Relativity changed us

When Einstein came up with the idea of relativity as it applied to the motion of objects, it forever changed the way we think about our existence in space and time.

Without getting too complicated, here’s a greatly simplified explanation, just to get at the gist of it:

We are all moving in space and time relative to each other. If a plane flies over you at 500 miles an hour and someone inside the airplane — who appears to be standing still inside the airplane, but is moving at 500 miles per hour overhead from your perspective — throws a baseball at a speed of 30 miles per hour, the baseball is moving, in relation to you as you stand on the ground, at 530 miles per hour.

You may imagine that you too, are standing still. Yet, you are also moving as you stand on the ground, because the ground underneath you is spinning and the rotating sphere covered by this ground is also flying rapidly through space. Even the sun, orbited by planets as they rush around it, is jetting through a galaxy as it spins through the universe. There is no single unmoving reference point, anywhere.

This makes it impossible to have a single stationary point that is not in motion. Everything moves in relation to everything else, even though it may feel like we are standing still.

In the same way, all monetary value is relative, yet even moreso. When we take a peek at the latest news about the economy, we are observing relative value between all things, such as real estate, gold, silver, oil, fiat currency, and all kinds of goods and services. Because of the creation of fiat money — money that can be printed at will through the issuance of more debt, with no inherent value — our understanding of the monetary value of assets, goods, and services is further convoluted in this constantly moving relativistic mess of moving parts.

Backed by nothing

Upon delving into the economics and politics of Bitcoin, one cannot help but see that the current state of money is one that is highly problematic. Prior to 1971, money relied on the “gold standard” in order to maintain a somewhat stable and genuine value that could be measured against a scarce resource. Gold, being of limited quantity and of significant utility as a measure of value (as well as being useful in all sorts of applications including electronics and jewellery), was the closest thing to “hard money” one could conceive.

When this gold standard was discarded in order to enable continuous and infinite funding of wars and the enrichment of those who could print money whenever they deemed it necessary, the nature of our money and its value became greatly subjective and mostly arbitrary. This has caused our current state of economic confusion, where the continuous printing of money out of debt has led us further and further down a bottomless pit, in which we desperately continue digging in the deluded hopes that we will somehow climb our way out.

Bitcoin and the USDT fractional reserve fiasco

The recent USDT fractional reserve fiasco has caused all sorts of potential doomsday theories for the Bitcoin market, yet at the same time, has catalysed what some identify as the beginnings of a bullish rally.

Why is this relationship to a coin that is supposed to be pegged to the USD so influential on the price of Bitcoin? Because the value of Bitcoin, even though it is a much “harder” money than fiat in that it is inherently scarce and impossible to print at will, is still considered, for the most part, in relation to fiat. We are like goldfish, trapped in a bowl of our own limited perspective, unable to see the reality that exists outside of our tiny space. We just can’t imagine Bitcoin outside of its relationship to paper money.

It is this psychological barrier that keeps us trapped in the current paradigm of fiat relativity.

Escaping fiat comparison

We are entering an era of de-dollarization that is seeing nations walk away from their uneasy relationships with the once-almighty USD. The world may once again see a shift in the relative value of money, this time away from oil and the military control of such resources as the means of determining fiat value. The dominance of USD currency may fade over time as countries choose instead to exchange according to their own forms of consensus, whether it be achieved via assets such as gold, or quite possibly, via hard digital money like Bitcoin.

At some point in the future, fiat will no longer be a reference point for value. It will be eschewed for superior means of determining agreed value that can not be printed into oblivion by corrupt powers. The value of gold, silver, oil, and so forth will remain relative, but fiat will not be the sun around which these entities orbit.

Thinking in satoshis

One step towards escaping the current fiat-relativity reality? Start thinking in satoshis. Imagine the value of objects relative to satoshis instead of dollars. Consider an ounce of gold, for example. How many satoshis are required to buy that ounce? By today’s measures, at least at this moment in the market, about one-fifth of a Bitcoin, or 22,000,000 satoshis, buys an ounce of gold. How about that cup of coffee? You can pick up a cup at a cost of around 50,000 satoshis, depending on how much whipped cream, blending, and flavored syrups your coffee purchase requires. It may seem ridiculous to think this way, and the numbers are admittedly more difficult than calculating in USD, but it’s an interesting shift in monetary thought. It turns out, you do not need to think in terms of fiat, at all, with a little bit of effort.

If you haven’t already made this shift in thinking when it comes to trading other cryptocurrencies, you are well overdue. Traders often make the mistake of comparing their trades to USD and may inadvertently be losing profits by doing so. If a currency only gains against USD but does not gain value in satoshis, you are not getting ahead, as you would often be better off keeping your holdings in Bitcoin. Consider the value of the asset in satoshis in order to make wiser trading decisions.

It could be years or even decades away, but a time may well come when we will no longer think of value relative to fiat currency. Will satoshis be the center of this new paradigm? Only time will tell.

Sources:

https://medium.com/@kvantorcom/the-world-trends-toward-de-dollarization-d282fc97fb8f