Jack Jones wrote: ↑Sat Mar 23, 2024 4:12 pm
Interesting property of Bitcoin is that, like other commodities, as the price rises, more miners come online because it is now profitable where it wasn’t before. Likewise, hard to access gold becomes more worthwhile to dig up.
However, with Bitcoin, the miners are competing for their share of daily supply. More miners coming online doesn’t lead to more Bitcoin on the market.
In contrast, when more gold miners come online, the supply of gold increases.
I believe this is a unique property of this commodity. The price is all about the demand.
I have a question about supply (I know you wrote about demand above, not supply), Jack.
Couldn’t one just keep dividing bitcoin ad infinitum and have it be worth more? I mean, gold can get pretty small, but once you get to a gram it becomes unattractive to own beyond that. Even fractional coins are a worse deal than one ounce coins.
Being intangible, Bitcoin can just keep dividing, right? Like a company adding more shares with a stock split.
Or is that fallacious thinking?
EDIT: I see a similar question was asked on reddit and the OP was roundly mocked. The OP asked how being infinitely divisible is not equal to infinite supply. I think the devil is in the details.
One of the early responders sarcastically quipped, “If I have a pizza and I cut it in two, I have two pizzas.”
Of course the total bitcoin is not going to increase, ever. However, I don’t think you can really compare it to physical items. You can’t increase the calories in either of those two slices of pizza. Bitcoin is abstract, however, and the value is perceived. The value of those new pieces of freshly split bitcoin could still go up.