Why you can't be rich by owning crypto

[NioXioma]

The value of Bitcoin have increased by 707% over the last year,  and the average deflation is 96%

As the value of Bitcoin increases, it's owners would have a reduced incentive to do their job, and they would retire at a younger age(since they would have enough money to live the rest of their life). This would decrease the global productivity, even if the demand remains same(or even increase due to increased wealth). This would in turn increase the price of all commodities almost at the same rate as that of Bitcoin(law of supply and demand)

So even if your rich, and your net worth is increasing with increase in the price of Bitcoin, after everyone have adopted Bitcoins globally, even your richness wouldn't be that much rich, since the value of the things that can be brought with those bitcoins would actually grow the same rate as the bitcoin(due to decreasing productivity)

The illusion that the value of your Bitcoin wallet is increasing only works when you compare it with other currencies, and if every other currencies go extinct, the only way to measure our currency is by number of things that can be bought for one unit(purchasing power)

I'm not sure if that's how it works, correct me if I'm wrong(I'm not really an economist)

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[paxmao]

That is a very interesting argument, the only problem is that it has been the same argument used when bitcoin was at 1$, 10$, 100$, 1000$, 10000$.... do you follow me?

I admit that the growth is likely to be less in the future years as bitcoin is more mature and is gaining traction among institutions, however there are still many companies, countries and investors that do not have a piece of the pie and may be interested in having it. Even if they do not hodl, it contributes to the network effect that is one of the key drivers of bitcoin value. Price will follow value.

Regarding your arguments of people getting rich too soon, you should make the title "why not everyone can get rich with crypto". Not everyone will hold enough to be rich just like not all basketball players can be rich. Global productivity is a million years from being affected by "bitcoin rich" effect.

The value of Bitcoin would only increase as long as the our society is inflationary.

Kind of yes, the price of bitcoin in USD will grow as long as the politicians decide to print money. Do you see that not being the case?

[dihari]

So you take bitcoin like fiat money which is false. Here is how you can calculate 2 pizza with bitcoin price.
If you bought 2 pizza with bitcoin last year, you will spend 0.001 btc from your wallet. But if you want to buy 2 pizza with bitcoin right now, you can spend only 0.0003 btc.

If you bought 2 pizza with usd last year, you'll pay $30. But if you buy it right now you have to pay $40

Do you see the difference?

[NioXioma]

Well that's because we estimate the value of the pizza still with USD. But when every traces of all currencies, except BTC have vanished. Then we would have no currency to measure the value of BTC, so we would measure the value of Bitcoin by the amount of thing it can but(Purchasing Power). And with that, we would just give an arbitrary value(or the value that the others are trading their pizzas) to our pizza and continue with the value.

And, if the USD did existed alongside, our society would estimate value of a currency by it's demand(and not Purchasing Power), which would make the growth rate of Bitcoin smaller, over time, when everyone have adopted the currency, and new adaptation can only be made by children or alien beings, who have decided to use our currency

But it is true that Bitcoin still is to be adopted by a lot more people, so the value would indeed grow for more time, but not forever

[macson]

For example, let's say, you have 10 BTC and a pizza cost 0.001 BTC, after an year not only the value of you 10 BTC increases, but also that of the pizza. So relative to the pizza your BTC value haven't increased at all

comparing the price of Bitcoin with the price of Pizza??  In 2010 you will get a complete pizza with onions, peppers, tomatoes, and pepperoni with a value of 10,000 BTC but to get that pizza at this time you only need to pay 0.00017 - 0.00034 BTC.

Bitcoin is basically a digital asset like gold and not a stable currency like fiat so it is very difficult to compare it with the USD.

I'm not sure if that's how it works, correct me if I'm wrong(I'm not really an economist)

because you are a newbie who creates a new account here and not an economist either, all you have to do is learn about the history of Bitcoin and do not draw conclusions based solely on your views.

[NeuroticFish]

You wanted to say something, but mixed up apples with oranges and the result is just a... fruit salad. Sorry, but imho you've got it all wrong.

Because of its scarcity, Bitcoin price goes up. It's not only making up for the US dollar's inflation, as you wanted to imply. Bitcoin goes up also against gold. Bitcoin goes up also against the price of a pizza.
So a pizza after a year will be much less than 0.001 and much closer to 0.000135 (0.001 / 7, minus the US dollar inflation, give or take).

[Ucy]

I was wondering  few days ago:  "what if we just make the value/price of bitcoins to be based on the things of good values they were used for in the past. That will mean that each coin will be priced based on what they were paid/exchanged for in the past. If you get paid for providing good services/goods, your coins will be worth more in terms of price and value. If you provide bad services/goods, it will be worth less.
This will probably make the coins unequal or priced differently, and we wouldn't be needing to price it in dollars/fiats, stablecoins etc

[Taskford]

The value of Bitcoin have increased by 707% over the last year,  and the average deflation is 96%

As the value of Bitcoin increases, it's owners would have a reduced incentive to do their job, and they would retire at a younger age(since they would have enough money to live the rest of their life). This would decrease the global productivity, even if the demand remains same(or even increase due to increased wealth). This would in turn increase the price of all commodities almost at the same rate as that of Bitcoin(law of supply and demand)

So even if your rich, and your net worth is increasing with increase in the price of Bitcoin, after everyone have adopted Bitcoins globally, even your richness wouldn't be that much rich, since the value of the things that can be brought with those bitcoins would actually grow the same rate as the bitcoin(due to decreasing productivity)

The illusion that the value of your Bitcoin wallet is increasing only works when you compare it with other currencies, and if every other currencies go extinct, the only way to measure our currency is by number of things that can be bought for one unit(purchasing power)

I'm not sure if that's how it works, correct me if I'm wrong(I'm not really an economist)

You can only say that you are not rich for taking bitcoins if you didn't take your profit when the right time came especially when bull run strikes and it hits the new all time high. But if you keep hodling eventhough the market crash well you cannot really became rich from that since instead you are sitting with a pile of cash already you decide to became greedy and earn less when price drop badly.

[joniboini]

The illusion that the value of your Bitcoin wallet is increasing only works when you compare it with other currencies, and if every other currencies go extinct, the only way to measure our currency is by number of things that can be bought for one unit(purchasing power)

It's not an illusion since with 1 BTC you can probably buy a good house in a developing country this year, compared to a few years ago when 10k BTC is only a good amount for pizza. If we reach the point where fiat or other currencies are deflationary then the market will eventually decide the price accordingly. You also need to measure that the supply of those things will continue to increase, it's not as if the supply will be stuck and everything becomes scarce.

[NioXioma]

Well I don't mean anything like that. What I meant, in simple terms is that, when everyone has already adopted Bitcoin, the growth in value would actually decrease by a lot. Of course, I'm a Bitcoin investor too, and it's value would grow but not forever

[Poker Player]

I agree with the others, that is a thought you have pulled out of your sleeve, which has a certain coherence but is fallacious. If you can't get rich holding Bitcoin, you can't get rich with anything, as Bitcoin has been the most profitable asset of the last decade and looks set to be the most profitable asset of the next decade. It's all a matter of quantity, of course, and if you only own 1,000 satoshis today, you're probably not rich, but those who bought whole Bitcoins when they were worth little, and have been able to hold them, are rich today, among them a few members of this forum.

[dihari]

What I meant, in simple terms is that, when everyone has already adopted Bitcoin, the growth in value would actually decrease by a lot.

Why in the world you think that increasing adoption of bitcoin will decrease its value?! Did you know that bitcoin supply will stay only 21m forever? If today we can calculate btc adopters is 1000 people, and tomorrow is 2000 people, with that limited supply please explain a simple economic law of supply and demand.

[arwin100]

What I meant, in simple terms is that, when everyone has already adopted Bitcoin, the growth in value would actually decrease by a lot.

Why in the world you think that increasing adoption of bitcoin will decrease its value?! Did you know that bitcoin supply will stay only 21m forever? If today we can calculate btc adopters is 1000 people, and tomorrow is 2000 people, with that limited supply please explain a simple economic law of supply and demand.

I don't know what he's trying to explain in that statement since if you think more adoption will came for sure the value will rise since bitcoin by now is base in supply and demand and if more demand will came the value increase expext that many will get a confidence since the adoption will give a greenlight on this.

Maybe he's afraid for dump but there's nothing to worry about this since the adoption rate is quite good these days.

[proTECH77]

Many people never still understand how to use crypto to invest  and start expecting something good from that particular investment. Since bitcoin price is still encouraging in the exchange market show that, those who still own bitcoin in their wallet can still smile, if only they can understand that, this is the season of profit making in the market. Those who really understand the season we are, will really benefit from this rising of bitcoin in the market.

[iamsheikhadil]

I don't have much knowledge in economics, and I understand what you are trying to say, but isn't it very wrong to assume that most people who might get rich due to Bitcoin will retire early and stop working? Also, it's a big generalization that majority of crypto holders are actually the youth! Because no one has done a survey of crypto holders and their life span etc. Plus, if deflation occurs, and prices gets affected, wouldn't that reverse the people who planned to retire early again forced to work?

[goldade]

The value of Bitcoin have increased by 707% over the last year,  and the average deflation is 96%

As the value of Bitcoin increases, it's owners would have a reduced incentive to do their job, and they would retire at a younger age(since they would have enough money to live the rest of their life). This would decrease the global productivity, even if the demand remains same(or even increase due to increased wealth). This would in turn increase the price of all commodities almost at the same rate as that of Bitcoin(law of supply and demand)

So even if your rich, and your net worth is increasing with increase in the price of Bitcoin, after everyone have adopted Bitcoins globally, even your richness wouldn't be that much rich, since the value of the things that can be brought with those bitcoins would actually grow the same rate as the bitcoin(due to decreasing productivity)

The illusion that the value of your Bitcoin wallet is increasing only works when you compare it with other currencies, and if every other currencies go extinct, the only way to measure our currency is by number of things that can be bought for one unit(purchasing power)

I'm not sure if that's how it works, correct me if I'm wrong(I'm not really an economist)

As much as your argument looks great in theory, it is actually impossible practically. There can never come a time when bitcoin won't be pegged against another currency. There will always be the US dollar which means you can become rich by hodling bitcoin.
Consider how much I'd worth right now if I had bought 50000 bitcoin when it was worth $10 and I'm hodling till now . Consider the profits I'd have made over the years.
Secondly, even all currencies disappeared one way or the other, bitcoin will be valued in something else. Gold, silver or oil. Trust me, something will be used.

[tyz]

That is a very interesting argument, the only problem is that it has been the same argument used when bitcoin was at 1$, 10$, 100$, 1000$, 10000$.... do you follow me?

I had the same thought when I read the OP  The arguments in the OP have been going on for as long as Bitcoin has been around. I think the OP is making the mistake of trying something new like Bitcoin with old academic economic thinking. These are no longer valid in my opinion, see Peter Schiff who is a perfect example.

[Mauser]

The value of Bitcoin have increased by 707% over the last year,  and the average deflation is 96%

As the value of Bitcoin increases, it's owners would have a reduced incentive to do their job, and they would retire at a younger age(since they would have enough money to live the rest of their life). This would decrease the global productivity, even if the demand remains same(or even increase due to increased wealth). This would in turn increase the price of all commodities almost at the same rate as that of Bitcoin(law of supply and demand)

So even if your rich, and your net worth is increasing with increase in the price of Bitcoin, after everyone have adopted Bitcoins globally, even your richness wouldn't be that much rich, since the value of the things that can be brought with those bitcoins would actually grow the same rate as the bitcoin(due to decreasing productivity)

The illusion that the value of your Bitcoin wallet is increasing only works when you compare it with other currencies, and if every other currencies go extinct, the only way to measure our currency is by number of things that can be bought for one unit(purchasing power)

I'm not sure if that's how it works, correct me if I'm wrong(I'm not really an economist)

This sounds quite interesting, but I see a problem here. For your arguments to be right it would mean that everybody is actually owning bitcoins. So everything would rise with the price of bitcoins if we all would profit the same way from bitcoins. But this is not the case, in my opinion owning bitcoins or crypto coins in general is pretty similar to owning stocks. We are seeing rising stock prices for the last 40 years but yet most people own only a very little stocks or don't diversify their stocks enough. So the price of goods doesn't move with stocks and it shouldn't move with cryptos either.

[20kevin20]

Well I don't mean anything like that. What I meant, in simple terms is that, when everyone has already adopted Bitcoin, the growth in value would actually decrease by a lot. Of course, I'm a Bitcoin investor too, and it's value would grow but not forever

By the time everyone has adopted Bitcoin, we will be rich AF. That's if Bitcoin ever gets adopted by everyone for real.

Of course Bitcoin won't grow forever. In 2013, it needed an almost 10x drop in order to return to where it is today. In 2019, it needed a drop from $20k to almost 10x lower to return to where it is now. Markets aren't forever bullish. Bitcoin has never been forever like this, it's just an illusion in your mind that it never stops growing up. It does, temporarily, but it always returns to higher and higher levels.

As long as Bitcoin's block reward decreases, if the market conditions of today (adoption levels + optimism + no more oppression from govs etc) stay the same or get even better, the price will increase substantially as time goes by.

Bitcoin is 2000% up from the lowest point of 2020. It's insane, yet people still don't get it: Bitcoin's death has been called so many times, yet it never happened. And it probably never will anyway!

[LUCKMCFLY]

The value of Bitcoin have increased by 707% over the last year,  and the average deflation is 96%

As the value of Bitcoin increases, it's owners would have a reduced incentive to do their job, and they would retire at a younger age(since they would have enough money to live the rest of their life). This would decrease the global productivity, even if the demand remains same(or even increase due to increased wealth). This would in turn increase the price of all commodities almost at the same rate as that of Bitcoin(law of supply and demand)

So even if your rich, and your net worth is increasing with increase in the price of Bitcoin, after everyone have adopted Bitcoins globally, even your richness wouldn't be that much rich, since the value of the things that can be brought with those bitcoins would actually grow the same rate as the bitcoin(due to decreasing productivity)

The illusion that the value of your Bitcoin wallet is increasing only works when you compare it with other currencies, and if every other currencies go extinct, the only way to measure our currency is by number of things that can be bought for one unit(purchasing power)

I'm not sure if that's how it works, correct me if I'm wrong(I'm not really an economist)

Well, the labor of some jobs will never happen, some Bitcoin Hodlers have companies and businesses apart from Bitcoin, although Bitcoin represents a great fortune for them, in the same way they must keep track of the price, some sell a part of their bitcoins, others panic and sell, some buy bitcoin to keep increasing their wealth.

World productivity does not decrease, because not all people own bitcoin, some have only fractions of Bitcoin and others want to acquire it but due to the increase in price it becomes more and more difficult for them, when compared to other currencies it is obvious that it is higher, because Bitcoin is the King currency, everything is in the comparison with the FIAT currency, dollar, euro, local currencies of some countries, also in comparison with gold it is very valid, in fact Powell has already named a similar issue, so even the Fed is aware of this.