I'm looking into investing some money into the bitcoin (although I think I'll wait till the current bubble stabilizes), but I just had some worries about its future.
My understanding of the bitcoin is still elementary so please forgive me if I'm asking questions that have already been answered hundreds of times.
Don't worry, this is the newbie section, feel free to ask whatever you want.
I realize that Bitcoin mining has grown exponentially more difficult and the cost of mining now often exceed the rewards of mining (electricity and hardware costs). Given that this will only continue in the future, especially considering that the usage of the bitcoin is outpacing the advancement in computer processing speeds, can we expect that, eventually, mining will be unprofitable to the vast majority of people? If this happens, then we might expect that bitcoin mining will be taken over by large companies with high economies of scale that can still turn profits. This, however, would undermine the bitcoin as a public, decentralized currency. Furthermore, if the rewards for bitcoin mining were increased, such that mining became attractive to more people, then this would only devalue the currency by flooding the market. How does bitcoin propose to solve this problem of diminishing returns on mining?
Mining is for Bitcoin like gold transport trucks are for gold. It's necessary that there is some competition, but mining doesn't need to be done by everybody.
Will we soon see a spike in the price of bitcoins as the demand for the currency increases but its suppliers face further diminishing returns for their efforts?
My personal bet is yes ^^ Although "soon" may be a bit longer.
If the adoption doesn't stop and the supply of new coins dwindles, this will happen. But only the second one is certain