What you can do with a bitcoin if the USD exchange price dropped to 0

[johnyj]

Everytime, when I tried to advertise bitcoin to my friends, the typical question they asked is: What is this thing backed by? What's the use of it?

Although I can explain to them that it is backed by mathematics and P2P network, and you can use it to buy anything online, it still does not make them feel safe enough, since that is real money, they are afraid of it's just a scam or a bubble

Just like MBS, CDS, eventually they are backed by a house, which is needed by majority of people, so no matter how abstract in concept and construction they are, they still get accepted. Because a house is a house, even the price crashed to 0, it still can provide some utility and that is the reason the price will never drop too much

"If the USD exchange price of this thing drop to 0, what is the use of it?"
There is an answer for gold/silver/diamond/house, even WoW gold
But there is no answer for bond/stock/options/futures

So it seems bitcoin fall into the second category, e.g. a financial security, and unlike bond/stock/options/futures, it has no underlying base instrument, or to say it is based purely on some promises

If we could find some good use of bitcoin even when the exchange price is 0, then it will flourish for sure

[Monster Tent]

The only reason the price will go to 0 is if there ends up being more than 21 million coins meaning someone has cracked the underlying encryption which allows them to print bitcoins at will.

[johnyj]

The only reason the price will go to 0 is if there ends up being more than 21 million coins meaning someone has cracked the underlying encryption which allows them to print bitcoins at will.

Let's just suppose the worst case scenario

Some people provide goods/services and accept btc payment, if they could still accept btc payment even btc exchange price is zero, that will give it some basic support, but is there any merchant provide exchange rate independant btc price for their service today?

[Le Happy Merchant]

If we could find some good use of bitcoin even when the exchange price is 0, then it will flourish for sure

Bitcoins can be sent in very small amounts. I could send a message using bitcoin transactions.

E would be the lowest, at one satoshi, and Z would be twenty-six (based on this https://i.imgur.com/H5yqeKX.png). Spaces and punctuation could be accounted for too, but would cost extra to communicate. I could send a message in this way by a series of transactions in very small denominations. You would pay a few thousand satoshi to have a method of communication that is completely anonymous.

If the two communicating nodes had an agreed upon cipher they could encode messages in the values sent, and nobody watching would know what was being said, or who was saying it.

I would put money into Bitcoins just to be able to do that.

[str4wm4n]

If we could find some good use of bitcoin even when the exchange price is 0, then it will flourish for sure

Bitcoins can be sent in very small amounts. I could send a message using bitcoin transactions.

E would be the lowest, at one satoshi, and Z would be twenty-six (based on this https://i.imgur.com/H5yqeKX.png). Spaces and punctuation could be accounted for too, but would cost extra to communicate. I could send a message in this way by a series of transactions in very small denominations. You would pay a few thousand satoshi to have a method of communication that is completely anonymous.

If the two communicating nodes had an agreed upon cipher they could encode messages in the values sent, and nobody watching would know what was being said, or who was saying it.

I would put money into Bitcoins just to be able to do that.

Bitcoin opens up so many possibilities for creative application.
I'd put money on it for that too

[niko]

What you can do with a bitcoin if the USD exchange price dropped to 0

The question suffers from circular logic. In reality, the only way exchange rate would drop to 0 is if you suddenly couldn't do anything with Bitcoin.

[markm]

It is this kind of thinking that led to some of the ideas the clans using the various galactic currencies in the Galactic Milieu came up with.

Basically if you want to issue a credible currency in a universe of many currencies that all float with respect to each other, one of the ways you can help make your currency seem "credible" is to "back" it with boatloads of each of the other currencies, or even focus on just some of the other currencies. Like, you could keep only US dollars, Japanese Yen, and Swiss francs in your "reserves" (if you were the Brits) or also keep some Brit currency in your reserves (if you were none of the above).

So basically as more and more miners, or stake holders, or interested parties, or Bitcoin Reserve Funds, or Bitcoin Foundations, or whatever, keep more and more quantity of more and more variety of other currencies in stock, poised to buy bitcoins with any time bitcoin's exchange rate with respect to that currency drops, well, then you are playing the Minister of Finance game, or the Royal Exchequer game, or whoever it is in each nation that tries to keep that nation's currency's exchange rates from dropping to zero.

(At what price would YOU snap up any bitcoins you saw going cheap? Would the amount of USD you'd find yourself willing and able to dig up to snap them up with differ for different actual numerical values of the term "cheap"? If so In what way?)

To directly answer your question: what I could do would be "increase the USD exchange price".

It has already been done: bitcoins already had a 0 USD exchange price way back when.

-MarkM-

[Stephen Gornick]

If we could find some good use of bitcoin even when the exchange price is 0, then it will flourish for sure

Let's say instead of being zero instead say it was just a penny, or a fraction of a penny even, instead.

Bitcoin is a protocol for a payment network.  Even valued at a fraction of a penny, bitcoins can be used to send and receive value.

So even if the total dollar value of all ten+ million BTC that currently exist was only valued at about $100K USD (10,800,000 * $0.01 each), there still would be demand for bitcoins to be used for transferring value.

And because it works well for that, there will be more transactions that occur.

But since there are only 10.8 million BTC that exist, the only way to accommodate the greater dollar value of the money transfers (assuming a constant currency velocity) is for the exchange rate to be a higher value.  So the exchange rate rises to meet the level needed for transactions.  And then there is speculation that future demand for the coins for use in sending money will continue to rise.

And you end up to where we are today.

[FreeMoney]

Buy it.

[twolifeinexile]

Buy it.

Take all and give the seller a bonus

[FreeMoney]

Do you really want a house that has a market price of 0 by the way? A 'house' is not always a house.

[gweedo]

I doubt bitcoin will ever go to 0. While bitcoins isn't backed by any official authority, they are backed by hard work and a dedicated community. So as long as we have people that still believe in Bitcoin, work hard to promote it and have some great businesses, the price will never drop that much (even thou that is probably the jinx and next week it will be back at $10 LMAO).

[Peter Lambert]

I doubt bitcoin will ever go to 0. While bitcoins isn't backed by any official authority, they are backed by hard work and a dedicated community. So as long as we have people that still believe in Bitcoin, work hard to promote it and have some great businesses, the price will never drop that much (even thou that is probably the jinx and next week it will be back at $10 LMAO).

Just to be clear, bitcoin is not backed by the work that went into it, it is backed by the work people are willing to do to get it. Bitcoin is not backed by the mining equipment people bought for bitcoin, it is backed by all the merchandise people are willing to sell to get bitcoin.

[gweedo]

I doubt bitcoin will ever go to 0. While bitcoins isn't backed by any official authority, they are backed by hard work and a dedicated community. So as long as we have people that still believe in Bitcoin, work hard to promote it and have some great businesses, the price will never drop that much (even thou that is probably the jinx and next week it will be back at $10 LMAO).

Just to be clear, bitcoin is not backed by the work that went into it, it is backed by the work people are willing to do to get it. Bitcoin is not backed by the mining equipment people bought for bitcoin, it is backed by all the merchandise people are willing to sell to get bitcoin.

I was getting more at sweat equality in bitcoin how hard people are willing to work to keep it as a strong as it is. While your looking at it from a pure bitcoin being currency and what you get for it.

[mobile4ever]

Its not a realistic scenario, so probably will not happen. The bitcoin is just entering its second growth phase. The dollar would have to start being backed by gold just to make it start having real value again. Its never happened in history ( somebody check me out ) that a fiat currency was reconnected to gold after being taken off it.

[gopher]

here is one hypothetical scenario:

1. Bitcoin price (for whatever reason) drops down to 0, that means there is absolutely no demand for Bitcoins, no one wants to pay even $0.00000001 for BTC 1.
2. The number of transactions on the network will reduce, eventually drop to 0
3. Few or no transactions will means there will be no blocks to mine
4. But also, the reward the miners receive for their work (BTC 25 currently) will be worth 0 and as there is no transactions and fees, the reward will be nullified
5. Many miners will stop their machines, only the ones that are mining for the sport of it and their electricity is free will keep mining empty blocks (is this possible?)
6. The difficulty will collapse dramatically, proportional to the hard-core miners hashing power left on the network
7. These few miners will earn(?) Bitcoins at a rate they never dreamed about, but of course these Bitcoins will be worth 0 at that moment
8. Everyone by default will become a hoarder.
9. All hoarders will wait for one of the two things to happen - someone suddenly decides he need Bitcoin and creates demand for Bitcoins or the end-goal of 21,000,000 million Bitcoins is reached and then the network suddenly stops to a halt, as there is no transactions, no fees, no reward, and no reason to waste electricity on.
10. Years later, someone invents a great application for the well forgotten Bitcoin, resurrects the projects, Bitcoin jumps to $zilion level, then everyone frantically starts searching through their grand parent's computers and USB drives for wallet.dat's with the hopes of becoming Bitcoin zilionaires, again...

[Monster Tent]

What can you do with your  fiat when the government calls a "bank holliday" and devalues your money to 0 ?

[DannyHamilton]

3. Few or no transactions will means there will be no blocks to mine

This is not true.  It is perfectly valid to mine a block where the only transaction is the coinbase transaction that pays the miner their subsidy.  There are many blocks like this in the blockchain already

4. But also, the reward the miners receive for their work (BTC 25 currently) will be worth 0 and as there is no transactions and fees, the reward will be nullified

The reward will be greater than 0 as long as one person runs one miner for the next 136 years.

5. Many miners will stop their machines, only the ones that are mining for the sport of it and their electricity is free will keep mining empty blocks (is this possible?)

Yes it is possible.

9. All hoarders will wait for one of the two things to happen - someone suddenly decides he need Bitcoin and creates demand for Bitcoins or the end-goal of 21,000,000 million Bitcoins is reached and then the network suddenly stops to a halt, as there is no transactions, no fees, no reward, and no reason to waste electricity on.

Maybe someone will buy two pizzas for 10,000 BTC?  It has happened before.  The moment that happens, bitcoin instantly has a value again (price of 2 pizzas divided by 10,000).  This creates a starting point for competition which can drive the price back up.  (I'll sell 2 pizzas for 9,000 BTC!).

[Gabi]

Call me when bitcoin price drop to 0.

[markm]

I'll sell 2 pizzas for only 8000 bitcoins!

-MarkM-