The price of bitcoin is based on what people are willing to pay, currently, on the exchanges.
If over time, many bitcoins are lost to the blackhole, that is less bitcoins that can be placed on those exchanges.
Not only will the halvings cause less bitcoins to enter the economy, but also the blackhole bitcoins.
Price is always based on supply. Supply goes down, price goes up. That is pretty much it, in theory.
When will you see an actual effect due to lost coins?
Probably far in the future when 90% of all coins are mined and we all see how many coins are actually circulating.
Yes we can set a more accurate formula for monetary inflation on bitcoin:
Yearly inflation from minting - Yearly bitcoins lost in blackholes = Actual yearly inflation.I said in my previous post that if the blackholes swallow more bitcoins than it gets mined, then we will see a price increase.
However we dont necessarly have to wait until 90% mining completion, since bitcoin is getting more centralized, newbies lose all their coins to gambling sites or exchanges all the time, thus eventually the bitcoins will be held by less and less people.
It's easier for a gambling site to accidentally destroy 10.000 bitcoins by forgetting private key, than for 100.000 newbies who hold 0.1 BTC isn't it?
So the more centralized the ownership it becomes, the more bitcoin will be lost eventually.
Price is always based on supply. Supply goes down, price goes up. That is pretty much it, in theory.
Haha that is not true, that is Keynesian woodoo economics BS.
Price = Demand / Supply.While Supply is generally precise and measurable, Demand is more subjective and harder to measure, but demand is not always correlated with supply. In most cases it isnt.
The demand for a bread can be high, if the supply truck is stuck in the mud and it will delay 2 weeks, the price will still stay high and not move to equilibrium.
Demand and supply are in most cases not moving in parralel. That is some inefficiency of the markets.
When I stated price was based on supply, I was referring to how many bitcoin's were in circulation and on exchanges.
The theory that price = supply/demand, is common sense.
I did not mention demand because as supply decreases, demand will have to go up, otherwise blackhole bitcoins have no effect on future prices.
If bitcoin has no demand, then supply is worthless. Thus no need to mention demand in this bitcoin blackhole thought experiment.
