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Ask HN: Could BTC price increase linearly with M2?

• unicornmama 5y ago
  Supply and demand. It’s a mistake to look at only one side of the coin. The demand for Bitcoin is 100% speculative. There’s still no economical application (if someone knows otherwise, I challenge you to prove me wrong). Put in another way: Bitcoin does not satisfy any sustainable need.
• jstx1 5y ago
  So what if it is a deterministic amount? You still need to have enough market demand to support the price. There's plenty of limited / fixed-supply resources (some of them in the crypto space) that nobody cares enough to buy or hold. If the demand is driven by some common belief that it will keep going up which in turn drives the price up which supports that common belief which in turn... - I'm not an expert on market dynamics to predict when and how those things end; it could end very badly when the trend reverses and it can also make some people a lot of money in the meantime. But it's a speculative game in its nature, there isn't anything fundamental that says that Bitcoin needs to have any relation to money supply at all.
  • abroad 5y ago
    I understand your point but... Isn't gold speculative in nature today? If any central bank can print as much as they want, what's the relation between gold and money supply now?
    • jstx1 5y ago
      I haven't mentioned gold at all. If there's a fundamental relationship between money supply and Bitcoin, you should be able to outline it without referring to gold.
    • hobofan 5y ago
      > what's the relation between gold and money supply now? Are you referring to the gold standard[0]? As you can see from the Wikipedia page, that concept has long been abandoned by national banks. So there is no special relation between gold and money supply nowadays (at least not one that differs in any meaningful way from any other natural resource). [0]: https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard
    • unicornmama 5y ago
      It’s a misconception that gold is purely speculative. Half of gold is used for jewelry and 7.5% is used in industrial application. Even if all the financial demand would go to zero, the price of gold would not go to zero. https://www.investopedia.com/financial-edge/0311/what-drives-the-price-of-gold.aspx https://www.investopedia.com/financial-edge/0311/what-drives...
• NicoJuicy 5y ago
  Gold is actually used, eg. In the phone you're typing on. If BTC is gone, outside of the lost money, there would be no real life impact.
  • kristofferR 5y ago
    Gold is artificially priced. The "real" intrinsic/industrial value of gold is a fraction of what it is currently priced at, since industrial use of gold amounts to around 10% of the gold usage.
    • unicornmama 5y ago
      50% is also used in jewelry.
    • NicoJuicy 5y ago
      It's also being recycled/sourced from used products. But I'm glad you agree it's actually used :)
• almost 5y ago
  Sure why not you can believe that if you like. Obviously there’s no reason to think it would but don’t let that stop you. What on earth has gold got to do with it though?
• dathinab 5y ago
  For both gold and BTC the price is purely believe based. The only way quantity in existence matter is if it makes people believe that it makes it less worth. So if I hypothetical conjure a few tons of gold as long as no one believes it makes a difference it doesn't, but if a make people believe there is tons of more gold then they thought I could make the market crash without the amount changing. Similar if I make people bribe Bitcoin gets outlawed by the whole world, Bitcoin can crash without the amount changing. Or in other words, it doesn't really matter weather the quantity for good it's know as long as it's generally beloved that is "low enough". Similar it doesn't matter that BTC had known limits as it does crash (or spike) due to external factors.
  • unicornmama 5y ago
    It’s a hyperbole to claim that the price of gold is purely belief based. Gold has demand from jewelry (50%) and for industrial uses (7.5%). https://www.investopedia.com/financial-edge/0311/what-drives-the-price-of-gold.aspx https://www.investopedia.com/financial-edge/0311/what-drives...
    • dathinab 5y ago
      The "actual" gold price is so much below the current price that it doesn't matter. I would say that a non-small part of it's jewelry usages is either because of it's perceived value or wouldn't drive the price nearly as much, sure people would still buy gold jewelry if it would not be perceived as that expensive, but they wouldn't be willing to pay nearly as much as they do today. As far as I can tell at least 50% maybe up to 90% of the value is "believe" based. But that doesn't mean it's a bubble or anything like that, believe drives value all the time and can be long term stable, as seen in the history of gold. (Through gold wasn't always in that position, silver was in golds position before the western world ran into a major trade deficit with china and mined much more of it, similar there had been cultures where gold was see as nice looking but otherwise worthless gifting it away to colonialists, which lead to misunderstandings about the amount of gold available.)
  • ykevinator2 5y ago
    You can't make a new gold out of thin air but you can a new crypto out if thin air. This is why all crypto is fictional, if you missed the last speculation bubble, just make a new crypto.
• bluesign 5y ago
  This is not objective value, this is theoretical maximum value of bitcoin. ( (Considering it will be "the only" currency) Imagine this: Sand grains on earth: 7.5 x 10^18 1 bucket ( lets say liter ) sand: 2 x 10 ^ 7 grains So sand on earth : 3.75 x 10 ^ 11 buckets M2 ( according to article ): 95 x 10^12 One bucket of sand objective value: $253
  • dathinab 5y ago
    Nice, but what kind of sand do we speak about?
  • abroad 5y ago
    That would be the case if we used that sand as a reserve of value, what looks quite more unlike than using bitcoin instead.