Topic: Investment demand itself will drive bitcoin to success - page 2. (Read 1397 times)

I'm not sure that this is a fair fear in the case of Bitcoin.  I mean it is obviously possible, but bitcoin is basically a global democracy, and if the admins make some stupid changes, like increasing the number of coins mined per block, then major miners can ignore that change and continue on the old blockchain.

The press are always very keen to point out that bitcoin is ruled by a few people, but they couldn't really be more wrong. Granted an active dev team was a good thing to start with, but now is too late to make major changes, so I expect, block size aside, no hard forks in the near future.

good post, well - written. thx.

nice post. 

right now the challenge Is crossing the chasm to where early adopters will start using it, not just innovators.

At a higher abstraction level, all the investments are to give some return for invested capital. In order to do this, the invested project should produce something that satisfy certain kind of customer demand, and the production cost should be lower than the price paid by customer, to ensure the investment will get some positive return

From this view, investment in bitcoin is because bitcoin can satisfy customer's long term saving and anti-inflation demand. And the cost now (measured by fiat money) will be lower than the price paid by future customer

Actually, investors don't really produce this service, the anti-inflation feature is already built-in for bitcoin. However, if you don't inject your capital into a company, the company would never produce anything, no matter how profitable it can be. Similarly, without people's investment in bitcoin, bitcoin's anti-inflation ability will not be shown clearly

So, all the capital invested into bitcoin through mining or purchasing will directly or indirectly raise its cost and price, a rising cost/price will further strengthen its anti-inflation promise, give people more confidence to further invest

Money thrown into a company might produce products at much higher cost than price, then cause bankrupt. But money invested in bitcoin will all drive up its cost/price, contributing to its long term anti-inflation promise, which is the ultimate feature that customers seek

For example, many people bought above $500, but their purchase reduced the sell pressure and kept the price high for a while, so that more mining investment followed and eventually pushed bitcoin's cost/price to a much higher level than last bottom


This is not Ponzi or pyramid scheme, because even the user base does not increase at all, e.g. every month, same amount of people enter and leave, thus the monthly investment capital never increase, it would still defeat inflation after 4 years due to reward halving

This decentralized consensus is building up quickly. Once the consensus is widely spread, everyone will invest in bitcoin at a well defined pace: periodically buy and hold, cash out late and small, thus make it a top anti-inflation product

Unlike bitcoin, most of the other things in the world do not have continuously shrinking supply and total limit, they can not give the same promise (Land maybe similar but the supply of habitable land is continuously increasing)


Some people might question the validity of the artificial scarcity, because it is man-made. But does it really matter if it is man-made (bitcoin) or nature-made (gold)? As long as the scarcity is impossible to change, it is enough

The fear maybe comes from the fact that artificial scarcity can be changed if the protocol is changed. But then the general consensus of the participants will make sure that will never happen, protocol change of the scarcity rule will be discarded by almost every participants