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It will not collapse. It's just the price will stabilize.

• betterunix 14y ago
  If nobody is willing to trade a currency, the currency is worthless -- also known as a collapse.
  • eru 14y ago
    Why? People are still perfectly willing to buy. Just not willing to sell. That will just lead to higher prices, not collapse.
    • betterunix 14y ago
      If nobody is willing to sell, then there is no trade. That makes a currency worthless. Bitcoin is even more vulnerable that gold in that regard, because if Bitcoin stops being used as a currency then there will be no incentive for anyone to run the Bitcoin software -- and then Bitcoin will just die.
      • oleganza 14y ago
        You are confusing two causes for "no trading". Collapse will come when no one is willing to buy (e.g. crypto is broken or there is no way to spend/use it). As people anticipate this coming, they'll start selling to anybody who is still willing to buy. The price will drop until no one is willing to buy, at which point the value of commodity will become zero. On the other hand, if many people are willing to buy (in expectation of future increased usefulness), then the price will go up until no one is willing to sell. At which point every holder anticipates some future benefit, cannot buy more from anybody, but has plenty of people willing to buy from him for some price. This situation will stay like that until anyone decides to "use" money by selling it (e.g. to buy a dinner because people need to eat sometimes). No collapse here.
        • betterunix 14y ago
          History has shown that when people start hoarding currency, a new currency arises to replace the one being hoarded. A currency is not useful if it is not being traded -- if the benefit of saving your money outweighs the benefit of whatever you would have purchased with it, you'll save it and find something else to trade. In the case of Bitcoin, there is an even greater risk, which is that people will stop bothering to run the Bitcoin software as fewer and fewer people trade their BTC. The problem with your argument is that it ignores the utility of the currency. A currency that nobody is willing to trade is not useful, which is harms the demand for that currency. Bitcoin's only utility is as a currency, and so without people willing to trade BTC for something else, Bitcoin is useless, which makes it worthless. Another way to put it is this: your argument only accounts for speculation, which is not the whole story.
          • eru 14y ago
            > History has shown that when people start hoarding currency, a new currency arises to replace the one being hoarded. Can you give some examples, please?
            • betterunix 14y ago
              Precious metals versus fiat currencies? Given the choice between coins made of gold and coins not made of gold, people traded coins not made of gold. Gold is not a currency for the majority of day to day transactions anywhere on Earth, despite having once seen widespread use. Even when currency was backed by gold, people did not actually trade gold; gold was (and remains) stored in vaults. Governments realized that they could issue money that contained less and less precious metals, even no precious metals at all, and there was no revolt at all, just widespread acceptance and use of the new currency.
              • oleganza 14y ago
                People totally sold their gold absolutely voluntarily. http://twitpic.com/c0f5h5 http://twitpic.com/c0f5h5