Running a small business on a Bitcoin Standard 💎
My solution (so far) has been to continually adjust prices in sats (down) to reflect approximate fiat value that we sell the same product for locally (with a discount included for Bitcoin purchases). I have decided that as Bitcoin price rises, I will have to continue to drop prices in Sats– because let’s face it, most customers will compare the amount of sats they are spending to an approximate amount of their local currency. If I simply set a price in Sats today and did not adjust, as some point there’s no one left willing to buy at that price!
However, what about when Bitcoin price falls?? I have decided NOT to (re)adjust prices and will instead pass the discount on to customers. I’ll earn the same amount of sats as when the Bitcoin exchange rate was higher, but the corresponding fiat value will be lower. Bitcoin drops by 30%? Honey is now 30% cheaper for customers in fiat terms! That means hopefully more people would trade honey for sats and I can stack a few more sats than I would have.
As long as I can cover costs and keep things running, the fiat value of each sale should not matter over time. Sats stacked with honey sales are never traded back to fiat, so to me the fiat value is not particularly relevant. It only matters that the customers do not over pay.
But this brings us to yet another problem: Bitcoin is by nature SAVINGS technology. NgU tech means that there is a strong incentive to HOLD sats– since they will inherently be more valuable over time. Conversely, fiat dollars are best spent as soon as they are earned, for their value rapidly decreases over time. Fiat in a bank account is quickly shrinking in value and the price of products are rising just as fast. So it’s best to spend fiat NOW and acquire TODAY what you may need tomorrow. On a Bitcoin Standard however, it’s best to defer purchases, because on a long enough time horizon the products you need will trend lower when priced in sats.
So how can I convince people to part with their precious Bitcoin and trade it for a humble jar of Honey?? If they wait a week, or a month, it’s quite possible that their patience will be rewarded and the jar of honey will cost a few sats less than if they would have purchased it before.
To me, this is significantly different than simply pricing items in fiat and accepting Bitcoin as payment. Pricing items in sats on a Bitcoin Standard comes with a lot of added complexity, at least until Bitcoin becomes the standard unit of account and everyone understands that 1 sat = 1 sat.
I’d love to hear more thoughts about best practices when running a business on a #Bitcoin Standard. 🧡
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