The Supply of Bitcoin Is Limited. The Supply of Cryptos Isn't!

[LotusPetal]

So, if Bitcoin really takes off, we think we have an honest, state-free money.  No central bank, or anyone, can create bitcoins past the 21 million limit.

Correct?  In practice, no.

What Western central banks are doing now is getting us used to the idea of multiple cryptocurrencies being viable.  When they use their printed money to buy some new cryptos, their values go up.  

One simple example of how they can continue to expand their money supply is to have a basket of cryptos against which they 'manage' exchange rates with dollars, euro, etc.  Say, at first this basket contains 1 BTC, 10 ETH, and 100 LTC, and the Fed and US government have an official or unofficial policy of keeping this basket at the price of $100K, with a combination of keeping money printing and public debt under control, and selling the BTC/ETH/LTC in its vaults to scare savers away from moving their dollars into coins.

As time goes on, the Fed will want to create more dollars.  (As it always has.)  Then they will  buy up lots of new cryptocurrency XYZ (cheap) with their dollars, and raise the price of XYZ.  After XYZ has 'proven itself in the market with its technical superiority,' the Fed will add it to the basket, and the new basket will be priced at $120K.  Since the 'base money' has expanded by 20%, the number of dollars can also be expanded by 20%.

This is only one of many variations.  The Fed doesn't even have to declare a basket (as mentioned above.)  Whatever it buys will rise in value, and will become part of the 'basket'.  Whatever it abandons will die out.  It will have all the power.

The system will be no different from the early days of gold and silver standards, but with a new twist: there are an unlimited number of new gold and silver mines, and only central banks know where they are!

So, I'm still thinking that gold and silver, whose scarcity is secured by physics, rather than computer code, are the superior forms of money for improving our freedom from governments and bankers.

Gold, Silver and other valued metals will always have a place but there are reasons why we stopped using those forms as payment. It's very uncomfortable to go to the grocery store with those metals. The chance of being robbed and losing allot of money is very high. Getting payed in these metals only risks being robbed of your entire paycheck whilst driving/cycling/waking home. The metals are very heavy.

Maybe the invention of teleportation will revolutionze the monetary system in the future as blockchain is doing now? You could directly teleport paychecks, valueable metals etc!
Or maybe at some point we will just outgrow this childish thing called money and think of something better.

[Hydrogen]

I still contend that the value of gold and silver can be manipulated. It is known that metals markets involving aluminum and other materials are manipulated by traders. There isn't a market which exists that is immune to overvaluing/undervaluing to manipulate price.

One key thing that is missing in precious metals to raise its price higher is a function of utility. If someone owned a 100 lb chunk of pure gold, they couldn't do anything with it other than sell it to redeem for fiat. Precious metals in that sense, lack options. They can't be utilized for electronic payment, earning interest, they can't be used to buy or sell. Metals are lacking the type of utility people have come to expect in the mdoern age where goods/services can be bought or sold in seconds with the click of a button.

One natural evolution which could happen eventually is gold backed crypto. That could eliminate one of the advantages fiat has over crypto in terms of being backed by collateral.

With the internet and technology advancing, there must be a way gold & other precious metals can evolve like a pokemon into a superior form.

[ss890]

I think gold and silver will go off the chart if the crypto currencies are hiked by half of the population on the earth. Don't forget that Feds can not cap the crypto market by any sense due to decentralisation and at least I don't think that will happen throughout the world. It just don't work like that and crypto still have to see the sunrise in it's all developments and features in the future. It will turn the world upside down if everything starts digitalising and then there will be world watching out for crypto to exchange it with digital assets and traditional assets. Then what will happen to your gold and silver nobody can tell.

[entrepmind23]

No doubt that cryptos can ensure some regulatory freedom as it is not limited physically like gold or silver. However, the unlimited supply of altcoins is not good for the overall crypto community. We are seeing new altcoins are popping up every single day and flooding the market where most of them are worthless and makes no sense to buy. This way the investments are getting divided into thousand fractions. If we had only a handful of altcoins with proper marketing plans and roadmap, that would be much beneficial for the crypto community. If we can't control this trend, then millions of altcoins will flood the market which will eventually bring down the worth and reliability of crypto currency market.

The ones that are benefiting from what is happening nowadays with ICOs here and there and airdrops of coins that doesn't even have roadmaps and whitepapers are the traders. The traders would take advantage of the situation to have more coins and would still end up exchanging it to bitcoin so bitcoin is still the coin that people would choose over others because of its demand and price. The government see this as a threat to the financial system that's why they are trying to regulate it and even consider creating another cryptocurrency that they have control of so that they can still have control of the people which they may lose if the trend of decentralized currency continues.

[reliable]

Yes it is right that there are endless cypto I would already in the market and new coins keep coming every day and bitcoin itself is the king which has a number of supplies availability. If btc becomes very expensive in the time to come it is obvious that the alt currency which are very reasonable in price and provides functionality of btc will be used in coming time.

[Pursuer]

the supply of Gold is limited. The supply of metals and matter is not!

how does that physics law go in English! matter never vanishes, it just changes form.
you can make different metals or better say alloys but you can never make Gold! Gold will always remain Gold. Diamonds as Diamonds. if you create it, then it will be fake Diamond or "synthetic".

this is the same with your analogy. altcoins are being created but they are not doing anything so their existence changes nothing.

[yvesp110]

Yes it is right that there are endless cypto I would already in the market and new coins keep coming every day and bitcoin itself is the king which has a number of supplies availability. If btc becomes very expensive in the time to come it is obvious that the alt currency which are very reasonable in price and provides functionality of btc will be used in coming time.

With the invention of bitcoin, the gate of a new world opened. This invention gave a new idea to the whole world, the concept of digital currencies. Ideas have larger impact than inventions. Because of the ease that we can have by converting our paper money system into digital currency system, new crypto coins will keep on releasing with time and bitcoin will always remain at the top as it is available in very limited amount.

[Basmic]

the supply of Gold is limited. The supply of metals and matter is not!

how does that physics law go in English! matter never vanishes, it just changes form.
you can make different metals or better say alloys but you can never make Gold! Gold will always remain Gold. Diamonds as Diamonds. if you create it, then it will be fake Diamond or "synthetic".

this is the same with your analogy. altcoins are being created but they are not doing anything so their existence changes nothing.

The law of conservation of energy only works in a closed system. For example, if the ground will fall the rain of Golden meteors that the price of gold will change. Who can know that this will never happen. The availability of alternative coins stabilize the situation in the cryptocurrency market and have a positive effect on the protection of whales. Hard to play cards with gamblers.

[BobK71]

Thank you all for many thoughtful comments.  I'll try to respond to some individual comments, but here are my answers to the major points you raised, plus some clarifications:

1. I believe it's likely that a system reset is underway that will result in a big wealth transfer to holders of Bitcoin and other favored cryptos.  If you look at a diagram of financial crises around the world for the last few hundred years, the totally fiat money system since 1971 has been the most unstable period of all, with the possible exception of the interwar years that included the Great Depression.  The elites likely know better than us that this system has to go, but they are of course not going to publicize this fact until it's too late for the average person to profit from it.

2. Altcoins can't be dismissed -- even if few people believe in an altcoin, the initial buying by central banks will give an incentive for investors to buy in.  This is not the same as trying to make money out of iron, as the supply of iron is too big, while the supply of any one altcoin is limited (or at least more limited than fiat money.)  This incentive actually works the same across all asset classes, bank deposits, real estate, bonds, stocks, etc. -- state power is used to prop up favored financial assets artificially.  It's how the elites get their power and wealth, and there's no reason things should be different here.

3. I also don't think altcoins will be so dominant that Bitcoin will suffer a major loss as a result.  To the extent that the elites need to move public perception in favor of cryptos, they have to maintain confidence in Bitcoin most of all.  The favored altcoins will rise and fall more sharply than Bitcoin, but their long term return will be better than Bitcoin (assuming all coins will go much higher than today) -- after all, there has to be an incentive for investors to buy into altcoins.  The goal of the elites will be to keep capital diluted among different coins, but not so much as to quickly expose the 'infinite-altcoin' underlying reality which would risk destroying the entire scheme.

4. I don't agree with the idea that the elites will always control things and that all we can do is to submit.  First of all, it's not either total freedom or total control, but somewhere in between.  We have some control over exactly what system takes shape.  Yes, it'll be a long term struggle, but the best method of resistance is to understand the system and pass on the knowledge.  E.g. there was no reason for Britain and the US to join World War One.  If Britons and Americans had understood that the real purpose of joining the war was not to defeat evil Germans but to effect a successful transfer of monetary and imperial power from Britain to the US, some of them would not have been singing war songs, and things might have turned out differently.

5. My personal thinking is that an effective method of resistance is to try to profit from the system by using good understanding.  Since deception and lack of knowledge are a major support for the system, if the elites can no longer depend on this, they will have to adjust to make the system more beneficial.  E.g. if we all jump on the assets we think the elites are supporting (but of course never betting enough to get hurt badly,) the resulting instability will help expose the nature of the system to the public, and help move long-term history in the direction of freedom.

[BobK71]

So, I'm still thinking that gold and silver, whose scarcity is secured by physics, rather than computer code, are the superior forms of money for improving our freedom from governments and bankers.

Just not this part. I'd say they are far less practical to use as currency, but unlike crypto or fiat they have true inherent value.

I'm not sure there's such a thing as freedom in this world, at least not while one is to live in society.

With both cryptos and precious metals, what we're really looking for is a store of value.  It's really not desirable, if possible at all, to use a distributed ledger based system as a means of exchange for everyday purchases, with every transaction verified and recorded on every copy of the ledger.

In fact, precious metals would be a better means of exchange, a role they served for thousands of years.  The reason they don't serve it any more is the same reason marijuana has been illegal until very recently: even though an artificial product has many side effects, the natural product gives less profit to the government and corporate elites.

We're not going to get total freedom or total slavery.  The reality will be somewhere in between.  Exactly what it will be like, is up to what we do and what we understand.

[BobK71]

But the only problem is gold and silver, along with other precious stones and metals are being held secure by the Feds and the bankers, so that option is also a no-go for those who doesn't want to be controlled 'again' by these entities.

If you're referring to the old gold and silver standards, yes, it was still a form of elite control and exploitation.  But that problem exists (or will exist) for both precious metals and cryptos.

Cryptos have the added problem that the elites' power is enhanced by being able to use new cryptos to expand the money base.

[carlfebz2]

But the only problem is gold and silver, along with other precious stones and metals are being held secure by the Feds and the bankers, so that option is also a no-go for those who doesn't want to be controlled 'again' by these entities.

If you're referring to the old gold and silver standards, yes, it was still a form of elite control and exploitation.  But that problem exists (or will exist) for both precious metals and cryptos.

Cryptos have the added problem that the elites' power is enhanced by being able to use new cryptos to expand the money base.

When it comes on possible manipulation or involvement then these metals investment or assets would really be include i don't think they would able to such thing on crypto knowing its decentralized but would rather they would create their own centralized coin which they could able to make control of it.Supply of bitcoin is limited which cant really be compared on gold or metals assets on this world.

[BobK71]

Bastards control us because we allow them to do so. Look how many people on the forum dreaming about the legalization of bitcoin. They do not understand that they themselves give themselves into the hands of these bastards? Maybe people have as Pets are accustomed to their controlled hosts and can't live without it?

The Western imperial elites have been good at:

- Divide-and-conquer: there are usually large nos. of people who benefit temporarily from their scheme, so these people are on board, and it's just convenient that they don't understand how money really works.  E.g. the entire populations of Britain and the US were on board to inflate national-financial bubbles that lasted for more than a century each.

- Analytics: you can't prop up a fundamentally weak asset or country.  So usually the asset or country the elites choose to work with and inflate have some inherent strength, but is not strong enough on its own to succeed.  It's the combination of this elite partnership, and inherent merit, that allows an inflation scheme to succeed.

[Omega Weapon]

So, if Bitcoin really takes off, we think we have an honest, state-free money.  No central bank, or anyone, can create bitcoins past the 21 million limit.

Correct?  In practice, no.

What Western central banks are doing now is getting us used to the idea of multiple cryptocurrencies being viable.  When they use their printed money to buy some new cryptos, their values go up.  

One simple example of how they can continue to expand their money supply is to have a basket of cryptos against which they 'manage' exchange rates with dollars, euro, etc.  Say, at first this basket contains 1 BTC, 10 ETH, and 100 LTC, and the Fed and US government have an official or unofficial policy of keeping this basket at the price of $100K, with a combination of keeping money printing and public debt under control, and selling the BTC/ETH/LTC in its vaults to scare savers away from moving their dollars into coins.

As time goes on, the Fed will want to create more dollars.  (As it always has.)  Then they will  buy up lots of new cryptocurrency XYZ (cheap) with their dollars, and raise the price of XYZ.  After XYZ has 'proven itself in the market with its technical superiority,' the Fed will add it to the basket, and the new basket will be priced at $120K.  Since the 'base money' has expanded by 20%, the number of dollars can also be expanded by 20%.

This is only one of many variations.  The Fed doesn't even have to declare a basket (as mentioned above.)  Whatever it buys will rise in value, and will become part of the 'basket'.  Whatever it abandons will die out.  It will have all the power.

The system will be no different from the early days of gold and silver standards, but with a new twist: there are an unlimited number of new gold and silver mines, and only central banks know where they are!

So, I'm still thinking that gold and silver, whose scarcity is secured by physics, rather than computer code, are the superior forms of money for improving our freedom from governments and bankers.

What you said it is correct but we are still very far to reach that point, when the dollar falls of grace as the world reserve currency the next question is what to do then, and economist have suggested what you are saying using a basket of fiats and creating a new world currency as a result, so what you are saying makes complete sense but you are too early, I do not think that is going to happen in decades or even in 50 years.

[BrewMaster]

what you are saying here is only half correct.
half because you brought bitcoin inside it! exclude bitcoin and your statement here will be 100% correct.

you see bitcoin is different. it is known among many as THE cryptocurrency. nobody knows the altcoins. that is why we call ALL of them altcoins. it is like this: "bitcoin and the altcoins". that automatically categorizes them.

so think of it like this: supply of xCoin is limited but supply of all altcoins is not. that is actually one of the reasons why most altcoins just struggle to gain any foothold.

[Blamsud]

what you are saying here is only half correct.
half because you brought bitcoin inside it! exclude bitcoin and your statement here will be 100% correct.

you see bitcoin is different. it is known among many as THE cryptocurrency. nobody knows the altcoins. that is why we call ALL of them altcoins. it is like this: "bitcoin and the altcoins". that automatically categorizes them.

so think of it like this: supply of xCoin is limited but supply of all altcoins is not. that is actually one of the reasons why most altcoins just struggle to gain any foothold.

New alts were developed and launche every now and then that's why its hard to choose among alts which is much better, but btc from its launched it have a fix supply amd we will know it's valie depending on demand. Though both were good to jave, just be careful on what alt to consider.

[BobK71]

What you said it is correct but we are still very far to reach that point, when the dollar falls of grace as the world reserve currency the next question is what to do then, and economist have suggested what you are saying using a basket of fiats and creating a new world currency as a result, so what you are saying makes complete sense but you are too early, I do not think that is going to happen in decades or even in 50 years.

To be blunt, mainstream economists have mainly existed to serve the ruling elites.  They were in favor of the gold standard when it was operating, but are now almost totally against it.  Both times, they were saying what the elites wanted to hear, at the time.

World reserve currency is essentially a bubble that is propped up by the elites.  The nature of bubbles is that you don't know when and how it will collapse, but you know it will, and that you know the elites and their mouthpieces are always going to be saying everything is fine, before the collapse.  So accurate information of this nature is hard to come by.

It is also possible that the emergence of Bitcoin has given the elites an opportunity to deflate the bubble preventively.  Something of that nature happened around 1985 when a hard landing of the dollar was prevented by a combination of talking the dollar down and forcing Europe to inflate and making their currencies unattractive.

A basket of fiat currencies is what economists always talk about (assuming you mean the SDR issued by the IMF,) but we have no history that shows success by a reserve currency issued by a centralized authority without the help of a unified imperial power.  Through 500 years of modern history, global imperial currency has always been a combination of state issuance, precious metal backing, and support by imperial power.  Over the last 45 years the currency itself went totally fiat, and I don't believe this condition can last long.  Of course, the politicians, economists, and bankers are always going to say it will last forever.

[jpoker272727]

Thank you all for many thoughtful comments.  I'll try to respond to some individual comments, but here are my answers to the major points you raised, plus some clarifications:

1. I believe it's likely that a system reset is underway that will result in a big wealth transfer to holders of Bitcoin and other favored cryptos.  If you look at a diagram of financial crises around the world for the last few hundred years, the totally fiat money system since 1971 has been the most unstable period of all, with the possible exception of the interwar years that included the Great Depression.  The elites likely know better than us that this system has to go, but they are of course not going to publicize this fact until it's too late for the average person to profit from it.

2. Altcoins can't be dismissed -- even if few people believe in an altcoin, the initial buying by central banks will give an incentive for investors to buy in.  This is not the same as trying to make money out of iron, as the supply of iron is too big, while the supply of any one altcoin is limited (or at least more limited than fiat money.)  This incentive actually works the same across all asset classes, bank deposits, real estate, bonds, stocks, etc. -- state power is used to prop up favored financial assets artificially.  It's how the elites get their power and wealth, and there's no reason things should be different here.

3. I also don't think altcoins will be so dominant that Bitcoin will suffer a major loss as a result.  To the extent that the elites need to move public perception in favor of cryptos, they have to maintain confidence in Bitcoin most of all.  The favored altcoins will rise and fall more sharply than Bitcoin, but their long term return will be better than Bitcoin (assuming all coins will go much higher than today) -- after all, there has to be an incentive for investors to buy into altcoins.  The goal of the elites will be to keep capital diluted among different coins, but not so much as to quickly expose the 'infinite-altcoin' underlying reality which would risk destroying the entire scheme.

4. I don't agree with the idea that the elites will always control things and that all we can do is to submit.  First of all, it's not either total freedom or total control, but somewhere in between.  We have some control over exactly what system takes shape.  Yes, it'll be a long term struggle, but the best method of resistance is to understand the system and pass on the knowledge.  E.g. there was no reason for Britain and the US to join World War One.  If Britons and Americans had understood that the real purpose of joining the war was not to defeat evil Germans but to effect a successful transfer of monetary and imperial power from Britain to the US, some of them would not have been singing war songs, and things might have turned out differently.

5. My personal thinking is that an effective method of resistance is to try to profit from the system by using good understanding.  Since deception and lack of knowledge are a major support for the system, if the elites can no longer depend on this, they will have to adjust to make the system more beneficial.  E.g. if we all jump on the assets we think the elites are supporting (but of course never betting enough to get hurt badly,) the resulting instability will help expose the nature of the system to the public, and help move long-term history in the direction of freedom.

All the points are valid and no second argument about this as supply of bitcoin is limited because supply is depending upon the user demand as the demand increases the supply is increased from the organization where as other crypto supplies are not limited because they produce a lot but user are in low amount and this makes it effect less as bitcoin user are in millions.

[Razick]

Thank you all for many thoughtful comments.  I'll try to respond to some individual comments, but here are my answers to the major points you raised, plus some clarifications:

1. I believe it's likely that a system reset is underway that will result in a big wealth transfer to holders of Bitcoin and other favored cryptos.  If you look at a diagram of financial crises around the world for the last few hundred years, the totally fiat money system since 1971 has been the most unstable period of all, with the possible exception of the interwar years that included the Great Depression.  The elites likely know better than us that this system has to go, but they are of course not going to publicize this fact until it's too late for the average person to profit from it.

2. Altcoins can't be dismissed -- even if few people believe in an altcoin, the initial buying by central banks will give an incentive for investors to buy in.  This is not the same as trying to make money out of iron, as the supply of iron is too big, while the supply of any one altcoin is limited (or at least more limited than fiat money.)  This incentive actually works the same across all asset classes, bank deposits, real estate, bonds, stocks, etc. -- state power is used to prop up favored financial assets artificially.  It's how the elites get their power and wealth, and there's no reason things should be different here.

3. I also don't think altcoins will be so dominant that Bitcoin will suffer a major loss as a result.  To the extent that the elites need to move public perception in favor of cryptos, they have to maintain confidence in Bitcoin most of all.  The favored altcoins will rise and fall more sharply than Bitcoin, but their long term return will be better than Bitcoin (assuming all coins will go much higher than today) -- after all, there has to be an incentive for investors to buy into altcoins.  The goal of the elites will be to keep capital diluted among different coins, but not so much as to quickly expose the 'infinite-altcoin' underlying reality which would risk destroying the entire scheme.

4. I don't agree with the idea that the elites will always control things and that all we can do is to submit.  First of all, it's not either total freedom or total control, but somewhere in between.  We have some control over exactly what system takes shape.  Yes, it'll be a long term struggle, but the best method of resistance is to understand the system and pass on the knowledge.  E.g. there was no reason for Britain and the US to join World War One.  If Britons and Americans had understood that the real purpose of joining the war was not to defeat evil Germans but to effect a successful transfer of monetary and imperial power from Britain to the US, some of them would not have been singing war songs, and things might have turned out differently.

5. My personal thinking is that an effective method of resistance is to try to profit from the system by using good understanding.  Since deception and lack of knowledge are a major support for the system, if the elites can no longer depend on this, they will have to adjust to make the system more beneficial.  E.g. if we all jump on the assets we think the elites are supporting (but of course never betting enough to get hurt badly,) the resulting instability will help expose the nature of the system to the public, and help move long-term history in the direction of freedom.

All the points are valid and no second argument about this as supply of bitcoin is limited because supply is depending upon the user demand as the demand increases the supply is increased from the organization where as other crypto supplies are not limited because they produce a lot but user are in low amount and this makes it effect less as bitcoin user are in millions.

The thing is, we do not even know if Bitcoin is going to be the coin which survives all of this. It is actually unlikely that Bitcoin would be here in 20 years, given how many altcoins offer improvements to the underlying technology. When something is better, usually it becomes more popular. There is no difference in that logic here. If something else comes along which is greatly improved then it will take precedent over Bitcoin. A case could even be made for Ethereum in this regard.

[BobK71]

The thing is, we do not even know if Bitcoin is going to be the coin which survives all of this. It is actually unlikely that Bitcoin would be here in 20 years, given how many altcoins offer improvements to the underlying technology. When something is better, usually it becomes more popular. There is no difference in that logic here. If something else comes along which is greatly improved then it will take precedent over Bitcoin. A case could even be made for Ethereum in this regard.

Most people discuss cryptocurrencies by assuming there is a free market in this money.

Modern history is fundamentally driven by elite manipulation of money and debt.  See my explanations here and here.

It would be naive to believe this is not happening to cryptocurrencies, as they have the ability to replace state-issued money and take the power from the elites.  The elites will either suppress cryptos or use them to enhance their power.  There is no in-between.  They are not going to let market forces decide the fate of cryptos.

So far it looks like they are taking the latter approach.  And I think the reason is that there is no limit to the supply of cryptos.