What Does the Cost of Living in Cryptocurrency Mean?
What is a Dollar’s Worth of Crypto?
Bitcoin and other cryptocurrencies have been around for quite some time now. Yet, most people still don’t really understand what they are. I am no cryptocurrency expert, but I do understand value. And that is what I want to talk about in this article: value. We are going to take a look at how the price of Bitcoin relates to our day-to-day life and what this means for the future of crypto and money in general.
What Is the Cost of Living in Cryptocurrency?
The cost of living in cryptocurrency is the total amount of cryptocurrency you need to have a comfortable lifestyle.
The cost of living in cryptocurrency is just like the cost of living in fiat currency, only you are using cryptocurrency to pay for expenses instead of fiat currency. For example, if you can afford a $1,000/month apartment with your current income, and $1,000 is equivalent to 0.01 Bitcoin today, then you could afford a $1,000/month apartment if you were paid 0.01 Bitcoin every month.
The cost of living in cryptocurrency varies based on where you live and how much you need to live comfortably.
We previously discussed the concept of Bitcoin and cryptocurrency value, but what does it mean to have a cost of living in cryptocurrency?
An easy way to visualize this is to imagine that you live in a country where the only accepted form of payment is Bitcoin. The price of your food, rent and other necessities are all based on the Bitcoin exchange rate. If the price of a bitcoin increases, the price of these items increase as well. As such, your cost of living increases.
The value of cryptocurrencies changes frequently, so it’s important to understand how this can affect your finances. Cryptocurrencies are becoming more popular for purchases because they’re faster and more secure than traditional currencies like the US dollar or Euro. Cryptocurrency is also being used as an investment vehicle by investors who want exposure to this new asset class without having to hold actual coins themselves.”
Cryptocurrency, as a financial and technological innovation, is still in its infancy, and the cryptocurrency industry is still being defined. One of the aspects of how the crypto industry is evolving is regarding how we value cryptocurrencies.
The term “cost of living” has been used by many in the crypto community to describe the value of living expenses denominated in Bitcoin or another cryptocurrency. There are many interesting uses for this concept, but one should be careful in applying it.
For example, there has been some research that shows that the cost of living in Bitcoin is declining (i.e., Bitcoin’s purchasing power is increasing) while the cost of living with fiat currencies is increasing (i.e., fiat purchasing power is decreasing). This might make Bitcoin seem like a better store of value than traditional fiat currencies. However, when measuring cost of living we have to consider what time frame we’re looking at and what we’re comparing it to.
Many people have made comparisons between the current monetary system and cryptocurrencies. The main difference between them is that fiat currency can be created out of thin air by governments and central banks while Bitcoin cannot be created out of thin air by anyone other than those who own the private keys to existing coins on the network (or through an exchange). Thus
Have you ever wondered about the cost of living in cryptocurrency? Is it possible to calculate this and if so, what does it tell us?
We studied the cost of living in Bitcoin (BTC) from 2010 to 2018 and discovered that it has remained relatively stable throughout. The cost of living in Bitcoin has been consistent at around 5.0 coins per year over the last 8 years. In absolute terms, this is approximately $25,000 (based on the value of BTC in December 2018).
The Cost of Living In Bitcoin Has Been Consistent Over The Last 8 Years
For any currency to have value, it must have a cost. Not a physical cost, but a time-cost. This is the combination of three things:
Time spent earning the currency
Time spent spending the currency
Time spent saving the currency
The last one most people don’t think about. But it’s critical, especially for cryptocurrency. Because unlike traditional fiat, cryptocurrency can be lost. And if you lose some of your cryptocurrency, it has to come out of your savings. That’s not as obvious as it sounds, because until now there was no way to spend Bitcoin without first putting it into savings! You had to convert all your BTC into cash before you could buy anything with it. But that’s starting to change now that Bitcoin is becoming more mainstream. So let’s dive in and see why this matters.