Topic: Supply & Demand :: Bitcoin+Altcoins & Consumer Investors (Read 469 times)

This entire thread has been about the very opposite of this, and the OP specifically made the point that Bitcoin's price point is not particularly related to the fact that there is the 21M limit since that doesn't speak to whether one wants Bitcoin in the first place.

The commenter above implied that Bitcoin has a unique advantage over its competitors because of the 21M unit limit, which is false.

you keep thinking (endlessly) that bitcoins price is solely determined based on the supply
again you are using highschool dumb economics

so one more time
lets use carrots as a comparison
if around the world any retailer can only purchase carrots at wholesale at $0.10.. and no one on the planet can grow carrots for any less
then this produces a base cost which retailers then speculate ABOVE when they sell carrots
if a carrot is then retailed at $20 people will argue that its an unjustified premium and that as a normal carrot its not worth the price so the price wont go above $20
if however there was a special carrot that was organic and hand picked and then selected for its precise shape and due to where it was grown has a special taste thats better then normal carrots. where the harvest cost was $50 and the retailer speculated to sell it at $200. more people would see the $200 price more justified, but would not be expected to pay more then $5000 for a carrot

lets use a car as a comparison
if around the world any dealership can only purchase cars at wholesale at $15k.. and no one on the planet can manufacture cars for any less
then this produces a base cost which dealerships then speculate ABOVE when they sell cars
if a car is then sold at retail for $100k people will argue that its an unjustified premium for a normal car and not worth $100k
if however there was a sports car thats most efficient manufacturing cost on the planet was currently $70k meaning no one would sell it for $50k at a loss, but people would see it as justified to pay $98k right now for it and think that is a good deal, where as $300k might be an unjustified premium right now

so using the examples
bitcoin is the sports car..
ethereum is a premium carrot

things are not priced based on pure speculation.. things do have underlying cost.. which THEN if the added speculation on top is too much, then people decide if the speculated add on is worth it or not

bitcoin is not a thing of a price of $98k with $97.990 worth of speculation
bitcoin is a thing of a price of $98k with ~$20k(20% speculation ontop of value)
ethereum is a thing of a price of $3.6k with $3.55k(98% speculation ontop value) whereby this hyped up bubble speculation is not due to direct feature/benefit/utility desire of ethereum, but instead pumped and pegged to bitcoin market events

Almost all of Bitcoin's competitors are limited in their supply. This is not a unique advantage.

That's almost entirely true and 21 million bitcoins available will make themselves a very valuable diamond because something that is considered unique with a limited supply will continue to increase in price. But you also have to realize that the more something is created, the greater its value will not necessarily be because in the economic formula of supply in the sense of supply and demand plays a fairly important role. Is not always determined by that because there are other reasons why bitcoin is so valuable, but the basis still leads to the existing supply because that's how people see bitcoin as unique to invest in.

the measure of market capitalisation is MEANINGLESS

its just the price of one unit multiplied by total units..
its not a measure of hidden fiat stored somewhere that people have invested
the market capitalisation does not represent that 45% of the crypto system is 45% of the entire industry/community

using just $1 i can create a $10trillion market capitalisation
EG create an altcoin of 10trillion units. sell 1 unit for $1. and instantly have a market cap of $10trilllion

so please dont pretend the market cap has some meaning of display of utility or community adoption.. its just a multiplication math game of single units

something having a large market cap does not mean it has huge adoption. it just means that a single unit is priced at X and there are Y units


bitcoin did not pump due to trump. it pumped because itts in the pump season of bitcoins economic cycle. its on its schedule to pump around now
(all 3 halvings (2024,2020,2016) seen a pump 7 months after halving

but yes there are some naive idiots that do not do their research to learn about bitcoin economics, that then try to make it all about US politics because they want to fan-boy and fame up their favourite celebrity that has some political/social media presence, pretending their famed idol is the cause of all events, like some modern jesus

You mean this? Yes, reminds me of something.  

Of course. Speculation first and foremost. (Or one could argue, speculation only.) I don't disagree with that. I disagree with comparing bitcoin, which is an asset that has a fixed supply, with a shitcoin, that it just some made-up token, whose supply can arbitrarily increase at will. In general, I think market cap is a meaningless metric when it comes to centralized tokens with unlimited supply.

There's a whole thread somewhere here about Bitcoin maximalism (too lazy to look it up right now). When 45% of a three trillion dollar market is non-Bitcoin products, that sure seems like a sign that those products have something to offer that people aren't getting from the first-mover.


Yes, the market price of all digital currencies is subject to--and even based on--the random machinations of the US Congress .

This is why many in the Bitcoin community are so extremely political these days, and why so many hang on everything the US government does, rooting for whatever politician or party who will artificially pump their coin.

One altcoin that is decentralized is Monero but it is a privacy coin, that means it has very big risk of being attacked by governments and delist by exchanges. With Bitcoin, after many years especially after having Bitcoin Spot ETF approvals in the USA, risk to be delisted from centralized exchanges is, in my opinion, zero.

With Monero, when such delisting news appear for Monero, price will have shock and no holders of Monero want it.

In security of transaction, not privacy, with about 1 hour for Bitcoin transaction, it requires about 10 days for a Monero transaction.
https://howmanyconfs.com/

May I interject in this discussion to highlight how flawed this metric truly is? You're essentially comparing apples to balloons. Market capitalization takes on a completely different meaning when the supply of a good is fixed and predictable for hundreds of years into the future. Most shitcoins are artificial pump-n-dump schemes, with supply controlled entirely by their developers. It's entirely plausible for these developers to expand the money supply at will, to make themselves richer. (For instance, ETH can be infinite.)

But, moreover, just because a few speculators buy a few hundred dollars' worth of dog coins at $0.01 each, it doesn't mean the remaining trillion coins will sell at the same price. To give you an example. Let's say that I create DOGGY and place 1 trillion of them on myself. If DOGGY goes on $1, because there's high demand for some time with very few sellers, it'd skyrocket my shitcoin to $1T market cap, but I think it's completely understandable that I will be incapable of selling all trillion of them to someone at $1.

Bitcoin, on the other hand, has large investors who purchase billions of dollars' worth of bitcoin at the market price. In simple terms, shitcoins are bubbles, and their market cap provides no meaningful information.

Oh give me a break. Have you ever heard of a company called Coinbase? Binance? About a thousand others like them?

Nobody I know keeps any amount of their digital currencies on their own person. I suppose if you have a few hundred dollars then it's fine, but no serious investor with their life savings is going to keep it physically on them.


You are making up a term called "reverse" and saying that Bitcoin's competitors can do this thing, when... they don't. Every normal financial system ever created has a ledger (hint: the term "ledger" was not invented by Satoshi Nakamura), and ledger entries are not deleted, ever. This is true for Bitcoin, for any other digital currency, for any financial system today, for any financial system from the last 50 years, for any notion of a recorded ledger since human beings began keeping records of their trades.



Bitcoin is 54% of the market right now. By your logic it should be 100%. What's wrong?

The other effect would be that consumers will hear about Bitcoin and then find the tools to get it (e.g. their existing financial products like PayPal or a new one like Coinbase) and then be presented with dozens of other options besides Bitcoin which work better, faster, cheaper, and/or have higher upside potential.

My thesis here is that an increasing number of competitive products will diminish Bitcoin's price because of simple supply and demand: there are only so many investor dollars, and more and more viable places to bet your money.

Obviously we will see what happens, but this is certain a case for Bitcoin diminishing in price.

Cycles are there for a reason, you are totally right.
And BTC is a coin, not some type of property: many rules from that world don't transcend into the crypto world.

True the 21 million coin limit of Bitcoin is just one side of the supply and demand side and the term scarcity brings hype to the demand equation making people hoard it for much higher value.  The supply on its own is not something worth mentioning unless the supply is rooted deeply in the demands thought, want,s and interests.

Aside from the supply and demand, there is also a force or activities that influence how the demand react to the supply, so I can say it isn't just a supply and demand thing since the third factor, marketing, advertisement, real-life use case, and more is the one that make the supply special.  And that is where Bitcoin beats any other cryptocurrency.  Not only that Bitcoin have a lower maximum limit of coins, but it already has the needed component that drives the demand crazy.

Well, you were abstract with your "every single digital currency ever created" statement so I had to make it real. Feel free to be specific.
As for PayPal, it is like a currency. Like one of those centralized stableshitcoins or wrappedshitcoins. It has its own ledger and what you have there is IOUs that can only be used inside that platform with its rules and its swap rate.

That is your guess and you have no solid data to back that up.

Well, if you change the definition of principles, then anything can do everything
Refund is not the same as Reverse.

And yet that ain't happening.
Gamblers go to shitcoins on that shelf and the moment bitcoin makes any kind of money, they immediately dump their bags and come back to bitcoin because everyone knows the shitcoins they bought are useless

So this is... pretty much the entire theme of my OP here, so... progress!


Well, PayPal isn't a currency (and confusingly enough, you can buy Bitcoin using the PayPal app), but I'll assume you mean its a form of retail payment, just like Bitcoin could be potentially used as.


Most investors who buy Bitcoin use a broker or an app or the ETF, etc. etc.

I get that self-custody is something that many (and clearly not all) here on bitcointalk.org value, but the real world demonstrates that most investors in Bitcoin don't--and they instead want the safety of some other company guarding their wealth for them.


Two things.

First, Bitcoin transactions are absolutely reversible in the same way any payment is: you create a second transaction that counteracts the first one. This is how absolutely any financial system ever made works. When you get a refund from Amazon, it's not like they erase the record of your initial payment from existence. And if you paid Amazon in a digital currency, and you demanded your money back, they would presumably remit your refund in that same digital currency. As such, I am not seeing any meaningful difference, to a merchant in this scenario, between a credit card transaction and one with digital currency.

When it comes to refunds, the form of payment is superfluous.

Indeed, Satoshi sorta demonstrated how little he knew about normal financial systems when he wrote that all he was doing was pointing out something Bitcoin did that everything else already does.

Second, insofar as you want to bring this up as an advantage for Bitcoin, then you have to concede that every single other digital currency does this too--except those other systems have all kinds of other advantages over Bitcoin.



Bitcoin's initial genesis was to allow entities that could not safely use existing (far cheaper and more efficient and safer) means of transacting for fear of government prosecution. That was the only unique problem it solved--and today it does not do that as well as other systems like Monero.

Hence we can come back to the OP's thesis here: Bitcoin exists on a shelf with alongside a number of products that a consumer can choose, and that shelf is getting bigger with many very consumer-desirable alternative products, which can lead to Bitcoin diminishing in overall market share, and even eventually lead to it diminishing in its influence of the market.

Again, just like countless other examples we can think of like Netscape Navigator (which I personally worked on btw ).

Because the supply and demand for land has reached some level of equilibrium so the price is stable. Bitcoin is still on the path to mass adoption so its adoption (aka demand) is increasing.

Now if the number of colonizers (aka demand) grows from 350 mil to for example 1.5 billion then your backyard could be worth more than it is now as well. You can even see that in states with more population concentration (pop./square mile) like New York (8 mil/300 sq mile) versus Dallas (1 mil/380 sq mile) which I believe is 3 times more expensive.

In other words you can't just look at supply without also considering the demand.

Since you didn't give an example I'll guess: Paypal can be categorized as a digital currency but it not only doesn't offer any of the utilities bitcoin offers but has a lot of its own specific flaws. One of which is being centralized and censorable. Meaning the company 100% own and controls your money and can shut down your account any time they want. Neither of it can be done to my bitcoins.
PayPal also is NOT a global payment system. It is not available in some countries whereas bitcoin is.
The other major flaw that is also mentioned indirectly in bitcoin whitepaper is being reversible. A big negative for merchants.

Bitcoin's objective has never been to "hide from government". It was to regain control over your own money. In other words when I have bitcoin, only my own hand is in my own pocket. When I have a bank account, I don't even have a pocket anymore and it is the bank's hand in my pocket that they also own

Every acre of land in the USA has a capped supply. It's impossible to make more land--even more impossible than it is for the core Bitcoin devs to increase the Bitcoin maximum. In other words, absolutely physically impossible.

Why isn't my backyard worth one trillion dollars then?

And Bitcoin offers a utility that thousands of things do, including every single digital currency ever created, and every imaginable thing somebody might invest in (including land).

And even if you are one of those rare people who need to evade your government and keep your money secret from them, Bitcoin doesn't even do that as well as currencies like Monero.

Face it: Bitcoin is nothing but a speculation instrument that currently--currently--has a popular brand name. But the Netscape browser had an 85% market share once? Did you know that?

Markets change, people...

I strongly believe that being censorship-resistant and robust is absolutely essential. But, when it comes to market value, I think the primary driver behind achieving currently $2 trillion in market cap, and an addressable market cap of $300 trillion, simply lies in possessing the best monetary properties.

If I had to summarize in one phrase why bitcoin is the best money ever created, it would be "predictable inflation rate, going into 0". Most capital tends to flow into assets that are the hardest to produce more of. This is why gold historically emerged as the best form of money; it had key monetary properties like durability, divisibility, and verifiability, but most importantly, it was the hardest to increase in supply compared to alternatives like silver or copper. Bitcoin, beyond being a commodity, takes gold's position as the hardest asset to make more of. I believe this unique quality is where the potential for trillions in market value lies.

Why no altcoins? Not only because 99.9% of them are highly centralized. It's because there can realistically be only one winner in the race for the best form of money. The need to store value naturally gravitates toward a single, dominant unit.

The cryptocurrency world has definitely grown in size but the situation is not really changed. At least not in the way you are suggesting here. In early days there were fewer altcoins, like there were a dozen altcoins listed on btc-e and people were gambling on that many useless altcoins. Today there are multiple version of btc-e listing thousands of useless altcoins people bet on.

This paragraph only proves that you have no understanding of the technical aspect of cryptocurrencies and like many others being ripped off in the altcoin market are caught up in the advertisement. Both of the main points here are wrong.

- Bitcoin is not going up in value only because it has a capped supply. It is because Bitcoin offers a utility that nothing else does. A decentralized censorship resistant payment system that is robust and works as promised.

- There is no altcoin that has any advantage over bitcoin.
Many of them pretend to have advantages and people who don't know any better and in most cases people who have never even used those altcoins believe it.

For example one of the most common lies that they tell newbies and they believe it is "faster transactions", which I've already explained a million times. "Fast" is not about when the tx is confirmed but when it becomes irreversible. That is 100 million confirmations on ETH blockchain that has a mutable blockchain still has absolutely no security because the blocks can be rolled back if the centralized authority chooses to do so like they did with the DAO mess; meanwhile a single confirmation on bitcoin blockchain has a massive security, so much so that the chances of that block being "overwritten" is very small.

I adore ETH? Huh? Where did you get that? I don't care about it one way or another. It's just one example--and it is subject to the same market forces Bitcoin is.

For that matter, I suspect ETH not keeping up with Bitcoin and other currencies is due to the fact that it's utility is lower than many others, and yet it doesn't have the legacy brand recognition that Bitcoin has.

saying a product is expensive just because "demand" for instance is not a value to any consumer. infact its a disadvantage

if you really think that ethereum(which you adore) should be worth $100ktoday because you think ethereum has more utility than bitcoin today, is a complete laugh

when ethereum went to PoS.. the best swap rate to btc was 1btc:12eth, ethereum will never be 1:1 nor better, infact right now ethereum has been sliding further apart and is at more than 1btc:20eth

no one would pay such a huge premium for ethereum above its underlying mint cost.. and yes many people actually are smart enough to do cost analyss to work out if something is good value or excessive premium