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Author Topic: Would using Bitcoin currently increase or decrease its value?  (Read 813 times)
hairballin
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October 05, 2017, 06:00:27 PM
 #1

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.
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October 05, 2017, 08:39:38 PM
 #2

You have pretty much answered few of your questions.
Meanwhile, for bitcoin market, where it is used to make purchase, it will bring more awareness to it and that will increase its value and growth till it gets to equilibrium - thats it's height because it has not got to its height because of awareness and acceptance.
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October 05, 2017, 08:45:28 PM
 #3

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

Definitely increase its value. As adoption increases, the network effect starts kicking in.
One of the reasons for the explosion in price today is that more and more people know about Bitcoin.


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October 05, 2017, 08:51:27 PM
 #4

It depends. We shouldn't forget that merchants accept Bitcoin through third party payment processors who directly, or eventually convert these coins to fiat on the market. If the demand remains strong, it wouldn't really impact the market too much, negatively speaking, but if the market experiences a stagnant period, it might actually suffer to a certain extent. It has all to do with supply and demand, simple basics. Only when merchants will start to actually keep a certain percentage of their sales in Bitcoin, I see the market react positively -- less coins in circulation always helps.
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October 05, 2017, 09:06:30 PM
 #5

It depends. We shouldn't forget that merchants accept Bitcoin through third party payment processors who directly, or eventually convert these coins to fiat on the market. If the demand remains strong, it wouldn't really impact the market too much, negatively speaking, but if the market experiences a stagnant period, it might actually suffer to a certain extent. It has all to do with supply and demand, simple basics. Only when merchants will start to actually keep a certain percentage of their sales in Bitcoin, I see the market react positively -- less coins in circulation always helps.

That makes sense. So then would the Segwit2X fork in November devalue Bitcoin as a legacy coin if a new one is created/put in circulation? I'm trying to understand that too
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October 05, 2017, 09:24:17 PM
 #6

The sale of a couple of pizzas for Bitcoin actually created a buzz about the currency in its initial days.
So by that yardstick, using bitcoin definitely helps.
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October 05, 2017, 09:43:01 PM
 #7

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

It's a good question, it's nice to see someone thinking rationally about the economics of bitcoin and asking an intelligent question. I see bitcoin transactions as essentially neutral in terms of whether they create or destroy value. On the one hand, buying bitcoins to spend at a merchant creates upward pressure on the price. Once spent, however, the merchant is likely to instantly liquidate the bitcoin into USD, because bitcoin has a low utility for actual commerce. It does no good to hold a currency the vast majority of the economy doesn't accept and when the rest of the economy conducts business in USD. There's also substantial risk of losing the profit of the transaction due to bitcoin's intense volatility, so all the incentives for merchants are to exchange immediately into USD, and this puts an equal amount of downward pressure on the price. I see commerce playing a negligible role in the actual value of bitcoin, all this up and down is related primarily to speculators.
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October 05, 2017, 09:46:57 PM
 #8

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

I think Bitcoin having usage will definitely increase in value.  By spending it to some online store supports its  community by enabling merchant to have client and profit from it.  From this point of view, if merchants are profitable using Bitcoin as mode of payment, more and more merchant will definitely flock in and the real life usage of Bitcoin will be strengthen thus community will grow and new comers will flock in.

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October 05, 2017, 11:13:49 PM
 #9

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

Definitely Yes! If the acceptance of bitcoin increases, it will surely increase the value of bitcoin because the demand will increase compared to the supply. It will also give a huge promotional boost to the community. The common mass will know about bitcoin and many of them will be interested in actually using the bitcoin. So the higher the acceptance will be, the higher the value will be. No doubt about that!

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October 05, 2017, 11:20:54 PM
 #10

I totally agree with the others! It will increase its value, because it will show to the world, that Bitcoin is real - and can be used as a normal currency, which many - unfortunately - don't think.
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October 05, 2017, 11:29:45 PM
 #11

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

It's a good question, it's nice to see someone thinking rationally about the economics of bitcoin and asking an intelligent question. I see bitcoin transactions as essentially neutral in terms of whether they create or destroy value. On the one hand, buying bitcoins to spend at a merchant creates upward pressure on the price. Once spent, however, the merchant is likely to instantly liquidate the bitcoin into USD, because bitcoin has a low utility for actual commerce. It does no good to hold a currency the vast majority of the economy doesn't accept and when the rest of the economy conducts business in USD. There's also substantial risk of losing the profit of the transaction due to bitcoin's intense volatility, so all the incentives for merchants are to exchange immediately into USD, and this puts an equal amount of downward pressure on the price. I see commerce playing a negligible role in the actual value of bitcoin, all this up and down is related primarily to speculators.

Thank you for the informative answer, that all makes sense. So then a widespread Bitcoin usage would require near-zero volatility? How can that be achieved if most vendors/merchants are quick to liquidate to fiat?
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October 05, 2017, 11:45:59 PM
 #12

In my point of view using of bitcoin in the business or accepting it as a mode of payment will create a diversity between fiat and cryptocurrency because I think most of people are going to pay with fiat and some are will pay with bitcoin but with that the bitcoin information will spread to the people and I think that will create a pump for the price of bitcoin because the demand will increase again and the supply of bitcoin will be lessen. 

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October 05, 2017, 11:55:09 PM
 #13

I like your subject I speak of it. Bitcoin is unpredictable no one well know like the weather it self and the time as well
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October 06, 2017, 12:55:51 AM
 #14

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.
Technically, it will increase it's value, the flow of demand and supply is continuously flowing and moving , which makes the bitcoin as a currency effective and active, holding it makes the demand and supply flow stagnant which makes its invalidate bitcoin as a currency.
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October 06, 2017, 02:48:31 AM
 #15

Thank you for the informative answer, that all makes sense. So then a widespread Bitcoin usage would require near-zero volatility? How can that be achieved if most vendors/merchants are quick to liquidate to fiat?
Not really, with how the price of bitcoin is moving right now that would be hard to achieve because of forks,halving,countries banning things related to crypto etc. That's one of the negative things for us who hold bitcoin to spend them. To avoid losing value I simply trade my bitcoin for an altcoin with a low volatility like tether where the price always sits at a dollar.

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October 06, 2017, 03:03:00 AM
 #16

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

It would increase its value because more people would be aware of its existence. The more people use it, there would be a higher demand thus a higher price due to its nature of being limited in supply. The difference of it in other things that when the volume increases, it would stabilize in value is that this things have unlimited supply thus an increase in demand is also an increase in supply and if you compare it with bitcoin with a limited supply then people would be willing to pay a higher price than someone else so in effect the agreed price of the buyer and seller would increase.

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October 06, 2017, 03:11:19 AM
 #17

I'm new to the Bitcoin / Cryptocurrency world, and the economics are pretty interesting.. My question is more of a large-scale economics question.

Would using Bitcoins, to purchase goods (not on this forum) or services, increase its perceived value due to wider exposure or level-out/decrease its perceived value by establishing an accepted value of it?

I hope that was clear enough. Just looking for ideas and thoughts.

Not with the value but the continous usage of bitcoin will make this currency more stronger since more people in the community will used this as a sign that they trust this currency eventhough it's virtual.

Coins will now be distributed more to different levels in the community and not just by some of the big whales. Price will become quite stable if active usages of it as a currency will happened. For traders, they might think that trading is not profitable anymore when price become stable. They are wrong here. Just look how healthy fiat currencies trades is.

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October 06, 2017, 03:16:58 AM
 #18

Definitely increase its value. As adoption increases, the network effect starts kicking in.
One of the reasons for the explosion in price today is that more and more people know about Bitcoin.

The answer isn't as simple as this, it would definitely not "definitely increase its value".

The question is whether the transactions result in selling Bitcoin for another currency or not. If we sell more Bitcoin for fiat or any other currency at a rate that exceeds the block reward rate (and thus growing supply) we will see a drop in price. Supply would be exceeding demand.

More specific to your question, if your transactions keep your bitcoin in the bitcoin ecosystem it would have a neutral effect on the price. Your transactions aren't influencing supply or demand (well, they're doing their part to keep demand stable...that's something!)

Adoption would only be influenced if your transactions are bringing new people into bitcoin, a purpose which transcends the transaction itself.

It's a good question, but don't fear that if you spend your bitcoin and use it as a currency you're going to do something to negatively effect bitcoin.

If you want to increase adoption, get into the habit of asking "do you accept Bitcoin" every time you try to buy something in person. And be ready to spend if/when the merchant says "yes!"

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October 06, 2017, 03:24:36 AM
 #19

It is an speculative asset, so we cannot predict whether the price increases or decreases with time. Everything happening with bitcoin is purely of the increased and increasing usage compared to the past. As the market supply increases, so will be the value. On such a thinking I believe the price grows high depending on increasing usage.
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October 06, 2017, 04:08:48 AM
 #20

When people start using Bitcoin to buy many services or goods bitcoin would start getting more well known and the prices can increase and maybe become stable in some time. But if people stop using Bitcoin or people lose interest in Bitcoins the value would start going down.
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