Putting a proper label on the value of money is not as straightforward as it should be. For example, some people might say how their paycheck can buy them half a car, or a new television. This same trend is slowly gaining ground in the Bitcoin ecosystem, and thanks to the new Bitcoin Purchasing Power Index, people will always know how many Big Macs they can buy with one Bitcoin.
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Giving Bitcoin Tangible Value By Association
Financial experts will gladly tell anyone willing to listen how Bitcoin has no intrinsic value on its own. These same people tend to forget that Fiat currency has no intrinsic value on its own either, as there absolutely nothing back it up its alleged value. The major difference between both currencies is how Bitcoin is a free market, and Fiat currency is centralized.
All of those issues aside, the Bitcoin Purchasing Power Index will be an interesting tool to give cryptocurrency “value by association.” For most people, any form of wealth is only as valuable as the things they can buy with it. For example, buying a car requires money, yet once people receive a certain amount of money, they can start to imagine which piece of the car they can buy with it.
Bitcoin users will be able to do the same, as the Bitcoin Purchasing Power Index will reflect the current value of Bitcoin, denominated in how many Big Mac hamburgers one can buy with one BTC. While this idea might sound a bit crazy at the beginning, the project is completely open source, allowing Bitcoin users to determine their wealth in whatever type of tangible good they desire.
The concept of a Big Mac Index is nothing new, as this tool was originally introduced by The Economist in 1986. Bitbond, the global peer-to-peer Bitcoin lending platform, has taken a page out of that book and created the Bitcoin Purchasing Power Index. What makes this tool so interesting is how users can see the global average index of the number of Big Mac’s one Bitcoin can buy, as well as the local indices by country.
Bitbond CEO & Founder Radoslav Albrecht stated:
“The use-cases for bitcoinppi.com are manifold and showcase Bitbond’s desire to bring further value to the bitcoin ecosystem. By launching this site, we aim to bring a lighthearted yet highly usable index signifying the products that one bitcoin buys you. I think it is worth highlighting that the bitcoin purchasing power index is perhaps the only measurement of bitcoin’s value, which is agnostic to the monetary policies of governments. Taking out the factor of inflation, allows for a far more accurate representation of the actual value of bitcoin.”
Open Sourcing The Bitcoin Purchasing Power Index
There is a good reason the Bitcoin Purchasing Power Index is linked to a universally uniform and accessible product. Displaying the everyday value is quite difficult, and price charts can only do so much to show people what they can do with digital currency. Expressing the value in Big Mac’s is an interesting direction.
But one can rest assured there are many improvements on their way to the Bitcoin Purchasing Power Index. Bitbond has decided to include a comprehensive API, letting everyone access the data and use it for their own purposes. In fact, there might be several platforms where the Bitcoin PPI will be integrated to display the current Bitcoin value in Big Mac’s.
Furthermore, the entire Bitcoinppi.com website is open-source as well, with the simple goal of sparking further innovation for this tool. Additionally, this concept can be used for future economic analysis around Bitcoin, an area that has been getting a lot of attention in recent months.
Radoslav Albrecht concluded:
“The Big Mac Index” is searched for around 27,000 times a month in the English speaking world alone, and is thus clearly proving its value to thousands of people worldwide. With bitcoinppi.com Bitbond hopes to bring similar value to the bitcoin and cryptocurrency communities.“
All in all, the Bitcoin purchasing Power Index is quite an interesting experiment. Giving mainstream consumers an idea of what can be bought with Bitcoin is a great idea, and further customization will make this a powerful platform.
What are your thoughts on the Bitcoin Purchasing Power Index? Do you like the concept? Let us know in the comments below!
Source: Press Release via Email
Images courtesy of Bitbond, Shutterstock