Vic on Nostr: Kudos for both a pizza and a car analogy in a single response, though I don't think ...
Kudos for both a pizza and a car analogy in a single response, though I don't think either made much sense. But seriously ...
An example of nominal and then adjusted for inflation
I deposit 100000 sats in some Bitcoin Bank at a time when 1 BTC is worth 100,000 USD. A year from now, I'm paid the fiat equivalent of 100000 sats + 5% gains when BTC is worth 85,000 USD. I end up with $89.25 fiat, and would immediately convert to Bitcoin getting 105000 sats. However, I owe say 20% of the 5% earnings in taxes (85 cents, horribly rounded up to 1 USD), so I'm actually left with $88.25 fiat, which gets me 103823 sats. My effective post tax rate of return is 3.82% after conversions. In the meantime, a year also cost 3% inflation, leaving my overall effective yield at less than 1%. If I had done nothing, I would have still lost relative value against inflation, but would have foregone all the counterparty risk.
I don't understand why people are jumping all over Saylor about yield. Putting a value on Bitcoin and lending it, like any other asset, makes sense to me.
An example of nominal and then adjusted for inflation
I deposit 100000 sats in some Bitcoin Bank at a time when 1 BTC is worth 100,000 USD. A year from now, I'm paid the fiat equivalent of 100000 sats + 5% gains when BTC is worth 85,000 USD. I end up with $89.25 fiat, and would immediately convert to Bitcoin getting 105000 sats. However, I owe say 20% of the 5% earnings in taxes (85 cents, horribly rounded up to 1 USD), so I'm actually left with $88.25 fiat, which gets me 103823 sats. My effective post tax rate of return is 3.82% after conversions. In the meantime, a year also cost 3% inflation, leaving my overall effective yield at less than 1%. If I had done nothing, I would have still lost relative value against inflation, but would have foregone all the counterparty risk.
I don't understand why people are jumping all over Saylor about yield. Putting a value on Bitcoin and lending it, like any other asset, makes sense to me.