Topic: The whole point of Bitcoin & its future (Read 165 times)

A few notes from a newbie (me). This is my first new topic post.

When I first started finding out about Bitcoin I learnt that it was designed as a currency - a method of exchange with which to transact for goods and services - in a decentralised, trustless form thereby bypassing corruption and manipulation of trust-based systems such as governments and central banks and so on. A financial system for the masses by the masses if you will.

Having spent quite some time reading the comments made by many people on this forum it's become apparent that many people are not using bitcoin in this way. Instead, people here seem to be building up a stack of bitcoin, maybe as an investment in the hope of the value increasing and thereby netting them a profit. If this is what people are doing then it's not what bitcoin was invented for. If we are just hoarding bitcoin, and not using it to transact for goods and services, then it is unlikely it will ever enter the mainstream.

The other issue with this approach is that, by hoarding bitcoin in this way, it will remain in the hands of the few not the many. Even now, with 16m out of 21m bitcoin in existence (that's just over three quarters of all bitcoin that can ever exist) probably only a tiny fraction of the world's population actually own any bitcoin. A stab in the dark I'd guess that's less than 0.000000001% of the world's population (one "satoshi" of all people in the world!). This is another hurdle in bitcoin being adopted by the masses.

The eventuality makes bitcoin more a store of wealth as opposed to the currency it was supposed to be. This means virtually all bitcoin remains in the hands of the very few, and those few become wealthier than the rest of the population who will mostly never be able to get their hands on bitcoin as it remains as a store of wealth and becomes increasingly more expensive due to the impending cap on quantity available.

There is another scenario. And this is already playing out now. People use bitcoin as a commodity to trade, buying and selling in shorter and shorter timeframes to make profits more quickly (as long as they guess the direction of the market correctly). This goes some way in explaining the price of bitcoin over the past few months. This has the effect of making bitcoin follow some well established market movements and, if those that hold bitcoin or invest for the longer term (as opposed to trading for short term gains or transact as a currency), decide they want to claim their profits or cut their losses accordingly, depending on when and at what price they bought, then we will see bitcoin falling further. Under this scenario we could see bitcoin falling to levels not seen since a year ago or even earlier.

There will always be spikes and dips. We are seeing them regularly and, despite many people on here seemingly complaining, they are a sign of a healthy market (unless you are a conspiracist or even a realist with insider knowledge and believe there is widespread price manipulation).

I don't know what the long term price movements of bitcoin will be, and won't even pretend to know, like so many do, but I feel confident enough to predict that the price will be nowhere near where it is at the moment in the twelve months ahead and beyond. We could end up exceeding the previous all time high or we could head towards zero. I'll just add that it's impossible to get to absolute zero simply because some people will have "lost" their bitcoin and a few may never sell, ever, and in this situation where some bitcoin will always be outstanding, the price cannot be zero. But it doesn't mean it can't get close. Then again it could double, triple or more. I'm not placing any bets. The playing field is level (unless you are that conspiracist) and it's open.

The bitcoin games have begun. How they pan out, and how they end we'll just have to wait and see. But the true face of bitcoin has changed. And it might just change again.