Topic: Supply & Demand :: Bitcoin+Altcoins & Consumer Investors (Read 28 times)

1. Yeah I agree first mover advantage doesn't last forever but they fail because something came up that was better than them in what they do.
Don't forget it's the standard of digital assets
So if another Bitcoin can exist with same history that surrounds Bitcoin,trust,adoption and community
Then it's possible.

2. Yeah profits beats decentralization, that's because many haven't been educated or see the essence of decentralization and disadvantage of centralization.
If Centralized system was so good, Bitcoin wouldn't have survive this long.
There are People that still care about Decentralization and might increase as Centralization continuously fall.

3. Again education and lack of knowledge. As adoption increases the vulnerabilities of these 'safe' tokens would become more pronounced.

About the inflation you had to give example with lands and APPL and not other cryptocurrency.
They can resist inflation but for how long
There's a reason many tokens with great utility has spranged up and died but Bitcoin still remains.

I agree with some of this:

1. Yes, Bitcoin came first, as I illustrated in the OP
2. Yes, Bitcoin is "more decentralized" than any other competitor
3. Yes, Bitcoin's platform stability (security) is higher than that of other coins

But my counterpoints are:

1. Being the first in the market only lasts so long. Most of the products people use on a daily basis are not the first company on the market. Why? Because markets quickly evolve and competitors come in.

2. More and more, consumers demonstrate that they don't care about "decentralization" and they don't even know what that means. Most altcoins (starting with ETH) are defacto centralized, and yet millions still invest in them. And most people use an app or a broker that's centralized anyhow. And then there's the ETFs. "Decentralized" is simply not a value that drives the market anymore.

3. Bitcoin is theoretically safer than many other platforms like ETH and Solana, etc. but... how safe do you need? Are people really concerned that their ETH is going to go disappear because the network gets compromised? I don't think so. The top-100 major digital currencies out there would appear to most people as... perfectly safe.

As for inflation, that's circular reasoning: any investment that performs better than the USD will "resist inflation". There are billions of acres of land in the USA you could buy in order to resist inflation. APPL resists inflation, as does NVDA, and so on. Of course these things can go down in price, but so could Bitcoin. Saying this is like saying, "Bitcoin is going to go up in price because Bitcoin is going to go up in price".


Are high school economics wrong? There's always more to add in top of basic principles, but that doesn't mean the basic principles themselves are wrong.



Yes, "desire" is just a synonym for "demand" in this context. I'm not sure what point you are trying to make (?).


Because there are millions more consumer investors wanting to buy digital currency now. Hence much greater demand. You are making my point for me here: the supply of Bitcoin doesn't really matter as compared to the demand.

And my thesis is that much of the new entries into the market are not yet aware of competitors--but the entire industry is very busy trying to teach them (and they have $billions in rewards by teaching them).

You explained the basic concept of demand supply and quantity availability, the reason why Bitcoin has been the major coin in the market is because of the static status of the 21 million supply, which by now has been reduced to almost half due to lost bitcoins and satoshi inactive wallets, so for sure bitcoin supply is now far lower that then demands a d this has caused a tragedy in the chain that makes bitcoin very expensive with low availability because those that gold bitcoin ain't willing to let it go by now.

So for sure this and many more have been the basis of Bitcoin value, liquidity and supply, and I believe we are still at the bottom of the ladder yet, as for Bitcoin, because a lot is still ahead and many more prices and market demands in going to spring forth as time goes on

You make a valid point and yes Demand is needed to complete the equation.
But scarcity isn't Bitcoin only advantage and edge.
Bitcoin still enjoys first mover advantage and has the largest and most established network
Which gives it edge in security, liquidity not to mention it's decentralization.
These has made it an attractive asset in the eyes of institutional investors as a store of value
And hedge over inflation.

Despite its simplicity and inability to perform complex utility
It has already built a form of Goodwill in the minds of investors that can be overlooked.
Though they have utility, what comes first is security, Consistency and ability to resist inflation.

you are using highschool economics

its not as simple as if there is more supply the price is less.. the lesser of supply the more the price
the actual economics is that there is a base cost of creation, where by if no one on the planet can make something for less than X, then no one wants to sell for less than X

then beyond that is the speculation above X based on many factors, one of which is availability(supply)
other factors are its utility, need.. its desire, and its popularity in trends/virility

but here is the thing
bitcoins 21m limit has nothing to do with market price setting directly because market orders are based on pricepoints of only selling 0.001-0.05btc
where the whole market orderbook is usually only about 200btc on the orderbook total and only maybe storing 2m btc in a exchange as a bank/custodian.. meaning the supply affecting price is no where near 21m

lastly, if price suppose to decrease with more supply then (rhetorical) why was the price $6/btc when there was only 10.5m btc but now its over 19m btc the price is 1500x more

..
there is a huge reason why other coins with less mining/minting costs have a lower price/speculation window

What drives prices in a free-flowing market? Supply and demand.

Here's what the "supply" looked like to average consumer investors in years past:

* They have only heard of Bitcoin
* Their mechanism for buying digital currencies only allows Bitcoin
* Non-Bitcoin alternatives are new and scary, and there are a lot of reports of them failing
* What few competitors Bitcoin has don't do anything that Bitcoin doesn't already do

Here's what "supply" looks like today:

* There are thousands of currencies out there people have heard of
* Many of them have big established brand names like ETH, DOGE, XRP, etc.
* Any app that allows you to buy Bitcoin also gives you the same seamless access to thousand of other currencies
* While there are still a lot of scams, the big established altcoins are now seen as safe
* There are currencies out now there that are far faster, cheaper to transact in, and still perfectly safe

Anybody convinced that Bitcoin can never ever go down in price because of the 21 million Bitcoin limit is missing the forest for the trees. The average consumer investor does not--and need not--limit themselves to Bitcoin, and technically-speaking, Bitcoin has no inherent advantage over its competitors, but alternatives have inherent advantages over Bitcoin (although most consumers aren't exposed to any differences between currencies in any case).

Yes, there is a sudden surge right now in Bitcoin's price, and massive new consumer investor adoption of digital currency apps: we're currently seeing a new load of millions of new investors get on board the digital currency market. But I would posit that these new consumers haven't yet learned what other consumers already have learned, but in time they will learn. In other words, they are simply in a different place on the learning curve.

But they are definitely going to learn, which portends a massive democratization of asset prices: the overall market cap of the market will be spread among thousands of instruments instead of just a few, since they are functionally interchangeable.

Focusing on the 21 million coin limit for Bitcoin is like saying your one acre of land is going to go up in price forever because your land's location is absolutely unique, which it is. But that's not how markets work, and it's not how supply and demand works. Scarcity only covers the "supply" side of the supply & demand equation.

Thoughts?