What if I end up paying someone $5,000 for a Pizza in Crypto?
If you have ever transacted in Crypto before for a real world transaction, you might find yourself wondering about how you may be potentially spending away your precious cryptocurrency on a real-world perishable like a pizza or a hotdog only to feel foolish when the value of your cryptocurrency rockets and what you have handed over in cryptocurrency for a $10 pizza suddenly becomes valued at $5,000.
The potential of cryptocurrencies in gaining (and losing) value over time is a double-edge sword.
It makes the headlines for its attractive gains and on a bullish market, you can look like a genius simply by being in possession of whichever cryptocurrency that has gained ‘flavor of the day /month’ status (or even subjected to a pump and dump scheme).
On a bad day, it can be demoralizing to see your investments take a severe beating and take a free fall into a fraction of what you’ve paid for it.
The fact that cryptocurrencies may appreciate in value makes it tempting to be regarded as something you hold on to instead of spending from.
There is a Chinese saying, ‘远水救不了近火’ that roughly translates into how water from a faraway land is of no use to raging fires happening here.
The saying is typically used in the context of how it is better to have help from those around you because help that is readily available and accessible is better than help that is valuable but inaccessible.
This saying comes to mind because it highlights an aspect of ‘timeliness’ that may be overlooked on hindsight when $10 becomes $5,000 and you are beating yourself up over having spent your precious crypto on a delicious pizza.
Let’s think of this as a thought experiment.
Let’s suppose that all you had that was of value was held in cryptocurrencies. If it makes it any easier for you to imagine it, think of it as you going on vacation to CryptoLand, a holiday destination not dissimilar to DisneyLand or any exotic faraway beach resort you fancy.
In preparation for your trip to CryptoLand, you have exchanged all your fiat currency into cryptocurrency.
In CryptoLand, only Crytocurrencies are accepted for everyday purchases, these include necessities such as food, lodging and entertainment.
In Cryptoland there is no way for you to transact in your existing fiat currencies and no amount of USD, EUR or any other currency could get you even a slice of pizza, a can of soda or a hotdog to munch on.
So if you are hungry or thirsty in CryptoLand, what will you do?
You have no choice but to spend some of what you have in crypto. If you choose not to spend your cryptocurrency and instead resort to holding on to them in hopes that the value will skyrocket (or in fears of looking foolish when it does rocket), you are going to have a very miserable time in CryptoLand because you are not going to be enjoying yourself and you will be hungry and miserable.
Of course, CryptoLand isn’t real and we don’t all have everything that we own stored in Cryptocurrencies, but when we think about it in such a context, it helps us better understand the true value of what our crypto-transaction really is about.
When you transact and purchase a real world perishable such as a hotdog or a pizza with a Cryptocurrency, you are not just getting a hotdog but the instant gratification of knowing that you have just transacted with a cryptocurrency and exchanged it for something tangible.
This is perhaps one of the easiest way for you to realize that what you possess in cryptocurrency is real and not just numbers on a digital screen.
Instead of thinking of cryptocurrency as something that is separate and compartmentalized from the ‘real-world’, this little experiment allows us to experience what it might be like living in a world where cryptocurrencies are an essential part of your daily life and transactions.
In the same way when I travel overseas and have to change my SGD into USD, EUR or GBP, it can be painful when the exchange rate changes in favor of my local currency. Yet, it would not have impacted me in any way because I could have only spent EUR/USD or GBP when I was on holiday.
This is one way in which we can help ourselves get over any feelings of ‘loss’ we may experience with regards to missing out on more gains in a cryptocurrency’s value (assuming we did not spend everything that we have on that one pizza).
Adoption of cryptocurrencies for everyday transactions is an essential step towards widespread adoption of cryptocurrencies and the benefits that blockchain transactions allow us. We are still in early stages of that development and you can think of each transaction you make as a trip to ‘CryptoLand’.