Ask HN: The Bitcoin adoption paradox

[Nition]

Am I right in seeing a sort of paradox in the adoption of Bitcoin as it exists today?

There is a finite supply of Bitcoin, and mining speed of new Bitcoins is reducing all the time. Hence as more people buy into Bitcoin, the value tends to increase, since there’s more money in the system and less Bitcoin to go around.

Let’s say Bitcoin takes off in the real world and various merchants start accepting it.

Since Bitcoin is useful now, more people buy in. But since more people are always buying in and the total pool is limited, the value continues to go up. The more merchants support Bitcoin, the more people adopt Bitcoin, and the more valuable it becomes. The more the value continues to increase, the less people want to spend it. Why spend a dollar if it’ll be worth $2 tomorrow?

The more useful it becomes, the better it is to not use it.

[architect]

> The more the value continues to increase, the less people want to spend it.

Exactly the opposite. Bitcoin value has gone up, my purchasing power has increased. Now I can finally I can afford that silver Bugatti. Why not spend the money now so I can have the life that I want rather than taking all those nice digits into my grave?

[rohitpaulk]

> Why spend a dollar if it’ll be worth $2 tomorrow?

Why sell your house right now, when you know land prices are going to increase in the future? Factor in the rate on increase (which is not going to be 100% in a day once the currency stabilizes), and the benefit of holding vs spending isn't that skewed anymore.

[Nition → rohitpaulk]

The example of $1 to $2 was a deliberate exaggeration really. It still seems to me that if something is a good investment, you are less likely to want to sell it now. The better Bitcoin seems as an investment, the more people can be expected to lean towards holding instead of spending.