Bitcoin Forum

I'm a newbie to the site but bought Bitcoin about 6 months ago and like most am pleasantly surprised by the recent price increase. I tried to get an answer to this on other threads but can't find one. Here goes:

If predictions of a future Bitcoin, valued at multiples of it's worth today ...are common belief, why on earth would you use Bitcoin in the first place, let alone sell it?

Thank you in advance for all informed responses.

You have to have a really good technical understanding on how computers work in general to answer your question. As it was the case with the internet, many people were asking similar questions you were asking. What is the internet's potential? How is it going to look in 20 years? The same could be said about Bitcoin. It is a technology still in development with many future applications down the road. There is going to be more use in the currency and Bitcoin will become as important as the USD. Every purchased Bitcoin for fiat is an investment in this technology.

I am not selling my coins, I assure you of this. I am spending them though since I believe that in this way I am boosting Bitcoin adoption, usage, transactions number, etc. So I am really trying to pay with Bitcoin whatever I can in my life and whatever it's available to be paid at the moment.

I do however tend to buy whatever I spend and very often, even more as my Fiat is coming in from my real job. Granted, I don't buy as I spend immediately, but once or twice a month I do replenish my spending reserves and I add a bit more. What will people that I send them to (pay goods to)are doing with coins, that's their worry.

Of course, I have my long-term cold storage stash. I am not touching this to at least year 2020.

Thanks for your answer Tom.
However, it is very unsatisfactory and the comparison with the internet...tenuous. It still doesn't tackle the very basic idea of a person holding Bitcoin believing that in 2 years time, the value may have doubled, for example.
Why on earth would this person use it, if he/she knew it was vastly undervalued?

While I think merchant acceptance is a bit of a sideshow, unless there's some actual utility it'll just sit there doing nothing. And there ain't no guarantee it's vastly undervalued.

There are plenty of people on here who don't hold it at all. They use it for what they need it for and then get out again. The speculators probably massively outweigh them but they're out there.

Listening to a podcast and heard guy doing some math (can't recall the details) and he said that 1 Btc could reach 2.8 Million dollars! And it seems that the bitcoin rally is real!

http://techcrunch.com/2015/10/30/the-bitcoin-rally-is-real/ (http://techcrunch.com/2015/10/30/the-bitcoin-rally-is-real/)

Thanks Gentleman and Mickey. I appreciate your point GM that it may not be undervalued. But for the sake of argument, we will assume it is.

So if the speculators massively outweigh users at the moment (see Blawpaw below), Bitcoin price inertia is inevitable. Correct?

Therefore, a massive shift in use is required. A seismic event/thinking must be applied to move from speculation to use.

However, it just seems that it is a chicken and egg scenario, .... leading back to my original question. Why would people ever use it if the current belief, (by the majority of Bitcoiners), seems to be that it is undervalued.

Any other input would be great. Thanks.

Here is a riddle to answer your riddle:
When you bought your bitcoin, did you buy it thinking it was a currency or it was an asset?

Depending on your answer, determines how you view and will use it.

At one time in history, gold was the only currency, but today it is an asset.
Only time will tell how bitcoin will ultimately be used.

I have the answer for you. There are many reasonably explanations to why people sell it.

The price of bitcoin, as do most investments, do not rise linearly in a straight line. There are up and downs. Investors may want to capture more profit buy selling at local highs and buy back at local lows. People genuinely need money for other things and are prepared to forego some profit to fulfil other more urgent needs. Some bitcoin owners have too little bitcoin to care about future profits because even if they sell at the future price, it's not a life-changing amount. Spending bitcoin is a novelty for many users. It is fun to try buying lunch with your saved bitcoin, only to buy it them back on the exchange later.

There are many more real life scenarios... and we do need more people spending it so the bitcoin economy can grow.

The predictions of price growth are only that, predictions. There's nothing certain about it. And there's still a wide debate over whether Bitcoin's future is as an asset class or a currency, obviously it's treated as both right now.

The connundrum is that  we can't really have asset class appreciation without adoption and adoption is acquired by use as a currency...

Some companies offer promotional discounts if you pay with Bitcoin. Newegg the online retailer has offered a number of deals such as an offer of $100 discount for buying an xbox one with Bitcoin. People holding Bitcoins who used them to buy xbox ones could get a free $100, then buy their Bitcoins back off an exchange. With offers like that why wouldn't you spend your Bitcoins, then replenish them?

Bitcoin is primarily something to own and speculate. But just like every other asset you can possibly own, you can trade it with people that are willing to exchange what they have for your Bitcoin, which is a small number of people. Why would you sell/trade your bitcoin, well not because you don't believe it will go up i value but because what you need for your bitcoin is more important to you now that the future value of bitcoin, as you can always go buy another bitcoin to replace the one you no longer have.

As a side note, bitcoin as a currency is a distraction. Is my mother going to take care of her private keys???, no way in hell. She will never use bitcoin, ever. One day in the future people will use bitcoin for more than just asset speculation, today if you do you are a techno geek that likes to roll the dice with encryption hell.

in bitcoin
most smart people spend 40% save 60%
most wealthy people save 100%
most poor people spend 75% save 25%

now imagine this
imagine you had $500.. to buy 2btc at last weeks value $250, (next years imaginary price $500)

smart people spend 0.8btc, saves 1.2btc (next year=$600 saved)
wealthy people save 2btc (next year=$1,000 saved)
poor people spends 1.5btc, saves 0.5btc (next year=$250 saved)
everyone is happy.
even the poor person who spent $375 and still had $250 ($625 total funds) is happy that they got $625 out of $500


but now, in fiat
imagine you had $500.. to buy 500 bottles of water..
most smart people would search around for offers to buy at a discount 750 bottles today
most wealthy people will buy stock in the water company to get a constant supply of bottles
most poor people would just buy 500 bottles..

but with fiat there is no need or reason to save $100 for 5 years. because in 5 years due to inflation you wont get 100 bottles you will only get 50 bottles

so the short story..
even if your dirt poor and need the money. bitcoiners dont spend it all, only whats really really needed.. the hope is to save atleast some for future investment

Bitcoin is onlu undervalued because it is a new technology and all of it's potential is being worked. In time, more applications will ve found and the price will soar.

If everybody just sat on bitcoin then there would be no market. Bitcoin is also very convenient to do trades.

Here is the answer:
It is an evolution of our current monetary system. Do you question evolution of life? If you do, then this answer is not for you.
Unlike me. It fits it just find.  ;)

Exactly the answer my friend. Those people who do not accept Bitcoin are like the creationists who think god created everything into existence. Is not what science says, and as we can tell Bitcoin is an evolution of our money system.

OP, the reason is because in any market no two market participants are alike. They could be:

- short term speculators
- long term speculators
- parasitic traders
- informed traders
- clueless traders
- liquidity providers
- people with low risk tolerance
- people with high risk tolerance
- hedgers with an offsetting exposure in another market

just to name a few. The overall result is that there will always be sellers and buyers at any price, each partaking in the trade for different reasons. Your assumption that everyone must be a long term speculator holding out for future gains is incorrect.

In my particular case I mine my BTC and I may sell off some of it to offset electricity costs (even though I can afford to pay for the entire electric bill from my salary).

Why not use it if I got it? Especially if the price has gone up since I first bought some BTC. I've bought things with BTC before only to have the price spring upwards after my purchase and vice versa. Not all of us are into BTC hoping to get rich.  Some of us like the technology and the freedom it offers from the usurious bloodsucking banking system.

If the price value does increase, I assume at that point people are actually using it as a real currency and not just buying and hoarding which I think is not sustainable in the long run to drive further price increase. When the demand is natural for example using it as a cross border transaction mode of transfer, that is where I see bitcoin having the most potential.

Bunch of nonsense.

The entirety of Bitcoin's value sits in those who have bought it and are holding it.

I like to quote Wences whenever this comes up, OP this is relevant:

That is what it's intention was from the start. It has to go through the cycle in order to be seen as a staple like any other currency. Then it will truly be accepted by the skeptics.

Thanks for your answers everyone. I am in agreement with BRG444. It's mostly about buying and holding. However, I'm not quite sure if it's totally fine when taken in the context of Bitcoin wishing to be a real currency player.
I understand it functioning as an asset class operating on an exchange: however, there are issues that will ultimately erode the trust in this asset class in the long term, all of which you have heard before.
1. Pump and dump which drives instability
2. Lack of real life applications
3. Reduction of new buyers of Bitcoin due to 1 and 2 above.
4. Unrealistic expectations

I guess only time will tell how VC money transforms this in the future, if it does at all. Thanks again.

It is true that most of the people are holding bitcoin hoping for a price rise. But there are lost of people spending it for remittance and other purposes. Most people I know buy back amount of bitcoin they spend

Not all people hold just to sell it off a bit later. Honestly, I also want to see bitcoin being valued hundreds of thousands because I know when that time comes, you don't need to sell/convert because you can use bitcoins directly to pay for many things.

I never sell bitcoin personally however I use it in a regular basis, why I do so? It's because bitcoin is the only online available payment method for me due to my geographical location plus the whole process is so easy and user friendly that as soon as I get a reasonable amount of bitcoin in my wallet, I use a local exchange for transfering the funds to my bank account so I could use it for buying things in the day to day life as well

OP is raising a fundamental question that has been discussed on here since 2011. It is just as important now than it was back then.

I think we can agree that Bitcoin is technically a currency but in essence an asset. An asset that is in great demand not only to speculators but for anyone having their doubts in the financial system of today. Today it is very hard and risky or sometimes impossible to save/accumulate wealth in traditional ways. Bitcoin was invented around the time of the financial crisis for a reason, entire industries and perhaps societies have been screwed over by market manipulation.

One idea is that BTC will become something like a reserve currency and will mainly be used for large expenses in the future. It will not be a libertarian's dream making everyone "free" as some have dreamed of, but it will transform the way we handle "money" nevertheless.

I don't see Bitcoin to be anywhere near an everyday currency neither now nor in the future. This is not a catch 22 situation either because Bitcoin will be fine without becoming a currency used by "the masses". There are and there will be alternative currencies that are interchangable with Bitcoin to do that job, even if we won't know which one(s) it will be yet. While BTC can be an investment, an asset for retirement or wealth preservation or speculation for everyone, it will be enough if it becomes a currency only for big players/industries/insurances/NGOs, "banks" (we will still need a loan system in the future) or entire governments. Perhaps if governments and central banks started to use cryptocurrency instead of pumping ever more funny money into a corrupt system -that could have potentially healing consequences for all of humanity.

I think these people you are talking about are just regular speculators who can be found in every financial aspects.
Bitcoin has potential to change all current finance. It just seeks for more awareness.
We may never need to sell our bitcoins again in future.

well you can always buy things with bitcoin to increase adoption, and then immediately buy it back.

This helps the bitcoin economy and you won't lose out on value.

simply because it is not true for everyone, many think that bitcoin will die fast and they dump, other are just doing their tradin activity to have more bitcoin, and i believe those are the majority that cause these spikes you see

then you have the holders that look at this price and don't care at all and those other that have many coins and what to dump some to cover emergencies or personal whims and like that

you will happy if you use bitcoin, don't worry about inflation. sell it? why not to spend it, it will make bitcoin usable, even try to introduce it to merchant, take a step for bitcoin goes to mainstream.

and about the price no one know if the value will be a worth as today, i think because bitcoin can use as currency and use as commodity too, the price still volatile and i think it will be volatile forever if the adopter growing.


well this is nice illustration!

Wow, that's a great question. I guess, for me, Bitcoin isn't just an investment. Bitcoin is also something I can use in day to day life. It is a investment, but not only that. It helps in day to day life, so you spend money but at the same time you are earning money. I have some bitcoin saved away in my hardware wallet, and some spare change in my online wallet.

I assume people are looking forward to spend them when the price raises to a certain level, which will probably be coincidental with a mass adoption and easier opportunities to use it.

Basically, this. Also, if no one spent their coins and trade was nonexistent... bitcoin prices would also be nonexistent. Using your bitcoins is vital to the price increases. (And, by the way, I too am very happy about the price increases.)

Because it's not a commonly held belief - at least by those doing a majority of the trading. If everyone on the planet agreed that its value would be significantly higher in the future - everyone would rush to buy it leading to increased demand and therefore prices and therefore creating a self-fulfilling prophecy. The reason this doesn't happen is because aside from the few people here who have incredibly unrealistic expectations - most people don't expect any major valuation changes in the short term so spending it is perfectly viable.