Circulus vitiosus is Latin for “A vicious circle” and it is often used in medicine.
Higher number of users and miners = higher price = higher number of users and miners = higher price…
Price of Bitcoin is determined by supply and demand which means that market is controlling the price, same as in capitalism, and nothing else. All those 17 million Bitcoins that are mined so far belongs to someone and if you want to buy 1 Bitcoin someone needs to be willing to sell it. If that someone(most of users) is not willing to sell it, price will rise. Same goes if many owners are willing to sell, price will go down. There is no way to simply “print” more Bitcoins as it is possible with national currencies for all countries in the world. That is the main and most important difference between Bitcoin and other currencies.
Most economists are not familiar with basic numbers and math regarding the blockchain and for that they are not capable to comment and analyze growth and declines of price. Also, those economists never had a chance to work with money that cant be simply printed out and it is logical that they refer to Bitcoin as a“bubble”. Simply, long term price of Bitcoin depends just on number of users and nothing else. If we take a look at short term price we can conclude that price varies because of manipulation by more “advanced” users over the new ones.
Again, there is just 21 million of Bitcoins in total and there is about 7 billion people on Earth. Bitcoin is owned by just 1% of total earth population and ones that are using Bitcoin in everyday payments are far less than 1%. How can just 1% of Earth population make a so called “bubble” as it is claimed by economists? How would you call a bubble such was Tulip, Dotcom where 50% of Earth population “made” those…
What will be the price of Bitcoin when we reach 50% of Earth population?
Since we have fixed 21 million of Bitcoins only parameters that can be changed are number of users and price so lets use simple math where we have one constant and two variables… If number of users is higher, higher will be the price since supply is limited and fixed to 21 million. Simple as that.
Only way for price to naturally decrease is for number of users to go down which is the case these days. This decline in number of users is caused by Countries and their negative statements on Bitcoin which successfully scared a lot of people who are uncertain and who can’t see the bright future and potential of Bitcoin and blockchain technology!
Those users who are scared are selling their Bitcoins and “advanced” users are picking up those for low price. At one point trend will change and price will go up again where all those users who sold off will be back and they will have to buy those Bitcoins for much higher price and rise will continue since they wont be willing to sell it anymore.
What will happen when we reach full potential and when Bitcoin reaches more than 50% of Earth population? What will happen with demand and price? Can you calculate the price at that point?