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Comment by notyourday | Hacker News Reader

It won't. Bitcoin is a fad. It will run out of fools and when it does there wont be a way out.

Let me illustrate it on a very simple scale. There are four participants in a market. Each one starts with 100 coins and $100 USD. Each coin is valued at a dollar. Minimum units are 1 coin and 1 dollar. What is the maximum market value?

The correct answer comes from a single pre-final stage:

One person has 400 coins another person has 400 USD and the other two people have nothing. At this point the person with 400 USD pays $400 USD for 1 coin giving all 400 coins value of $400 each i.e. $160,000, except there are no $160,000 in this market.

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Far too simple of an analogy. First there is competition between miners so there's never going to be a single source, plus there are millions mined already in the pool. Also, bitcoins are currently divisible to 8 decimal places but that can be changed as soon as it's needed.

It's quite possible in 20 years that 0.000000000001 of a bitcoin will make the average house payment and by then, we'll have friendly names for all the decimal places.

This entire thing is based around the premise that BTC is freely exchangeable for real currency. The amount currently exchanged is microscopic compared to the market value of BTC.

Here's old school BTC:

https://en.wikipedia.org/wiki/Shell_money

> It's quite possible in 20 years that 0.000000000001 of a bitcoin will make the average house payment

No, it isn't.

Thats a bold claim given the history.

No, it isn't.. and I sincerely hope you're joking.

You should do the math on that and figure out what the value of a single bitcoin would have to be to make it come true. If that doesn't wake you up to how ridiculous that claim is, I don't know what to tell you.

I'll even go incredibly easy on you and let you assume the average mortgage payment is only $100.

Hint: it's a number larger than the US GDP

It's somewhat terrifying to me that I even have to argue this with someone.

OK, I didn't do the math. Thanks for the correction :). Turns out - lets ignore your generosity there, that we are realistically talking around 1000 trillion. National debt is at like 14 trillion. Chinese M1 money stock is 7 trillion. Now at the current growth rate, which is unreasonable to continually sustain, could continue to be high for a while, and you can't ignore the incredible growth of the global narrow money stock - https://data.oecd.org/money/narrow-money-m1.htm#indicator-ch... (10x in 15 years - 62x for Turkey in 20 years!). So I'll agree with you, highly, highly unlikely - but not at all beyond the realms of possibility - given what appears to be highly improbable (yet predictable history).

   the question is not how scarce Bitcoin is
   the question is how abundant are fools

2. Your example is flawed, Bitcoin isn't an isolated ecosystem, it parasitizing on a global economy. HODLers even use USD as a Unit-of-Account, when bragging about paper gains.

please illustrate how my example is flawed without hand waving.

In your example you start with 4 players each having $100, but IRL there are many more players with many more dollars who can and will join this game and 4 original players will eventually willingly or unwillingly exploit them.

It's like Israeli Kibbutzim[1] had a members-only Communist-like system, by exploiting outside employees and living on government subsidies.

Most kibbutzim are not self-sufficient and have to employ non-kibbutz members as farm workers (or later factory workers).

[1] https://en.wikipedia.org/wiki/Kibbutz

market is a closed system.

Now add on a system where there are years where people buy Bitcoin in dense, multi-output exchange transactions, and they suddenly all have to transfer their coins to the exchanges using inefficient 1-output transactions.

The pool has been filling with a hose and now suddenly must be drained with a straw.

Then add on a system where sudden price drops instantly lower the transaction throughput (hashrate, while difficulty takes days to adjust). The straw gets kinked.

We got a window into this nightmare on nov 13, that was enough for me.

This is an oversimplification. You need to add goods and services to your hypothetical situation for it to make sense.

Say there is one hotel room and the alternative is sleeping on a park bench. The cost of the hotel room is 1 BTC. The price of Bitcoin is peggged to the perceived value of the room by the market.

The reason why currently the price of BTC is rising without goods being traded is speculation by investors that this will be possible in the future.

This is the equivalent that it costs $10 a night to stay in the hotel room but in 2 days time it will cost 1 BTC. If BTC is trading at $5 USD then it will be a good deal to buy BTC today as long as I have enough money that I’m not homeless in the interim.

There are no hotel rooms quoted in bitcoin. They are quoted in real currencies.

The problem with your example is that there is no demand, so there's no reason for anyone to buy any bitcoin at any price and so no expectation that you could sell your 400 bitcoin for $160,000. The driver of speculative value for bitcoin is future demand, i.e. what the demand is expected to be down the line. This is partly driven by speculation/greater fools right now. But its also partly the potential of Bitcoin to be a global currency.

There's a potential that if you play the price of your chineese take out as tje powerball numbers you will win it.

Right, but the chance that bitcoin reaches widespread usage, e.g. overtakes VISA/Paypal is judged to be much higher than winning the powerball.

Bitcoin is an underdog in that fight now.

Network effects work in bitcoin's favor.

There's a chance that a shared public ledger will overtake Visa/Paypal. It is million times higher than a chance of BTC overtaking either, and it is a bad bet.

If any crypto does, it's likely to be bitcoin (with lightning network).

This is easy to refute for crypto fans.

In your scenario, a third-party prints $159,600 USD. (aka inflation, government deficit/debt, quantitative easing...).

Time will tell who's right.

It does not. We have defined a totality of the market. Since it does not fit crypto-nutcases view of the world, they come up with the slogans: QE! Fiat! Inflation!

Do you at least accept that in the market described above coin value is fictitious as soon as totality of the market is value for coins is higher than $400?

[late edit]: Do note that it is not to mean that there's no money to be made before the collapse - there are tons of fools who are willing to part with it. That's why financial firms are starting to salivate looking at it.

Try switching the labels "USD" and "BTC" and try to work out where your argument breaks down.

When one person buys 1 USD for 400 BTC, that means the 400 USD is worth 160,000 BTC, but where are all the BTCs?

If that's not a good argument against the US dollar's viability as a currency (and it's not!) then your version is also not a good argument against Bitcoin's viability as a currency.

When goods and services start being quoted in BTC you would have that argument.

There are no goods and services inside your model.

There are only 2 currencies. Your assertion that the exchange rate is bogus because it is possible to buy 1 BTC for $400 applies just as well in the opposite direction.

Except that we have never seen that happen.

What does that even mean?

Was your $400 + 400 BTC model supposed to be an argument from first principles, or was it supposed to be a reference to some empirical evidence?

I don't think you're being as intellectually honest in this thread as you could be.

Ok, that was a cheap shot, I agree.

I am, however, yet to see a single article talking about USD being quoted in bitcoin. Just like I do not see any articles of USD being quoted in Samsung TVs. I do see bitcoin being quoted in USD. I see USD being quoted in Euros and I see Euros being quoted in USD.

That's why Sansung TVs and BTCs are not currency while USD and Euros are. So BTC is asset. Assets in an non-liquid markets are prone to enormous bubbles.

> ... crypto-nutcases view of the world ...

I'd suggest that discussing your point without the ad hominems makes for a stronger argument.

Kinda like how a third-party prints USDT in the cryptocurrency case ;)

To the person talking about a auto:

Bitcoin is a fad - it will be worthless. Shared public ledger is where the money is.

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