Bitcoin as Store of Value - Not Sustainable - page 2.

Iranus

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Quote from: ulhaq on December 12, 2017, 01:46:36 PM

as more people hoard, there are fewer transactions, and thus not enough fees for miners.

This may seem intelligent, but it's not necessarily true. Even if people are mainly hoping to hoard, it would still be traded in a relatively liquid market, and there would be a fair number of exchanges between BTC and fiat currencies or between BTC and gold.

The main reason why BTC could not be used as a store of value in the long term isn't really to do with miners - it's mainly to do with utility. Any cryptocurrency can have utility, so Bitcoin doesn't inherently preserve its value if it doesn't have utility.

BTC will generally function best as an alternative currency for certain niches.

kueyen

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Quote from: ulhaq on December 12, 2017, 01:46:36 PM

Quote from: Hydrogen on December 11, 2017, 08:30:31 PM

On the contrary, the value of bitcoin should rise consistently as it proves itself a more reliable and cost effective means of storing value than other investment vehicles. By the time, bitcoin's limited supply becomes an issue we will probably have seen multiple recessions and economic meltdowns, we'll likely have seen multiple stock market crashes and possibly even the crash of the dollar and euro.

If bitcoin holds steady without any major malfunctions during what could be a difficult future in terms of economic and financial forecast, its value should climb steadily in comparison to other stores of value.

You are missing my point, the reason for this thread. I agree that the price of bitcoin will go up. The issue is, as more people hoard, there are fewer transactions, and thus not enough fees for miners. That is why I do not see how bitcoin is sustainable if it is only a store of value.

I see what you mean, but if the price constantly rises, people will inevitably regard bitcoin as an asset, because you wouldn't want to pay for your grocery with bitcoins if you know that today a certain amount of btc costs $10 and tomorrow it will cost $12; in such a case you would choose to pay with fiat currency and hoard your btc.

I think in order for btc to become a daily mode of payment, the price has to stabilize first. But I don't see that happening in the near future.

odolvlobo

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Quote from: ulhaq on December 11, 2017, 08:02:45 PM

I hear more and more by people that they consider bitcoin more of a store of value (eg, gold replacement) than as a currency, especially as the transaction fees go up. I have also heard many people say that even if bitcoin is only used as a store of value, and not as a currency, it has utility.

But this is not sustainable. Imagine bitcoin prices continue to increase and eventually all the coins are mined. There are not many transfers because people are mainly hoarding. Thus not much transaction fees, which is the only source of income for miners. Hash power reduces dramatically, and so network security deteriorates.

It seems to me that the only solution would be for bitcoins to be perpetually made available (no limit at 21 million).

Beanie babies were a "store of value" until they weren't. The ability to store value only has utility if there is value to store.

ulhaq

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Quote from: Hydrogen on December 11, 2017, 08:30:31 PM

On the contrary, the value of bitcoin should rise consistently as it proves itself a more reliable and cost effective means of storing value than other investment vehicles. By the time, bitcoin's limited supply becomes an issue we will probably have seen multiple recessions and economic meltdowns, we'll likely have seen multiple stock market crashes and possibly even the crash of the dollar and euro.

If bitcoin holds steady without any major malfunctions during what could be a difficult future in terms of economic and financial forecast, its value should climb steadily in comparison to other stores of value.

You are missing my point, the reason for this thread. I agree that the price of bitcoin will go up. The issue is, as more people hoard, there are fewer transactions, and thus not enough fees for miners. That is why I do not see how bitcoin is sustainable if it is only a store of value.

pooya87

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i do believe that something will happen soon. we won't need to wait for these long term scenarios after years when price is so high or fees are so high,...

pretty soon either fees go so high that nobody uses bitcoin anymore and it stops being a currency and soon it stops being a store of value and it will eventually be abandoned because an altcoin will replace it. it is even possible that the shitcoin called bitcoin cash to rise and replace bitcoin for a while before it is also replaced by an altcoin.

or we decide to do something about the scaling issue that bitcoin is facing. so far with blocks that can not even reach 1100 kB we can say nearly nobody is using SegWit, this has to change. then we need this LN which they kept talking about to see what that will do for bitcoin. if these solve the issue for good then we will be ok. but if onchain transactions continue to rise in fee like this, i don't see much chance for bitcoin really.

Hydrogen

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On the contrary, the value of bitcoin should rise consistently as it proves itself a more reliable and cost effective means of storing value than other investment vehicles. By the time, bitcoin's limited supply becomes an issue we will probably have seen multiple recessions and economic meltdowns, we'll likely have seen multiple stock market crashes and possibly even the crash of the dollar and euro.

If bitcoin holds steady without any major malfunctions during what could be a difficult future in terms of economic and financial forecast, its value should climb steadily in comparison to other stores of value.

Introducing infinite supply is to invite the same economic maluses venezuela is experiencing at the moment with the bolivar. Hyperinflation is a real thing. Satoshi's vision was to implement an algorithmic method of currency supply and it might be said that bitcoin's current success is derived from this. If bitcoin had infinite supply and an arbitrary subjective method of supply, it would likely never have enjoyed the success it has.

Cryptopher

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Keep it dense, yeah?

Quote from: ulhaq on December 11, 2017, 08:02:45 PM

It seems to me that the only solution would be for bitcoins to be perpetually made available (no limit at 21 million).

There are altcoins which follow that pattern, and some have a significantly larger sum.

Of course, Bitcoin wouldn't be Bitcoin if more than 21 million could be mined.

What you have to remember is that there are potentially 2.1e+13 units available. At this rate a single coin will be enough to buy a house, people are turning to mBTC and such.

Transaction speeds need to increase, more off-chain activity is needed, transaction fees are higher than ever (in terms of $ value) - that's a huge blocker for many...

Walrus1

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I think that often. Bitcoin was meant to be an currency, despite what I hear somewhere. If it has become a accepted store o currency it would need to be long excepted as such and we have people saying oh it's the new gold despite gold being around for 1,000s of years. Quite redicoulous to compare it to gold. We will see. It could very well be a bubble but I'm in it and like it and if it does evolve into a widely excepted currency, perhaps one major retailer could start it, it would be a great positive change

ulhaq

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I hear more and more by people that they consider bitcoin more of a store of value (eg, gold replacement) than as a currency, especially as the transaction fees go up. I have also heard many people say that even if bitcoin is only used as a store of value, and not as a currency, it has utility.

But this is not sustainable. Imagine bitcoin prices continue to increase and eventually all the coins are mined. There are not many transfers because people are mainly hoarding. Thus not much transaction fees, which is the only source of income for miners. Hash power reduces dramatically, and so network security deteriorates.

It seems to me that the only solution would be for bitcoins to be perpetually made available (no limit at 21 million).

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