The believe that because of Bitcoin limited supply the price will rise is a myth

[fxsurfer]

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not. This is because the utility of consuming a potato - the want-satisfying power of a potato is much smaller than that of a car or of 10.000 dollars worth of goods or services. In other words, from the mere fact that the supply of something is limited it does not follow that the price will soar.

In comparison to a potato, Bitcoin is not even a physical tangible good that can be used for satisfying human wants or needs, and its only utility is that it functions as a medium of exchange. So, just because Bitcoin supply is limited, that does not mean its price will rise. People will NOT pay enormous amounts of money just to have a medium of exchange function, especially if this function is equally available whether the price of Bitcoin is 1 cent or 7.000 dollars, and if this function can be realized with various alternative cryptos or fiat money.

[emuLOADs_temp]

good job, you've discovered elasitcity of demand. now go study some more to realize why your conclusions are not neccesarely very insightful or likely.

Bitcoin is not a good in the sense potatoes are, that's one place where you can start.

[BrentMack]

I don't think it is a myth because whenever demand surpasses supply, prices of commodities and goods in a market always go up, this also applies to bitcoin and the reason the price is going down is because there is so much supply and not enough demand to balance it out.

[daarul50]

Everyone already knows that bitcoin supply is very limited and if everyone wants the rising bitcoin price to be accompanied by an increased demand for bitcoin. There will be no price increase if demand for bitcoin continues to decline. Hence, Bitcoin developers must increase investor confidence in bitcoin to make price increases because with investors buying bitcoin the demand for bitcoin will increase.

[JerryJam]

Bitcoin has no intrinsic value. It has utility.It quickly transfers the cost equivalent over long distances cheaply and reliably.The number of bitcoin users is constantly increasing. This means that the usefulness and value of bitcoin is growing in the same proportion.The more nodes in the bitcoin network the more expensive will be its unit of account.Bitcoin exchange rate fluctuations depend solely on the market mechanism.Demand is constantly growing and this entails an increase in the market value of bitcoin.

[fxsurfer]

good job, you've discovered elasitcity of demand. now go study some more to realize why your conclusions are not neccesarely very insightful or likely.

Bitcoin is not a good in the sense potatoes are, that's one place where you can start.

The utility of Bitcoin  - its function as a medium of exchange, is equal whether its price is 0.0000001 dollars or 7.000 dollars. The same is true for a potato. For some irrational reasons people may pay as much as 100,000 dollars for a potato, like they paid 100,000 florins for a tulip bulb in a Tulip mania, but the utility of consuming a potato will stay the same and the price of a potato will always return to value determined by its utility. The same thing will happen with the price of Bitcoin  - it will return to value determined by Bitcoin's medium of exchange utility, which is somewhere around 1 cent, or probably even lower.

[pawel7777]

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not.

Potato will be worth as much as the highest bidder is willing to pay for it. Google 'most expensive food' or wine and you'll be surprised how much people are willing to pay.

[Trinidad_James-All_Potato_Everything.jpg]

Your 'argument' doesn't even require debunking, the reality proves it false everyday.

[fxsurfer]

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not.

Potato will be worth as much as the highest bidder is willing to pay for it. Google 'most expensive food' or wine and you'll be surprised how much people are willing to pay.

[Trinidad_James-All_Potato_Everything.jpg]

Your 'argument' doesn't even require debunking, the reality proves it false everyday.

I am not claiming that a potato will not be worth as much as the highest bidder is willing to pay for it. I am instead claiming that the price of a potato will always return to value determined by its utility.

[pawel7777]

...
I am not claiming that a potato will not be worth as much as the highest bidder is willing to pay for it. I am instead claiming that the price of a potato will always return to value determined by its utility.

Just like the gold's value returned to the utility-only value? Just like Chateau d'Yquem ($50k/bottle) is now worth same as any other wine sold at supermarket? Just like you can now buy white truffles at $1/kg?

Price is determined by supply and demand. Scarcity is a factor that drives the price up - whether you want to accept it or not. Utility itself won't automatically create monetary value, for the same reason you won't pay for air, even know it has huge utility - it keeps you alive.

[BitcoinHodler]

if anybody said just because of limited supply price will rise, then they were making a mistake. but my guess is that you misunderstood them or probably read half of their statement!

the reality is that there is another part: demand.
with increasing demand while having a limited supply price will rise and that is what will happen to bitcoin.

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato?

potato is not a useless thing. it is useful so if the supply of it dropped, the price of it will grow. that is basic economy, ask anyone!

let me give you a real live example to help you understand.
during wars, like world war, nobody cares about cars. what they are desperate about is food, and potato actually becomes important and expensive. you may even exchange your luxury car with a sack of potato when you are dying of hunger because the supply of potato and food in general during war is extremely low.

[Patatas]

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not. This is because the utility of consuming a potato - the want-satisfying power of a potato is much smaller than that of a car or of 10.000 dollars worth of goods or services. In other words, from the mere fact that the supply of something is limited it does not follow that the price will soar.

Why did you pick example of an potato ? That is the utility which has an alternative,you know people can survive just fine without consuming a potato.It is not an essential part of livelihood.Take water of example,what if the entire Earth dries up and there is literally no water supply ? Would you buy a car or rather drink water ? Not saying bitcoin is that essential but in the word  it has it's own hardcore followers.

In comparison to a potato, Bitcoin is not even a physical tangible good that can be used for satisfying human wants or needs, and its only utility is that it functions as a medium of exchange. So, just because Bitcoin supply is limited, that does not mean its price will rise. People will NOT pay enormous amounts of money just to have a medium of exchange function, especially if this function is equally available whether the price of Bitcoin is 1 cent or 7.000 dollars, and if this function can be realized with various alternative cryptos or fiat money.

If they can predict that their money is going to get doubled after some time,they will never lose a chance to buy bitcoins even when the supply is low.You don't see the point here,it's not about bitcoin at all,it's about the real value it holds.

[krishnapramod]

Throughout all your posts, you have been quite repetitive about the term "tangible" There is utility/scarcity, medium of exchange/store of value. Not just limited supply, decentralized digital scarcity, yeah intangible. Now basic economics, anything that is both useful and scare tend to have value, not a myth. Does Bitcoin's utility have satisfying power? Yeah, again not just any medium of exchange, a peer-to-peer censorship-resistant payment network. Now spending enormous amounts of money, add utility + scarcity, you would have a decentralized medium of exchange that retains purchasing power. A few altcoins does have real utility and can be a good medium of exchange, but do lack decentralized digital scarcity and in that sense Bitcoin is far ahead and assuming Bitcoin becomes a more efficient payment network with very low fees then there is no reason to believe why utility/scarcity driven demand wouldn't lead to price increase.

In comparison to a potato, Bitcoin is not even a physical tangible good that can be used for satisfying human wants or needs.

Potato – tangible – Satisfying human needs.

Bitcoin – intangible – Satisfying human needs.

Guess your definition of human wants is a bit messed up, not necessarily tangible, and terms like decentralization, peer-to-peer, censorship-resistant, privacy, economic freedom does include in human wants.

[Ilegendph]

Bitcoin has no intrinsic value. It has utility.It quickly transfers the cost equivalent over long distances cheaply and reliably.The number of bitcoin users is constantly increasing. This means that the usefulness and value of bitcoin is growing in the same proportion.The more nodes in the bitcoin network the more expensive will be its unit of account.Bitcoin exchange rate fluctuations depend solely on the market mechanism.Demand is constantly growing and this entails an increase in the market value of bitcoin.

His explanation is true on top of that remember that potato can reproduced by plant so that's why it is not comparable to bitcoin. But bitcon is can be compared to oil since we all know that oil(gasoline) is limited because there will come a time that these commodity will deplete.

[guybrushthreepwood]

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not. This is because the utility of consuming a potato - the want-satisfying power of a potato is much smaller than that of a car or of 10.000 dollars worth of goods or services. In other words, from the mere fact that the supply of something is limited it does not follow that the price will soar.

In comparison to a potato, Bitcoin is not even a physical tangible good that can be used for satisfying human wants or needs, and its only utility is that it functions as a medium of exchange. So, just because Bitcoin supply is limited, that does not mean its price will rise. People will NOT pay enormous amounts of money just to have a medium of exchange function, especially if this function is equally available whether the price of Bitcoin is 1 cent or 7.000 dollars, and if this function can be realized with various alternative cryptos or fiat money.

Then where does bitcoin derive its value from? And why are people buying it? It's basic supply and demand. I'd look at bitcoin more like an asset than anything else. It is like owning digital gold. Bitcoin may not have intrinsic value like gold or whatnot but there is still a finite supply of it and that's what gives it its value because people believe it has worth.  Anything is only worth what people are prepared to pay for it and supply and demand factors into that. A rare pokemon or baseball card isn't really any different from a bog standard card of which there are hundreds of thousands but it's because of its scarcity/rarity and because people are prepared to pay good amounts of money for it that it has worth. Same with bitcoin.

[Casmania]

No, I don't consider bitcoin rise in price could be a myth since it had shown to the world that it can reach it's price further than we thought in the last quarter of 2017 reaching almost $20K USD. When people are more interested to put investment in bitcoin then demand could go up and this will trigger on the price value to shoot up. I believe that bitcoin will continue to potentially grow in the coming years to come giving more good profit to investors.

[fxsurfer]

...
I am not claiming that a potato will not be worth as much as the highest bidder is willing to pay for it. I am instead claiming that the price of a potato will always return to value determined by its utility.

Just like the gold's value returned to the utility-only value? Just like Chateau d'Yquem ($50k/bottle) is now worth same as any other wine sold at supermarket? Just like you can now buy white truffles at $1/kg?

Price is determined by supply and demand. Scarcity is a factor that drives the price up - whether you want to accept it or not. Utility itself won't automatically create monetary value, for the same reason you won't pay for air, even know it has huge utility - it keeps you alive.

The prices of the goods you mentioned didn't rise 200,000,000 percent from their utility value, while the Bitcoin's prices did. Regarding scarcity, it is true that scarcity is a factor that drives the price up, but the utility provided by bitcoin is not scarce, since people can create an infinite number of digital currencies that will serve as means of exchange. If 21 million grains of sand are put into a box and a limitation is set that this is the maximum number of grains that can be put into the box, this artificial constraint won't make these grains scarce or valuable. This is because people can create their own boxes, fill them with sand and set their own quantitative limitations. Why would people pay 10,000 dollars for a grain of sand in your box if they can make their own boxes with sand in them? Likewise, why would people pay 10,000 dollars for numerical values in your digital box if they can design their own digital boxes with numerical values in them? You people live in a fantasy world. When you wake up, it will be too late.

[dragoz11]

well it is a good point of view and I was thinking recently that nowadays we barely use cash with the systems provided by banks and it is a matter of time for governments and banks to copycat all the advantages of btc so what then, if there is a more secure coin why should people buy something which is not backed by anything.

[franky1]

I don't think it is a myth because whenever demand surpasses supply, prices of commodities and goods in a market always go up, this also applies to bitcoin and the reason the price is going down is because there is so much supply and not enough demand to balance it out.

commodities have a purpose. a commodity is a raw material used to create other products.
wheat can be turned into bread,.. oil can be turned into fuel/plastic

now this is the confusing part for some.
GOLD sits on 2 markets. commodities AND asset.
golds commodity value is its raw material state to the create electronics and jewellery

bitcoin does not share golds commodity value. bitcoin is not a commodity, emphasis bitcoin is not a commodity

now because gold has a commodity value, this gives it a value. and combining golds commodity(raw material) value with golds scarcity. and golds utility/function value as part of a circuit/jwellery(end product) gives gold an asset value

again. bitcoin has no commodity value. and thus it only holds value due to scarcity ethos/utility(trading) and merchant use for bitcoin to be an asset. emphasis bitcoin is an asset
emphasis. without real world merchant use. bitcoin loses its main aset value. (remember bitcoins first price push due to bitcoin pizza, then silkroad, then things like bitpay/coinbase shopping cart tools)

but if we take away bitcoins ethos/function by making it the expensive to use (tx fee onchain / high cost to open/close 2nd layers) then it loses its utility.. if its no longer useful to buy things in the real world... all thats left is scarcity..

so lets talk about scarcity alone
now.. i have a dog that does 2 poops a day. in 2 years it will be trained to do 1 poop a day. and as it gets older, it starts getting constipated and only does 1 poop every couple days.
in its life thats about 2500 bags of dog poop will ever be created by my dog.. wh wants some.... no one.. but wait. its scarce. so why no demand(sarcasm)

in short. scarcity alone is meaningless. something is not an asset just by being scarce.

demand due to scarcity alone is meaningless. there has to be function/utility of the item for there to be demand. otherwise its just crap..
as shown by all the crap coins that get dumped once people realise theres no utility. even if the coin has faster tx times and lower fee's there is no real world function/utility

bitcoin had/has many utility/functions. but slowly its losing those abilities. so dont always rely on 'scarcity' as the sole thing that will keep bitcoin prices up.. because otherwise you might well just be holding a bag of poo..

we need to concentrate on not letting devs destroy bitcoins ethos. not letting regulators turn it into fiat. not let users turn it into a gimmick via sounding like a ponzi get rich scheme.

[emuLOADs_temp]

fxsurfer, you really, really need to study fundamental economics.

Let's make some essentials cristal clear.

IF the supply of bitcoin remains unchanged
IF the demand of bitcoin remains unchanged

then over time the "exchange value" to, say, the US dollar WILL indeed change, with a unit of BTC becoming worth "more" units of dollars. That's for the fundamental truth that the value of a unit of dollar, over time, decreases (rapidly).

Now, that the supply will not increase, but rather decrese, is a well established FACT, it will not change.
One uncertainty is wether the number of users and uses of bitcoin will increase, stagnate, or decline. That will, of course, impact its growth in value.

While we cannot predict how much Bitcoin will be Worth in a day, month, or decade's time, we can sat for certain that its scarcity will be a major factor in deciding its value. Obviously if there won't be any demand at all, it won't be Worth any money at all... but this is a somewhat obvious yet unlikely scenario. not really anything you can be insightful about.

So, you're either being completely lapalissian, claming that if there is no value for bitcoin it won't be Worth anything, or you're being--frankly--ignorant in claming that scarcity alone isn't a key value driver.

[Anti-Cen]

oh yes the world is running out of numbers and digits and I am selling pugs from my left nostril
because they are a finite resource and will boom in value when I die.

Never mind that each fork double the money supply, adds to inflation, just buy my pugs