Tuesday, April 06, 2021

A Fundamental Misunderstanding ...

At American Consequences, Corey McLaughlin discusses the now-iconic 2010 "Bitcoin for Pizza" incident:

[Laszlo] Hanyecz wanted to show that you could buy something with bitcoin. So one night, from his home in Jacksonville, he logged on to the BitcoinTalk message board, a place for early bitcoin enthusiasts to talk online. And he made an offer Hanyecz would give 10,000 bitcoins to anyone who would send him two large pizzas. ... 
Hanyecz got his pizzas -- two large pies with all the fixings from retail chain Papa John’s. In exchange, he sent 10,000 bitcoins (then worth about $41 in total) to a 19-year-old American named Jeremy Sturdivant. 
The obvious punchline to this story is that those pizzas turned out to cost more than $530 million.

That "obvious punchline" is simply incorrect.

At the time of the transaction, 10,000 BTC was worth a little over $40.

If you've ever found an old coin that's worth more than its face value, no, losing that dime that now sells for $10, back when it was worth ten cents, didn't "cost" its previous owner $10. It cost that previous owner ten cents.

Anything you exchange for something else could turn out to be worth more later. If your goal is to hold on to things and hope you can sell them later for more than you're paying for them now, that's a fine idea that may or may not work out for you. But right now they're worth what they're worth right now, not what they might be worth later.

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