Topic: Price Matters... And Here's Why - page 2. (Read 1365 times)

Which is kind of a huge issue we're facing. For the price to go up, we need more people. But people put money into it because they want to make money and get rich. It leads us to the perpetual cycle we've been in for a while now. Something big has to occur to break us out of this. Basically we need MORE money dumped in but NOT as a way to get rich and dump, but rather as a way to create a sustainable economy. If I buy in at $1 and dump at $1200, I helped grow it and then helped dump it back down, causing a net effect of zero on my own part.

I generally agree with all of that. But why I personally think price is the biggest determinant is because high price is what's attracting the average joe, not the technical aspect of bitcoin. Price has a larger impact on headlines than any other characteristics of bitcoin.

Everyone knows that price matters, the only people trying to fight it are those who are trying to avoid admitting that Bitcoin is in an extreme crisis right now that calls for mindful actions.

I keep hearing over and over that price doesn't matter on Bitcoin. The general idea behind that is that "it's a method of transferring funds, so whether it's $1 or $1m, it still serves its purpose." This is flawed. Here's why:

1) As long as it keeps going through swings up and down, it's difficult to use it solely as a way to transfer funds. I buy $100 worth now to send my friend so he can cash it out real quick for $100, only to find that in the 10 minutes it took me to send it to him, it's now only worth $85. Now I'm $15 short. So either I have to over-buy or deal with the constant fluctuations.

2) The fluctuations are causing a lot of holders and speculators. By the very nature of this, they are like stocks and will fluctuate up and down, preventing #1 from being fixed.

3) The price is going to be altered according to how much money comes in and out of the system. If people use it solely as an intermediary between fiat and fiat, the same amount would need to go in as goes out on a daily basis to keep things steady. With Bitcoin's low market cap ($10b or whatever it is right now isn't even that much considered to a lot of businesses), this is too easy to manipulate even if it was being used as many feel it's intended to be used like.

4) The fix to #3 is to raise the price up. The higher the price is, the harder it is to manipulate. If I have $1m and the cap is $100m, I have a lot more power than if I have $1m and the cap is $100b. The latter is like a drop in the bucket.

Basically what all this leads to, from a strict economic point, is that the price has to go up for Bitcoin to be used like everyone wants it to be. And then it has to stabilize. The lower it gets, the easier it is to swing up and down. This is why price matters.

Please feel free to dispute this with me if you want. I'd love to hear your takes on it. After following the market, events, etc. for quite a while now, though, this was my conclusion. Do note, though, that I am in NO way saying that Bitcoin shouldn't be used as a currency, and in fact I do agree with that. But the current market doesn't support that.