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A house that cost 1 517 bitcoin a decade ago can now be bought for 2.25 bitcoin

Proving once again the deflationary power of bitcoin.
Putting your money into bitcoin rather than bricks and mortar would however have been a better bet. Image: Bloomberg

A house that cost 1 517 bitcoin (BTC) 10 years ago can today be picked up for 2.25 BTC, even allowing for house price inflation over the last decade.

We took R1 million as the starting price for a house in 2011 and indexed that price to average house inflation over the subsequent decade.

The graph below tells the story of what happened to house prices in rands and BTC.

A year ago we ran the numbers and at that time (October 2020) the same house would cost 6.23 BTC. Bitcoin went on a rampage after that, so that same house today has reduced in price to a third of what it was a year ago in BTC.

Source: Moneyweb

“This chart speaks to the great rise in the value of Bitcoin. Value is relative. The one chart that looks worse than this is the chart of the value of the rand itself when measured in terms of bitcoin,” says Farzam Ehsani, CEO of crypto exchange VALR.

“It’s astonishing,” says Brett Hope Robertson, investment analyst with crypto company Revix.

“The power of bitcoin as an inflation hedge has actually been hard to fathom. Housing is one of the most trusted and sought-after inflation hedges in the financial world – then here comes along a geeky little Bitcoin and simply blows it out of the water. Yet people still question bitcoin’s ability as an inflation hedge, I mean you can’t not help but laugh.”

Another way of looking at things

There’s another way to look at this chart: putting your money into bitcoin rather than bricks and mortar would have been a far better bet.

While the average house appreciated in value by just under 50% over the last decade, bitcoin has gone up nearly 1 000-fold in rand terms over the same period.

As we previously reported, bitcoin’s supply is capped at 21 million coins, with 18.5 million currently in circulation. New coins are ‘mined’ at a decelerating rate that was built into the bitcoin protocol. That inflation rate is currently 1.56% today, and will decline every four years until it hits zero (at which point all 21 million coins are ‘minted’).

Fiat currencies like the rand and US dollar are subject to continuous expansion of money supply.

The chart below shows the increase in M2 money (cash and near cash) over 10 years.

M2 money supply over 10 years

Source: Trading Economics, SA Reserve Bank

Given this kind of money expansion in the rand against the fixed supply of BTC, the vision of Bitcoin founder Satoshi Nakamoto – who set out to cure the debasement of currencies worldwide – has been achieved and to some extent demonstrated in the graph above.

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COMMENTS   18

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So, bitcoin is a better investment than bricks and mortar?

But can Elon Musk, create a crash in house prices with just one tweet?

China SEC and FSCA does the crash musk does the rise in prices so there is a difference.

The discovery of this hard fact can be compared with the wet seawater surprise effect, on all, when the Titanic sank.

Nooooo, Never sell your crypto. If you must buy a house rather than more crypto, rather borrow money using the crypto as security. Serious, just ask your banker.

This is a hindsight is 20/20 situation, no one could have predicted the explosion in crypto prices and even now no one can guarantee that it will continue on the same trend. In my opinion you don’t gamble with your core assets and investments, as such to rather buy a house instead of punting it on bitcoin or any high risk investment was the correct thing to do. It’s fine to have a small portion of your portfolio exposed to crypto, the issue is I know of people who have maxed out their financing and liquidated all their investments to get into crypto.

April 2021 total crypto market exceeded 2 Trillion USD, worth more than the entire American banking system

El Salvador has BTC as legal yender
Iran sells Oil & Gas in BTC
Nigeria is the largest user-to-user base globally, despite government crack down

Crypto is not an asset as central banks would want it to be, its “money” were FIAT is not

BTC / Ether / Solana / Monero

BTC’s mempool is way too small for it to ever be used as money, the store of value argument might still work because people don’t mind spending ~2USD per transaction, but BTC will never be able to uplift the worlds un-banked population with a whopping 7 transactions per second.

PJJ …valid points for today but S AN analogy, the Wright brothers flu a contraption compared to today’s aircraft. Think about the years between

…and West Africa is not everyone’s cup of tea for a destination but its this part of Africa and Kenya, I might add that is fueling the acceptance of Crypto and the poor are saving on bank fee’s and other transaction costs

I was sceptical at first but travels in parts of Europe, even restaurants ask if you want to pay in crypto …and in situations like this Monero rules

Investing will always remain a risk. Those that are doing very well are able to take calculated risks investing into unknown investments. It often requires going against mainstream. Crypto is similar. Agree not to put everything in crypto, but a small (but substantial enough) amount is what is required to do well. Also it must be left for a long period of at least 5 years.

I started investing in Dec 2017 (peak of previous cycle), lost 70% due to selling in the subsequent correction, but bought again at the low. Total investment up by more than 300% and not selling anytime soon (part of the HODL statistics).

If you want to market Bitcoin this is a great article.

Personally I wouldn’t touch them. You have had the fads from Tulip sales in the early 1600 to the bitcoin. If you want money outside the country transfer it to wherever legally. Its a known fact that terrorists launder money via crypto currencies.

Old school thinking. Terrorists were using and are still using fiat for years.

Incorrect. Minus 45% from sars plus the expenses to convert the bitcion to fiat because fsca wont allow you to buy crypto with a credit card so you can’t spend with Visa and you have a daily limit to withdraw bitcion. So its impossible to draw 2.5 bitcoin without loosing 1.5 bitcoin in the process. Also move to el Salvador it’s way easier.

You don’t know your tax.

If you trade in BTC you will be taxed at you marginal rate of tax after tax on your other income. the maximum is 45%

If you don’t trade, then realised gains are subject to Capital Gains Tax, CGT, at a current maximum of 20%

What is SARS doing? SARS is looking at frequency of trading and taxing you accordingly.

If you trade, sell, no more than 4X per annum, SARS will consider your gains to be capital.

If you buy on a steady basis and can justify an accumulation policy, you are not considered a trader.

That was how my gains were taxed for the 2021 tax year.

Tell us what we can buy with one BC in 10 years time and I may consider speculating. Refer 20/20 hindsight vision.

A house that cost you 100 000 Sasol shares 18 months ago will now only cost you 7850 Sasol shares …..
You can do this calculation with anything you choose . Non sensical article . Hind sight …..No one is talking about Bitcoins returns for the year to date !

Compare Apples with Apples, please.

Precisely 10 years ago Sasol had a $USD 46.05 vs $USD 18.82 yesterday.

Sasol is a flea infested many cur. Bad Comparison.

You wish you had bought BTC 18 months ago.

BTC appreciated 315.07% this year to date.

Sasol has become the Simmers an Jack of the penny traders, sad.

End of comments.

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