Post
Topic
Board Bitcoin Discussion
Re: Bitcoin's Core Value Proposition: Two Approaches to Understanding
by
Roger_Murdock
on 27/05/2015, 05:21:03 UTC
One objection I've seen to the claim that Bitcoin is "trustless" goes something like this: "what do you mean I don't have to trust anyone to store value in Bitcoin? What about trusting Satoshi with his million-plus coins? What about who knows how many other early-adopting whales who could crash the market with a huge sell off?" It's not a bad-sounding argument, but it's important to understand that the risk involved is really just "market risk," a risk that is common to all assets (including fiat). In other words, there's always a risk that the market price of an asset in the future will be less than its current price due to changes in supply and demand. Now, as a practical matter, the market risk associated with holding Bitcoin (certainly in the short-term) is a lot greater than the market risk associated with holding US dollars. But the reason it's greater is that the Bitcoin market is small and illiquid. In other words, the problem goes back to the fact that Bitcoin is not yet money / still has a small network effect.