dreamspark
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May 13, 2014, 07:42:01 PM

It was interesting after AnonyMint's lengthy and detailed rebuttal of why Bitpay is such great news for BTC that responses there came...none.

Or should I say...sheesh

Yeah, maybe I should compose a lengthy rejoinder?  I don't think it's worth the time.  Anonymint is clever and educated, but obstinate and sometimes obsessively ideological.  Which works for his purposes, but I see little point in trying to correct him (unless he's making an error which is likely to hurt himself or someone else).  Heck he argues well enough so that he might convince me to be wrong too.

Anyhow, bitpay adds liquidity to BTC which increases the utility and hence use of BTC, which increases demand.  Everyone who spends via bitpay has to get BTC somewhere, somehow.  It is certainly true that if one could only buy BTC and never sell it, then in the presence of a fixed non-zero demand, the price of BTC would be higher than if selling was an option.  But the fact is that demand is not fixed, and in the long run, steady-state, demand would go to zero and price to zero in that scenario.  The sustainable condition is that supply and demand are matched, and price varies to accomodate that equation.  The more BTC is used, the higher the demand, and the higher the price will go to find supply. 

Bitpay is use.  Use is good.


I do agree and certainly in the sense of the long term but I find it hard to wrap my head around the idea that just because its being used its a good thing. In money velocity terms it is but the fact is if 10% of people don't buy btc to replace what they spend the net effect on the price is that to sustain the same levels you need new investors to inject that missing 10%.

The other thing is while you are right that they had to get the coins sometime and somewhere, that demand theoretically drove the price up, if that demand is lost (by spending and not buying again) how can the net gain , without new investors, be positive?