Bitcoin Forum

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not. This is because the utility of consuming a potato - the want-satisfying power of a potato is much smaller than that of a car or of 10.000 dollars worth of goods or services. In other words, from the mere fact that the supply of something is limited it does not follow that the price will soar.

In comparison to a potato, Bitcoin is not even a physical tangible good that can be used for satisfying human wants or needs, and its only utility is that it functions as a medium of exchange. So, just because Bitcoin supply is limited, that does not mean its price will rise. People will NOT pay enormous amounts of money just to have a medium of exchange function, especially if this function is equally available whether the price of Bitcoin is 1 cent or 7.000 dollars, and if this function can be realized with various alternative cryptos or fiat money.

good job, you've discovered elasitcity of demand. now go study some more to realize why your conclusions are not neccesarely very insightful or likely.

Bitcoin is not a good in the sense potatoes are, that's one place where you can start.

I don't think it is a myth because whenever demand surpasses supply, prices of commodities and goods in a market always go up, this also applies to bitcoin and the reason the price is going down is because there is so much supply and not enough demand to balance it out.

Everyone already knows that bitcoin supply is very limited and if everyone wants the rising bitcoin price to be accompanied by an increased demand for bitcoin. There will be no price increase if demand for bitcoin continues to decline. Hence, Bitcoin developers must increase investor confidence in bitcoin to make price increases because with investors buying bitcoin the demand for bitcoin will increase.

Bitcoin has no intrinsic value. It has utility.It quickly transfers the cost equivalent over long distances cheaply and reliably.The number of bitcoin users is constantly increasing. This means that the usefulness and value of bitcoin is growing in the same proportion.The more nodes in the bitcoin network the more expensive will be its unit of account.Bitcoin exchange rate fluctuations depend solely on the market mechanism.Demand is constantly growing and this entails an increase in the market value of bitcoin.

The utility of Bitcoin  - its function as a medium of exchange, is equal whether its price is 0.0000001 dollars or 7.000 dollars. The same is true for a potato. For some irrational reasons people may pay as much as 100,000 dollars for a potato, like they paid 100,000 florins for a tulip bulb in a Tulip mania, but the utility of consuming a potato will stay the same and the price of a potato will always return to value determined by its utility. The same thing will happen with the price of Bitcoin  - it will return to value determined by Bitcoin's medium of exchange utility, which is somewhere around 1 cent, or probably even lower.

Potato will be worth as much as the highest bidder is willing to pay for it. Google 'most expensive food' or wine and you'll be surprised how much people are willing to pay.

[Trinidad_James-All_Potato_Everything.jpg]

Your 'argument' doesn't even require debunking, the reality proves it false everyday.

I am not claiming that a potato will not be worth as much as the highest bidder is willing to pay for it. I am instead claiming that the price of a potato will always return to value determined by its utility.

Just like the gold's value returned to the utility-only value? Just like Chateau d'Yquem ($50k/bottle) is now worth same as any other wine sold at supermarket? Just like you can now buy white truffles at $1/kg?

Price is determined by supply and demand. Scarcity is a factor that drives the price up - whether you want to accept it or not. Utility itself won't automatically create monetary value, for the same reason you won't pay for air, even know it has huge utility - it keeps you alive.

if anybody said just because of limited supply price will rise, then they were making a mistake. but my guess is that you misunderstood them or probably read half of their statement!

the reality is that there is another part: demand.
with increasing demand while having a limited supply price will rise and that is what will happen to bitcoin.


potato is not a useless thing. it is useful so if the supply of it dropped, the price of it will grow. that is basic economy, ask anyone!

let me give you a real live example to help you understand.
during wars, like world war, nobody cares about cars. what they are desperate about is food, and potato actually becomes important and expensive. you may even exchange your luxury car with a sack of potato when you are dying of hunger because the supply of potato and food in general during war is extremely low.

Why did you pick example of an potato ? That is the utility which has an alternative,you know people can survive just fine without consuming a potato.It is not an essential part of livelihood.Take water of example,what if the entire Earth dries up and there is literally no water supply ? Would you buy a car or rather drink water ? Not saying bitcoin is that essential but in the word  it has it's own hardcore followers.

If they can predict that their money is going to get doubled after some time,they will never lose a chance to buy bitcoins even when the supply is low.You don't see the point here,it's not about bitcoin at all,it's about the real value it holds.

Throughout all your posts, you have been quite repetitive about the term "tangible" ;D There is utility/scarcity, medium of exchange/store of value. Not just limited supply, decentralized digital scarcity, yeah intangible. Now basic economics, anything that is both useful and scare tend to have value, not a myth. Does Bitcoin's utility have satisfying power? Yeah, again not just any medium of exchange, a peer-to-peer censorship-resistant payment network. Now spending enormous amounts of money, add utility + scarcity, you would have a decentralized medium of exchange that retains purchasing power. A few altcoins does have real utility and can be a good medium of exchange, but do lack decentralized digital scarcity and in that sense Bitcoin is far ahead and assuming Bitcoin becomes a more efficient payment network with very low fees then there is no reason to believe why utility/scarcity driven demand wouldn't lead to price increase.


Potato – tangible – Satisfying human needs.

Bitcoin – intangible – Satisfying human needs.

Guess your definition of human wants is a bit messed up, not necessarily tangible, and terms like decentralization, peer-to-peer, censorship-resistant, privacy, economic freedom does include in human wants.

His explanation is true on top of that remember that potato can reproduced by plant so that's why it is not comparable to bitcoin. But bitcon is can be compared to oil since we all know that oil(gasoline) is limited because there will come a time that these commodity will deplete.

Then where does bitcoin derive its value from? And why are people buying it? It's basic supply and demand. I'd look at bitcoin more like an asset than anything else. It is like owning digital gold. Bitcoin may not have intrinsic value like gold or whatnot but there is still a finite supply of it and that's what gives it its value because people believe it has worth.  Anything is only worth what people are prepared to pay for it and supply and demand factors into that. A rare pokemon or baseball card isn't really any different from a bog standard card of which there are hundreds of thousands but it's because of its scarcity/rarity and because people are prepared to pay good amounts of money for it that it has worth. Same with bitcoin.

No, I don't consider bitcoin rise in price could be a myth since it had shown to the world that it can reach it's price further than we thought in the last quarter of 2017 reaching almost $20K USD. When people are more interested to put investment in bitcoin then demand could go up and this will trigger on the price value to shoot up. I believe that bitcoin will continue to potentially grow in the coming years to come giving more good profit to investors.

The prices of the goods you mentioned didn't rise 200,000,000 percent from their utility value, while the Bitcoin's prices did. Regarding scarcity, it is true that scarcity is a factor that drives the price up, but the utility provided by bitcoin is not scarce, since people can create an infinite number of digital currencies that will serve as means of exchange. If 21 million grains of sand are put into a box and a limitation is set that this is the maximum number of grains that can be put into the box, this artificial constraint won't make these grains scarce or valuable. This is because people can create their own boxes, fill them with sand and set their own quantitative limitations. Why would people pay 10,000 dollars for a grain of sand in your box if they can make their own boxes with sand in them? Likewise, why would people pay 10,000 dollars for numerical values in your digital box if they can design their own digital boxes with numerical values in them? You people live in a fantasy world. When you wake up, it will be too late.

well it is a good point of view and I was thinking recently that nowadays we barely use cash with the systems provided by banks and it is a matter of time for governments and banks to copycat all the advantages of btc so what then, if there is a more secure coin why should people buy something which is not backed by anything.

commodities have a purpose. a commodity is a raw material used to create other products.
wheat can be turned into bread,.. oil can be turned into fuel/plastic

now this is the confusing part for some.
GOLD sits on 2 markets. commodities AND asset.
golds commodity value is its raw material state to the create electronics and jewellery

bitcoin does not share golds commodity value. bitcoin is not a commodity, emphasis bitcoin is not a commodity

now because gold has a commodity value, this gives it a value. and combining golds commodity(raw material) value with golds scarcity. and golds utility/function value as part of a circuit/jwellery(end product) gives gold an asset value

again. bitcoin has no commodity value. and thus it only holds value due to scarcity ethos/utility(trading) and merchant use for bitcoin to be an asset. emphasis bitcoin is an asset
emphasis. without real world merchant use. bitcoin loses its main aset value. (remember bitcoins first price push due to bitcoin pizza, then silkroad, then things like bitpay/coinbase shopping cart tools)

but if we take away bitcoins ethos/function by making it the expensive to use (tx fee onchain / high cost to open/close 2nd layers) then it loses its utility.. if its no longer useful to buy things in the real world... all thats left is scarcity..

so lets talk about scarcity alone
now.. i have a dog that does 2 poops a day. in 2 years it will be trained to do 1 poop a day. and as it gets older, it starts getting constipated and only does 1 poop every couple days.
in its life thats about 2500 bags of dog poop will ever be created by my dog.. wh wants some.... no one.. but wait. its scarce. so why no demand(sarcasm)

in short. scarcity alone is meaningless. something is not an asset just by being scarce.

demand due to scarcity alone is meaningless. there has to be function/utility of the item for there to be demand. otherwise its just crap..
as shown by all the crap coins that get dumped once people realise theres no utility. even if the coin has faster tx times and lower fee's there is no real world function/utility

bitcoin had/has many utility/functions. but slowly its losing those abilities. so dont always rely on 'scarcity' as the sole thing that will keep bitcoin prices up.. because otherwise you might well just be holding a bag of poo..

we need to concentrate on not letting devs destroy bitcoins ethos. not letting regulators turn it into fiat. not let users turn it into a gimmick via sounding like a ponzi get rich scheme.

fxsurfer, you really, really need to study fundamental economics.

Let's make some essentials cristal clear.

IF the supply of bitcoin remains unchanged
IF the demand of bitcoin remains unchanged

then over time the "exchange value" to, say, the US dollar WILL indeed change, with a unit of BTC becoming worth "more" units of dollars. That's for the fundamental truth that the value of a unit of dollar, over time, decreases (rapidly).

Now, that the supply will not increase, but rather decrese, is a well established FACT, it will not change.
One uncertainty is wether the number of users and uses of bitcoin will increase, stagnate, or decline. That will, of course, impact its growth in value.

While we cannot predict how much Bitcoin will be Worth in a day, month, or decade's time, we can sat for certain that its scarcity will be a major factor in deciding its value. Obviously if there won't be any demand at all, it won't be Worth any money at all... but this is a somewhat obvious yet unlikely scenario. not really anything you can be insightful about.

So, you're either being completely lapalissian, claming that if there is no value for bitcoin it won't be Worth anything, or you're being--frankly--ignorant in claming that scarcity alone isn't a key value driver.

oh yes the world is running out of numbers and digits and I am selling pugs from my left nostril
because they are a finite resource and will boom in value when I die.

Never mind that each fork double the money supply, adds to inflation, just buy my pugs  

if its too expensive to trade. and has no merchant usage.. then its demand dies.
check out all the crap coins that cant buy a loaf of bread(random example) in the real world. but all have 21mill coin cap

scarcity is meaningless without utility/function.
emphasis check out all the crap coins with 21mill coincap

dont rely on scarcity as bitcoin saviour of value. otherwise your willing to say kill off utility/function because scarcity will push bitcoin up. reality is it wont. scarcity is meaningless without function/utility

scarcity is about supply.. function/utility drives demand. supply does not drive demand

I do not think the Bitcoin price hike could be a myth because it has shown the world that it can reach its price farther than we thought in the final quarter of 2017 that reaches over $ 20K USD.

And I can not predict how much Bitcoin will be needed in a day, month, or decade, we can only be sure that its scarcity will be a major factor in determining its value.

I believe that bitcoin will continue to potentially grow in the coming years to provide more profit for investors.

This is a basic law of supply and demand in the economics. Of course, prices will vary in accordance to the circulating supplies in the market.

If potatoes suddenly became extremely scarce, their prices would skyrocket because they would become luxury food similar to truffles. Scarsity itself doesn't create value, but it amplifies the value of something that already has some utility.


You're mixing up different things here. If we're talking about medium of exchange, then the costs of using it are a combination of network fees, exchange fees and price fluctuations and in some cases it can already be lower than traditional payment methods.

bloody hell is reading comprehension no longer a thing?

I've been on this forum long enough to know not to engage in incoherent rants. Clarify your position. Are you arguing that scarcity doesn't affect the price or that Bitcoin is not really scarce?

Everyone knows that. Even if the supply of a certain commodity/stock is so finite, as long as no one wants it, or a large number of people don't really care, there wouldn't be any value to such. You must have unlocked the logic behind supply and demand then, because a limited supply alone wouldn't permit insanely high prices, you need other things to meddle with it.

So yeah, the law of supply and demand isn't a myth at all, but rather a simple logic.

Any finite number of things, in the end it will have a reasonable price. So BTC will definitely have a reasonable price in the end.

This iA true. If the demand is high,what will hapoen is that the price of a prodict will rise as well. Since the demand is high, and a lot of people will also be interested in bitcoin.This is a great oppoeftuniy

Supply will stay the same, demand will effect the price. Demand of bitcoin has grown over the years so price has risen.

To only think of it as a medium of exchange I think is somewhat narrow minded.

border-less
store of value similar to gold

Those two alone I think will yield ever increasing demand.

I do not believe that a limited supply of bitcoin will make bitcoin rising is a myth, otherwise I strongly believe if the total supply of bitcoin is limited and bitcoin enthusiasts so much the price of bitoin aoan keeps going up. Everyone knows that. Even if the supply of a particular commodity / supply is very limited, as long as nobody wants it, bitcoin will not cost a bit, but if bitcoin is a lot of people who bother bitcoin then bitcoin prices will continue to rise.

No one actually knows what is going to happen in the future weather it's a myth or not bitcoin is really a good innovation to the world and i can disagree of it being any sort of bubble , till now most coins price is compared with it's supply bitcoin has surely been an exception but you never really know what the future holds

you shout research more my friend, i am not only saying you, it is for all of us, if we do research deeply and then post here it will be very helpful for all of us.

You shouldn't compare bitcoin with a potato.
If a potato price reaches 10000 dollar, I won't buy potato any more. And note that a potato will never reach 10000 dollar. Because there will be no demand at very lower prices.
You should compare bitcoin with something else like a house. You need a house and you have to pay for it. If a house becomes very expensive, then you will buy a smaller house.

Big house = bitcoin
The smallest house = Satoshi

it does make a lot of sense that an item in limited quantity will of course appreciate in price should the demand for that item increase . what will drive the demand is the benefits that bitcoins provide at this moment in time
1. its the most dominant and is the major crypto,
2. it is decentralized and basically somewhat untraceable
3. most trusted crypto at this point in time
these three features is what will maintain the demand and cause the prices to rise ,these three features are very important to people especially persons who engage in multi million dollar transactions daily.

What you tried to sayings pure economics. But the problem is, Potato is a commodity that reduce our hunger. It has many supplements. Whereas, Bitcoin is not a commodity but a medium of exchange. It doesn’t work like any goods. Besides, I think balance between Demand and supply of Bitcoin will not drastically be hampered. Just my thought.

The bitcoin price will base on Supply and demand and this are the two most fundamental concepts in modern economics, and they have a dramatic impact on one another. If demand outstrips supply, then prices of bitcoin tend to rise. However, if supply is greater than demand, prices tend to drop. This is true in every deregulated market, and is essential for understanding the increase in Bitcoin’s price. The higher the demand for bitcoin, the higher prices will be.

What about gold? Why the price is so high? It is a metal after all.. Why some painting were sold for millions? They are just painting after all.. Why bitcoin should grow? It is just an unique currency owned by anyone after all..
Ps. Many btc were lost also ;)

If your logic is true then why are people using bitcoin at all? Many people do create crapcoins but they're largely worthless or or worth very little. Why would people use gold when they can use silver? Why use silver when you can use bronze? Why use bronze when you can use aluminum? Why use aluminum when you can use clay? Why use clay when you can use something else you just made up? Why buy stocks in Berkshire Hathaway when you can buy stocks by the thousands in a brand new startup? Why is the Mona Lisa worth something when an exact copy painted by somebody else is worthless or worth very little? Why do people value some art more than others? Why does anything have value? It has value because people place value upon it just like anything else.

If there is a limit to the value of things, its value should be unlimited. It's good for long-term investment.

It is not myth in my opinion and it can be one of the strongest reason behind bitcoin touching a million mark in future.Rest depends on demand for bitcoins in coming years.

I disagree with OP because the limited in supply of bitcoin was the main thing that make the price surge ever since bitcoin creation. However, in economics what lead to scarcity is insufficiency or short supply of substance or commodity.

in the crypto world we can not convict this fact or mythos. let us review 1 year backward, bitcoin users continue to grow is a fact in economic law where the more demand of an item while inventory limited goods will automatically increase price, bitcoin whose number is limited while its users continue to grow making bitcoin prices continue to rise if we review from the year before it

Are you being stupid man? Why are you comparing Bitcoin to a potato? Potato is a food and Bitcoin more or less is a currency, Digital Currency to be exact. If you want to compare Bitcoin, you should at least compare it to gold or silver because this 2 is a currency base material.

So what you mean is, if Bitcoin is too expensive then nobody wants to use Bitcoin anymore? Hmm I don’t think so, as long as people still use it, especially if people already dependent to use Bitcoin then Bitcoin will still be used. People above me might true who suggest you to learn about economics deeper.

Yes i would agree this fact and its a reality on ground as well.Due to limited supply, it depends on big players when they enter and leave the market ,thats where the whole concept of supply and demand enters and we see  price rise or drop .IF many of them are selling that would make the price gain or lose and vice versa.

Dependency cannot be eliminated just like that, there must be people who want to pay with equal price to use it. Especially about Cryptocoin, so many altcoins so the users are scattered to various altcoins that previously incorporated in Bitcoin. Transactions between Coins are troublesome, aren’t they? Therefore the demand won’t be easily to break when the price is high and the supply is also become lesser.

I have long ago come to the conclusion that after the production of all 21 million bitcoins, its price will not grow just because its offer on the market will decrease. As it is rightly said, bitcoin is a utility, a shell that allows you to quickly transfer the equivalent of the value of money over long distances. Already, there are many digital coins that provide the same services as bitcoin, much cheaper and faster. Why would I need to pay tens of thousands of dollars for what I can do for a few dollars using another crypto currency?

Bitcoin still has a value storage function. However, if it costs a very large amount, then people will be afraid to lose it and with different negative information, which even theoretically can affect the price of bitcoin, some people will immediately sell their bitcoins. This will produce a real drop in its rate, as the supply on the market will increase. The fall of the course along with negative information can cause panic, after which the rate of bitcoin will rapidly decline, down to depreciation. As a result, bitcoin will very badly perform the function of storing value, this value will be too unstable and problematic.

Supply depletion is not the main cause of price inflation, demand influences it also. If the supply keeps reduced and the demands are low it won’t create inflation. Then the usage dependence, in this case Bitcoin, won’t be as simple as changing it to altcoin even to anything else. The huge amount of altcoins could break the market so there will be no market centralization could make transactions difficult.