Robert (Bro. Pepper-spray of Reasoned Discussion) (montecristo) wrote,
Robert (Bro. Pepper-spray of Reasoned Discussion)

Bitcoin value equillibrium

The problem with Bitcoins is that their value, relative to all other goods and services, increases as the number of people using them rises. This is because the rate of growth in the number of coins is fixed to a very low number. Bitcoins have no intrinsic physical properties. Their benefit is in providing a channel for anonymous transactions. This is their nature. It is one of the intrinsic abstract properties to which individuals can impute value, thus pricing the Bitcoins against everything else for which they may be traded. As the number of people using the Bitcoins for more and more transactions rises, the value of the coins in terms of all other goods and services rises. This is basic Law of Supply and Demand. As governments become more rapacious, controlling, and tyrannous, the need for anonymous transaction channels goes up and more people use Bitcoins.

As more people use Bitcoins though, this tends to improve freedom and increase the understanding of tyranny among people. It also gives them channels for avoiding tyranny and resisting it. It pushes back tyranny. As tyranny crumbles, the pressing need for anonymous transactions falls and people stop going to the extra trouble of using Bitcoins. This causes the value of the Bitcoin, in terms of all other goods and services, to fall.
Tags: economics, ponderings and curiosity, science and technology

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