Here is my understanding of Bitcoins, would love to hear from people more knowledgeable than me on what I am getting wrong Only a certain number of bitcoins can be mined if the price of bitcoin...
Here is my understanding of Bitcoins, would love to hear from people more knowledgeable than me on what I am getting wrong
- Only a certain number of bitcoins can be mined
- if the price of bitcoin goes up, it makes mining seem more profitable which encourages more mining
- If there is more mining, the difficultly of mining eventually increases, & so miners consume more electricity until mining becomes less profitable again
- Bitcoin is already consuming so much energy that countries are starting to actively discourage mining
This implies that any substantial increase in bitcoin price will result in substantial regulation of the bitcoin industry as it impacts the supply and price of electricity to other industries
- Bitcoin is highly volatile, and over time has increased in price substantially
- A significant portion of bitcoin investors are speculating on an asset rise
- If the asset stops rising, some speculators may start to sell
- Increased selling activity will lower the price
- A lower price will force more speculators to sell
This implies that if bitcoin does not keep rising, it will start to fall
- Other crypto currencies are highly correlated with Bitcoin price movement.
Therefore if bitcoin falls, other crypto currencies fall.
- Bitcoin is the current default for accepting cryptocurrency as payment
- Bitcoin has a limited number of transactions it can process (3-7 a second)
- If too many people want to process transactions, the fee will rise
Therefore one or more other cryptocurrencies that uses proof of stake, must become the default for accepting cryptocurrency as payment.