Recounting the most expensive pizza ever bought is a fun but increasingly irrelevant historical fact: In 2010, programmer Laszlo Hanyecz completed the first documented commercial Bitcoin (BTC) purchase when he bought 10,000 BTC for two Papa John’s Pizzas, which were only worth $41 at the time.
As of today, these two pizzas cost R6.3 billion.
In 2012, entrepreneur and author Andreas Antonopoulos reportedly paid five BTC for a pound of coffee beans. That’s R3.14 million in today’s terms.
There are hundreds of stories of people who bought BTC early and cashed out when the price doubled or tripled, missing out on the extraordinary gains that were to follow.
Remember that in 2011 a BTC in Rand could be bought for 659 Rand. When BTC price surged to R10,000 in 2016 (this week it was trading at R628,000), these early investors couldn’t believe their luck and cashed out.
What about house prices?
As Moneyweb reported in 2020, a house for R1.4 million could be bought for six bitcoin. And in 2021, we reported that a house that cost R1 million in 2011 could be bought for the equivalent of BTC 1,517 back then. From today’s perspective, that’s a pretty expensive house: 1,517 BTC is currently worth R960 million.
Read:
Today, a million rand house would only cost 1.6 BTC, proving Bitcoin’s deflationary power.
To make it more realistic we took this house in 2011 for R1million which was inflated for the average house price increases in subsequent years and we ended up with a house which is now valued at R1.52million.
While real estate prices have risen about 50% in just over a decade, Bitcoin has risen almost 950 times.
But there’s a catch: For the first time in ten years, SA house prices have actually increased, as measured in bitcoin. Not much, but still an increase.
Our original house of 1 million Rand had risen to 1.46 million Rand in 2021, which was 2.25 BTC at the time. A year later, in March 2022, the same house is worth 1.52 million Rand, which is 2.3 BTC.
Source: Moneyweb, Ycharts.com
Morgan Stanley did a similar exercise for US home prices, and here’s the chart.
Source: MorganStanley
A US house that cost 993 BTC in 2015 had fallen to 8.27 BTC by February 2022.
To keep timescales consistent, an average sized house in SA worth say R1.16 million in 2015 would have cost 371 BTC then, with the price having fallen to 2.3 BTC today, even adjusting for house price inflation.
What is striking from the charts above is that BTC’s big gains occurred in the years leading up to 2017. Since then, gains, while still impressive, have been much slower than in the early years.
House prices in Ethereum (ETH)
The second largest crypto by market cap is Ethereum (ETH), which has a much shorter history than BTC. If we had bought a house for R1 million in 2017, it would have cost 242 ETH – which back then could be bought for just over R4 000 per ETH.
Factoring in average house price increases over subsequent years, that house would be worth around R1.17 million today, or just over 26 ETH (one ETH was trading at around R47,000 this week).
What stands out in the chart below is the volatility of ETH, which fell 80% in price between 2018 and 2019 before reversing direction and posting a 2,200% gain by March 2022.
The message is clear: the deflationary power of ETH, measured in Rand, has far outpaced that of BTC since 2019.
Source: Moneyweb, Ycharts.com
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