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The people on the outside aren't really relevant to the value and market price of Bitcoin. The price is a reflection of the activity of the market participants
by hndamien 8y ago
The people on the outside aren't really relevant to the value and market price of Bitcoin. The price is a reflection of the activity of the market participants economic equilibrium. Non-participants can gawk at the price, but so long as there are enough participants using the system, trading and creating wealth then the system will continue to grow, and attract more participants one would assume (although this is not necessary). Eg, your opinion of a foreign currency and their monetary policy makes little difference to them and the forex price until you participate in their economy.
- AnimalMuppet 8y agoAll true. And Bitcoin could have a real value long-term (decades), if enough people believe (and continue to believe) that it does. The forex example is a bit off, though. If I don't believe the price of the Euro, for example, well, there's still a ton of stuff being produced in countries that use the Euro, and they trade with other countries, and that sets a price for the Euro in relation to those other countries. But how much stuff is produced in places that use Bitcoin? Perhaps I should have said in "places" that use Bitcoin, because it doesn't have to be countries. But how much stuff is for sale only in Bitcoin? That's where Bitcoin is going to have a price as a currency. If there aren't many things with Bitcoin-only prices, then Bitcoin can still have a value, but it's value is more like gold - as an investment that's not subject to inflation. Even as that, it can have a value forever - gold's done pretty well at that, after all. But I still think it's too soon to see if Bitcoin will do that. Gold has several millenia of being accepted; Bitcoin has 10 years. We'll see what happens in the long term.