Bitcoin Forum

I hear more and more by people that they consider bitcoin more of a store of value (eg, gold replacement) than as a currency, especially as the transaction fees go up. I have also heard many people say that even if bitcoin is only used as a store of value, and not as a currency, it has utility.

But this is not sustainable. Imagine bitcoin prices continue to increase and eventually all the coins are mined. There are not many transfers because people are mainly hoarding. Thus not much transaction fees, which is the only source of income for miners. Hash power reduces dramatically, and so network security deteriorates.

It seems to me that the only solution would be for bitcoins to be perpetually made available (no limit at 21 million).

I think that often. Bitcoin was meant to be an currency, despite what I hear somewhere. If it has become a accepted store o currency it would need to be long excepted as such and we have people saying oh it's the new gold despite gold being around for 1,000s of years. Quite redicoulous to compare it to gold. We will see. It could very well be a bubble but I'm in it and like it and if it does evolve into a widely excepted currency, perhaps one major retailer could start it, it would be a great positive change

There are altcoins which follow that pattern, and some have a significantly larger sum.

Of course, Bitcoin wouldn't be Bitcoin if more than 21 million could be mined.

What you have to remember is that there are potentially 2.1e+13 units available. At this rate a single coin will be enough to buy a house, people are turning to mBTC and such.

Transaction speeds need to increase, more off-chain activity is needed, transaction fees are higher than ever (in terms of $ value) - that's a huge blocker for many...

On the contrary, the value of bitcoin should rise consistently as it proves itself a more reliable and cost effective means of storing value than other investment vehicles. By the time, bitcoin's limited supply becomes an issue we will probably have seen multiple recessions and economic meltdowns, we'll likely have seen multiple stock market crashes and possibly even the crash of the dollar and euro.

If bitcoin holds steady without any major malfunctions during what could be a difficult future in terms of economic and financial forecast, its value should climb steadily in comparison to other stores of value.

Introducing infinite supply is to invite the same economic maluses venezuela is experiencing at the moment with the bolivar. Hyperinflation is a real thing. Satoshi's vision was to implement an algorithmic method of currency supply and it might be said that bitcoin's current success is derived from this. If bitcoin had infinite supply and an arbitrary subjective method of supply, it would likely never have enjoyed the success it has.

i do believe that something will happen soon. we won't need to wait for these long term scenarios after years when price is  so high or fees are so high,...

pretty soon either fees go so high that nobody uses bitcoin anymore and it stops being a currency and soon it stops being a store of value and it will eventually be abandoned because an altcoin will replace it. it is even possible that the shitcoin called bitcoin cash to rise and replace bitcoin for a while before it is also replaced by an altcoin.

or we decide to do something about the scaling issue that bitcoin is facing. so far with blocks that can not even reach 1100 kB we can say nearly nobody is using SegWit, this has to change. then we need this LN which they kept talking about to see what that will do for bitcoin. if these solve the issue for good then we will be ok. but if onchain transactions continue to rise in fee like this, i don't see much chance for bitcoin really.

You are missing my point, the reason for this thread. I agree that the price of bitcoin will go up. The issue is, as more people hoard, there are fewer transactions, and thus not enough fees for miners. That is why I do not see how bitcoin is sustainable if it is only a store of value.

Beanie babies were a "store of value" until they weren't. The ability to store value only has utility if there is value to store.

I see what you mean, but if the price constantly rises, people will inevitably regard bitcoin as an asset, because you wouldn't want to pay for your grocery with bitcoins if you know that today a certain amount of btc costs $10 and tomorrow it will cost $12; in such a case you would choose to pay with fiat currency and hoard your btc.

I think in order for btc to become a daily mode of payment, the price has to stabilize first. But I don't see that happening in the near future.

This may seem intelligent, but it's not necessarily true.  Even if people are mainly hoping to hoard, it would still be traded in a relatively liquid market, and there would be a fair number of exchanges between BTC and fiat currencies or between BTC and gold.

The main reason why BTC could not be used as a store of value in the long term isn't really to do with miners - it's mainly to do with utility.  Any cryptocurrency can have utility, so Bitcoin doesn't inherently preserve its value if it doesn't have utility.

BTC will generally function best as an alternative currency for certain niches.

Why not? People keep their wealth in a store of value (e.g., fiat currency savings, bonds, stocks, mutual funds, real estate, gold) and then sell those items as they need that wealth for spending.

If you have no limit of coins available the supply outweighs demand and the value goes down....and as the value goes down people realize that bitcoin is no longer a good option to store their wealth, and the whole system crashes. This is what fiat currency systems are driven by, that's why the spending power of your fiat money erodes over time, that's why regular commodities (things that have no increased tangible value, i.e., milk, eggs, gasoline) increases in cost over time.

I agree. There's no way Bitcoin's value can keep rising indefinitely after all. It's going to peak at some point, after which demand will start to dwindle. If it's not growing anymore, then wouldn't it make more sense to use a storage of value that actually has some utility? But then again, who says Bitcoin will only be a store of value? Bitcoin's end goal is still to be a trustless currency. This is why the community is hard at work to address the scaling issues, which is for the most part, the only thing that's really holding Bitcoin back.

The only reason Bitcoin is only being regarded as a store of value is because it's pretty much all it's truly good for at the moment, and it's one of the best out there in that aspect. It can be used as a currency, but pales in comparison with other options.

Bitcoins are observed to be more of an asset than a currency that you can use for payment at stores or malls, but it is only really so because of the number of support it currently gets, as the support rises we should soon see that bitcoins will be used as currency more often.

Looking at how fast the price of bitcoin rises, it shows that it’s a good store of value. In the coming years the value will continue growing.

If the btc supply is infinite then who would be willing to spend more than $ 10k to buy 1btc? And you have to know that then btc will be back to the starting point. Surely no one would expect this to happen.

Because with all of those, there are no miners that are needed to support the network. If I hold gold, nothing external will affect my gold holdings. But if I hold bitcoin, and mining reduces dramatically due to low fees, then the security of my bitcoin is affected.

A bit of a tangent to this thread, but according to this paper transaction fees by itself are not sufficient to support the bitcoin network:
https://www.cs.princeton.edu/~smattw/CKWN-CCS16.pdf

How do we know it would be enough? If it is only a store of value then most people are going to be hoarding. A tiny percentage of the world's gold is actively traded compared to the amount in existence.


This is a key point and another reason why bitcoin cannot survive as a store of value only. If another cryptocurrency can function as a transactional currency and a store of value, then people would flock to it instead of bitcoin.

Yes, I am about of the same opinion, because it's true, if it's got so much excitement surrounding it, then why not keep your investments in it? That's very reasonable.

altcoins is better than bitcoin to be used as Store of Value.
litecoin as example have fixed price last two years and can be use more than bitcoin.
people love bitcoin because short time earning only

If your saying increasing the supply is the solution(correct me if I am wrong, that won't be happening. First, the Bitcoin was set to only be 21M and Second, increasing the supply will mean decreasing the value of it in the market which I think all of the investors will not agree with.

the idea is by the time all is mined, mining would be based on tx fees ... in the future if 7B people use it ... there would always be transactions even if 90% are holding .. 10% of 7B people would transact thus giving miners an income to operate.

You have it backwards. If it is ONLY used as a store of value, and the supply is limited to 21 million, then the value on the market will decrease, possibly going to zero. The only way that bitcoin can survive is to increase their supply. Read the above posts in this thread. What people think is going to happen if they increase the supply is irrelevant. The market wins in the end.

This is wishful thinking. How do we know that there would be enough transaction fees (not just transactions) to give miners enough income to operate? No one so far as been able to give any hard numbers. In fact, someone published a paper demonstrating that mathematically, the fees-only model cannot support itself.

I don't see how the 21million cap can possibly be kept to.  If people want Bitcoin to be the main crypto currency then it would be impossible.  There will be a few people controlling the whole global economy.  Though maybe there is now.  So it will be the same only with different people.  I don't think Bitcoin can survive unless it changes drastically. But nobody can say for sure.

It won't be impossible with a 21 million dollar cap. You do know that the coin can get spent in decimals? That's a lot of numbers.

I think that if there were to be more than 21 million, minus what ever has been lost forever over the years it would have a detrimental affect to the value of bitcoin. Yes hodling isn't the answer either as for bitcoin to truly flourish as a currency it has to be spent and not just transactions from trading.

Of course it is always important to consider what people would think if the "VALUE" would decrease because of the increase in supply. This had been proposed long before but the public have not accepted because it will surely undermine the market value of BTC.

You're starting with the assumption that everyone would be using Bitcoin purely as a store of value. This, in my opinion, is extremely unlikely to happen on such a large scale that it woulds massively impact the number of transactions being sent with Bitcoin.

Even if Bitcoin was mainly used as a store of value, you'd still have people using it either for short term or for long term storage.
If used for short term storage, there would still be enough transactions to pay for mining fees.

I agree with you on the problem you raise, but not on the solution. Bitcoin as a store of value is a temporary madness which cannot last forever. The reason which makes this madness "normal" is that the mainstream finance has become even more mad and even more disconnected from reality. Therefore Bitcoin is a sort of "lesser madness" compared with the fantasyland of mainstream finance. Both of them cannot last forever. It is not clear which would collapse first though. As for the solution you propose, making more Bitcoins is not necessary, since there are more an more new altcoins which cover the function of "more bitcoins", supplying more assets that can be used as a store of value.

The problem with changes is acceptance just look what happened to segwit and segwit2x.

Yes, I am starting with that assumption, which I did not come up with, but was responding to.


And the basis of this is what? According to this paper https://www.cs.princeton.edu/~smattw/CKWN-CCS16.pdf transaction fees are not going to be enough to support the network.
I disagree with this because if altcoins turn out to be superior to bitcoin in terms of store of value, then people will shift out of bitcoin, not buy altcoins in addition to bitcoin.
You mean the bitcoin public have not accepted it, not the general public. But the bitcoin community is very insulated in terms of economics and exposure to any ideas outside of crypto. It "surely" does not undermine the market value of BTC.