, 1, it's too slow. 2, it will eventually get very difficult for miners to be profitable. Bitcoin halves every 4 years, meaning it takes twice as much power to get the same reward

So mathmaticly, Bitcoin cannot sustain itself forever

The past few weeks have been very profitable for bitcoin miners, they earned more in tx fees (because of ordinals) than the block rewards. It's still elevated now, but not as much

Bitcoin miner revenues will come mostly from tx fees starting as early as next halving cycle. This was predicted in the white paper

 

[GlobalMacro90]

I am all for crypto. But I just can't see Bitcoin going on forever. Think of this, 1, it's too slow. 2, it will eventually get very difficult for miners to be profitable. Bitcoin halves every 4 years, meaning it takes twice as much power to get the same reward. And with the rise of electricity costs, it will become increasingly difficult for miners to be profitable, (unless they go solar which would still be very costly to set up). But Bitcoin will eventually have to go well above 100k and stay there in the next 4 years for miners to be profitable. Electricity prices are also going up. So with Bitcoin above 100k, who would want to buy at those levels? And with miners being unprofitable with higher electricity costs, they will shut off their rigs, and that will shut down the network.

Of course that's just my theory. I'm sure some miners will look to alternative means of power, but that will be a fraction of the miners that are already out now, and the network will be extremely slow at least.

So mathmaticly, Bitcoin cannot sustain itself forever

well you know that block fees are higher now then ever (thanks to ordinals). Miners get the block subsidy (new bitcoin) and fees when they win a block. Fees are already higher then the block subsidy.

point is IF a sustainable fee market develops on bitcoin, which I admit, is still an open question, this is a non-issue.

my personal prediction is that demand for layer 1 block space will get bigger and bigger, and this alone will create a sustainable fee market for the miners. But I admit this is an open question

 

[GlobalMacro90]

Also … I don’t think any “normal” person will transact in small amount on the bitcoin L1 in the future. It’s equivalent to using a bank wire to pay for groceries.

 

[Tokenz]

The past few weeks have been very profitable for bitcoin miners, they earned more in tx fees (because of ordinals) than the block rewards. It's still elevated now, but not as much

Bitcoin miner revenues will come mostly from tx fees starting as early as next halving cycle. This was predicted in the white paper

Oh that's good to know. Hopefully the fees don't become too high either

well you know that block fees are higher now then ever (thanks to ordinals). Miners get the block subsidy (new bitcoin) and fees when they win a block. Fees are already higher then the block subsidy.

point is IF a sustainable fee market develops on bitcoin, which I admit, is still an open question, this is a non-issue.

my personal prediction is that demand for layer 1 block space will get bigger and bigger, and this alone will create a sustainable fee market for the miners. But I admit this is an open question

Makes sense.

 

[MarkBrown]

there are other more unorthodox things that are much better for unit of accounts.

just the mind is stuck in this box and won't jump out to see possibilities beyond the norm.

 

[llIHeroic]

I think modeling BTC as a store of value commodity makes the most sense. There are sub-functions active like retail hype, collectibles, etc, but I think the non-decaying commodity function will be the long-term driver of value, since inflation constantly erodes societal currencies. Gold and jewels are prominent in history as stores of value and I think it’s likely BTC will find long-term stability fulfilling that function, the modern techno-centric global culture helps out with that.

But even gold I’d argue was never really a unit of account, the only way we got it to function that way was creating currency and backing it 1:1 with gold. It was the currency unit(s) that drove gold as a unit of account, never the actual ounces of gold.

Humans naturally organize in a hierarchy, form governments and cultures, and there is utility for local entities to control currency. So I don’t think we will ever have some truly decentralized currency mechanism that existing powers consent to having no ultimate power or influence over. And to think the people can/will choose otherwise and win that fight smacks as a little naive imo.

I think if adoption continues and as global wealth transitions to the tech native generations, BTC mkt cap could potentially still have a ways to go and crack into the 6 digit realm for spot. But there’s a ceiling there somewhere and I think it’s still gotta be below total world gold market cap at $13T or whatever, since established governments and powers that be with all their reserves aren’t just going to quietly let their value go.

Long-term, inflationary fiat is the worst place to concentrate your assets, store of value is better, but ownership of useful production is always going to outperform both in the long-run. Trade the BTC adoption boom if you are a crypto bull but don’t get parked here forever, eventually equities / risk assets will surpass any commodity on a boom in the long term as they always have throughout history.

 

[Pekelo]

Unit of account of stupidity. Yes.

By the way someone just sent 1.1 M worth of BTC to a dead address. This is how you prove what kind of whale you are.

 

[MarkBrown]

How the Price of Ammunition Has Changed Each Year Since the 1970's

> Change in ammunition prices from 1976 to 2022: +482.6%
> Change in price of all consumer goods and services from 1976 to 2022: +414.3%

 

[wxytrader]

BTC will never a be unit of account because its not a currency, its a collectible. The lightning network is a joke

It became pretty apparent it moved beyond being a currency to becoming the new gold standard. The new store of value digital gold, digital real estate. It doesn't need to be a currency...if it did you wouldn't see it hitting 70k when it is rarely used as a currency.. They could just price things in satoshis if you wanted to use it daily... But you'd probably just convert it into whatever is used as a currency. Maybe the new digital money. I can see Bitcoin being used more and more in exotic car purchases and homes. Current common real word uses right now are equity loans.

 

[piezoe]

Money is 1. medium of exchange, 2. store of value and 3. unit of account

For the longest time, gold was the unit of account. The gold standard

Today, USD is the unit of account. International markets are priced in USD, the global reserve currency

There is however an emerging unit of account, the Bitcoin standard

Most of the world are oblivious to this, busy with every day lives, Superbowl coming up soon, election year, social issues, and stuff

Heck, ET is still trying to figure out if Bitcoin is a tulip, a bubble, a ponzi, a worthless digital token, a scam or a combination of all of these

https://twitter.com/x/status/1743660868536005044

Most of the world will remain oblivious to bit coin as the "the emerging unit of account" of course, because bit coin has none of the necessary attributes to be adopted as either a national currency or a reserve currency. It can never be either, and so it never will be...