When you say deflation are you meaning that after those 21 million have been issued then slowly bitcoins will be lost and so what is left will have more value?
Probably sooner than that.
Bitcoins are already being lost all the time. The rate at which new bitcoins are being created is cut in half every 4 years. Eventually there will be more bitcoins lost per year than are created, and at that time the net supply will become deflationary.
But does that really make the current price reasonable.
The price is based on currently available supply and current demand. If it weren't reasonable to enough buyers or sellers, then it would change.
I can't understand how something that will have 21 million coins with each divisible by 1 million can have a value that is as high as near to $300.
First of all, each coin is not "divisible by 1 million". Each coin is
divisible by 100 million.
Those 100 million "pieces" that each bitcoin is divisible into do NOT have "a value that is as high as near to $300". Each of those 100 million pieces only have a value of about $0.000003
If I take speculation completely out of the picture and buy a bitcoin for $300 today then why would (or will it) be worth more in 1 year (again from a technical only point of view).
It will only do so if there is increased demand, decreased supply, or both. Increased demand can come for new uses and from increased popularity of current uses. Decreased supply can come from hoarding or destruction of existing supply.
This isn't just true of bitcoin, it's true of any and all commodities. A barrel of crude oil will be worth more in 1 year if there is increased demand, decreased supply, or both. Increased demand can come for new uses and from increased popularity of current uses. Decreased supply can come from hoarding or destruction of existing supply.
is the supply really limited if we can have 21 million and then each of those can be divided up a hundred million times.
There is a fixed amount of gold on the planet. Ignoring the possibility of mining asteroids and other planets for the moment, that supply is limited. When it is first discovered the supply greatly exceeds the demand, gold isn't very valuable. Let's say people are willing to exchange a single 100 unit (pounds? kilograms? doesn't matter, choose the unit that is natural to you) bar of gold for a loaf of bread.
Eventually the demand for gold increases (and perhaps it becomes more difficult to find new gold mines). The supply isn't growing as quickly anymore and the demand is growing faster, as such the value increases. People start dividing their gold into smaller pieces. Instead of exchanging a single 100 unit bar of gold, they divide it into 100 separate units. They still have 100 units, but they've "divided" it. Now they can buy a loaf of bread with a single 1 unit bar. Is the supply of gold really limited if each 100 unit bar can be separated into 100 individual units? Well, the owner of the 100 unit bar has gone from being able to purchase only 1 loaf of bread to being able to purchase 100 loafs of bread without changing the amount of gold he owns.
Eventually the demand for gold skyrockets (and perhaps there is no longer any gold that can be afford-ably mined). The supply is slowly shrinking as bits of gold are permanently lost or destroyed. Therefore the value takes off. People start dividing their gold into smaller pieces. Instead of exchanging a single 1 unit bar of gold, they melt it down and make 100 coins out of each unit. They still have 100 units of gold, but they've now "divided" it into 10,000 coins each. Now they can buy a loaf of bread with a single coin. Is the supply of gold really limited if each 100 unit bar can be separated into 10,000 individual coins? Well, the owner of the 100 unit bar has gone from being able to purchase only 1 loaf of bread to being able to purchase 10,000 loafs of bread without changing the amount of gold he owns.
Replace the "bar of gold" concept with "wallet of bitcoin" and perhaps it will all make sense?
