The Economist invented the Big Mac Index in 1986, which acts as a guideline whether currencies are at their “correct” level. The index is based on the theory of purchasing-power parity (PPP.) The idea is that in the long run, currency exchange rates should move towards the prices of an identical basket of goods and services in any two countries, in this instance, a Big Mac burger.
Now this metric has come into the Bitcoin economies. The argument is that each MacDonald’s burger is identical regardless of the country it serves. The only thing that changes is the price of the burger. BitBond – tokenized debt securities platform, created a software that does the same for Bitcoins during 2015. This revealed how many Big Mac burgers one Bitcoin will buy you, called as Bitcoin Purchasing Power Index.
Big Mac Burgers and Bitcoin – Burgernomics
According to the site, the global Bitcoin PPI will tell you “how many Big Mac burgers you can buy with one Bitcoin on average globally.” With Bitcoin’s current market price of US $10,619, you can buy 4,456 Big Macs which, will account for 2.5 million calories.
This index, the Bitcoin PPI will also help you to calculate local exchange rates to assess how far a one Bitcoin will stretch in a country. For instance, in Mexico, it will buy you 4,433 Big Mac s when compared to Denmark 2,873 Macs.
With the use of PPI, you can also measure the volatility of global PPI. During this year, the volatility was highest in April even with all the uncertainty caused by the pandemic. Bitcoin maintained a stable figure throughout the period while other stablecoins, DeFi protocols, and exchanges, prospered.
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