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Comment by mavhc | Hacker News Reader

Bitcoin has 3 mechanisms built in to make it almost always increase in value, halving of the rewards, finite total+lost bitcoins, and increasing complexity when more people are mining.

In the end all you're doing is buying electricity and converting it to bitcoin, anything above that cost is based on future costs when the rewards halve.

All this means you should never sell your bitcoins, which means it's a terrible currency

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"to make it almost always increase in value"

To any investor this should be the biggest red flag that you are in a Ponzi/pump and dump scheme. "You can't lose!"

And rather than you are "buying electricity" I would say you are buying used electricity, which is useless.

It's a deflationary currency. The opposite of "USD always decreases in value because of inflation". Not a red flag at all. Even the idea that it's deflationary is debatable since exchanges now offer loans, a service which effectively creates new bitcoins out of nowhere.

Deflationary currencies cannot be deflationary forever. Think for 5 seconds: if that was true, then the person who sold the pizza for bitcoin will eventually have enough value to buy everything on the planet. So will the person whose CPU was mining to keep the pizza warm. Can there be two planets of value on the planet?

The value on the planet is not increasing as a result of bitcoin. Available bitcoins with which to buy valuable things are decreasing. There is a finite amount and people constantly lose bitcoins which takes them out of circulation.

People speak of the value of bitcoins increasing, as if it's some kind of universal law. If it was a universal law, you could just hold onto 1 BTC for long enough and then buy the entire planet. It's not.

Not a law, but it's part of the design, because "omg inflation is bad, the government are taking your money!" theories from people who left before Economics 102

It's not the value of BTC that's increasing. It's the value of USD and all other fiat currencies that are decreasing. Governments print trillions of them while fractional reserve banking and loans create even more. If you have a steadily decreasing supply of bitcoin and a steadily increasing supply of fiat, it's only reasonable to expect that more fiat will buy less bitcoin over time.

This is false. 10000 bitcoins used to buy $10 or a pizza. If USD's value was decreasing, 10000 bitcoins would buy $100 or a pizza. But no. Actually 10000 bitcoins buys $300,000,000 or 30,000,000 pizzas.

It's not false, it just means there must also be other factors influencing the price.

You're buying electricity, and using it to make the bitcoins.

The red flag is you're buying something that's useless. The cost of a bitcoin may be correct, but doesn't mean it's worth the cost.

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