Today we cover the important concept of Stock-to-flow for a monetary asset.
It's important to understand how this works so you can think reasonably about the price to value of a monetary good, whether that's gold, silver or Bitcoin.
Stock is the total supply of an asset at present time.
Flow is the increase of the asset over time. (inflation)
The ratio of stock to flow is a ratio to show how long it will take the supply of an asset to double.
In the case of gold, it currently takes about 60 years to double the supply.
For silver, it takes about 10.
And the prices for each metal represent this.
Because gold’s high stock to flow means it is considered scarcer, and thus more valuable, than silver.
When it comes to money, you want the scarcest and lowest inflation rate possible. You don’t want others to be able to produce more of it since that devalues your holdings. The best form of money is as resistant as possible to manipulation and increasing supply.
Bitcoin beats all other money due to its known supply and consistent production rate, which will mint the last Bitcoin sometime around 2140.
Then there’s the halving, which cuts the block reward (release of Bitcoins) every 4 years. Here’s the current halvening history of Bitcoin:
Bitcoin inception 2008: 50 BTC per block reward
November 28, 2012: 25 BTC per block reward
July 9, 2016: 12.5 BTC per block reward
May 11, 2020: 6.25 BTC per block
Upcoming: Spring of 2024: 3.125 per block
and so on.
2140: Last BTC will be mined.
Measuring Scarcity: At this point, it is necessary to describe a common measurement of scarcity that can be used as a relative point of comparison – the stock to flow ratio. The delineation of a stock and flow variable dates to the work of Fisher and Irving in 1896 and is conceptually applied across the fields of finance, accounting, and economics.9 Stock is the accumulated amount of some asset at a point in time, and flow is the increase in that asset over a period (typically a year). The stock/flow ratio is a metric to show the amount of time in which it will take for the current stock to double in amount. The higher the ratio, the longer it takes for the asset’s stock to double and the scarcer the asset. This is particularly helpful when assessing the relative degree of scarcity in commodities. Today the stock to flow ratios of gold and silver are roughly 60 and 10 years, respectively. The scarcity of the precious metals, gold in particular, is the primary reason that societies converged upon them. Gold’s high scarcity relative to silver made it the ultimate standard of value.
-The 7th Property
💡 Today's Big Idea
If you believe in property rights, then you must believe in sound money since fiat robs the wealth of humanity.
If you believe in natural law and human rights, you believe in #bitcoin
Welcome to the Bitcoin Basics Podcast, member of the Better Human Podcast network. We are focused on helping you understand how revolutinoary Bitcoin really is.
The show covers the fundamental concepts of money, history, economics, and human nature as well as interviews with non-bitcoiners so you can understand Bitcoin from first principles.
I’m Your Host Colin Stuckert of The Better Human Company, and I believe Bitcoin is the ultimate Trojan horse for freedom that is going to bring financial sovereignty to 8 billion humans. As a Freedom Advocate, I believe Bitcoin is our best chance at a better future, so I’m doing my part to help us get there.
Get all the updates over at Colin.coach and subscribe on your favorite podcast app and check us out on YouTube.
🌎 BetterHuman.World My new company focused on doing Direct Impact work. 50/50 Model, 50% of all profits go directly to our mission of bringing Education, Financial Literacy, and access to the global economy to those around the world that need it most.
- 🦌WildFoods.Co - Better Foods and Supps for Better Humans - Code WILDCEO for 15% off
- 💰Swan Force bitcoin - Colin.coach/swan How I buy Bitcoin daily/monthly, Auto-Buy, Best Fees for Buying BTC I’ve found
- 🥩Crowd Cow - Colin.coach/meat → Small Farmers, Quality Supply Chains, Delicious/Nutritious
- 🐟SizzleFish - Colin.coach/fish → Sustainably Sourced, Premium Quality, Wild Caught
Our Mission it To Build sovereign individuals and communities through Bitcoin and education so those that need access to the global economy more than anyone can actually benefit from humanity’s prosperty so they can then take their destiny into their own hands rather than having to rely on Western’s.
Mission: Bring financial sovereignity to humanity through bitcoin-focsued education by getting a pre-loaded device with a FREE Eduction, courses, videos, and instructions on how to use the lightning network.
Unsound money ENSLAVES humanity - problem we are solving? Multiple. We are giving access to the global ecomoy, the creator economy to those that need it most - the simple ability to accept payments for work rendered gives agency and ownership to individuals instead of them having to rely on DOLE/Charity.
Sound money → When the US gov prints money, the elite get richer, asset owners get richer, the poor and middle classes in AMERICA and the rest of the world get poorer. Their earning power is now less. Their savings is now less. Their ability to get ahead is now less likely.
Those living under crumbling jurisidcations, war-torn areas, tyrants, socialism, communism, and other terrible ideas that are still used by those in power ot enslave others, need sound money. Bitcoin is the best chance they have to protect thier wealth from governments and theft.
Bitcoin surpasses outdated monppolies thathave been praying on the poor, like Western Union, with their high fees and slow payments or their outright shutting down in a place like Afganistan and Cuba, places where humans need money from relative the most, where they can starve to death.
Disburse phones with EDUCATION + Guides translated to show how to join the Bitcoin network. We want to encourge hodlers yes, but also lightning users if needed.
Include Videos, Guides, How to, things that support people in different areas, from nutrition, to physics, engineering, etc.
For places that dont have it + education on lightnign wallets and usage for africans and south american
Small communities in places with hyper-inflating currencies that need access to the hardest money in existence