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Money has always been a representation of value. It is also the case that scarcity is a necessary feature of it.
Many years ago, people used things as common as Stones and Cowries for money. Why? https://twitter.com/emekaokoye/status/1342952498596892675
Many years ago, people used things as common as Stones and Cowries for money. Why? https://twitter.com/emekaokoye/status/1342952498596892675
Because they were scare and when they were no longer scare, they had to find and alternative.
The more the production in a given society, the higher the value of the money we are using as a medium of exchange should be.
Why? Because the nature of money is such that more of it should not be possible to make.
Why? Because the nature of money is such that more of it should not be possible to make.
As I wrote in this article, that’s the natural order of the world; deflationary - https://www.davidalade.com/the-natural-economic-order-of-the-world-is-deflationary/
A deflationary economy is one where the value of money is rising as the price of goods and services fall.
A deflationary economy is one where the value of money is rising as the price of goods and services fall.
Unfortunately, that’s not the case with fiat system because the system is designed to be inflationary. In other words, the equation reverses and price of goods increase while the value of money decreases.
20% of total dollar supply was created this year alone.
20% of total dollar supply was created this year alone.
Bitcoin on the other is designed to restore the state of nature where the price of goods fall and value of money increases.
We need not ask what determines it value just as we may not ask what determines the value of the Stones used on Yalp Island many centuries ago or that of cowries used in Africa for many years. Btw, those are two elements freely available in nature.
If we asked where their value comes though, it will boil down to demand and supply as well. My earlier article used a simple explanation for this.
Bitcoin has a fixed supply according to its verifiable technology. More of it cannot be made beyond 21 million and so it’s infinitely scare.
That’s why the more the demand for it the more its price tend to rise.
Recent event shows that their are more demands than anyone could have anticipated. Michael Saylor of MicroStrategy started something big, a lot more corporations will follow suit.
Recent event shows that their are more demands than anyone could have anticipated. Michael Saylor of MicroStrategy started something big, a lot more corporations will follow suit.
This data for instance shows that a lot more people are willing to hold on their Bitcoin than trade it. Exchanges don’t have as many #Bitcoin 
to sell again. https://twitter.com/coincornerdanny/status/1342783896275083266
to sell again. https://twitter.com/coincornerdanny/status/1342783896275083266
I also wrote in this other article that if Bitcoin will become a multi-trillion dollar asset as the Bitcoin Maximalist believe, their are 3 pertinent questions it will have to answer. You may read...
https://www.davidalade.com/bitcoin-has-a-multi-trillion-dollar-question-to-answer/
https://www.davidalade.com/bitcoin-has-a-multi-trillion-dollar-question-to-answer/
What Bitcoin is being used for right now is as a store of value just as Gold has been used for centuries. The market of Gold is 7 trillion and if Bitcoin will succeed as a store of value asset which is highly likely to, then we can expect it to be comfortably more expensive.
Just to emphasize, we can see the movement of Bitcoin this way because of the nature of the the market that we’ve developed over the period. If we had this kind of market when the cowries or stones where a form of money, maybe that generation would have told similar story.
I hope that helps a bit. I can provide more clarity to the best of my knowledge if their is still grey area.
