Is Bitcoin a Pyramid Scheme? – Hacker Noon
Cryptocurrencies are important and valuable. Distributed blockchain technology, as pioneered by bitcoin, is important. The future of money really is cryptocurrencies, possibly led by bitcoin.
I’ve been getting into a lot of discussions with supporters and promoters of bitcoin, who tell me that the price of bitcoin is going up so fast because there is a limited supply and an increasing demand. Their argument is that only a small percentage of the world currently has bitcoin, and that everyone will eventually need to use bitcoin.
It’s true that prices reflect the difference between supply and demand. There is a limited number of bitcoins, and there is a great demand for them, so the price is shooting up. However, what these proponents of bitcoin seem to be missing is the reason for the demand.
It’s clear that the most significant reason, by far, for the massively increasing demand for bitcoin is that people want to own it because they think that it will go up in price. They think it will go up in price because increasing numbers of people are going to want to buy it. The reason that they think that more people will want to buy it is that those people are going to believe that it will go up in price. This is a self-fulfilling prophesy.