BTC in the PP

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Jack Jones
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Re: BTC in the PP

Post by Jack Jones » Thu Mar 28, 2024 8:49 am

Smith1776 wrote:
Tue Mar 19, 2024 12:46 pm
ArthurPooh wrote:
Tue Mar 19, 2024 12:25 pm
Does it contain anything that already wasn't included within Moldbug's article that started the whole "Bitcoin as a store of value" argument?
I didn't know the name Moldbug until you just mentioned it. Is it this article?

https://www.unqualified-reservations.or ... is-bubble/
The tip jar at the end of the post has received 28.5 Bitcoin, worth $2 million today.

https://mempool.space/address/12jmAcfRp ... 5yDsYxHRiZ
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dualstow
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Re: BTC in the PP

Post by dualstow » Thu Mar 28, 2024 9:05 am

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.
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vnatale
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Re: BTC in the PP

Post by vnatale » Thu Mar 28, 2024 9:56 am

dualstow wrote:
Thu Mar 28, 2024 9:05 am

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 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 comapre 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.


Yogi Berra: “You better cut the pizza in 4 pieces, because I’m not hungry enough to eat 6.”
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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dualstow
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Re: BTC in the PP

Post by dualstow » Thu Mar 28, 2024 10:46 am

Love that guy.
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Re: BTC in the PP

Post by 425 » Thu Mar 28, 2024 1:05 pm

dualstow wrote:
Thu Mar 28, 2024 9:05 am
Of course the total bitcoin is not going to increase, ever. However, I don’t think you can really comapre 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.
Not Jack, but I'll have a go at answering.

The reason divisibility is an important in money is because if the value of the smallest unit of account gets too large relative to the value of the goods and services the money serves as a claim on, then the unit of account is no longer appropriate.

I see this as a feature not a bug so as the demand for the units of account increase, being divisible allows it to continue to function even for small transactions. The important thing is that on the ledger 1 bitcoin will always be 1 out of 21 million units. When each satoshi (1/100 million of a bitcoin) becomes the relevant unit to track $0.01, it is because the dollar has inflated and not because of the divisibility of bitcoin.

When even 1 satoshi is too large in value to appropriately track the value of goods and services then the divisibility of the ledger can be increased if needed and the blockchain reaches consensus to do so.
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Re: BTC in the PP

Post by dualstow » Thu Mar 28, 2024 1:12 pm

Thank you, 425
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