Disclaimer: I use Bitcoin and USD as an example but this ideology applies to any cryptocurrency or asset.
When the price of 1 Bitcoin goes to $40,000USD. Most people view this as the price of Bitcoin increasing. But what if you were to look at it the opposite way. If you look at this inversely, the value of 1 bitcoin is always 1 bitcoin and the value of USD changes over time.
Since the price of crypto is not controlled by a central government or company, its value is true. The US dollar is a sheet of paper, it is only worth “one dollar” because the United States government told you so. Bitcoin’s value on the other hand, is controlled by supply and demand. It’s value is perfect and true. While the government tells you how much their currency is worth, Cryptocurrency reflects the natural price.
The price of crypto can be used to estimate the true value of FIAT currency. If $35,000 USD is worth 1 Bitcoin but it was worth 2 Bitcoin a month ago. Maybe it is the value of the US Dollar that is falling, and not the value of Bitcoin that is rising.
This starts to make a lot more sense when you take into account the current events in the United States. The current situation in the stock market has caused people to think twice about where the government stands, big banks, or the American people. The coronavirus has been bad for America. The inflation that goes along with relief money for Americans causes the value of the US dollar to fall. I am personally an American, but if you feel your countries currency is also losing value faster than usual, comment below.
Along with crypto, the overall average value assets like precious metals and stocks as a whole have increased a lot more than normal recently. When everything besides for FIAT goes up, is it really going up or is FIAT just going down. Even consoles and other products are worth more than before.
TLDR: View crypto value as constant and FIAT value as variable.
Apply this yourself and share in the comments below
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