Opportunity Cost: Silver, Bitcoin
Let’s say that at $49 you had 1,000 ounces of silver. And you kept it. You’d have 1,000 ounces of silver, valued in USD denominated terms at $27,500.
Now, let’s say that anytime between then and now, you moved just half of that silver into Bitcoin. Let’s look at your silver, now, as insurance on your liquid funds via the bitcoin protocol.
That 500 ounces of silver could have been $15,000 in value to about $300,000 now. That’s assuming a $10 bitcoin price…That could have been as recently as January, 2013.
Now, let’s say you traded back into silver now, with premiums on silver products rising in price now. You could buy about 10,344 ounces of silver…
Opportunity cost was formalized under the economics umbrella by Austrian Friedrich von Wieser in the late 19th century. Opportunity cost is the cost of an activity when measured against the terms of the value of the next best choice. It is the value of sacrifice. Now, opportunity cost is key to economics theorizing, and has been described as expressing “the basic relationship between scarcity and choice.”
A ship underway can be burdened by too much weight on one side. A savings strategy is similar. Each asset or protocol will have its time, but its time cannot be forever. Diversity is as key to the allocation of goods on a ship as it is to life itself. So, naturally, it must also have something to do with the “financial portfolio.”