Originally posted by @Jame V.:
Originally posted by @Jerry Shen:
1) There is a difficulty algorithm built into bitcoin so this scenario is impossible. Even after every bitcoin has been mined (in 2140) miners will still get transaction fees. The economic incentives to run bitcoin nodes are self-stabilizing.
2) Which government? Almost every developed nation has bitcoin regulations. It's impossible to regulate bitcoin itself but you can regulate at the exchanges when you convert to local currency. As far as the top few owning the majority of bitcoin, this is no more true than the top few in the world owning a high percentage of wealth. A lot of the analysis I've seen on this fails to point out that a lot of bitcoin addresses with a ton of bitcoin are actually owned by exchanges where they could potentially be shared among thousands of people. Volatility is also a function of total market size. On a percentage basis it has gotten way less volatile as it's gotten bigger, and the introduction of bitcoin futures has also significantly reduced its volatility
3) No retailers don't want to take bitcoin because no one will pay a $25 confirmation fee to buy $25 worth of stuff on amazon.
I'm talking about the electricity costs of mining and transactions. If there is no change (in the efficiency of algorithms, or upgrade of hardware/tech), all these miners keeping bitcoin alive will pull out because it will cost too much to run. In the long run it will stabilize, but energy cost to reward gap is getting closer, faster.
Good point about controlling the exchange rate, I'll look more into that
If by wealth you mean cash reserves, this is regulated by government. These top cash reserve holders can not greatly change, by any means, the value of the dollar.
Bitcoin looks more volatile than ever IMO.
Ya...And also it'll take 2 days for a transaction 😂
The difficulty algorithm directly affects electricity costs. If value of bitcoin decreases, that means difficulty decreases, which means electricity costs also decrease.
I'm not comparing bitcoin to cash, hardly any wealthy individuals keep their net worth in cash. I'm talking about other assets and commodities. Do you think average people own a lot of corn futures? Of course not. Most of the world's wealth (assets) are owned by very few. My position is that bitcoin is not a currency, it is a commodity or security, which the SEC has also agreed with. Usually, when a security is owned by a few large players, there is a built in incentive to keep prices high. So centralized control of assets actually runs counter to what you are describing. It's common sense. Take an extreme example and say one person owned 50% of all bitcoin. If he wants to unload all at once, the price would tank so he would never be able to get the price he wants.
You can see this play out in real estate as well. In tier 1 markets like NY and San Francisco the real estate is owned by a few wealthy individuals and institutions, most retail investors (like the majority of BP) are simply priced out. Yet, the prices are far higher (even relative to income and other factors) than places like the midwest where RE ownership is much more spread out.
Bitcoin's volatility is decreasing significantly over time, it's not debatable volatility is accurately measurable for any financial asset. See here: https://www.buybitcoinworldwide.com/volatility-ind...
My prediction is that CME futures trading which opens Dec 18 will reduce volatility even further. When you can arbitrage between futures and the underlying asset financial incentives basically serve to keep volatility down.
