Ok people, I'm talking about a man made resource with a finite supply being supposedly used as a currency. I admit I have phrased some things incorrectly, I don't have a degree in economics, only journalism. I'm addressing a problem that I see with using something like bitcoin as a currency and no one, in this 4 page thread has really given me a solution, just run arounds like 'read up on it yourself.' So far there has not really been a stable price, which is essential for a currency of trade. From the useful posts, people seems to be denying that Bitcoin is a Ponzi (fair enough, I agree) but haven't denied its speculative nature, that there is a finite supply and obtaining it raw will get increasingly more difficult. Doesn't having such highly speculative features render its primary objective - being a self-regulating currency - useless? I think this resonates even in the current trend where more people are using it for price speculation rather than trade and sustaining an mobile economy.
Can someone please explain to me how this problem might untangle. That somehow these speculative features will balance out over time and a stable price could be achieved. Because otherwise there really is no financial revolution and it is just like every other speculative bubble like the Dutch tulips.
I draw a distinction between Bitcoin and natural resources because I believe there is a inherent value in natural resources. You can use it to do something else. Silicon was traded because people found a use for it, otherwise it would just lie on the ground worthless! People only traded for natural resources, not traded in.
Would be great if someone can actually help me because I am trying to write as accurately as possible and I haven't found any online resources that discuss this issue.
Then dont bother trying. Understand what it is first.
The fact that you keep saying "man made resource" makes me think you dont even give this any fcking thought and just spilling stuff.
Man made material such as carbon fiber are all processed from natural resource. Do you think its coming from thin air? Only fiat money comes from thin air (hence the term "fiat"). Bitcoin supply is from mining. You used energy and computer resources to "mine" bitcoin. The supply rate of bitcoin is known and by design. Its finite number of quantities is not an issue for using it as currency because 1 btc is dividable in 8 decimals (more than all the fiat currencies in the world--
combined). As a form of money, we never had a deflationary money ever so you cant say it wont work.
As for you point of "speculative feature", bitcoin economy is small, ofcourse it will be speculative. In fact every commodities in this world is being speculated by various investors. It seems you keep talking this garbage because you still dont understand the value (not price) of bitcoin.
Does email protocol has any value to you? just because you're using it freely (hence no price), doesnt mean it has no value (otherwise, no1 will offer email service for free ....cough gmail, hotmail...). What if i told you in near future, there will be financial services offered from institutions that utilize bitcoin network? You as a customer use this service at free(or very low fee) and you dont even have to own a single bitcoin. Creditcards are free to you right? guess what? nope, merchants paid for it so its passed right to you. You're just fooled by thinking its free!
Using bitcoin as currency isnt very practical right now due to lacks of legit exchanges around the world. However the network will grow so does the popularity of bitcoin.