I’ve been thinking, how will it be possible for shares traded in a currency that has a limited supply to rise or even maintain their value? The more valuable bitcoins become, the less profit a company will be able to generate and the less valuable their assets will become (in bitcoins), so there should be a downward pressure on the price of its shares. An example:
Company A issues 1000 shares at 1 BTC each to buy some equipment that will generate 50 BTC in monthly profits. After a couple of months the price of bitcoins have doubled and so the company can only generate 25 BTC. Company B is born and issue 1000 shares at 0.5 BTC to buy the exact same equipment (which now only costs half the amount of bitcoins) and generate 25 BTC. Shareholders of company A start selling their stock to buy from company B since they can get double the amount of shares on a company that’s basically a clone of the previous. Finally the prices of A’s stock fall until they level out with B.
Is my logic terribly flawed somewhere?
Btw, if this holds true I’m not suggesting that just holding bitcoins would always be better than buying stock since even if your stock loses value you can still make more than your initial investment from dividends.
