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that's a valid question. three reasons why bitcoin & crypto is NOT like gold and very dangerous. 1) limited supply: drives up price enormously. almost endless.
by thkim 9y ago
that's a valid question. three reasons why bitcoin & crypto is NOT like gold and very dangerous. 1) limited supply: drives up price enormously. almost endless. minimal supply, infinitely increasing demand. depending on how far this will go it can potentially suck up all liquidity in the world. 2) no authority, no price stabilization, meaning extreme volatility that adds fuel to vol & price rise, 3) ease of access: anyone can buy with a dollar, also fueling to vol & price rise.
how bitcoin will end looks very ugly to me in any case. either collapsing a global economy or bringing an unprecedented global inflation
- jstanley 9y ago> 1) limited supply [...] 2) no authority [...] 3) ease of access But there must be something bad about it as well, right?
- deleted 9y ago[deleted]
- nopinsight 9y agoI’m curious. How would it bring about global inflation since almost all of bitcoin is not really used for getting goods/services and people need to exchange real dollars/yen/etc to drive up its price? Doesn’t it actually suck out liquidity from other assets and drive down inflation of other assets?
- thkim 9y agobitcoin's price increase creates inflation because it makes holders wealthy. inflation is not a bad thing when driven by fundamental growth (value creation). bitcoin is not creating value.
- afsina 9y agoAll your points are positively good things. 1- Limited supply prevents money printing and inflationary theft. Besides there are many coin alternatives and a BTC can be divided to a hundred million units. 2- No `central` authority is a big plus (probably the best property of it). Once crypto coin pass its infancy, the volatility will be much lower. 3-Ease of access. Another superb property.
- thkim 9y ago1 - money printing is not crony capitalism like what bitcoin creators tout them to be. it is a method of stabilizing value. when used wrong it can destroy economy (venezuela, zimbabwe), but that is a question of politics (voting wrong people). bitcoin or crypto's decentralization is NOT a solution to this problem. also bitcoin is particularly problematic because it gained traction. value is simply sum of people's belief. when other coins gather enough followers then it will similarly be a problem, but not at the moment. 2 - this is false. if you know how currencies work you will know that this whole "decentralization" makes no sense. central authority is required for a currency because price needs to be stabilized. unlike what some people believe, bitcoin will not "self-stabilize" because currency stabilization has nothing to do with how many people use it. currency stabilization works by an authority dictating how much it should worth and manipulating market towards it. this is not some conspiracy, it is a protection provided for all currency users. not only bitcoin offer zero protection (completely exposed to vol risk), but also it is not really decentralized as 40% of entire bitcoin owned is owned by 1000 people only. 3 - yes, this is a good property. so there should be a state sponsored coin.
- patrickk 9y ago> either collapsing a global economy Barely anyone uses bitcoin as a percentage of the world's total population, this isn't even remotely feasible today, or likely even in five years.
- thkim 9y agous economy is big so bitcoin feels like a noise right now. in other countries, it is a real threat. it's going to take some years until us feels the heat, but by then it will be too late.