And as this happens, Bitcoin’s real supply is less, thus it will be worth more if demand is constant. This is the second type of growth for bitcoin, which is basically like a naturally occurring “interest rate”.
Bitcoins unlike fiat money can never be increased without consensus of the entire community, and not at the whim of one government. If it does increase, it devalues their holdings, so there is no incentive to do so. However because Bitcoin is all software and networks, it can be divided to as many decimal places as needed (current limit is. Unlike printing money where your pie shrinks, with Bitcoin it’s like keeping the same chunk of the pie. More people will agree with increased divisibility than increased supply, because it keeps their wealth the same.
While this may end up with the ridiculous notion at 1 bitcoin will keep the economy alive forever, Bitcoin’s security can and likely will be upgraded over time in the distant future (like, every 50-100 years), due to Moore’s law or new technology breakthroughs. Older coins that don’t move to new, secure addresses will eventually be recovered by gravediggers/treasure hunters. This means it can keep up with new technology, and keep the supply of bitcoins healthy. None of this of course needs to happen now, because the current security is more than enough for the technology we have today.
Because bitcoins can only ever be 21 million, it makes economic sense to hold some money in bitcoins (even $10, or $100) now just in case it does take off and go through the moon. If it doesn’t, who cares, it was yesterday’s Gem money. But you’ll start to see the problem with fiat once you do. Because the value of fiat decreases over time, you need more fiat to buy a bitcoin. In reverse, if you hold your bitcoin long enough, you’ll see it can be traded back for fiat for a higher price not because it is valued by more people but because there is also simply too much fiat.
- C. It’s an efficient system if everyone uses it.
Transactions comply instantly and safely confirm within 1 hour, globally. A bank needs 24 hours to confirm a local transfer, up to 3 days for international transfers. The bottlenecks when you first buy bitcoins start to show where you see fiat is the slower part of the whole process.
- D. Some do it just for fun.
In all seriousness, Bitcoin isn’t going to bring down USD, and governments can’t bring down Bitcoin. It’s just a fresh, fun currency to use. People have even sprung up clones of Bitcoin, collectively “Altcoins”, to try and find the real “sweet spot” with the transaction system (confirming transactions faster or slower, or using different algorithms, or even going with a non-deflationary minting rate). The true beauty of this is if you use a conversion service that accepts them, you can theoretically accept them all at no risk.
- E. It’s energy efficient compared to fiat
Think of all the co2 emissions the money printing machines emit to print out money. The money needed to hire vans and security to ship cash from ATM to bank to ATM (and the co2 emissions these cars emit). And the trees!! I don’t have the statistics, but some article (if you google it) has researched the amount compared between the two systems and Bitcoin is significantly less. Bitcoin lets the global warming group put their money where their mouth is. And they do. I don’t care too much in this space though (hence not knowing the stats).
- F. It’s a Ponzi Scheme. In it to win it!!!!
(It’s a joke btw). A ponzi scheme means there is one perpetrator behind all the entries into the game. Bitcoin is purely market driven, so by definition it isn’t a ponzi scheme. Even if it is a variant of a ponzi scheme, the software has been created regardless and can be used for more than just currency. If someone as brilliant kitten .N. who knows cryptography inside out, and understands Keynesian & Austrian economics inside out, and the banking system, and knows C/C++, and creates a ponzi scheme for the hell of it, then I don’t mind falling for this man’s ponzi scheme. He has my respect. (The software source code isn’t even in his control anymore, btw. That’s the beauty of open source and reinforces the idea it isn’t a ponzi)
Disclaimer:
I’ve been playing GW2 since release and GW1 for 5-6. Definitely not a scrub that just bought GW2 just to comment on this. I know my economics & my tech, and Bitcoin is fascinating in both the finance and IT world. Intelligent people around the world talk about Bitcoin and how it can change the world, and everyone else is debating whether it is a ponzi scheme, a volatile trap or what not. Bitcoin is just what the world needs, but not the one it deserves.