The believe that because of Bitcoin limited supply the price will rise is a myth - page 3.

pawel7777

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Quote from: fxsurfer on April 05, 2018, 06:13:50 AM

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I am not claiming that a potato will not be worth as much as the highest bidder is willing to pay for it. I am instead claiming that the price of a potato will always return to value determined by its utility.

Just like the gold's value returned to the utility-only value? Just like Chateau d'Yquem ($50k/bottle) is now worth same as any other wine sold at supermarket? Just like you can now buy white truffles at $1/kg?

Price is determined by supply and demand. Scarcity is a factor that drives the price up - whether you want to accept it or not. Utility itself won't automatically create monetary value, for the same reason you won't pay for air, even know it has huge utility - it keeps you alive.

fxsurfer

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Quote from: pawel7777 on April 05, 2018, 04:51:25 AM

Quote from: fxsurfer on April 05, 2018, 03:47:42 AM

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not.

Potato will be worth as much as the highest bidder is willing to pay for it. Google 'most expensive food' or wine and you'll be surprised how much people are willing to pay.

[Trinidad_James-All_Potato_Everything.jpg]

Your 'argument' doesn't even require debunking, the reality proves it false everyday.

I am not claiming that a potato will not be worth as much as the highest bidder is willing to pay for it. I am instead claiming that the price of a potato will always return to value determined by its utility.

pawel7777

legendary

Activity: 2436

Merit: 1561

Quote from: fxsurfer on April 05, 2018, 03:47:42 AM

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not.

Potato will be worth as much as the highest bidder is willing to pay for it. Google 'most expensive food' or wine and you'll be surprised how much people are willing to pay.

[Trinidad_James-All_Potato_Everything.jpg]

Your 'argument' doesn't even require debunking, the reality proves it false everyday.

fxsurfer

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Activity: 274

Merit: 2

Quote from: emuLOADs_temp on April 05, 2018, 04:06:08 AM

good job, you've discovered elasitcity of demand. now go study some more to realize why your conclusions are not neccesarely very insightful or likely.

Bitcoin is not a good in the sense potatoes are, that's one place where you can start.

The utility of Bitcoin - its function as a medium of exchange, is equal whether its price is 0.0000001 dollars or 7.000 dollars. The same is true for a potato. For some irrational reasons people may pay as much as 100,000 dollars for a potato, like they paid 100,000 florins for a tulip bulb in a Tulip mania, but the utility of consuming a potato will stay the same and the price of a potato will always return to value determined by its utility. The same thing will happen with the price of Bitcoin - it will return to value determined by Bitcoin's medium of exchange utility, which is somewhere around 1 cent, or probably even lower.

JerryJam

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Bitcoin has no intrinsic value. It has utility.It quickly transfers the cost equivalent over long distances cheaply and reliably.The number of bitcoin users is constantly increasing. This means that the usefulness and value of bitcoin is growing in the same proportion.The more nodes in the bitcoin network the more expensive will be its unit of account.Bitcoin exchange rate fluctuations depend solely on the market mechanism.Demand is constantly growing and this entails an increase in the market value of bitcoin.

daarul50

legendary

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Everyone already knows that bitcoin supply is very limited and if everyone wants the rising bitcoin price to be accompanied by an increased demand for bitcoin. There will be no price increase if demand for bitcoin continues to decline. Hence, Bitcoin developers must increase investor confidence in bitcoin to make price increases because with investors buying bitcoin the demand for bitcoin will increase.

BrentMack

newbie

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I don't think it is a myth because whenever demand surpasses supply, prices of commodities and goods in a market always go up, this also applies to bitcoin and the reason the price is going down is because there is so much supply and not enough demand to balance it out.

emuLOADs_temp

newbie

Activity: 11

Merit: 1

good job, you've discovered elasitcity of demand. now go study some more to realize why your conclusions are not neccesarely very insightful or likely.

Bitcoin is not a good in the sense potatoes are, that's one place where you can start.

fxsurfer

jr. member

Activity: 274

Merit: 2

Let's suppose that for some reason the supply of potato drastically decreases all around the world. Does that mean that people will pay 10.000 dollars for a potato or give up their cars just to get a potato? Of course not. This is because the utility of consuming a potato - the want-satisfying power of a potato is much smaller than that of a car or of 10.000 dollars worth of goods or services. In other words, from the mere fact that the supply of something is limited it does not follow that the price will soar.

In comparison to a potato, Bitcoin is not even a physical tangible good that can be used for satisfying human wants or needs, and its only utility is that it functions as a medium of exchange. So, just because Bitcoin supply is limited, that does not mean its price will rise. People will NOT pay enormous amounts of money just to have a medium of exchange function, especially if this function is equally available whether the price of Bitcoin is 1 cent or 7.000 dollars, and if this function can be realized with various alternative cryptos or fiat money.

Topic: The believe that because of Bitcoin limited supply the price will rise is a myth - page 3. (Read 488 times)