- Dec 14, 2013
Uh, no. It's not the same. If all gold stopped being mined tomorrow, gold that you hold in your hand wouldn't suddenly go to zero. It would likely go up in value.
However, if Bitcoin Mining stops...... It's done. There is no value, because there is no way to transact. This is the difference between "Money of Account" and "Money of Exchange."
Disagree, bitcoin mining will stop one day (year 2140 actually), it is expected that tx fee reward will replace the incentive for miners to mine. There are thousands of transactions everyday, currently the average is $1T of value everyday.
Bitcoin is currently believed by a large group to be a store of value, it is also a medium of exchange, and at the moment only in some isolated cases a unit of account. I'm not sure if these terms overlap with yours. Bitcoin as a unit of account, meaning things being priced in bitcoin, while limited today, will continue to grow. But even if this did not happen, bitcoin would still have value today as a store of value, just like gold. Gold has monetary value even though you can't buy a burger for a certain # of ounces of gold.
But you aren't "trading" anything of value. It's digital entries in a ledger. It requires "work," but so does banking, printing money, and other accounting functions.
And plenty of exchanges are willing to take unbacked, fiat dollars in exchange for Bitcoin. So much for this trading "something of value." This is the same thing that give Federal Reserve Notes value. I can take those to the store, and buy food or whatever.
It's not "value for value" like exchanging a gold piece for suit, where the gold buys the suit, and the suit buys the gold. But with both FRNs and Bitcoin, you are simply "discharging debt."
Printing money out of nothing is in no way comparable to mining bitcoin by proof-of-work.
All value is subjective, thats how a market works. You think something has more value than the money you pay for it, the otherside thinks the opposite, they think the money has more value, they are both correct because they each have a unique circumstance. There is no objective value, Austrian economics 101.
Lol, I don't think you really understand what a "Free Market" is. How, exactly, can it be a "Free Market" when Governments can push the price around with legislation, rules, or threats thereof?
Of course there is no perfect free market, there are only degrees.
Maybe it's not "The Market Learning," but a change in the value of something. When Amazon dropped from $114 to $7 in 2001, it was NOT the same company it is today. They sold books. Annnnnnnd...... that's pretty much it. They were a tiny retailer. Now, they are obviously massive.
But, if they were "Mis Valued" in the past, what makes you think the valuation in the present is any better?
Again, there is only subjective value. I believe bitcoin could be valued much higher than it is today, somewhere around $5 million per coin. So I won't sell below that, unless my life circumstances force me to. But otherwise of course I understand I could be wrong and so I will loose my purchasing power if I am. But I am okay with that, thats how a market works.