As you can see, I'm learning ABC in crypto currencies and studying this for last 3 4 months, even after reading all these web pages, forums etc, still Im having one basic question needed to clear out. I would really thankful if someone can help me with this.
We all know, BTC is making a huge growth for past few years and as a result, people start to invest / trade in BTC. With my little knowledge I assume that no one is going to use BTC / couple of Sathoshi to purchase things as they are really good to keep (HODL) as the value is going high and high. But if you think of any of fiat currency, the value of money is depending on the use of it. For example, if everybody is keeping their money (fiat) in their pocket without spending, the market will not have enough money for trading and value of the currency will not goes up. Why the same principle not applicable for BTC ?
Ive seen lot of answers like, market will not have morethan 21M BTC and that amount will be saturated by 2140, hence there will not be any inflation etc. But what I do not understand is, if a currency is not using (in trading purpose you buy something with that money), what is the logic behind the reason of value of the money goes up ?
We all know, BTC is making a huge growth for past few years and as a result, people start to invest / trade in BTC. With my little knowledge I assume that no one is going to use BTC / couple of Sathoshi to purchase things as they are really good to keep (HODL) as the value is going high and high. But if you think of any of fiat currency, the value of money is depending on the use of it. For example, if everybody is keeping their money (fiat) in their pocket without spending, the market will not have enough money for trading and value of the currency will not goes up. Why the same principle not applicable for BTC ?
Ive seen lot of answers like, market will not have morethan 21M BTC and that amount will be saturated by 2140, hence there will not be any inflation etc. But what I do not understand is, if a currency is not using (in trading purpose you buy something with that money), what is the logic behind the reason of value of the money goes up ?
Hi there rameshEl! Yes you are right with the attitude of people hoarding bitcoin make the bitcoin price in the market goes up. We can't compare it to the local fiat because the local currency is used or circulated million times in a day compare bitcoin which is mostly used for trading rather than purchasing goods or services. Another factor is the limitation of the blocks or coins that could be generated, unlike local fiat where people don't even bother to know the limit because the government could produce more given the act that their value could go down. And lastly, I think the more demand people want to obtain the coins the more little the could about to get could be the significant factor that contributes to the price.
