3 ms·

I don’t understand. There’s a finite amount of both gold and bitcoin right?

Drakim 2y ago
there is a finite amount of gold, but we don't know exactly how much that is, we could potentially find several big gold veins tomorrow and crash the gold market. There is a finite amount of Bitcoin, and the amount of Bitcoin that will be injected into the market is deterministic by algorithm. (Note that there are several old bitcoin wallets with "dead" bitcoins that could one day suddenly become active, which I suspect would have the same effect as finding a new goldmine)
- brookst 2y ago
  But there are lower bounds on how much you can split gold. Part of its value is as a tangible stored value. Nobody will store 0.00001 ounce of gold because you’d be in danger of accidentally inhaling it. The numerator for Bitcoin has an upper limit, but the denominator does not; it is functionally infinitely divisible with no loss of value. This doesn’t negate the argument, but mitigates it some.
  - Drakim 2y ago
    What you are saying is just objectively wrong, Bitcoin has a lower limit for it's denominator, it even has a fancy name: "one satoshi"
oniony 2y ago
No, Bitcoin was designed to have a finite supply of approximately 21 million coins, after which the mined Bitcoin would be all there ever is in circulation*. This makes it a deflationary currency: your holdings should** become worth more over time due to the limited supply: as more people enter the market there are few coins to buy due to more people holding them and due to those that are inaccessible due to lost keys. So, in the early days, the people running Bitcoin miners originally earnt money both on the fees on the few transactions but also on minting new coins. The algorithm was designed such that "miners" would transition to earning revenue entirely on transaction fees once all the Bitcoin had been mined, by which point the economy should be up and running. In both cases this encourages them to actually run the proof-of-work nodes that provide the distributed ledger. * assuming there is no successful change to the algorithm, which would require concensus by those running the nodes. ** this assumes people want to buy it – that a better investment vehicle has not materialised – and that Bitcoin has not been outlawed or had cripling taxes applied to it. https://crypto.bi/deflationary/ https://crypto.bi/deflationary/

there is a finite amount of gold, but we don't know exactly how much that is, we could potentially find several big gold veins tomorrow and crash the gold market. There is a finite amount of Bitcoin, and the amount of Bitcoin that will be injected into the market is deterministic by algorithm. (Note that there are several old bitcoin wallets with "dead" bitcoins that could one day suddenly become active, which I suspect would have the same effect as finding a new goldmine)

brookst 2y ago
But there are lower bounds on how much you can split gold. Part of its value is as a tangible stored value. Nobody will store 0.00001 ounce of gold because you’d be in danger of accidentally inhaling it. The numerator for Bitcoin has an upper limit, but the denominator does not; it is functionally infinitely divisible with no loss of value. This doesn’t negate the argument, but mitigates it some.
- Drakim 2y ago
  What you are saying is just objectively wrong, Bitcoin has a lower limit for it's denominator, it even has a fancy name: "one satoshi"

oniony 2y ago

No, Bitcoin was designed to have a finite supply of approximately 21 million coins, after which the mined Bitcoin would be all there ever is in circulation*. This makes it a deflationary currency: your holdings should** become worth more over time due to the limited supply: as more people enter the market there are few coins to buy due to more people holding them and due to those that are inaccessible due to lost keys. So, in the early days, the people running Bitcoin miners originally earnt money both on the fees on the few transactions but also on minting new coins. The algorithm was designed such that "miners" would transition to earning revenue entirely on transaction fees once all the Bitcoin had been mined, by which point the economy should be up and running. In both cases this encourages them to actually run the proof-of-work nodes that provide the distributed ledger. * assuming there is no successful change to the algorithm, which would require concensus by those running the nodes. ** this assumes people want to buy it – that a better investment vehicle has not materialised – and that Bitcoin has not been outlawed or had cripling taxes applied to it. https://crypto.bi/deflationary/ https://crypto.bi/deflationary/