Post
Topic
Board Speculation
Re: Bitcoin Shrinking - The Long View
by
Synaptic
on 16/07/2011, 22:29:09 UTC

You look at it from a naively optimistic point of view, as that of a child imagining what a superhero might eat for breakfast.

The correct way to approach it is "At 1:1 USD/BTC, which places the total Bitcoin market cap at $6m of value, what market forces produce enough value to support that price?"

The answer as it's been for the past 3.5 months is hype. As the hype has faded and reality sets in and the price deflates as I'm explaining to you it will, even at $6m of value the answer is: Practically Nothing.

See, Bitcoins basically need the equivalent of a "GDP" to sustain it's value.  There is no "GDP" behind Bitcoins now, nor will any "GDP" be growing within 6 months, or a year, or likely ever, for all the reasons I've listed across many threads over the past 2 months.

But I'll turn it over to you and that other genius that started posting:

Given a 1:1 parity with the dollar, what in all of the God's Hells impart $6m of market value?

Don't spout off bullshit about people paying what they think it's worth: that's speculation, and speculation isn't value...

Slow down a bit......

GDP wise, there is no nation Wink

But ignoring that, BTC has generated economic activity around it's existence. You mightn't place much value on it, but people creating the various sites for trade and exchange of varying goods and services is what gives bitcoin it's economy, and that's an important point of this whole exercise, people are essentially working and producing in exchange for BTC, essentially giving it value.

All currencies start out as nothing, it's the work of the people behind the nations currency that gives it value. You can argue that bitcoin is over valued, but certainly not of no value. I don't think it unreasonable that bitcoin has generated more then 6 million usd of economic activity by now.

That's why I said "GDP," as a turn of phrase.

I'm not saying there's no Bitcoin economy AT ALL, just not enough of an economy to justify anywhere NEAR the current trade price, now or in the near future.

Hence, my entire premise that the market value will continue to contract as the artificial inflation subsides and takes BTC back to where it belongs.