Module 8: USD vs. BTC - Past 10 Years
Introduction
Moving from theory to practice, this module examines the actual performance of Bitcoin compared to the US Dollar over the past decade. We'll look at how each has functioned as a store of value and what this might tell us about their future prospects.
Purchasing Power Comparison
The primary function of money as a store of value is to preserve purchasing power over time. Let's examine how the USD and BTC have performed in this regard:
US Dollar Performance
The US Dollar has experienced consistent inflation, losing purchasing power every year. According to official CPI data, the dollar has lost approximately 30-40% of its purchasing power over the past decade, though many argue that real-world inflation has been higher.
Bitcoin Performance
Despite significant volatility, Bitcoin has appreciated dramatically against the US Dollar over the past decade. $1 worth of Bitcoin in 2013 would be worth hundreds or thousands of dollars today, representing an enormous increase in purchasing power.
Use the interactive wealth preservation simulator below to compare how an investment in USD versus BTC would have performed over different time periods. You can adjust the starting date, time horizon, and investment amount to explore different scenarios.
USD vs. BTC Wealth Preservation Race
Simulation Parameters
Results After 10 Years
Key Insights
- Inflation Impact: At 7% annual inflation, USD purchasing power decreases by 0.00% over 10 years.
- Bitcoin Growth: With 25% annual growth, a $1,000 investment becomes $0.00 after 10 years.
- DCA Strategy: Dollar-cost averaging $100 monthly into Bitcoin yields $0.00 from a total investment of $0.00.
- Volatility Consideration: This simulation uses average annual growth and doesn't show Bitcoin's short-term volatility, which can be significant.
Real-World Comparisons
To put these numbers in perspective, let's consider some real-world examples:
Housing
USD: The median US home price has increased from approximately $220,000 in 2014 to over $350,000 in 2024.
BTC: That same house would have cost about 350 BTC in 2014, but less than 5 BTC in 2024.
Education
USD: The average cost of a 4-year college degree has risen from about $100,000 to $140,000 in the same period.
BTC: In Bitcoin, this would have decreased from approximately 160 BTC to less than 2 BTC.
Vehicles
USD: The average new car price has increased from $32,000 to over $48,000.
BTC: In Bitcoin, this represents a decrease from 50 BTC to less than 1 BTC.
Volatility vs. Long-Term Trend
These examples illustrate how Bitcoin has outperformed not just the US Dollar, but also traditional inflation hedges like real estate, despite its volatility. While Bitcoin experiences significant price swings in the short term, its long-term trend has been strongly upward as adoption increases and the supply remains capped.
Dollar-Cost Averaging
Many Bitcoin investors use a strategy called dollar-cost averaging (DCA), where they invest a fixed amount at regular intervals regardless of price. This approach helps mitigate the impact of volatility and has historically produced strong returns over multi-year periods.
Looking Forward
Past performance does not guarantee future results, and Bitcoin remains a relatively new and experimental asset. However, its mathematical scarcity and growing adoption suggest that it may continue to serve as an effective store of value in the long term.
In the next module, we'll explore potential future scenarios for Bitcoin adoption and what they might mean for its value and role in the global financial system.
Module 8 Quiz
Please read through the module content first