Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
You really don't know much about economics, do you Professor?
I confess that most of what I know I learned in the last 2 years, watching bitcoin demonstrate all the basic principles as a universal counter-example.
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Bitcoin price is fueled by speculative investors. These people are forward thinking. They don't buy BTC based on current utility value, but implied future utility value. Just as stocks are valued by implied (and discounted) future rate of returns, we are betting that these cryptographic token thingies will become (more) useful down the road.
No disagreement about that.
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Basically we are paying for the right to write on a very secure immutable ledger in the future.
OK, one can look at bitcoins that way.
(However, the word "right" is meaningless if there is no entity that will assist you in realizing those rights. No one will come to your help if the miners tomorrow decide to refuse your transactions, for instance. But OK, I suppose that you intend "right" as "capability", namely you get private keys that, miners willing, will let you move your bitcoins.)
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ANY inflation beyond the baked-in block reward means that the ledger will get diluted and polluted with extra data to a degree that we hitherto didn't factor in.
That does not follow. Even with perpetual inflation, the ledger would still be immutable, and would work in exactly the same way. Your right to write on it would be preserved, and you could exchange that right with others for money or services, just as you do today. The only difference between that hypothetical inflationary ledger, and what you today think that the ledger ought to be, would be that the coin rewards do not go to zero, but remain above some value.
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Also, there is the slippery slope of if we can increase by 1% after so many assurances that it would NEVER happen, you have to add the uncertainty that this inflation rate may be adjusted higher in the future.
Indeed, but the "slippery slope" argument is notoriously ineffective in preventing changes.
Promises by some group of people that "we will never change our decision X" are totally meaningless: if one day a majority of those people gets convinced that X was a bad decision, that same majority will conclude that the promise to never change X was a bad decision, too -- and then go ahead and change X.
I have seen that happen many time in the administrative Boards that I had to sit in the university. Once in a while someone will propose that the Board votes to not debate issue X again -- forever, or before N years. Sometimes Common Sense will have left the room for a cup of coffee, and such motion will get approved -- only for the issue to be reopened two months later, due to "unforeseen curcumstances"...