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The way I see it is that bitcoin's potential value is the share of the economy it will manage when bitcoin adoption is widespread. Then the current value is som
by hackinthebochs 9y ago
The way I see it is that bitcoin's potential value is the share of the economy it will manage when bitcoin adoption is widespread. Then the current value is some fraction of this potential value, the product of the likelihood that the state of widespread usage comes to pass. As more people become aware of bitcoin and buy it, that future becomes more likely, and so the current value increases.
- alexasmyths 9y ago"the share of the economy it will manage when bitcoin adoption is widespread" Nobody will use BTC as a currency. It's too volatile and has no underpinning. Much for the same reason Gold is not used as a currency. Currencies are designed and managed for economic zones. Having a second currency for any zone is unwieldy. Think: you sell Milk and Bread. You make 5% margins. You sell in USD. Now - if you price in BTC - the price of BTC is fluctuating all day! So how do you even do that? You don't. You could 'accept' BTC and just do the calculation on the spot - as many Canadian stores accept USD at some specific exchange. But - with 5% margins - you can't afford to hold on to those BTC, quick, you have to convert to local currency. So the whole BTC thing is a useless exercise. Granted - there are some business entities that could use BTC, but again, they'll almost always have a local currency problem and given the inherent volatility of BTC ... it will never go away. The 'more people that hear about BTC buy it' - true for now, but has nothing to do with economics. It's just a speculative mania.