What happens to #Bitcoin as a possible medium of exchange if 60%-80% of BTC circulating supply is soaked up by govt, sovereign, corps & ETF’s? Hardly any of these groups have showed up in numbers yet.
#asknostr
Discussion
If 60-80% of circulating supply is restricted, the price will simply go up to match the total value of goods being traded. It scales in proportion naturally as long as natural market forces are left alone.
I think I get what happens to price relative to fiat, but my question was more about the potential for bitcoin to be a medium of exchange. There are hopes that MoE will catch on in a big way as part of the adoption cycle. If I understand it correctly, there would be less of it able to be used p2p which would therefore stifle adoption.
OK so there's two different scenarios that can play out...
In a hyperbitcoinized world, where fiat is basically worthless, 1 sat = 1 sat. If there simply isn't enough sats to go around, the price of goods being traded will go down naturally.
In the more likely scenario where bitcoin and fiat both exist, if fiat is the dominant currency, price of bitcoin will rise (what we are seeing today). If bitcoin flips fiat and isndominant, bitcoin will continue to rise, albeit slower, and price of goods (denominated in sats) will likely start to fall.
Where are they going to get that kind of majority of the supply when we have so little left to be mined? Are you going to sell it to them?
I'm not.
nostr:npub13cnlldwfhwxd6qf34hnwlfya2m2qrd2zfk0alxnrup6d2fasw9wqxwkzpe has the right of it, at any rate. No matter how much supply ends up restricted, the purchasing power will increase to accommodate. It will just take less sats to buy the same amount of stuff.
Long story short? Nothing. The economy can be ran off any quantity of currency as long as the market value of the currency is allowed to float to meet the market demand.
As long as the currency is divisible and the value of the currency is allowed to grow to meet the amount of trade done then we could operate the whole economy on just a few bitcoin. This could look like a market cap in the quadrillions or more (depending how few bitcoin were in circulation) but if that occurred it would incentivise people and nation states to use some of their bitcoin which would add more float into the market. (decreasing the purchasing power of the bitcoin in circulation) this would theoretically occur until an imbalance came about where the perceived value of holding was higher than the percieved value of spending and the cycle would repeat. hope that helps elucidate my thought process.