So you're basically agreeing with me, BTC would not be a good idea because it is not a store of wealth. The situation you're speaking of is a fantasy right now. Could the future hold that very situation, well of course it could...
The only point we appear to be in agreement on is that no one can predict the future with certainty. But I think you
do believe you can predict the future, otherwise you would also agree that bitcoin is useful as a store of value.
Consider Billionaire Bob. For simplicity sake, Bob has exactly $1 billion in US treasury bills and no other assets. He is vocal in his support for small governments, is concerned about US unfunded entitlements and its effect on the dollar's reserve status, and was recently an innocent victim of a politically-targeted IRS probe. He knows skeletons can be found in any closet.
Bob wants to maintain his wealth 10 years into the future. He analyzes the situation and concludes the following probabilities:
P(lose all money) = 5%
P(not lose all money) = 95%
To simplify the math, assume the treasuries pay zero interest and inflation is zero (unless the dollar-collapse event occurs). 10 years out, Bob's wealth has expectation value and standard deviation:
= 0.05 x (0) + 0.95 x (1000) = $950 million
stdev = sqrt(0.05 x (0 - 950)^2 + 0.95 x (1000 - 950)^2) = $218 million
Now Bob discovers bitcoin. He sees that bicoin's success is more likely if either of his two fears come true (the USD collapses or confiscations of private wealth increase in frequency). He calculates that if the event he fears happens, that bitcoin is likely to be 20X as valuable. If the event doesn't happen then he doesn't care about the price of bitcoin as he was just using it for a hedge anyways.
He moves 5% of his wealth into bitcoin. 10 years out, Bob's wealth has expectation value and standard deviation:
= 0.05 x (20 x 50) x + 0.95 x (950) = $953 million
stdev = sqrt(0.05 x (20 x 50 - 953)^2 + 0.95 x (950 - 953)^2) = $11 million
In other words, Bob can decrease the variance of his wealth 10 years out with little change to its expectation value by employing bitcoin as a store of value. You can repeat similar analyses using all sorts of probabilities and assumptions and add all sorts of complexities, but I have never found a rational case where it is not wise to store at least a small portion of your wealth in bitcoin. If you can think of one and mathematically argue your case, please let me know.
I believe this simple analysis illustrates my point. Bitcoin is useful as a store of value.
You're math is pointless because it is based on assumptions. I suppose in the end it simply comes to the risk that one is willing to stomach. Watching an asset lose 50% of it's value in one month multiple times in a two year period would bury that asset in any real world market.
Do I think that bitcoin is worthless, no not at all. I think quite the opposite. But it is not a store of value because there is no track record to prove your assumptions on. The volatility gives it some amazing short term potential though, which is why Bitcoin has become what it is.