November 6

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How Does Buying Big Ticket Items With Bitcoin Compare to the US Dollar?

Years ago, during a work trip in the streets of downtown Singapore, a vendor offered me a “copy watch”. With my friends, we took a look at his display of duplicate Rolexes, Tag Heuer and Movado watches. We were young, and didn’t think about how these copies were copyright theft, we just wanted a cool looking watch for cheap. In total, we ended up looking at 10 watches for 685 Singapore dollars.

But how much was this purchase going to be in my native USD currency? Was it worth it?

When I used to travel internationally a lot, I found myself doing a lot of this math in my head.

At a restaurant, or in a mall, I’d be converting the local currency into USD, so I could understand how much something cost. Without that frame of reference, I would really struggle to make meaning out of it.

Many do the same thing with Bitcoin. 

While Bitcoin is a store of value and we believe something to hold on to -converting the value of any asset to the price of something in a currency you use most frequently helps orient us.

That said, there’s a very interesting thing that happens when you look at these prices over time. While we are used to the “slow boil” of inflation, what’s happening can especially stick out when we look at 10 or 20 years of what our currency  buys us. What’s even more interesting is when we compare this change to a “hard money”, or a currency that does not inflate.

So, let’s take a look at a few small and big items over the last decade or so, and see what prices look like.

Eggs

To start off with, we have to start with the inspiration for this article, eggs! The St Louis Federal Reserve has both a blog post and an updated graph with egg prices in Bitcoin.

Here’s what their graph looks like with USD for a cost of a dozen eggs over the last few decades:


And to compare, here’s what the price looks like for the same dozen eggs (and same timespan) with Bitcoin:


There’s a very big difference in the shape of these two graphs.

While eggs are a relatively low-cost good, one graph shows a steady price with considerable inflation over the last few years (USD) while the other shows a steady decrease in price, relative to the value of the asset (BTC).

Let’s look at some higher ticket items to see if this pattern holds true - or if it’s just about eggs.

Vehicles

One of the more common, higher-ticket items in the US is vehicles. According to Statista, there were nearly 14 million vehicles sold by the auto industry in 2022.

Car prices have climbed considerably in the last decades - so what does it look like when comparing Bitcoin to USD in this space?

As the chart shows, the price in BTC for vehicles keeps going down, then levels out. 


At the same time, the USD price in cars keeps going up.

Here are the numbers we found to support this. We used Bitcoin values from Yahoo Finance and a mix of PR Newswire, Kelly Blue Book, Motorweek, and Edmunds to get average car price values.

Here they are:

Year

Average Car Price USD

Average Car Price BTC

2014

$16,800.00

45.01607717

2017

$36,113.00

3.46494755

2020

$40,107.00

2.40508325

2023

$48,558.00

2.25588850

Again, this data shows that inflationary assets continue to increase in price for goods and services. There is no scarcity in these currencies and their issuers continue to add more supply. Keep in mind that entities like the Federal Reserve, that greatly shape the money supply and inflation numbers, are made of bankers.

In general, banks make their money by loans and debt products. In exchange for money now, a customer is charged interest and pays a larger amount back. In short, banks make money by keeping customers in debt. That pattern requires a continual amount of money supply to work.

In contrast, hard money like Bitcoin has scarcity. Over time, the value of Bitcoin goes up and the relative costs of products goes down. Bitcoin is not run by bankers or a government entity. Instead, it has an algorithm and a public ledger. Further, it has scarcity that cannot be compromised to sell a product or shape the market. 

Graphs like the above show this pretty clearly.

Okay, let’s look at perhaps the largest big-ticket item for consumers - homes.

Homes

According to Statista, around 5 million home transactions will be completed in 2022. 

Unlike most vehicles, homes tend to last a lot longer and real estate can be considered a scarce asset. The old adage of “they aren’t making more land” comes to mind. We’ll ignore places like Dubai that are terraforming new islands as that’s certainly an outlier!

The data here is a little more complex - housing prices vary by location, income levels, and many other factors. So, let’s be honest and share the data here is not perfect.

However, the trend and direction is still helpful in understanding the difference in USD prices and BTC prices for homes.

Year

Average Home Price USD

Average Home Price BTC

2017

$381,150.00

36.57

2020

$389,800.00

23.38

2023

$500,200.00

23.24

While this graph covers less than a decade, the direction is very clear - in USD terms, home prices are going up and in Bitcoin terms, they are going down.

Keep in mind that this includes times when the Bitcoin exchange rate was valued at $70k and times when it was $15k. Even with this volatility in value, the overall trend remains constant.

And, the increase in an average home price, from a USD perspective, is fairly staggering. In some areas of the country, this number can approach $1M pretty quickly. How do people starting out stand a chance?

The other side of this story that’s interesting to consider is, what would happen if someone bought Bitcoin when it was under $1000? Say they invested in $25k worth of BTC. Today, they could buy a car and house with that outright. The same amount, even if invested in the S&P 500, would be just $157k. The USD holder could place a nice 30% down, to be sure, but the BTC holder is in a much better position.

All too often, the impact of inflation is missed - or as we like to say, the devaluation of the USD due to increased supply and policies that benefit banks the most.

Okay, let’s go back to a lower ticket item, and one many use a lot of - gas.

Gas

In 2022, the US used about 135 billion gallons of gasoline, per the US Energy Information Administration.

Maybe more importantly, many politicians use this number in their election campaigns to say how great they are and how bad the other opponent is. Even though neither honestly have much directly to do in the complex setting of gas prices.

What neither is talking about is the devaluation of our currency, probably because that doesn’t fit into a sound bite… or maybe they actually don’t know.

So, let’s look at gas prices from a USD and BTC perspective.


Year

Average Gas Price USD

Average Gas Price BTC

2014

$2.92

0.00781350

2017

$3.29

0.00031605

2020

$3.45

0.00020671

2023

$5.52

0.00025645

All things considered, gas prices from a USD perspective remained relatively stable from 2014 to 2020. In fact, $3 in 2014 dollars would take about $4 in 2023 dollars for the same buying power, accounting for inflation. So, gas prices were flat or slightly decreased, when you account for inflation, at least for the first half of the year compared here.

However, at the same time, from a BTC perspective, the price dropped considerably, and remains low. The pattern of eggs, cars, and homes holds consistent when compared to gas too.

What This Tells Us

Most of us know that inflation is painful. However, the pace has been so relatively slow that we don’t struggle as much and just write it off as part of life.

However, when you zoom out, and when it’s compared to a hard asset, the images are pretty compelling. 

Now, many will go to a story of “if I only bought Bitcoin at $100” - and yes, that would be a great move years ago, but we can’t go back in time.

But, we can go forward. And, if you look at the patterns here, it’s clear that fiat currencies like the USD will continue to devalue - and make it harder to make ends meet. At the same time, hard currencies like Bitcoin will continue to see increased buying power.

And, instead of buying the equivalent of “copy watches”, like I did early in my life, you can buy and hold the best money there is - Bitcoin.

At Avid Intent, this is why we recommend adding Bitcoin to your assets that you leave as a legacy, in your inheritance. Over decades, the patterns you see in this document will continue. Put simply, there’s a very strong chance that you can leave more to your heirs in Bitcoin than just leaving something based on the USD.


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