How sustainable is Bitcoin

[mcgin]

I propose that the number of bitcoins in active circulation will ultimately reach zero.  This is not going to happen anytime soon, but it will happen eventually - might be 1 year, 100 years or might be 1000 years I don't know.  The reason I believe it will happen is a combination of three factors.

1) It is impossible to access the coins of a properly secured wallet
2) There will only ever be a finite number of bitcoins (21M)
3) Humans do not live indefinitely

This means that as people who hold bitcoins in a completely secured manner pass away (i.e. no one else has access to their coins) or simply lose their wallets, their coins are removed from active circulation or effectively destroyed.  I'm pretty sure there is a considerable number of coins which were mined in the beginning which are now lost (I know I personally had some when they were being exchanged for about 25 cents which I lost)

Compare this to traditional currencies, where my money is stored in a bank, stuffed under my mattress or stored somewhere that noone can find.  There is a few things that can happen when I die, either
a) The executor for my estate will find the money wherever it is stashed and gain control of it (if it is in the bank or mattress). 
b) If an executor doesn't find it then it will go to the government if it is accessible (e.g. bank account with no will/executor to claim the money).
c) If the money does get completely lost then the money will ultimately get replaced by the printing of new money.

That's why a traditional currency is not susceptible to this while bitcoin is.  Because of this, at some point the scarcity of bitcoin will reach such a point that they loose all their value as so few people will have them that they have no value for exchange.

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[pheaonix]

wills. infinite divisibility.

[christop]

That's why a traditional currency is not susceptible to this while bitcoin is.  Because of this, at some point the scarcity of bitcoin will reach such a point that they loose all their value as so few people will have them that they have no value for exchange.

I think you don't understand how supply and demand work. If demand stays constant while supply decreases, prices go up, not down.

Also, the opposite of "gain" is "lose". The opposite of "tight" is "loose".

[mcgin]

I think you don't understand how supply and demand work. If demand stays constant while supply decreases, prices go up, not down.

In the general case yes you are right, however Bitcoin derives it's value like any currency from the ability to trade it, i.e. that other people are willing to accept it in exchange for something else.  When there are so few bitcoins left in circulation that it no longer has value as a mechanism for trade it loses it's value entirely.

Take the extreme case of where there is only a single Satoshi left in circulation, at that point the currency will no longer be accepted in any transaction as it is of no use to anyone.  In fact, take it one step further, what happens when all BTCs are lost?

[christop]

Take the extreme case of where there is only a single Satoshi left in circulation, at that point the currency will no longer be accepted in any transaction as it is of no use to anyone.  In fact, take it one step further, what happens when all BTCs are lost?

Long before there is only one Satoshi in circulation, the protocol will (hopefully) be extended to permit more divisibility.