Theoretical scenario : Will loyal bitcoin keepers be the death of bitcoin?

[Quartx]

Lets start with this.

For any object used for trading / for use as a currency such as cryptos or fiat, its value is somewhat determined by several factors such as total supply, circulation , innovation and ease of use among other factors.

For bitcoin, we have a limit of 21 million bitcoins.

Lets say that early adopters of bitcoins with 25% of it mined within 2 years are held by diehard bitcoin holders. That would leave a 75% remaining of bitcoins in circulation. However, roughly the last 7% of bitcoin will be mined over a timespan of 100 years.

That means of the total supply of bitcoins, hypothetically only 50% to 60% of the total supply would be spendable / incirculation.  The total spendable supply is always lower than the theoretical total supply, and is also subject to accidental loss, willful destruction, and technical peculiarities.

With an increased interest by general public and more and more companies accepting btc. Isn't it a vested interest for bitcoin holders to hold their BTCS rather than selling/trading it for other goods as many treat it like an investment rather than an actual fiat replacement?

So as more and more goods are available for exchange but with more and more people holding bitcoins/cryptos.

Wouldn't this supply and demand anomaly result in the slow death of bitcoin over time?

Pardon this retarded thought from someone with no clue about economics at all. Let the scolding/ education begin.

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[Dinki]

Well, I am a newbie. But people need money and bitcoin is money. They will have to release some amount of bitcoins from time to time to pay for something. Since they are not Bill Gates, they can't keep money stashed forever.

[The Sceptical Chymist]

Don't you think bitcoin is a lot like precious metals?   Your description very much matches that of gold or silver.   Limited supply, etc.  People can hold it and it can retain its value just like metals.  It doesn't have to be spent but it can be.

[Ted E. Bare]

For trading and transacting we don't need all 21 million coins. A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts. To my understanding bitcoin is likely to appreciate in value if coins are taken out of circulation or lost by accident.

[~BitSy~]

To those that treat it as an investment, it would be better to hold but it's the question of when is enough to spend those as well. No I doubt that will be the result of this nature and I wouldn't call it an anomaly. It's how it works and demand always adjust to it's surrounding and the limited supply isn't a problem at all and it's actually a good thing.