If we check products traded on the markets we will notice they have two uses. One is of course trading, the other is a specific purpose. The first use is what constitutes speculative demand. The second use is what constitutes real demand. For example. People can desire to purchase wheat or gold because they want to sell them later. That is speculative demand. But these products are also used for specific purposes. Wheat for nutrition, while gold for making jewelry, ornaments, electronic components, etc. Demanding wheat or gold for these purposes is a real demand.
A similar is true for financial products. They are used for both trading and specific purposes. The purpose of stocks is to represent shares of ownership in organizations that sell goods or services to make a profit. Demanding stocks to benefit from these profits or eventual liquidation of equity is a real demand. The purpose of bonds is to represent debt that companies and other entities must pay in the form of face value and coupons. Demanding bonds to receive these payments is a real demand. The purpose of fiat currencies is to represent debt that individuals, organizations, or governments owe to commercial and central banks. Demanding fiat currencies to pay a bank loan or repay a government bond is a real demand.
Bitcoin and crypto, however, have only one use - trading. Anyone who has ever bought or mined them must ultimately sell them to another speculator because there is no specific purpose for which they can use them. When you hear about the uses of crypto, such as 'transferring funds online', 'spending money privately', 'low-cost money transfers', 'day-to-day purchasing of normal goods', or 'buying drugs' this is saying the same thing with different words. All that just means exchanging products, services or fiat currencies for these virtual coins. Trading is the only use they have.
A situation where something is traded on the market but has no real demand has never been seen in human history. The only reason why products are created and come to the market is because they have real demand that uses them for specific purposes. Speculative demand is only a byproduct of real demand. Speculators on the market make predictions about how valuable a product is to those who use it for specific purposes and then pay prices according to those predictions. For example. By wheat having a nutritional purpose, speculators can tell how valuable it is to consumers and whether prices are cheap or expensive. Similarly, by fiat currencies having the purpose of paying debt to the banking system, and by debtors facing foreclosures in case of default, speculators can tell how valuable they are to debtors. No speculator would give a high-end vehicle for a specific number of currency units if they see that banks issue that number of units by taking low-end vehicles as collateral. On the other hand, debtors would be happy to accept such vehicles after getting loans, because in case of default, the banks would foreclose their low-end vehicles.
Given that crypto has no specific purpose there is nothing to predict. There's no way to tell whether prices are cheap or expensive. In crypto, speculators pay prices solely on the hope that other speculators will pay them higher prices. They essentially believe in the growth of speculative demand in the future. Crypto is therefore a perfect example of the greater fool theory.
Throughout history, there have been situations of big discrepancies between real and speculative demand. This caused market bubbles, the most famous of which is the tulip one. But never before has there been an infinite discrepancy, with real demand being zero while speculative demand above zero.
All bubbles eventually but inevitably pop. Then, massive sell-offs cause prices to decline, often quite dramatically. The real demand is what stops prices from further decline. With crypto lacking such demand, there is nothing to stop the decline, and prices inevitably must fall to zero.
The bolded paragraph is where you are wrong.
BTC has value in the following manner.
It is a flight to safety product. It never be traded. You can stack it to an address that no one know you have.
You can flee your country in a disaster or a war.
You have your flight to safety stashed safely on the block chain.
At this point I have shown you to be wrong and please just archive the thread. As it is a trolling hit piece.
You will be dead and buried long before BTC and crypto goes to zero in all, but one case that would be total destruction of earth by a cosmic event.
BTW this is true for all of us.
are you getting fun? I don't see the point to discuse with someone that don't want to see the obvious, @JamesNZ is a bitcoin hater just like the other guy jvanname.
