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Originally Posted by Smack dat
RemindMe! in 4 years.
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You should read this insightful Forbes article
What Determines The Price Of Bitcoin?.
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Bitcoin trades much like a commodity. Over the long-term, the market price of commodities tends towards their marginal cost of production. Putting this another way, mining profits eventually fall to zero. As I noted earlier, when profits fall to zero, producers eventually stop producing.
But whereas commodities would still be traded if mining ceased, Bitcoin would instantly die. This is because the real job of miners is not bitcoin production, but transaction verification. Without transaction verification, bitcoins can’t be bought, can’t be sold, can’t be spent, can’t be earned. If mining ceased, existing bitcoins would become immovable - and an immovable asset is worthless. Thus, unlike a commodity, if mining profits fell to zero, so would the value of all existing bitcoins.
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