If you evaluate skins and crypto in BRL, you are doing it wrong

Do it in USD

It is quite common to see my Brazilian fellas evaluating the price of everything in BRL, not in USD. However, for accuracy purposes, there are goods that should be valued in U. S. dollar. Some of those goods are games skins and cryptocurrencies, such as Bitcoin and Ethereum.

Bitcoin (source)

So why is it not ideal to evaluate those products in local currencies, rather than in the “global currency”, i.e., the USD)? Well, if you are dealing with goods that are “international”, they are measured in dollar by default. That means that the correct form of valuation of a product is to do it in relation to USD. The reason for that is quite simple.

After the end of Bretton Woods, the gold standard was replaced by fiat money (not the best decision imho…), and every national currency began to be valued in relation to USD.

That means that since 1971 the global standard is the U. S. dollar. The value of Real (Brazil’s currency) depends on the exchange rate between USD and BRL.

By the time that I am writing this, USD is very expensive in Brazil. And it was worse last year.

Dollar and Real

If you are thinking about Bitcoin, for example, its value is remarkably high. You could be easily a “millionaire” in Brazil if you have some bitcoins. But that doesn’t say much.

Bitcoin and Real

Nonetheless, if the government of Brazil suddenly decides to drop or raise the exchange rate (and there are discussions of that all the time), for many it will seem that Bitcoin has decreased or increased in value.

However, the cryptocurrency value is the same, given that the price is established in relation to the USD, regardless the exchange rate between local currencies and dollar.

Bitcoin and Dollar

The same happens on skins market. Last year, when USD was extremely high, skins got awfully expensive. However, in reality, they have maintained their US$ prices. They have become more expensive only in Brazil, not in America.

Anyway, all of it was to say, if you are trying to find the value of your CS:GO inventory, or how much do you really have in crypto — especially if you are trading and interacting with foreigners (which is a common thing in this internet environment) —, you should calculate it in U. S. dollars, not Brazilian reais.

Verba volant, scripta manent.

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Henrique S.

Henrique S.

Verba volant, scripta manent.

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