The idea of supply and demand ok, but to me it seems more and more to be some kind of sophism more than anything. Look like some form of sollipism like i make the reality how i want it to be. But in reality you will rarely find some instance when this logic apply in real life. There is always a reasonable price to expect for something at a particular time. Then the price can vary following different factors etc but it's the thing i really fail to see with bitcoin. I mean whyt bitcoin worth 100x more now than 5 years ago ?
https://saylordotorg.github.io/text_microeconomics-theory-through-applications/s13-03-asset-markets-and-asset-prices.htmlImagine you passed a coffee shop and saw the sign shown in Figure 9.4 "Arbitrage at a Coffee Shop". This would make an economist salivate, not because of the prospect of good coffee but because it presents an opportunity for arbitrage. Facing an offer like this, you could immediately go and buy a pound of coffee beans for $10. Then you could turn around and sell the coffee at $12 per pound. You would have made $2 easy profit. Forget about drinking the coffee: just buy and sell, buy and sell, pound after pound—and become a billionaire. This is an example of arbitrage.
Sadly, you will never see a coffee shop making you an offer like this. We are confident of this because any coffee shop that made such an offer would very quickly go out of business. After all, if you can make a profit by buying at a low price and selling at a high price, then whoever is on the other side of these transactions is making a loss.
This summarize the problem as i see it
I mean ok you take real-estate for example where this kind of logic that the price can flucuate much depending on the demand. But then if the price of a certain real estate is much higher than another you can be sure the person paying significantly higher amount for this particular place is having a good reason to do so. Maybe it's close to a good school for their kid, maybe they like the neighrborhood. In any case there is always a good reason for someone to buy something at a higher price.
Stocks as share of a company are a different story, because history has proven the human mind is capable of incredible thing, and when you buy a share, you buy some share of future revenue of a work, most likely on royalities on the developement of sometime new that will pay off dividends , and history has shown many time how some brilllant mind can create things entierely new.
But bitcoin is not a stock, holding a coin on exchange is not going to pay any salary, and in anycase the main creator isn't being paid from it. The person who make a profit is the one selling on the exchange, the exchange who takes some operational fees and period.
When i see the original discussion, they were more concerned about bitcoin taking off, and of course at first it would be under evaluated, can see this as initial launch discount price, and to my knowledge this practice has never lead to any kind of market collapse, not to break any hearth, but i think we are way beyond a phase of initial launch discount.
Can always say ok but you can buy a fraction of it, but as anything in bitcoin it's much of a relativist game, so if you have only dust coins they will be hard to move because of fees and network congestion, so i thinks it's partially false to say some dust bitcoin has same value than more of it due to fees and network constraint.
Even the idea of it being an asset or store of value seems pretty moot, or contradictory with the idea that it's impossible to determine it's right price, and that it's highly flucuating from unknown and unpredictble factor, that seems to be contradictory with it as being a good store of value. Then ok with current state of global economy, it's not unreasonable to expect a massive crash sooner or latter, and there is clearly a high demand for some kind of hedge, or some asset that will resistant inflation, but at any rate i don't think the problem is mostly the one of monney printing, there are much deeper problem within the productive economy than only monney printing, and in any case regarding this fact that everyone say there is no way to really reliably determine bitcoin value doesn't make it a very good store of value. Other than for billionere who can set the price as they want by hoarding a massive stock of it.
So ok can take the argument of it being usefull for poor migrant to send monney home, but let me ask this question, how many of you has already invested 1$ in cash transfer system for that poor migrant can some monney home ? How valuable do you really think this is ?
Same for salvador, how many of you would have invested even 1$ into salvador economy, and even if they hire the best financial counselling to bootstrap new currency for their economy, how many would have bought even 1$ of it thinking it's going to make you rich ?
The idea that it's not used in the industry like other metals ok, that's a good point, but then also it's a digital technology, so it's normal it's not being used in the manufacture industry, maybe it can be compared to a databse into the digital economy.
Domain name same, in themselve they don't worth much, they have value because they are used by another buisness who will use the name as part of a marketting strategy, and they will make monney with their buisness, the domain name is just a part of it and its value depend completely on the success of the buisness behind it, not much in domain registration itself.
I mean that's just to throw some reflection and market parallel to find what kind of dynamic to expect. And it seems to me at this point the only way to really expect a huge rise from it is only by practicing some form of shady things like market conerning or pyramid scheme, which never really last very long in a free market where competition lead price toward a minimum for the demand. If the demand is only fueled by the perspective of resell profit while not adding any value to it by just holding it on an exchange , it cannot end well.
see hal finney on it
https://bitcointalk.org/index.php?topic=1388.msg37762#msg37762The danger is if people are buying bitcoins in the expectation that the price will go up, and the resulting increased demand is what is driving the price up. That is the definition of a BUBBLE, and as we all know, bubbles burst.
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