Author Topic: Does Bitcoin have the potential to replace fiat?  (Read 1322 times)

Offline Melo

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Does Bitcoin have the potential to replace fiat?
« on: 30 12, 2020, 11:27:50 pm »
Bitcoin is gaining traction again after surpassing its previous all time high of $20k USD back in the bull run of 2017. It is currently valued at $28.8k at the time of this post.

The current bull run is different than the last one in how there are now billion dollar financial institutions such as MicroStrategy and Greyscale investing millions/billions of dollars in Bitcoin.

These investors are taking Bitcoin and holding it, making the available supply on exchanges less. As the demand for Bitcoin increases and the supply decreases, it results in sudden spikes in price. However, Bitcoin has not “crashed” after showing growth in such a short amount of time. It reaches a new ATH and consolidates along newly established support levels. This is further proof that Bitcoin’s median price increases with every cycle. Despite having major dips over the years, there was always an upward trend in its price.

https://coinmarketcap.com/currencies/bitcoin/

What’s so special about Bitcoin? Why are investors rushing to have a position in it?



This video briefly explains how BTC works, and how it differs from fiat currency and gold. The main advantage BTC has over fiat is that it cannot be manipulated by a centralized party (ie: the government) and that it does not depreciate over time, as opposed to fiat money that has an average inflation rate of 2%. People who leave their money in their bank account don’t realize that it loses purchasing power over time.

These institutions see the potential Bitcoin has here, and are allocating a significant amount of their money to BTC as a hedge against inflation, other assets etc.

The waves of retail investors have not appeared yet, but as Bitcoin approaches new all time highs, a domino effect happening becomes sooner than later.

Do you think Bitcoin has the potential to become a globally accepted and adopted currency? Do you think it doesn’t have a chance and is just a trend with no real substance? Let’s discuss.




Offline Arran

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #1 on: 31 12, 2020, 11:02:03 am »
Bitcoin is too slow to replace fiat. Unless there is a way to do the major optimizations to the system. Bitcoin can only handle something like 100 transactions a second while in the world there are tens / hundreds of thousands of transactions a second. There are other much more optimized crypto currencies. Perhaps in the future there will be something like Ripple or Ethereum for day to day transactions and bitcoin for your savings.

If crypto started getting used then it could be completely world changing for the reason that it takes away power from banks to create fiat money out of thin air in the form of debt that most of the world is enslaved to.
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Offline domi

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #2 on: 31 12, 2020, 05:20:09 pm »
My humble opinion:

While blockchain technology shows great promise, Bitcoin itself is the 21st century equivalent of the Tulip Mania. In other words, Bitcoin is in a bubble.

If we ignore crypto speculators, Bitcoin is a niche market mostly populated by gamblers, criminals and darkweb psychos. They aim to buy and sell in Bitcoin, hoping to remain anonymous in transactions. But Bitcoin fails at this too: it fails to protect them as many arrests have shown in the past. So the cryptocurrency doesn't even provide a good service for its main market.  Monero could be a better alternative for them, but it remains to be seen.

Bitcoin's only saving grace is that it has been used in countries with failing currencies like Venezuela.

Besides, it is needlessly complicated. If you're a regular guy who wants to buy something online without revealing identity, it's easier to get a prepaid gift card at your local bank or grocery store. It's way easier than learning about cryptocurrency exchanges, crypto wallets, and it's more comfortable than contacting cypto dealers online who probably do business with criminals.

Bitcoin cannot function as a currency. Its price fluctuates widely and it's not stable enough. Imagine the poor sap who bought Bitcoin at $20.000 during its previous peak, only  to see it crash below $4000 in value before he had to reuse the funds. Inflation rate of 2% is nothing compared to that.

Crypto speculators can earn money, yes, but it's nothing more than gambling.

Also, governments will never give up their ability to manipulate interest rates through quantitative easing ("printing money out of thin air"). Such loose monetary policy allows them to postpone the crash and to postpone necessary changes on the market. It's an amazing political tool. The cronies who are close to the newly printed money can spend it at original value while the rest of us have to pay the inflation tax.
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Offline Melo

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #3 on: 31 12, 2020, 05:57:19 pm »
Show content
Bitcoin is too slow to replace fiat. Unless there is a way to do the major optimizations to the system. Bitcoin can only handle something like 100 transactions a second while in the world there are tens / hundreds of thousands of transactions a second. There are other much more optimized crypto currencies. Perhaps in the future there will be something like Ripple or Ethereum for day to day transactions and bitcoin for your savings.

If crypto started getting used then it could be completely world changing for the reason that it takes away power from banks to create fiat money out of thin air in the form of debt that most of the world is enslaved to.

It’s true, Bitcoin has older technology (lightning network has helped a ton with speed though) and is outperformed by some other cryptocurrencies like Nano, but despite this it’s remained the number one cryptocurrency as far as market valuation goes. I think this is mainly due to Bitcoin being the oldest, and therefore most trustworthy cryptocurrency.

It’s also true that Bitcoin serves better as a store of value and is often referred to as digital gold. There are other cryptocurrencies that are better suited for fast transactions but they have not had the same mainstream attention that Bitcoin (and to a lesser degree, Ethereum) has. Ripple (XRP) is actually being sued by the SEC: https://www.sec.gov/news/press-release/2020-338. I’m not sure what the long term affect this will have on XRP but it’s dropped nearly 50% in the past weeks.

Overall I agree with you in how Bitcoin is better suited as a store of value rather than a day to day currency. However the technology is being improved overtime and it could get another upgrade similar to lightning network.

Show content
My humble opinion:

While blockchain technology shows great promise, Bitcoin itself is the 21st century equivalent of the Tulip Mania. In other words, Bitcoin is in a bubble.

If we ignore crypto speculators, Bitcoin is a niche market mostly populated by gamblers, criminals and darkweb psychos. They aim to buy and sell in Bitcoin, hoping to remain anonymous in transactions. But Bitcoin fails at this too: it fails to protect them as many arrests have shown in the past. So the cryptocurrency doesn't even provide a good service for its main market.  Monero could be a better alternative for them, but it remains to be seen.

Bitcoin's only saving grace is that it has been used in countries with failing currencies like Venezuela.

Besides, it is needlessly complicated. If you're a regular guy who wants to buy something online without revealing identity, it's easier to get a prepaid gift card at your local bank or grocery store. It's way easier than learning about cryptocurrency exchanges, crypto wallets, and it's more comfortable than contacting cypto dealers online who probably do business with criminals.

Bitcoin cannot function as a currency. Its price fluctuates widely and it's not stable enough. Imagine the poor sap who bought Bitcoin at $20.000 during its previous peak, only  to see it crash below $4000 in value before he had to reuse the funds. Inflation rate of 2% is nothing compared to that.

Crypto speculators can earn money, yes, but it's nothing more than gambling.

Also, governments will never give up their ability to manipulate interest rates through quantitative easing ("printing money out of thin air"). Such loose monetary policy allows them to postpone the crash and to postpone necessary changes on the market. It's an amazing political tool. The cronies who are close to the newly printed money can spend it at original value while the rest of us have to pay the inflation tax.

While it’s fair to see Bitcoin as just a bubble, what is actually happening is that it (and the rest of the market) goes through cycles, every 4 years. If you bought Bitcoin at the worst possible time in the last bull run in 2017, you would be up 68% profit today. Most bubbles pop and either don’t recover or take many years to build up again. Bitcoin has shown much different behavior.

Also it’s a bit of a stretch to say that only gamblers, criminals and such are the ones who really occupy the market. If this were the truth it would wouldn’t make sense for the likes of PayPal, Cash App, Robinhood etc to allow you to buy Bitcoin from their apps. Also, it would sound like something that billion dollar institutions would steer clear of, but that isn’t the case: https://www.bloomberg.com/news/articles/2020-12-09/jpmorgan-says-gold-will-suffer-for-years-because-of-bitcoin

Bitcoin is just a currency, like cash. It’s not the root of the problems it’s been associated with such as dark web transactions. It was not made for that purpose.

I agree with you to an extent that it’s hard to adopt as a daily currency. I think that as time passes  and we move towards a more digital world, things like Bitcoin will be encouraged and made much easier to adopt.



Offline domi

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #4 on: 01 01, 2021, 03:39:45 pm »
Also it’s a bit of a stretch to say that only gamblers, criminals and such are the ones who really occupy the market. If this were the truth it would wouldn’t make sense for the likes of PayPal, Cash App, Robinhood etc to allow you to buy Bitcoin from their apps. Also, it would sound like something that billion dollar institutions would steer clear of, but that isn’t the case: https://www.bloomberg.com/news/articles/2020-12-09/jpmorgan-says-gold-will-suffer-for-years-because-of-bitcoin

Here's what I said:

If we ignore crypto speculators, Bitcoin is a niche market mostly populated by gamblers, criminals and darkweb psychos.

Is anyone else really adopting Bitcoin other than the bad guys and Bitcoin speculators? Paypal may be offering Bitcoin transactions, but everyone still sticks to traditional ways of buying and selling. Some may use Paypal to buy Bitcoin for "investment," but how many will actually use Bitcoin as a regular currency in their day-to-day lives? I'm afraid the number is incredibly small, and I already mentioned some of the reasons for that (price instability, unnecessary complexity, low value provided by Bitcoin, etc)

I believe the institutional investors are pouring money into Bitcoin so they can pump and dump to make a quick buck off the current boom. If you think about it, there's lots of uncertainty surrounding the stock markets and real estate prices are reaching unsustainable levels around the world.

So here's what they may be thinking: "Bitcoin is already in a bubble, and since everything has become so uncertain, let's pour some money in there, prolong the boom and then sell to poor saps for profit as the price begins to come down again."
« Last Edit: 01 01, 2021, 03:42:24 pm by domi »
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Offline Nyle

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #5 on: 08 01, 2021, 07:18:10 pm »
As the world, we are developing day by day.
As we develop, technology improves and it becomes more useful and more important.
One of these developments is E-Commerce. People make a lot of investments and purchases on the internet, and new developments are occurring day by day. One of these developments is Bitcoin.
Although Bitcoin is very valuable these days, it is taking the market by storm. Considering the developments so far, such a thing is possible.
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Offline Harshil

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #6 on: 13 01, 2021, 04:30:46 pm »
As you said in the original post that bitcoin cant be manipulated by government, I think its not true cause any government can put a ban on trading of crypto currency and it can be manipulated and also if some rich company or person tries collecting BTC the price can be manipulated and the total number of BTC in market are constant and is fixed.

Offline Arran

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #7 on: 14 01, 2021, 11:17:49 am »
As you said in the original post that bitcoin cant be manipulated by government, I think its not true cause any government can put a ban on trading of crypto currency and it can be manipulated and also if some rich company or person tries collecting BTC the price can be manipulated and the total number of BTC in market are constant and is fixed.

Unless the government ban the Internet, they can't really ban crypto. Though they could try stop shops accepting it. Governments definitely will try to restrict it so they can maintain their control.
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Offline Klash

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #8 on: 20 02, 2021, 03:54:32 am »
I doubt it, but I like the idea that there is no government that controls this currency


Offline M3dusa

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #9 on: 21 02, 2021, 01:15:12 am »
Bitcoin is more of an asset than it is a currency, if your question is can a cryptocurrency replace fiat then the answer could very well be yes, however, none of the current stablecoins would be fit for that role, just yet.
It wont be as simple as BTC taking over fiats, there's still a missing piece, but again, the tech is relatively new and there's still lots of unexplored paths.
It's feasible that certain economically troubled countries can benefit from adopting cryptocurrencies, which Cardano ($ADA) is currently trying to lay the structure as means of doing so.
But there remains the fact that many countries are studying the possibility of issuing sovereign cryptocurrencies as means to curb the dominance of btc, some of them already are testing their prototypes such as China.

Is Bitcoin in a bubble? even if the answer is yes, it's too early to call and bubble is nowhere near busting, it's just getting started.




Is anyone else really adopting Bitcoin other than the bad guys and Bitcoin speculators?
https://bitcointreasuries.org/


Imagine the poor sap who bought Bitcoin at $20.000 during its previous peak, only  to see it crash below $4000 in value before he had to reuse the funds.
That poor sap would've tripled his initial investment in 3 years, also, it's kinda his fault that he bought without doing his homework.

Edit; clarified some basics
« Last Edit: 21 02, 2021, 05:02:00 am by M3dusa »
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Offline domi

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #10 on: 21 02, 2021, 05:19:25 am »
https://decrypt.co/47061/public-companies-biggest-bitcoin-portfolios
That poor sap would've tripled his initial investment in 3 years

Not many people are going to stick around on a sinking ship.

If the poor sap bought Bitcoin for $20.000 and then sold it when the value hit $10.000, he lost 50% of his investment, but he still cut his losses considering that Bitcoin eventually went down below $5000. Only the most steadfast "HODLER" didn't sell it at that time.

Now I agree that the speculators who bought the "dip" made a good move, but only if they also decided to hold it for a long time. It was a highly risky move though, considering that almost nobody is using Bitcoin other than criminals and people who speculate that its future value is going to increase.

it's kinda his fault that he bought without doing his homework.

Even the most educated and experienced people in finance cannot beat the market. This is not about "doing homework". Bitcoin is pure speculation, i.e. gambling, because of the factors I've already talked about.

Quote
https://decrypt.co/47061/public-companies-biggest-bitcoin-portfolios

Bitcoin is only a small part of their total portfolio, and again, they're buying Bitcoin for speculative reasons. They're not using it as a currency or whatever.

In reality the coronavirus situation made investments in stocks and real estate more uncertain so some investors are pouring money into crypto. As I previously explained:

Quote
I believe the institutional investors are pouring money into Bitcoin so they can pump and dump to make a quick buck off the current boom. If you think about it, there's lots of uncertainty surrounding the stock markets and real estate prices are reaching unsustainable levels around the world.

So here's what they may be thinking: "Bitcoin is already in a bubble, and since everything has become so uncertain, let's pour some money in there, prolong the boom and then sell to poor saps for profit as the price begins to come down again."

The current boom isn't going to last. It's driven SOLELY by a speculative frenzy made possible by corona.
« Last Edit: 21 02, 2021, 05:30:31 am by domi »
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Offline M3dusa

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #11 on: 21 02, 2021, 05:52:22 am »
Not many people are going to stick around on a sinking ship.
That's true, but I don't see how is that crypto's fault, markets crash, be it wallstreet or crypto, it happens lol.

If the poor sap bought Bitcoin for $20.000 and then sold it when the value hit $10.000, he lost 50% of his investment, but he still cut his losses considering that Bitcoin eventually went down below $5000. Only the most steadfast "HODLER" didn't sell it at that time.
But that's the point, buying at ATH is just stupid, do your research, know what's up with the market trend at the time of investing, wait for a correction and set a proper stoploss. You don't actually "lose" money on crypto if you know when to get in and when to get out.

Now I agree that the speculators who bought the "dip" made a good move, but only if they also decided to hold it for a long time. It was a highly risky move though, considering that almost nobody is using Bitcoin other than criminals and people who speculate that its future value is going to increase.


Even the most educated people in finance cannot beat the market. This is not about "doing homework". Bitcoin is pure speculation, i.e. gambling, because of the factors I've already talked about.
It's supply and demand, just like how any other asset value is determined, and don't get me wrong here, a whale can manipulate the market, and it happens so often, but there's always signs for it if you know where to look, you can also leech of that whale and make shittons of money.
TA and FA are there for a reason, and nobody should ever go all in if he doesn't know what he's up against.
I don't do stocks, I believe it's rigged, and honestly, with all these flying predictions by the most educated people in finance, they either don't understand what crypto is or they're just afraid of tapping into uncharted waters.
Here's Peter Schiff making a fool out of himself not on one prediction but two.


Bitcoin is only a small part of their total portfolio, and again, they're buying Bitcoin for speculative reasons. They're not using it as a currency or whatever.

Considering that the coronavirus situation made investments in stocks and real estate more uncertain, some investors are pouring money into crypto. As I previously explained:

The current boom isn't going to last long. It's driven SOLELY by a speculative frenzy made possible by corona.
As I said in my first post, I don't consider BTC to be a currency but it's definitely an asset.
And honestly, you do you, I'm not trying to convince you to put your money into crypto, but to say it's a frenzy... eh.
The crypto market is just like the stock market minus the Fed's stinky manipulation, and just like how you can lose all your money in wallstreet, you can definitely lose it in crypto.

The current boom isn't going to last long.
That's where you're wrong though, the bull market is juuust getting started.
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Offline domi

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #12 on: 21 02, 2021, 06:59:04 am »
The difference between investing in Bitcoin and investing in, say, S&P 500, is that the stock market has been on an upward trajectory for a very long time.

The stock market has credibility and it's based on products and services that provide real-world value to people.

If you put your money in an index fund, you're going to get 10x to 20x your money back eventually, but you have to wait.

With Bitcoin you can lose money and it has yet to prove itself.

Bitcoin is not a value-producing asset like a share of stock that's based on a company which solves people's problems.

Similarly, Bitcoin is not a value-producing asset like a piece of real estate. Real estate can be rented out, providing value to tenants, or it can be used for work, providing value to workers and business owners, which ultimately allows them to provide value to customers.

In contrast almost everyone buys Bitcoin because they want to get rich. Bitcoin's price doesn't reflect the value it provides. Rather, its prices reflects how many people want to get rich off it right now. And that's the problem. The price is driven by a speculative frenzy.
« Last Edit: 21 02, 2021, 07:00:48 am by domi »
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Offline M3dusa

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #13 on: 21 02, 2021, 11:39:20 pm »
The difference between investing in Bitcoin and investing in, say, S&P 500, is that the stock market has been on an upward trajectory for a very long time.
Exactly, cryptocurrencies still have a HUGE room to grow, 30x to say the least.
As of now, the crypto market cap is $1,738,558,915,511, unironically 2 days ago it was only $1.5T, that's 200 billion usd growth in two days, 1 year ago it was only $350B, you catch my drift there?
S&P500 is already at its peak, yeah, sure, it's $23T but again, that's its peak and cryptocurrencies are catching up, QUICK.

The stock market has credibility and it's based on products and services that provide real-world value to people.
Hello? blockchain?? DeFi???
If you put your money in an index fund, you're going to get 10x to 20x your money back eventually, but you have to wait.
Oh come on man, with a 10% APY tops? seriously? how many lifetimes do you need to 10x your money in an index fund LOL, also, you'll have to deduct the inflation rate so good luck with that.
With Bitcoin you can lose money and it has yet to prove itself.

Bitcoin is not a value-producing asset like a share of stock that's based on a company which solves people's problems.
Again, the fact that there's no room for bitcoin manipulation produces values in and of itself. And the scarcity and halvings does the rest.
The last bitcoin to be mined will be in 2140, so really, we don't have anything to worry about before then.
Similarly, Bitcoin is not a value-producing asset like a piece of real estate. Real estate can be rented out, providing value to tenants, or it can be used for work, providing value to workers and business owners, which ultimately allows them to provide value to customers.
You can rent your cryptocurrencies for traders and gain interest, BTC included, and you can buy stuff with BTC already.

In contrast almost everyone buys Bitcoin because they want to get rich. Bitcoin's price doesn't reflect the value it provides. Rather, its prices reflects how many people want to get rich off it right now. And that's the problem. The price is driven by a speculative frenzy.
You can apply that argument to banking, hell, to the whole economic structure.
The difference is, BTC not only preserves its value against fiat currencies, it also racks up profits, why does it do it so quickly? read my first point again.


Edit: I'm in no way telling anyone to get into cryptocurrencies, do your own research and make sure that you have a solid risk management strategy.

Edit2: Forgot to mention that while Bitcoin's tech is indeed outdated and that there's no possibility of it having advancements (that's why you see BTCB, BSV, BTG, BCD and BCH) it still is the godfather of all the cryptocurrencies, and it still has the dominance over the cryptocurrencies (62.53% as of this writing) so yes, all the other technology that come out of altcoins still drives the bitcoin price in a sense, it's even still the safest bet if you're going long term and don't want to get into the hassle of watching the market and trading in general.
« Last Edit: 21 02, 2021, 11:59:46 pm by M3dusa »
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Offline domi

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Re: Does Bitcoin have the potential to replace fiat?
« Reply #14 on: 22 02, 2021, 11:49:18 pm »
Quote
Oh come on man,? seriously? how many lifetimes do you need to 10x your money in an index fund LOL, also, you'll have to deduct the inflation rate so good luck with that.

See, that's the problem. You should understand the difference between investment and speculation. Speculation is highly risky, so you can lose your shirt quickly, but investment is about steadily growing your wealth over time while controlling your risk of loss.

You can decide to gamble with crypto trading. Sometimes you will win, and other times  you will lose. It's gambling. But in the long run, Bitcoin will likely crash and burn, as several Nobel laureates of economics have predicted.

Compare this with investing in something like S&P 500. You can steadily grow your wealth over the next decades. You put in $50.000 after saving and working hard, and later you take out $500.000+ without lifting a finger. And if you decide to continuously invest over the years, you can easily retire as a millionaire – or even as a multi-millionaire.

Which path is better: retiring as a millionaire  OR risking to lose your shirt with crypto trades,  living off govt pension as a poor old man?

Now don't get me wrong: maybe you're a master crypto speculator. Maybe you're a master of financial wizardry who can beat the market with crypto. Beating the market is a feat that even hedge fund managers struggle to achieve.

But likely you're not. In the long run, hardly anyone beats the market.

That's why crypto should only be a small part of someone's investment portfolio because of its risk. 10-15% tops. The rest of the portlofio should be way more conservative.

If you want to get rich, start a business and work hard. Become a top expert in your field and charge high fees. Crypto is gambling right now. Depending on your timing, you may win, you may lose... who the hell knows?

Quote
Again, the fact that there's no room for bitcoin manipulation produces values in and of itself. And the scarcity and halvings does the rest.
The last bitcoin to be mined will be in 2140, so really, we don't have anything to worry about before then.

Let me clarify with an example that'll be at least  familiar to the CIT audience.

We can compare the price of AMD stock with the price of Bitcoin. AMD provides value to customers in the form of high-end graphic cards,  CPU and other PC equipment.

AMD has been very innovative  with the Ryzen lineup and RX 6000 series cards. As a result they've been agreesively increasing their market share for years. And the price of their stock natually went up .

In the case of AMD, there's a  cause-and-effect relationship between the stock price and increased customer value made possible by innovation.  AMD is now making better cards, more affordable CPU's, and they're reaping the benefits as the PC market rewards them.

That's what's driving the price of the AMD stock; there's a direct cause-and-effect relationship between the increased price and increased customer value. People are benefiting and using those innovations in the real world.

Compare that to Bitcoin. What drives the price of Bitcoin at the moment?
Speculation drives its price – not customer value as in the case of AMD.

People are buying Bitcoin solely because they think the price is going to increase. As more people demand Bitcoin, its price is indeed going to to go up.  Then even more people are going to buy it, in hopes of getting rich quick.

When a high price point is reached and there are no more buyers for Bitcoin, we can expect a crash of enormous proportions as people massively start to sell in panic

It's a bubble. Real estate and  stocks and are no immune to bubbles, and at times they should also be avoided when they become overvalued as in the case of Bitcoin.

The problem with Bitcoin is that its price is massively overvalued right now thanks to corona uncertainty. Bitcoin is about to crash.

"Bitcoin has been characterized as a speculative bubble by eight winners of the Nobel Memorial Prize in Economic Sciences: Paul Krugman,[12] Robert J. Shiller,[13] Joseph Stiglitz,[14] Richard Thaler,[15] James Heckman,[16] Thomas Sargent,[16] Angus Deaton,[16] and Oliver Hart;[16] and by central bank officials including Alan Greenspan,[17] Agustín Carstens,[18] Vítor Constâncio,[19] and Nout Wellink.[20]"

https://en.wikipedia.org/wiki/Cryptocurrency_bubble#Bitcoin
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