No. of Recommendations: 12
What if the bitcoin supply, along with its use as a substitute for money for transactions, became so prolific that it started to rival a true currency? Is there a point where the supply becomes large enough, and the number of people using it broad enough, that speculative activity (i.e., buying it with the expectation of making money) no longer strongly impacts the price, and it starts to have the stability of an actual currency?
I tend to agree that this ain't going to happen. Great for money laundering and scams, but no other viable use cases can be seen on the horizon.
But even if it did, my previous observations still hold: the true price (measured in a broad basket of goods and services) can't continue to go up without an ongoing incremental demand, and almost nobody holds it except because they think the price will go up.
So even a real world broad use case wouldn't make the price rise over time, any more than the purchasing power of any (non metallic) currency has gone up over the long run.
New holders come from the expectation of price rises, and price rises come only from the arrival of new holders. That process works beautifully, till it ends, as it must. I assume that some day not too long thereafter, the process goes into reverse.
Jim
