Although not commonly regarded as a currency by many, Bitcoin’s rise in value in just 10 years has made it the best currency investment of all time so far.
In order to understand just how valuable bitcoin has become, in this post, we compare the value of major world currencies at their inception, and in 2020, with that of Bitcoin since the first transaction 10 years ago, and its value today.
The United States dollar became the official currency 228 years ago in 1792. While the US dollar is the world currency today, its decoupling from the gold standard in 1971 had huge value implications.
Using Consumer Price Index (CPI) data which has been documented over the decades, and available here, we can deduce its value today to be 256.369 in comparison to 9.6 in 1792
Now, using these figures, we can calculate the inflation rate for $1 since 1792 below:
- CPI today / CPI in 1792 x 1792 USD value = Today’s value
- 256.369 / 9.6 x $1 = $26.71
Thus, $1 in 1792 has the same purchasing or buying power as $26.71 in 2020.
The Euro (€) became legal tender of the European Union countries on January 1, 1999. This was just 10 years older than Bitcoin.
Again, using official data from the European Central Bank, the CPI for the Euro stands at 105.85 in 2020 in comparison to 74.30416667 in 1999.
Again, we can calculate the inflation rate for €1 below:
- 74.30416667 / 105.85 x €1 = €0.70
To get the total inflation rate for the 21 years of the Euro’s existence, here is the equation:
- CPI in 1999 – CPI in 2020 / CPI in 2020 x 100% = Cumulative inflation rate (21 years)
- 74. 30416667 – 105.85 / 105.85 x 100% = -30%
The British Pound
The British Pound is the oldest world currency having been in existence for 1, 200 years.
The original 8th Century Sterling Pound was composed of 240 Silver pennies, equivalent to 350g.
Credible data from the UK Bureau Labor of Statistics dating back to 1860 however, show the CPI in that year for the Pound was 9.3 while 2020 stands at 1138.2433607545
Today, the value of this amount of silver is £156.45 ($200).
From this available CPI data, we can deduce:
- CPI in 2020 – CPI in 1860 / CPI in 1860 x 100% = Cumulative inflation rate (160years)
- 1138.2433607545 – 9.3 / 9.3 x 100% = 12, 139%
The first bitcoin transaction in May 2010 was used to purchase two pizzas worth $30 for a price of 10, 000 bitcoins.
Now, assuming this was the value of bitcoin then, we can deduce:
- $30 / 10, 000 bitcoins = $0.003 per bitcoin
Historical mining and market data dating back from 2009 however show the energy it consumed to mine a single bitcoin.
Using these figures, we can deduce the following:
- $1 = 1, 309.03 Bitcoins or
- $0.000764 = 1 Bitcoin
Using our inflation calculator once again, to calculate appreciation as a percentage, divide the change in the value by the initial value and multiply by 100, as shown below:
- $9, 704 – 0.000764 / 0.000764 x 100% = 1, 270, 156, 968.1%
From the above calculation, it is clear that bitcoin as a currency and investment vehicle, dwarfs major world currencies in all ways.
All of this in just 10 years!