Okay, I have a question(s) about something I've been pondering since I got into crypto recently. (inb4 newfag etc etc.)
- When one invests in BTC (por ejemplo), it means that that one believes that it is undervalued. Believing that it is undervalued => believing that the amount&diversity of goods&services that can be exchanged for BTC will increase in the future. Correct?
- In order for this network of goods&services to increase, people need to be willing to participate in this network/economy; i.e. exchange their goods/services for BTC.
- But (this is my main contention), if I believe that my bitcoin will be worth (much) more in the future, why would I want to buy something with BTC now; i.e. why would I want to exchange my BTC for something worth the current price of BTC when I believe my BTC will increase (significantly) in the (near) future?
That is, there seems to be tension here: that belief in the growth of the BTC goods/services network (the things bought and sold with BTC) actually prevents the network from growing.
Is there a name for this? I'm sure this has been discussed in econ and the bitcoin community but I don't even know what search terms to use to find it. inb4 someone calling me low iq. I have a strong math & comp sci background but my knowledge of the lower-tier sciences is weak.
>i believe my 1 USD is worth 2 USD >i'm going to use my 1 USD to buy 4 coins because i think that those 4 coins will increase in value and be more beneficial than my 1 USD
Matthew Baker
1. people hold for different reasons. the main thing to understand its a lot less inflationary than 99% of other currencies, its not so much a bet BTC will go up but a bet that other currency will go down.
2. yes check out metcalfs law
3. its called supply and demand
Adoption drives the actual price while speculation is what causes the wild trends in volatility. Imagine if a government announced their reserves in BTC, how would this change your perception as a store of value.
Benjamin Sullivan
this
Bitcoin is a store of value. Artificial demand created by people's mind, a bit like gold. It's also like a piece of a collection, you buy the privilege of owning a part of the original crypto blockchain, the one that will be considered forever as the first of the new asset class.
Christopher Sanchez
is that an honest answer? it's just considered a store of value? is that what people mean when they say btc is digital gold?
Leo Allen
So greater fool, or similar thought process.
Jose Barnes
If you have a currency available that becomes less and less valuable over time, and one that becomes more and more valuable over time, which one will you hold? Why would you hold fiat instead of Bitcoin if fiat loses you wealth and Bitcoin increases it. The game theory clearly favors BTC. Of course for this to work, the public has to have a relatively high confidence in BTC vs fiat. This could certainly happen, should the masses wake up to the utter joke most fiat currencies have become (trillions of dollars printed in the last decade, manipulated inflation figures etc..).
Jose Bennett
New currencies start like this, the idea of BTC as a global currency only make sense in the long run (100-200 years), it is normal in the early phases to just be a pump and dump scheme.
Josiah Miller
Yes. Nobody really believe that Bitcoin will be used massively in real life, there is much better technology for that.
Logan Miller
I understand fiat currency. I read Creature from Jeckyll Island when I was 15 (shout outs to Alex Jones for the reco).
But: why would people choose something as a store of value unless they believe that they can eventually exchange goods and services for it?
Nicholas Cooper
People were always using 3 types of coins - made of gold, silver and copper. Gold was used more as store of value, silver for moderate purchases and copper for cheap goods. When crypto replaces fiat, BTC will take place of gold, while BCH will become digital era silver, and some altcoins will be used as copper. Ppl will use their BTC for purchases very unwillingly. Why buy a mansion today for 10k satoshi while in a year it gonna cost 5k satoshi?
Ryder Jenkins
>while BCH will become digital era silver no way lel
Juan Turner
1: yes but it is technology so besides the traders looking for increased demand vs diminishing supply, there is also belief in a high increase in adoption and use cases. 2. yes, adoption. lightning network is the bridge from store of value (gold) into buying coffee. The current network is not fit for the high transaction number of regular mass usage. There is no shortage in verification nodes or miners. 3. do you think gold is going to be worth more in the future? Go spend that in a store. Bitcoiners will probably die before ever spending their shit and the network is driven by scarcity. Since not many markets besides shitcoining are directly translateable to bitcoin the value is driven by the greater fool theory. The majority of buyers now are hoping to sell in the future for a higher price.
Eli Long
I don't think anyone really knows if Bitcoin will actually see mass adoption as a currency. You'll find a lot of different opinions on that. One of the reasons why you could make so much money holding it is cause you're early, before anyone can really say how it's going to pan out. It's a gamble, that's why you shouldn't put in money you aren't willing to lose. For me, the main reason to hold it is that we're in a speculative bubble for just about every asset excluding crypto and precious metals. When things come crashing down, there else will people put their money?
Jackson Thompson
In 2011 when I found bitcoin, it was for p2p transactions. Freedom from dealing with paypal or regulations on buying/selling digital content. I've come to accept its current purpose is a store of value and to move your money outside of inflationary fiat. Since bitcoin is world wide, its a bigger issue in a lot of places and an issue itself in all places. A lot of people are still pushing for transactions and I think transactions will grow again with better payment apps and such. But really, exchange some Bitcoin into like USDC, move it onto the SPEDN app, spend that in a store. That stuff will be getting bigger. Go to a website, buy something, QR pops up, scan your phone, you paid, etc. off chain through apps. Its more than that, its a MLM, a ponzi, digital gold, a means of transaction, its all those things right all creating demand and pulling it in different directions. Pretty crazy. The first digital currency free from government/central bank control. Its like its own special asset class. All these alts can be destroyed by the gov but BTC is P2P, its unstoppable as a means of moving money around or transacting.
If someone asked for a specific answer, Id say yeah its digital gold now. Its even better than gold if you buy into the meme of finding new gold mines, being able to mine gold under the ocean, bringing in asteroids full of gold. But bitcoins amount is fixed unlike gold, so its more rare.
Also, unrelated, when iPhone first released someone released an app that was just a red jewel that would show up as the icon for like $1k. A shit ton of rich goofy people bought that just to have a $1k red icon on their phone. So youll also be having people who want to buy some just to say they have some. Richfags around the world buying it just for street cred and to own it but not really caring much about its value since they are already rich.
Sebastian Young
shoo shoo venezuelan pajeet
Liam Wilson
You forget that buying and selling is also currency arbitrage. Its value is relative to whatever currency it is traded against.
Imagine being Turkish and having your life savings in Lira depreciate by 40% relative to the euro or dollar. Then look at the euro and dollar depreciating 235% against bitcoin.
These are second and third order network effects we are seeing as well. Also, distribution is a function of time, even if we cannot tell broadly what the distribution is, it is just getting flatter and flatter (fat tail) as time goes on.
Wrong the literal first paragraph in the Bitcoin white paper says it's peer to peer electronic cash >Fuck of with your store of value, you trendy bandwagon fuck
Congratulations! You've discovered that bitcoin is just a way of gambling with some fancy math behind it.
>hurr durr it's a store of value that fluctuates wildly stfu
Daniel Turner
Would anyone mind telling me why you can’t spoof a new block onto the blockchain? Or must I read the whitepaper
Asher Lee
Retard it's not what's written in the whitepaper that matters... We're 10 years later.
Kayden Bennett
>But (this is my main contention), if I believe that my bitcoin will be worth (much) more in the future, why would I want to buy something with BTC now; i.e. why would I want to exchange my BTC for something worth the current price of BTC when I believe my BTC will increase (significantly) in the (near) future? Look up "deflationary spiral". The exception with btc is that it is used in a complementary way in respect to usd, so that the problem doesn't exist. And so btc became like gold, store of value dictated by its limited supply. A safe haven.
