A topic I've been thinking about...
Before I explain, if you're unfamiliar with Bitcoin and cryptocurrency, here's a YouTube video breaking down the history of money and currency: Watch Video – and here's a video on how Bitcoin works: Watch Video
Disclaimer: I'm not an economist so my POV or math might be flawed. If you're an economist, please reach out to me if you have some input, critique, or are willing to do a brief video interview as a podcast conversation!
Now, here's my pitch...
It baffles me that we rely on a FIAT-based Market Cap for Bitcoin's value, aren't we supposed to be moving away from the FIAT system with the help of crypto/blockchain tech?
The Lightning Network – a second-layer scaling solution built on top of Bitcoin's blockchain to facilitate faster and cheaper transactions, making Bitcoin more practical for everyday transactions while maintaining its decentralized nature – helped speed up the currency adoption; but it's still reliant on FIAT valuation, which not only suffers from extreme volatility scaring away merchants and providers to accept BTC for payment, but in my opinion, it's not the best way to think about how to use the Bitcoin protocol. We should consider how to utilize the Bitcoin code's protocol to properly trade goods and services with the network's value, measured by the GDP provided by its users, without any reliance on FIAT Market Cap.
Hear me out...
The U.S. abandoned the gold standard in 1971 – so FIAT isn't backed by anything (it's merely digits on a screen) so the volatility in Trade Markets is irrelevant since BTC should be backed by the Bitcoin Network's GDP – not FIAT.
A suggested FIAT-to-BTC "Anti-volatility Conversion Rate":
BTC has a 21M Max Supply ÷ 11B Global Population by the year 2140 (last mined BTC) = 0.0019 BTC per person for equal allocation (0.19% of 1 BTC = 190k Satoshis ––– *excluding lost/irretrievable coins.)
Now the question is, how do we value, price, and trade with "0.0019 BTC per person"?
Example:
0.0019 BTC ÷ $10k (median annual income in USA in 1971) = 0.00000019 BTC
This would make market rates for Goods & Services as:
$1 = 0.00000019 BTC
$10 = 0.0000019 BTC
$100 = 0.000019 BTC
$1k = 0.00019 BTC
$10k = 0.0019 BTC
$100k = 0.019 BTC
$1M = 0.19 BTC
$10M = 1.9 BTC
$100M = 19 BTC
Does this conversion rate & overall idea make sense? If so, why aren't we putting thought and energy into perfecting this type of utilization with Bitcoin? Or if this idea is not applicable, why not?
Comment your thoughts below...