Quote from: elebit on March 11, 2014, 09:56:28 PM

Quote from: aminorex on March 11, 2014, 12:54:55 AM

Quote from: elebit on March 10, 2014, 08:57:42 PM

Should Bitcoins become widely used, I think the average worth per user should be expected to drop (since its value as an investment lessens)

Say what? It's difficult for me to react temperately to a statement like this which so offends my reason. Am I misinterpreting it? Please expand.

It is only a supposition. Do you think it is incorrect? Please expand on your thoughts.

The reason I expect it to hold true is because as Bitcoin gets more widely used and more valuable, people would come to expect less gain in its future value. We have already seen more than a thousandfold increase in value (or even more), but even an optimist would consider such an increase again to be unrealistic. A stable Bitcoin could probably not sustain a value of millions of dollars each.

I also think that as the user base increases above and beyond the globally well off, less new adopters would have access to thousands of dollars to invest.

I see. You think that current prices are discounting future gains, and as price approaches long-term value, it will necessarily discount less gain. Makes sense. However, we mustn't neglect the risk factor. Risk adjustment means that early prices discount at a larger rate, and probably exponentially, on behavioral grounds. I would expect coins to be cheap now, relative to a purely rational risk adjustment.

The reason I found it offensive was that I was not thinking about instantaneous market price, but about the underlying economic value to which price stochastically converges. The value increases with increasing transaction volume and decreasing velocity, after PQ=MV. PQ should increase and M decrease while V increases as the log, with increasing number of users.