Agree with bitcoin or not I want to state some facts here that are indisputable:
1. Bitcoin can never replace a currency with a central bank as a medium of exchange in our current economic system because it doesn't have an expandable supply. You can look at an increasing money supply in two ways - 1) It devalues savings, creates inflation and everything else we hear about, but 2) The devaluing of savings encourages as much spending as possible and we know from economics that spending must equal income in the economy, so it results in great economic growth. It devalues debt over time, making debt easier to pay in the long run, it creates room in the price for increased employment or investment in capital. Now aside from looking at an expandable money supply in a negative vs positive light, the Federal Reserve's mandate from congress is to ensure price/market stability (not stocks, but all markets such as money markets, job markets, etc...). So over time they've developed tools, most recently the widespread use of the Repo Market/Lender of Last Resort after the 08 GFC. Most of the assets held by firms in 08 were long term debt like mortgages and the problem was that the profit would be realized much later down the line, so when selling these assets, they would sell at a discount, crashing markets. The Federal Reserve now steps in and exchanges these assets for cash to the bank to operate. If the bank's default, the Fed has assets to back the cash. This is what they do permanently through QE, instead of lending, they buy these assets to keep the loanable funds of banks at their target interest rates. This is just an example of how an expandable supply can help the economy in the short run. Back in the 1929 depression, we found it hard to get back to full employment, it was a 10 year depression basically caused by the inability of the government to effect policy that could help the economy move. With bitcoin we would see economic hardship last much longer, not to mention an initial decrease in the standard of living.
2. My next argument for bitcoin is that you have to remember nothing is inherently valuable because something is only worth what the next person is willing to pay for it. If water was scarce it would cost millions for a few bottles, so it all depends on so many factors, least of all intrinsic value. So bitcoin will keep rising as long as people are willing to buy it and why would they continue buying it? Well it can be used reasonably anonymously, low risk of being stolen, quick transfer times, low fees, virtual and more.
3. The last thing that people don't quite get is that any market, stock market, forex market are determined based off supply and demand. With currencies the supply is expanding/contracting regularly, but with bitcoin it's consistently contracting versus the USD it's valued against which is always moving. So eventually bitcoin's supply will be so limited that's it's only going to get more volatile over time because of the low liquidity at each price. It's far easier now for Bitcoin to move from 54k to 100k than it was for BTC to initially move from 3k to 20k.
This lasts as long as the USD remains weak overall and people's demand for BTC consistently outweighs the supply...
1. Bitcoin can never replace a currency with a central bank as a medium of exchange in our current economic system because it doesn't have an expandable supply. You can look at an increasing money supply in two ways - 1) It devalues savings, creates inflation and everything else we hear about, but 2) The devaluing of savings encourages as much spending as possible and we know from economics that spending must equal income in the economy, so it results in great economic growth. It devalues debt over time, making debt easier to pay in the long run, it creates room in the price for increased employment or investment in capital. Now aside from looking at an expandable money supply in a negative vs positive light, the Federal Reserve's mandate from congress is to ensure price/market stability (not stocks, but all markets such as money markets, job markets, etc...). So over time they've developed tools, most recently the widespread use of the Repo Market/Lender of Last Resort after the 08 GFC. Most of the assets held by firms in 08 were long term debt like mortgages and the problem was that the profit would be realized much later down the line, so when selling these assets, they would sell at a discount, crashing markets. The Federal Reserve now steps in and exchanges these assets for cash to the bank to operate. If the bank's default, the Fed has assets to back the cash. This is what they do permanently through QE, instead of lending, they buy these assets to keep the loanable funds of banks at their target interest rates. This is just an example of how an expandable supply can help the economy in the short run. Back in the 1929 depression, we found it hard to get back to full employment, it was a 10 year depression basically caused by the inability of the government to effect policy that could help the economy move. With bitcoin we would see economic hardship last much longer, not to mention an initial decrease in the standard of living.
2. My next argument for bitcoin is that you have to remember nothing is inherently valuable because something is only worth what the next person is willing to pay for it. If water was scarce it would cost millions for a few bottles, so it all depends on so many factors, least of all intrinsic value. So bitcoin will keep rising as long as people are willing to buy it and why would they continue buying it? Well it can be used reasonably anonymously, low risk of being stolen, quick transfer times, low fees, virtual and more.
3. The last thing that people don't quite get is that any market, stock market, forex market are determined based off supply and demand. With currencies the supply is expanding/contracting regularly, but with bitcoin it's consistently contracting versus the USD it's valued against which is always moving. So eventually bitcoin's supply will be so limited that's it's only going to get more volatile over time because of the low liquidity at each price. It's far easier now for Bitcoin to move from 54k to 100k than it was for BTC to initially move from 3k to 20k.
This lasts as long as the USD remains weak overall and people's demand for BTC consistently outweighs the supply...