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Author Topic: The Ultimate Bitcoin Paradox...To increase value or decrease value...24/7  (Read 1187 times)
bitrebel
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August 13, 2011, 09:27:12 AM
 #1

In the world of tangible currencies and precious metals, we invest in precious metals to hedge against inflation of fiat currency. We hope that it will not gain in value, but if it does, we are protected.

With bitcoin, it is not tied to the dollar or any currency, so the value is completely speculative based on known supply and speculated demand in a given moment, hour, or day.

Therefore, we are constantly in a state of flux between the desire for bitcoin to increase in value due to our holdings, and the decrease in value due to our desire to acquire more at a better rate.

How should this paradox be handled, if we were to take decisive action? Surely, we all have opposing opinions of whether it should go up or down, at any given time.

All of us want bitcoins to stay low for as long as it takes for us to get what we feel is the acceptable safe amount to own or invest in....

 by contrast, those of us that increase our holdings, will desire the value to increase substantially.

No market in history has ever had to deal with this paradox before.

Comments??? Thoughts???

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Astrohacker
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August 13, 2011, 02:11:32 PM
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Yep. I hope it will increase in price to $10000 so I can be rich. I also hope it drops in price to $0.01 so I can buy a whole bunch.
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August 13, 2011, 02:55:44 PM
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Why would we want anything other than for bitcoin to inrease in value? None of us will ever have all the bitcoins we'd like to have, but it really doesn't matter, does it? If their value rises, you just get fewer bitcoins, which is ok, because their value will rise!

So what if their price is such that I can only buy 50 more instead of 100? Everything in the BTC economy will be adjusted to reflect their current value, and bitcoins are (technically, will be) deflationary, so those 50 BTC will actually be the same use to me later on as the 100 would have been.

Now, if I somehow manipulate the market to drop their value, by either dumping large amounts hopingmto buy back later, or by already FUD, I risk losing everything.

Am I happy with the number of BTC I own? Nope, and probably never will be, but as long as their value keeps climbing, I won't really care.
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August 14, 2011, 10:01:59 AM
 #4

it's exactly the same with gold. there are metals that are more rare but worth far less.

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August 14, 2011, 10:33:16 AM
 #5

As the bitcoin economy grows and/or reaches a more stable size where you're unlikely to see a huge number of new users relative to those already here, the price should stabilise... I think all we really need is significant enough trade volumes.

Hopefully now we've reached a point where the mass of new users brought in by the press coverage have settled in and we're finding a stable price now for the size of the economy.

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