🔸 Value Unit: A unit of measurement used to express the cost of goods and services. The BVI supports multiple value units beyond fiat currency, including:
By changing the denominator, the BVI reframes the cost narrative — revealing whether prices are truly rising or the measuring stick is shrinking.
🔸 Log Return: A method for calculating price change using natural logarithms:
r = ln(price(ₜ) / price(ₜ₋₁))
This approach models compounding effects more accurately than simple percent change, especially across volatile assets or long timeframes. It also enables clean index construction via additive return aggregation.
🔸 Core BVI - Index Variants: All variants of the Bitcoin Value Index track the same 32 real-world components across 8 categories. What differs is the value unit used to express cost, allowing direct comparison across asset regimes:
🔸 Bitcoin Halving: The Bitcoin halving is a programmed event that cuts the Bitcoin mining reward, also known as the "block reward," in half each time 210,000 new blocks have been mined, which occurs approximately every 4 years. This means that the reward given to the contributors securing the network is reduced by 50%, directly impacting the rate at which new Bitcoins are introduced into circulation.
🔸 Fiat Decay: The erosion of purchasing power caused by the debasement (or devaluation) of a fiat currency supply. Unlike hard assets or assets with a fixed supply, such as Gold or like Bitcoin, fiat currencies (e.g., USD) are inflationary by design, allowing an issuing government or central authority to increase the supply without limit. The BVI makes fiat decay visible by comparing cost trajectories across non-fiat units of account.
🔸 Normalization: The process of setting each BVI index variant to a base value of 1,000 on June 30, 2010. This allows for clean visual and statistical comparisons across time and between value units. Importantly, only the final index variants are normalized — individual components remain in their natural units (e.g., USD/pound, BTC/month) to preserve real-world interpretability.
🔸 Asset Regime: A macroeconomic environment defined by the dominant store of value or measuring unit in use — such as fiat currency (e.g., USD), Bitcoin, Gold, or equities. By analyzing purchasing power across different asset regimes, the BVI reveals how shifts in the underlying monetary system affect the cost of living.
🔸 Modular Index Architecture: A structural principle of the Bitcoin Value Index where:
This design ensures transparency, scalability, and adaptability across user needs and asset regimes.