Bitcoin Forum

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

You have pretty much answered few of your questions.
Meanwhile, for bitcoin market, where it is used to make purchase, it will bring more awareness to it and that will increase its value and growth till it gets to equilibrium - thats it's height because it has not got to its height because of awareness and acceptance.

Definitely increase its value. As adoption increases, the network effect starts kicking in.
One of the reasons for the explosion in price today is that more and more people know about Bitcoin.

It depends. We shouldn't forget that merchants accept Bitcoin through third party payment processors who directly, or eventually convert these coins to fiat on the market. If the demand remains strong, it wouldn't really impact the market too much, negatively speaking, but if the market experiences a stagnant period, it might actually suffer to a certain extent. It has all to do with supply and demand, simple basics. Only when merchants will start to actually keep a certain percentage of their sales in Bitcoin, I see the market react positively -- less coins in circulation always helps.

That makes sense. So then would the Segwit2X fork in November devalue Bitcoin as a legacy coin if a new one is created/put in circulation? I'm trying to understand that too

The sale of a couple of pizzas for Bitcoin actually created a buzz about the currency in its initial days.
So by that yardstick, using bitcoin definitely helps.

It's a good question, it's nice to see someone thinking rationally about the economics of bitcoin and asking an intelligent question. I see bitcoin transactions as essentially neutral in terms of whether they create or destroy value. On the one hand, buying bitcoins to spend at a merchant creates upward pressure on the price. Once spent, however, the merchant is likely to instantly liquidate the bitcoin into USD, because bitcoin has a low utility for actual commerce. It does no good to hold a currency the vast majority of the economy doesn't accept and when the rest of the economy conducts business in USD. There's also substantial risk of losing the profit of the transaction due to bitcoin's intense volatility, so all the incentives for merchants are to exchange immediately into USD, and this puts an equal amount of downward pressure on the price. I see commerce playing a negligible role in the actual value of bitcoin, all this up and down is related primarily to speculators.

I think Bitcoin having usage will definitely increase in value.  By spending it to some online store supports its  community by enabling merchant to have client and profit from it.  From this point of view, if merchants are profitable using Bitcoin as mode of payment, more and more merchant will definitely flock in and the real life usage of Bitcoin will be strengthen thus community will grow and new comers will flock in.

Definitely Yes! If the acceptance of bitcoin increases, it will surely increase the value of bitcoin because the demand will increase compared to the supply. It will also give a huge promotional boost to the community. The common mass will know about bitcoin and many of them will be interested in actually using the bitcoin. So the higher the acceptance will be, the higher the value will be. No doubt about that!

I totally agree with the others! It will increase its value, because it will show to the world, that Bitcoin is real - and can be used as a normal currency, which many - unfortunately - don't think.

Thank you for the informative answer, that all makes sense. So then a widespread Bitcoin usage would require near-zero volatility? How can that be achieved if most vendors/merchants are quick to liquidate to fiat?

In my point of view using of bitcoin in the business or accepting it as a mode of payment will create a diversity between fiat and cryptocurrency because I think most of people are going to pay with fiat and some are will pay with bitcoin but with that the bitcoin information will spread to the people and I think that will create a pump for the price of bitcoin because the demand will increase again and the supply of bitcoin will be lessen. 

I like your subject I speak of it. Bitcoin is unpredictable no one well know like the weather it self and the time as well

Technically, it will increase it's value, the flow of demand and supply is continuously flowing and moving , which makes the bitcoin as a currency effective and active, holding it makes the demand and supply flow stagnant which makes its invalidate bitcoin as a currency.

Not really, with how the price of bitcoin is moving right now that would be hard to achieve because of forks,halving,countries banning things related to crypto etc. That's one of the negative things for us who hold bitcoin to spend them. To avoid losing value I simply trade my bitcoin for an altcoin with a low volatility like tether where the price always sits at a dollar.

It would increase its value because more people would be aware of its existence. The more people use it, there would be a higher demand thus a higher price due to its nature of being limited in supply. The difference of it in other things that when the volume increases, it would stabilize in value is that this things have unlimited supply thus an increase in demand is also an increase in supply and if you compare it with bitcoin with a limited supply then people would be willing to pay a higher price than someone else so in effect the agreed price of the buyer and seller would increase.

Not with the value but the continous usage of bitcoin will make this currency more stronger since more people in the community will used this as a sign that they trust this currency eventhough it's virtual.

Coins will now be distributed more to different levels in the community and not just by some of the big whales. Price will become quite stable if active usages of it as a currency will happened. For traders, they might think that trading is not profitable anymore when price become stable. They are wrong here. Just look how healthy fiat currencies trades is.

The answer isn't as simple as this, it would definitely not "definitely increase its value".

The question is whether the transactions result in selling Bitcoin for another currency or not. If we sell more Bitcoin for fiat or any other currency at a rate that exceeds the block reward rate (and thus growing supply) we will see a drop in price. Supply would be exceeding demand.

More specific to your question, if your transactions keep your bitcoin in the bitcoin ecosystem it would have a neutral effect on the price. Your transactions aren't influencing supply or demand (well, they're doing their part to keep demand stable...that's something!)

Adoption would only be influenced if your transactions are bringing new people into bitcoin, a purpose which transcends the transaction itself.

It's a good question, but don't fear that if you spend your bitcoin and use it as a currency you're going to do something to negatively effect bitcoin.

If you want to increase adoption, get into the habit of asking "do you accept Bitcoin" every time you try to buy something in person. And be ready to spend if/when the merchant says "yes!"

It is an speculative asset, so we cannot predict whether the price increases or decreases with time. Everything happening with bitcoin is purely of the increased and increasing usage compared to the past. As the market supply increases, so will be the value. On such a thinking I believe the price grows high depending on increasing usage.

When people start using Bitcoin to buy many services or goods bitcoin would start getting more well known and the prices can increase and maybe become stable in some time. But if people stop using Bitcoin or people lose interest in Bitcoins the value would start going down.

Bitcoin has an unstable value that fluctuates over time and is so easily influenced by things like supply and demand.. or panic selling and panic buying. The more that sells the price will moving down, the more buyers the price will be moving up. In addition, the latest news can also affect to bitcoin users, because the news can make everyone take the decision to immediately selling it or buying it and there are many other factors besides that. Well i think that's who can really affects the bitcoin price movement caused by all bitcoin users.

Using Bitcoin will definitely help in increasing its value because more people would like to get a hold of it. Example is LGD token, which is used the LegendsRoom which is a bar in Vegas, this token increases its value every time there's an event in Vegas (boxing or MMA) because people buy this token as it will be used in the LegendsRoom. There's a demand, and when there's a demand it will dictate the value of a product.

i think the bitcoin value will increase because people realize the existing bitcoin and they know bitcoin can be another solution for the payment. but for being used for payment, bitcoin price need to be stabilized first so when people want to buy something, they can used bitcoin as fiat. without stabilizing the price, bitcoin is hard to reach economic because once the price is down too deep, the economic will be panic and the country will be in chaos.




yes bitcoin price require near-zero volatility to be used for the economic of the country. i think we are too far for used bitcoin as large scale of the economic because bitcoin hasn't reach a stable price until now and i guess we needs more years again. but i am sure that we are going to go that way and once we are there, we can see bitcoin will be as new currency for all country for their economic too.

Definitely it will increase because the more people spend their bitcoin it just only means that the demand is becoming higher yet the supply becomes more and more limited as well as the coin circulation also affects the market.
Well if there will be a mass awareness bitcoin price will constantly increase.
On the other hand, the price also affects by the fake news and trolling but these will be all useless as the trust and hopes that everyone is giving and eventually bitcoin price will recover.

Right now? I don't think it would have a substantial effect. Current demand for Bitcoins is being driven by people who want to invest and ride the wave. Seeing people spend their money in a different way is not going to spur them into buying Bitcoins, which means little to no change in demand, and consequently, little to no change in value. I am assuming the number of vendors who accept Bitcoins as a form of payment in this scenario stays the same though.

More vendors accepting Bitcoins is a different story though, as it legitimizes Bitcoin's status as a currency, potentially bringing in more users.

Well obviously, the more people using btc, the higher the price would become. Bulk selling or panic selling decreases its value. So the more people owning bitcoin, the better the result would be for it's users

I understand how supply and demand works. I was asking more about value consensus in general. And can you explain how using Bitcoin in everyday life would increase its demand and, subsequently, its "price"?

If you offer/trade XX Bitcoin for a good or service (commodity), you're establishing a value. The more common that this trading happens, a value is established and solidified.

I think it depends on what the merchants would do with your bitcoins, and whether you would replace your spent bitcoin or not.
Bitcoin is limited, so it's price increases as demand increases, so the more people buy and less bitcoins are available, it's price will increase.

If you buy things with it, nothing should happen to the price, since they are just circulating. But let's say you buy, and the merchants exchange them to fiat, and neither you or the merchant would get more BTC. Then it was actually a sell of bitcoin so the price decreases (at least if this continues, because then it would look that everyone was selling and no one was buying).

But id you buy stuff, the merchant holds them or uses them to buy stuff as well, and more and more merchants offer the option of buying things with BTC, then more people that don't have BTC right now, will get them, in order to trade them for goods as well etc. In this case the price will increase of course.

If purchasing goods or if there are already accepting bitcoin payment in merchants definitely these would bring more awareness to the users. So this means if this will happen it would become increasing its value and the demand of bitcoin.

I believe that when there is more use of bitcoin in the online market or even the ordinary market the price of bitcoin will increase significately. If there will be more Bitcoin transactions there will ne more demand to buy it and eventually the value will rise according to the demand.
Such thing needs that people start believing in crypto word and start accepting btc payments.

To me using bitcoin to buying goods and services do increase it value and as a matter of fact bitcoin and other alternative coins were developed to be used as a means of payment for goods and services. Though we have not got to that level were every body in the level of our society will accept bitcoin as a means of payment but the more people used it the more many people will become aware of it and the more it value increased.

Simplifying it along the line and law of demand and supply, that's exactly what will happen because by the time I offered to pay using bitcoin outside the forum then the merchant do his research to accept, he then consider to suggests the option to him employee whether they would prefer their take home in bitcoin or not. They in turn then influence their families and the cye continues

Using the chain above, it then means for everyone who came into contact with bitcoin and acted on it then means one more person got in to the crypto to and when that happened it cause price to increase the population increase is on the demand side.

Bitcoin in a speculative asset because people are making it so, and because we are still in fairly 'early adopter' phase.
We may agree that some of us would want for bitcoin to never become a stable currency because it would kill the thrill of volatility.
Increasing everyday usage and paying with Bitcoin will just create more demand and since our supply is limited - the price should rise as a result.
The problem currently is that people are kinda unwilling to spend their coins - because they expect them to be more valuable in the future and another thing -
bitcoin user experience is kinda lacking, and this fact is putting off newbie users from using BTC full scale.

In my own words and understanding if you do tend to use up your bitcoin to buy goods and other stuffs and services i cant see that it would increase nor decrease its current value since those merchants are holding up their bitcoin that they do earn unless if they would decide to sold up those amounts on an exchange then it will surely affect depending on how big it is but if we do say on small amounts even on selling or exchanging them wont really give impact at all.

Converting Bitcoin to fiat currency means selling your bitcoin, if you are selling a huge amount of bitcoin that will eat out buy demands of bitcoin then it will affect the price because priced moved lower but I know eventually the price will recover.

Definitely the high demand for bitcoin and crypto currency generally will increase its value and not decrease crypto currency value. Since the supply of bitcoin is a little beat small as compare to the demand for bitcoin which will likely increase its value.

Using of bitcoin will definitely increase its' market value. As long as the demand for bitcoin gets high, and the supply isn't enough for the demand, the market value goes up. And you can observe when you sell or convert your bitcoin, the price goes down afterwards.

In fact if in present time we are using bitcoin, i am sure that it is increasing its value. because more people comes to know about bitcoin and more people start investing money in bitcoin, therefore i think no doubt that its value is increasing. I think that it is our duty to introduce bitcoin to our friens and family so that they can also become active users of bitcoin, which will certainly help bitcoin in  their future.

Hi hairballin! I'm just a bit confused with your introduction. You said you're new to the bitcoin and cryptocuurency world, yet you stated in your quote below your activity count that you're "an experienced technical writer, altcoin  trader." Quite contradictory...lol! Anyways, as far as I know, the general rule in the market value of things is, the higher the demand, the higher will be the value..simply put. Just like a professional who offers his service, when he gets recommended or referred to others more often, then he could partially increase his fee due to the trust that is being built. Same thing with bitcoin, the more people use it-the higher the demand-the value rises. Quite similar to a popularity contest so to speak..

It increase the value of bitcoin because as long as the people are keep coming in bitcoin and using it then it means that the demand is growing and in the future it will help bitcoin to grow its value because the demand is the main reason why the price of bitcoin is moving and if using bitcoin will continue then it will make the price higher based on the law of supply and demand.

Bitcoin derives its value both from its use as a medium of exchange and as a store of value. Bitcoin price is highly dependent upon its utility. By using Bitcoin as a medium of exchange for buying things will only gonna increase the price because of higher utility. That is why Bitcoin community always stresses upon the widespread adoption of Bitcoin among vendors and merchants to increase its utility which in turn will increase its demand and so does the price.

That is true. Currently, bitcoin's and digital currency's increasing price trend is the effect of more people using. Like any good and services if it does become so widespread and people what to get aboard on it as quick as they can then we can expect prices to skyrocket. More people using means higher value of circulating token not only limited to bitcoin but all digital currency.

Thanks for the insight! And I am new. But I have technical writing experience and I just started trading altcoins. Diving in the deep end to learn as much as I can I suppose.

Definitely,using bitcoin more would give more exposure to it and it would attract the attention of many companies and retailers to start accepting bitcoin payments.So,more we use,the demand for bitcoins would increase and it would in turn increase its value.Even more people who don't even know about bitcoin would come to know actually what bitcoin is.By using bitcoins more,merchants would be pressured to accept bitcoin as a payment to face the competition.All these factors would directly or directly help bitcoin to increase in its value.

Perhaps it will increase as more people come get acquainted with it and consider it as an investment. Demand will make the price grow just like you say. And this is probably what will happen, because btc isn't really appropriate for everyday life due to varying but mostly expensive transactions. Yet if it was possible for btc to be actually used, the price would probably decrease, because it would adjust to real goods people can buy for it and effort they make to get the money.

Neither. Simply using Bitcoin as a mode of payment won't affect its price. What affects its price is of course the demand and supply of it. The demand of Bitcoin comes from us when we determine what is the fair market value of Bitcoin, it is also affected by other factors which cause a stronger buyer side or a stronger seller side. Think about it this way if Fiat currency is being used daily in your country why does it not increase in price over time? Because the demand and supply still remains the same.

That makes sense. I'd ask though when it comes to Fiat currencies, they're subject to inflation due to either an increase in supply (printing more money -smh Zimbabwe) or legislation increasing minimum wage, forced price floors/ceilings on surplus/shortage commodities.

But as Bitcoin isn't Fiat, it isn't subject to those factors (regulation, legislation, increased volume). So can it really be analogous in that way? It seems like it would obey different economic principles.

That is right, even there are a lot of people who holds or get "acquainted" to this currency, there is no certain that the price will pump or increase in value. What if many people will be holding to this digital currency but just let it stay in their wallets and not join the circulation? It will not be staying at the good price.

yes this can be one factor i think you are asking for the reason for the increase and decrease of its value, i think when the value increase good news are being on the way of the grow of bitcoin and when it decrease some fear, uncertainty and doubt is on the process.

Which means anything should really be in circulation for further development or progress into bitcoin. Usually people think off that bitcoins price would tend to go up if people would tend to buy more bitcoin but not thinking off into the possibility for people on totally holding it up for the sake of future profits which means it would really lessen the circulation.I cant say it would majorly affect but would be one of the factor.

If the usage itself is the basis, using Bitcoin in a peer-to-peer transaction won't affect the price since you did not sold nor buy Bitcoins. However, if we are to talk about the impact for the awareness, it could contribute to Bitcoin's demand. If a merchant declares that he is accepting Bitcoin as payment, some people might get aware what Bitcoin is. From the contribution for the increase in demand, the price will follow.

In my opinion, using bitcoin will decrease its value for a short time but help to improve its platform and many other things. Spenging bitcoin also will make bitcoin more popular and people will pay attention to bitcoin. Moreover, developers can find bugs and fix bitcoin right. However, at the moment, people tend to hold bitcoin instead of spending it and this action has made the price of bitcoin extremely high. It is not good at all. When the price of bitcoin keeps increasing like this, people will no longer consider bitcoin as a currency. They will see bitcoin as a digital gold, a form of investment and invest their money in bitcoin.

Definitely using bitcoin cause increase in the value of bitcoin, because when more and more bitcoin circulate in the market more and more people will touch with bitcoin and thus the demand for bitcoin will increase and so is the value. Decrease here is out of sense because I think the value of anything will increase only when I use it and if I ignore something the value for that thing will decrease.

More usage = price increase. If the day comes when no one is using bitcoin the it will be worthless. Currencies need to be used to be worth anything.

The more people use bitcoin the high will be the value. When all the people in the world will start using bitcoin then no doubt other currencies of the world will disappear or of less value than bitcoin. Now you can better understand that the use of bitcoin will increase its value or decrease? Decrease is only in that situation when bitcoin will out of the market and people leave using bitcoin.

It is obvious  ::) if there is more people using cryptocurrencies, then the price would be higher, because its market capitalization is growing, doesnt matter if someone invest $10 or $1m, the price will increase because it means that we have more cap.
so yes, the price will be higher everytime that someone buys, and it applies to bitcoins and altcoins

Using bitcoin will increase its value. The Law of supply and demand will always be followed. If more people chase and use bitcoin, it means the demand is high. If the demand is high, the price will rise too. Now if tooamu people will dump their bitcoins, that's the time bitcoin's price will go low. So,let's encourage everyone to use bitcoin!

it's possible the bitcoin will decrease if we spend continuously the coins we have.

Using bitcoin will not make the price of bitcoin change significantly but I do believe that in a long process, the price of bitcoin will slowly increase. Using bitcoin will make bitcoin more popular and force the government as well as banks to accept bitcoin. Holding bitcoin is also a great way to make money, but it will make bitcoin hard to be accepted and use widely by the people. Therefore, its price will not stable but fluctuate strongly

Value increases. Just think about it yourself why would you using something decrease its value. Has that ever happened to you? Using something more increases the demand of that commodity. 

And I am sure that you have heard about the supply demand paradox. When supply increases and demand decreases prices go down. But when demand increases and supply decreases prices go up. 

Using Bitcoin frequently in your everyday life will only increase the demand for it. Since the supply is limited and more demand is being conjured up every minute due to mainstream adoption, Bitcoin prices will only go up.

Definitely when bitcoin gets accepted as payments in more places,it would get more familiar with new people and it would increase its demand which in turn would increase its value.Just before few months,we saw in japan that after bitcoin got legalized,thousands of retailers started accepting bitcoin payments which increased a huge demand for bitcoins and bitcoin's price triggered as a result of it.