The title is funny, there is not much point in having 1000 BTC worth $10 billion if all you gonna do is stare at the zeros in your wallet. The real gratification of having Bitcoin is being able to buy stuff with it at some point  Having said that, I do plan on always having at least 1 BTC saved up  Are you sure? I have no problem holding 1000 BTC worth $10 billion and staring at the zeros 3 times a day in my wallet  I don't have too much things to buy anyway, all the latest gadgets are disappointing, and cost of ownership concern will make bitcoin the best asset to hold |
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No no. Since there is no production (in principle) and no consumption (the money just moves from one owner to another ad infinitum), the demand is only demand to hold the money in the reserve. (For consumable commodities, think of reserve demand as a large heap of iron ore in front of a steel factory, the reserve is grown when the ore seems cheap to the steel-maker, and reduced when he envisions a lower price in the future).
The demand to hold money in reserve is the only reason to hold money, and the supply is other people running down their reserves for any reason. By trading against something else, price pairs are discovered. The reasons behind the supply and demand, respectively, is basically the same, only inversed. The actual amount each market actor wants to hold, depends on everything, and changes continually.
you can't exchange iron ore for anything else except money, but with money you can exchange anything, the liquidity preference is different. If you produce 5x more iron ore, most likely the price will crash to 1/5, but FED has proved that printing 5x more USD will not affect its value The demand for money can be driven by many psychological cause, most notably purchasing of high valued goods and building a safety net for future. Nothing prevent everyone from accumulating 1 billion dollar and do nothing with those money: A large amount of reserve just increase the feeling of safety dramatically and positively affect their mental status, even most of the consumptions in today's life is already enough good and cheap |
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This kind of mobile payment service has already been very popular in Sweden since 2 years ago (called swish), and it has already a user base of 30% of swedish population. And you know what is the best usage of this payment? -- Purchase bitcoin  Now it is very popular to use swish to buy bitcoin from other people on localbitcoins, because the trade is transparent and you see the name of both payer and receiver, it dramatically reduced the fraud risk The major reason that people buying bitcoin is not for daily consumption, the payment is just one function that enable its usage when needed |
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There are two problems:
1. Price depends on supply and demand, and you cannot predict what might happen to the price without knowing what will happen to both supply and demand. Furthermore, you can't assume that demand will rise constantly. It is possible for demand to fall even as adoption rises.
2. You are confused about the meanings of the word "supply". "Supply" as in "money supply" is not the same as "supply" as in "supply and demand". The money supply is the total number of bitcoins in existence. It effects the supply (as in supply and demand) in the market, but is not the same thing. Furthermore, supply and demand are curves, not numbers. The price is at their intersection.
This is correct, and the vision that bitcoin will appreciate forever, also depends on that market actors (everybody) regard bitcoin as the best money. Otherwise, it will not happen. Only English people using Pound is enough to support its value, similarly, only IT interested/Libertarian/Austrian economists giving bitcoin strong support can maintain its value. For merchants, it is so easy to accept international payment with bitcoin, just download an app. It has not gained enough traction because of its volatility, it takes time for people to get rid of their fear towards new things when you speak of not attracting new users based on volatility.. are you expecting minimum like 1k like we did see fake value with mt.gox i know I got in it cause there was no option of making money and another form to get cash. 1k was an overshoot of the speculative bubble top. Long term wise, the coin value should be close to its mining cost, which should rise over time if there is no major disaster in bitcoin ecosystem |
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As analyzed, if the demand falls, the first thing we will notice is that the mining difficulty will go down. Because mining is the lowest cost to get bitcoin constantly, serious investors will always first seek large mining operation, if they can not get coin through mining, they will consider buying on open market. That is the reason when ASIC arrives, suddenly many investors lost the ability to get coin from mining, thus they all went to market to purchase, and made the price rise 10 fold
So far the mining difficulty is still rising, means the demand is still strong. If difficulty jumps up, then it means the demand is extremely strong
The difficulty depends on the price (w.r.t the cost of mining). The price depends on both supply and demand. Therefore, demand can be lower when the difficulty rises and vice versa. Higher price will raise the difficulty since it created speculative mining demand - make a quick buck with mining, that is also a demand. Speculation demand is always part of the bitcoin demand, but it changes with price, not like other demands. Currently we are in a low volatility period, thus speculative demand is at its minimum. If the speculative demand is dropping while difficulty is rising, then you know there are some other type of demand quietly driving the difficulty up. Because the supply of bitcoin on market is very easy to estimate, that makes the demand the only variable that can affect price, and demand is very easy to spot through difficulty, which makes it extremely simple to model the future valuation By the way, money's value is decided by a consensus, supply and demand theory never works on money, because money can be regarded as having infinite demand, thus any change in supply will not affect money's value. This seems start to apply to bitcoin too: Bitcoin's demand can be very very high, but its value is not really decided by supply and demand, but by a consensus, around the mining cost, similar to gold |
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There are two problems:
1. Price depends on supply and demand, and you cannot predict what might happen to the price without knowing what will happen to both supply and demand. Furthermore, you can't assume that demand will rise constantly. It is possible for demand to fall even as adoption rises.
2. You are confused about the meanings of the word "supply". "Supply" as in "money supply" is not the same as "supply" as in "supply and demand". The money supply is the total number of bitcoins in existence. It effects the supply (as in supply and demand) in the market, but is not the same thing. Furthermore, supply and demand are curves, not numbers. The price is at their intersection.
This is correct, and the vision that bitcoin will appreciate forever, also depends on that market actors (everybody) regard bitcoin as the best money. Otherwise, it will not happen. Only English people using Pound is enough to support its value, similarly, only IT interested/Libertarian/Austrian economists giving bitcoin strong support can maintain its value. For merchants, it is so easy to accept international payment with bitcoin, just download an app. It has not gained enough traction because of its volatility, it takes time for people to get rid of their fear towards new things |
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Productivity can rise forever, but the resource allocation is always 100%, with less and less people owning more and more. So if you define the economy growth as people owning more and more resources, that is definitely a no, people just get more and more efficient using exiting resources, although their share of resources are shrinking for most of them: Those born after world war II can easily own a large house, but those born after 2000 are most likely to work their life to get their small apartment in cities
The only one who is getting more and more resources are banks, they just print money and purchase assets
a lot of them can probably still get large homes in the right places. They just want to be in expensive, large cities. economics can grow as long as there are more resources. But there is probably a theoretical maximum, unless we discover something that defies our current understanding of physics in the future. They can get large homes in rural places that no one used to live, but all the convenient places in modern cities are occupied Human does not create resources, they just consume it, the early stage of the resource occupation is critical. US purchased Alaska from Russia for $7.2 million, and that is one apartment building you can purchase in large city today |
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Productivity can rise forever, but the resource allocation is always 100%, with less and less people owning more and more. So if you define the economy growth as people owning more and more resources, that is definitely a no, people just get more and more efficient using exiting resources, although their share of resources are shrinking for most of them: Those born after world war II can easily own a large house, but those born after 2000 are most likely to work their life to get their small apartment in cities
The only one who is getting more and more resources are banks, they just print money and purchase assets
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There are two problems:
1. Price depends on supply and demand, and you cannot predict what might happen to the price without knowing what will happen to both supply and demand. Furthermore, you can't assume that demand will rise constantly. It is possible for demand to fall even as adoption rises.
2. You are confused about the meanings of the word "supply". "Supply" as in "money supply" is not the same as "supply" as in "supply and demand". The money supply is the total number of bitcoins in existence. It effects the supply (as in supply and demand) in the market, but is not the same thing. Furthermore, supply and demand are curves, not numbers. The price is at their intersection.
It does not matter what is the definition of supply, there are 5000 coins net sell every day on market, that is calculated after considering several facts getting from poll. There is larger transaction volume daily, but those are day traders and short term speculators, basically the buying and selling volume cancel each other, only the net sell amount matters In fact the total money supply in bitcoin is irrelevant, because many of them does not exist in circulation. It's the money in circulation matters. FED printed 5x USD but the money in circulation remains the same, that's the reason the USD did not crash in value by 5x As analyzed, if the demand falls, the first thing we will notice is that the mining difficulty will go down. Because mining is the lowest cost to get bitcoin constantly, serious investors will always first seek large mining operation, if they can not get coin through mining, they will consider buying on open market. That is the reason when ASIC arrives, suddenly many investors lost the ability to get coin from mining, thus they all went to market to purchase, and made the price rise 10 fold So far the mining difficulty is still rising, means the demand is still strong. If difficulty jumps up, then it means the demand is extremely strong |
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A little summarize about the development during past year: First, increased usage will reduce the daily coin supply on market thus raise its value, An easy way to make bitcoin worth millions of dollarsHowever, the effect is not as large as long term hodling: If you constantly spend 10 coins every month, then only 10 coins will disappear from exchange, but if you hold 10 coins, they will also disappear from exchanges, for a long time With more established exchanges, the usage as remittance medium just become more user friendly. Now I'm doing all my international transactions using bitcoin, if the receiver is in a country that have good bitcoin exchange. It is much cheaper and faster than traditional way There are still limited spaces to spend bitcoin, but that means majority of merchant still have to learn how to use bitcoin by themselves, instead of relying on payment processor like bitpay. And that require a thorough understanding of bitcoin security, it will take some time. It is not recommended to rely on any third party to take care of your bitcoin, while majority of people are not geeks, this is still the major obstacle towards mass adoption Mining difficulty does not drop, this indicated that the demand is still strong. If the demand drops, the mining difficulty will drop, because majority of the demand is fulfilled by mining (lowest possible cost to get coin) So far, we have not seen hyperinflation following the huge scale of fiat money printing. Just like stock market bubble, as long as fiat money hold its value, big institutions would still ride the wave for a while. But those institutions are fully aware of the overvalued situation of fiat money, now it is a fiat money bubble, they will get rid of their fiat money positions as soon as they see the sign of a crash, we just don't know how and when it will happen |
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People always say this, but if bitcoin really reached 10K or 100K, their opinion will change, they will wait for 1 million dollar coins And people used to have strong motivation to sell when price rose too quick in a short time, that's the reason each bubble is followed by a crash. Making a quick buck and take profit is always attractive, given the fiat money's value never changes so dramatically |
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exchange is always a pain point in the whole chain, better forget about them altogether and just use bitcoin to pay
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in the USA there is a 250K USD cap (insured by our ever trustworthy government) on the insured money in the bank. and guess what money in banks with a different bank (by name) may be under the same cap. ie 250k USD in what may be at 1st glance in different banks are under the same 250k policy. as they are owned by the same entity. so depending on what you have where you might 50%, more or less.. the math is left as an exercise for the student. someone please correct me if Im wrong. https://www.fdic.gov/edie/fdic_info_calculator.html?height=400The insurance is more of psychological support than real support, I remember that some statistics showing that the insurance only covers 1% of all the deposit in banks. Rich guys usually do not put money in banks because those big money are not covered by the insurance |
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More austerity will simply kill growth. In fact for fiat money system, the only way forward is to borrow more and more, if you want a sane fiscal policy, then you can not use inflative fiat money system, you must use gold or bitcoin based deflationary monetary system
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That's a respectable hit |
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There are many abolished paper currencies, they all have limited number, but only worth something in the eyes of currency collectors. If a currency is not in circulation, then its demand and value will be very limited
A large portion of this forum is blindly beliving that the 21 000 000 cap is going to make everybody want to use bitcoins. It has no effect on the mainstream user if there is a cap or not. The physiological effect of owning a bitcoin today wont have any effect on the masses. Not more than having a rare stamp is affecting the masses as it is only other stamp collectors who cares. The things that make a good currency has nothing to do with how many or what medium they are in. What matters is as follows. Are it trustet so you can buy stuff, can you earn it doing normal jobs, are everyone else around you using it and finally is it legal so you dont risk anything by using it. 99.9% of the worlds population has no desire to use a currency just because of it anonymity. They want something usefull. If people wanted a currency with limited supply there are a lot of options and many are easier to adapt than bitcoins who are being hoarded by geeks and other oddballs. Either they adopt a crypto who is spread evenly so everyone could get in on it or they could go for low inflation systems. Low inflation has been tested in Japan, and the sharia laws forbid interest on loans.... The 21 million cap is an agreement. Bitcoiners believe that if everyone voluntarily use a money that have hard limit in supply, they can protect themselves from inflation and make this money most trustworthy and valuable on the planet The question is, how many people purchase bitcoin because of its long term anti-inflation property? In a period of hyperinflation, bitcoin adoption will gain traction quickly, but currently not so much Regarding the early adopter problem, every useful and scarce resource have this limitation: Early adopters sitting on their land, gold, oil field, forest, etc... and watching their assets rise in value, while the latest adopters can barely purchase a little with their petty income. People could also start to collect any scarce resources that no one have noticed, but that does not guarantee they will become useful. Bitcoin has real utility in certain area, that gives it value, but not so many people really realize the benefit until they start to use it. Speculation does not increase its value, increase the real usage is the key. Imagine that you can always spend bitcoin when you are traveling abroad, what kind of convenience that will be |
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There are many abolished paper currencies, they all have limited number, but only worth something in the eyes of currency collectors. If a currency is not in circulation, then its demand and value will be very limited
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In modern society, very often majority of the demand is fulfilled, each producer are dumping excessive goods in an attempt to get most liquid assets (usually money) from the other, then it does not benefit anyone
Even in a modern society, imagine Alice produces Californian sparkling wine, and sells them for $10/bottle to Bob. Bob buys 100 bottles, pays a $10 dollar shipping fee and sells them for $12 dollars/bottle in Japan. Then 100 people buys Bob's wine. Alice made money, Bob made money, and the 100 people made money because otherwise they would have to pay $20 dollars to get that bottle of sparkling wine shipped to them. So in effect, they each saved 8 dollars. The scenario you described is not low demand, there are still demand for those sparkling wines In reality, it is very likely that Alice is producing sparkling Californian wines and Bob is producing is sparkling Canadian wines and Keiko is producing sparking Hokkaido wines and they all compete on the international wine market and there will be a price war to drop their price even below the production cost. And there is a race to drop the production cost and shipping cost further by using robots and drone delivery, and fire more workers, just because the winner could sell a bit more wine and get some fiat money Worse than that, since both Alice and Bob and Keiko could get loan from their bank, the ability to defeat their competitors will depends on how long they could sustain the operation at a loss (the loss is coverd by a long term loan). After 5 years of price war, eventually Alice and Bob are out of business because the Japanese central bank gave Keiko 1 billion dollar loan, helping her to occupy 90% of the international wine market, so that future human would mostly drink wine from Japan |
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In fact, exchanges and banks are very similar, all of the customers share one account, and when that account blow up, exchange or bank will fail
A bank can be regarded as a simplified exchange: It only records the change in each customer's USD balance, while exchanges must record the change in customer's both bitcoin and USD balance
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