Bitcoin is Too Expensive: Unit Bias and Halo Effect
We've all heard someone or another say this.
I can't afford Bitcoin because it is too expensive.
Too expensive? Compared to what?
Imagine someone saying they couldn't visit England because Pounds were "too expensive". But all the goods and services in England costs less Quid than dollars, because Pounds are worth more. Therefore, you'd tell them they were talking crazy, yet the same thing does not apply to Bitcoin somehow?
It's literally impossible for a currency to be "too expensive". Currencies aren't expensive, it's the product/service you buy with the currency that might be expensive.
I've already blogged about Unit Bias quite a bit. People see that $9000 price tag on Bitcoin and their brain tells them they need at least a full Bitcoin for it to be worth it. Did you know a full Bitcoin is also worth 100,000,000 Satoshi? There, now don't you feel better? 0.01 Bitcoin is still 1 million Satoshi. These numbers are totally arbitrary.
More than just Unit-Bias, this is a clear example of making the mistake that Bitcoin itself is the product or service. It isn't. It's a currency; it can't be expensive. (albeit a very bad currency when it comes to unit-of-account)
It also points to the idea that cryptos are stocks because when you look at their liquidity it reads like a stock would. Again, this is incorrect.
Conclusion
Crypto is not a stock.
Blockchains are not products.
Dev teams are not corporations.
Even if Steemit Inc. disappeared Steem would still continue to be developed.
Most people suffer from the Halo Effect when it comes to crypto. It is the ultimate form of projection. They are taking what they know about the world and finance and applying it to this technology that is like nothing we have ever seen before. Do not fall into this trap. Assume you know nothing about open-source capitalism, because literally no one does. It's never existed.
Related post.
https://steemit.com/bitcoin/@edicted/unit-bias-fallacy-21-million-bitcoins-is-not-scarce
Unfortunately, if you have one bitcoin... but had
10,000 payouts of 10,000 satoshis (like a minor shared mining payouts from a few years ago) you actually have nothing.
Even though, you have 1 bitcoin, the cost to spend those are larger than the amount you have.
So, there is that problem with bitcoin.
We are hoping that segwit and lightening networks will take care of this kind of thing, however i do see an unspent/unspendable pennies problem.
Still, 0.01 bitcoin will be worth a lot of money in the future.
Probably enough to buy a house, if you can afford the transaction fee.
I believe one day (soon?) One Satoshi will be worth $1. When that day comes Bitcoin will have to fork and create more decimal points. I'm not sure how complicated the technicalities of that are. Might be easy... might be very difficult and create a fork... not sure.
What i believe, about bitcoin.
I too believe that one satoshi will be worth $1.
But i believe that bitcoin will be for "big boys"
great for buying luxury yachts, mansions, settling trade deficits...
and that any attempt to change bitcoin itself will be heavily resisted.
However, the off chain trading of bitcoin will be fast and furious.
I believe there will be bitcoin "mutual funds"
I believe this because the "bitcoin development teams" have all been digging their heels in causing several forks for such no-brainer implementations.
And listening to these guys they are FIRMLY in the bitcoin as a store of value camp.
Anyway, there is BCH, LTC and Digibyte and they are gearing up for being the transaction token.
Personally I think that Ethereum is going to dwarf Bitcoin very soon and everyone will wonder why Bitcoin was such a big deal in the first place. We already see hints of Ethereum being the goto "boring financial" sector where users who know how to navigate the system will make millions easily.
OOooh, boo hoo, i bet on bitcoin, and i only made 100x on my money!
I should have bought ETH.
Yep, most likely.
I would like to own a full bitcoin just to have it but I will have to settle for a few thousand satoshi’s lol I like my main investment because it’s a nice round number, I’m just weird I guess.
It's not weird at all everyone suffers from unit bias. It's part of our psychology and it is useful in other situations.
My father used to tell me it is useless to own less than 1 bitcoin because it is hard to get rid of it if you want to sell. Why would anyone want less than 1?
These are all arbitrary numbers. What if there was only 1 Bitcoin total in existence? Would you still need 1 (all of them) for it to be worth it?
What about coins that have billions/trillions of tokens in circulation? Are they somehow a 'better deal' because someone decided to mint more coins and dilute the value of this arbitrary number?
I also don't understand why anyone would want more Bitcoin because they are hard to sell. The more you have the harder it is to sell. Also, it's not hard to sell, so... seems like nonsense to me. If you sold 13 Bitcoin on Coinbase right this second the price would only go up $1.
Nah, Bitcoin totally was too expensive when it was like almost 30k. :P LOL! Bitcoin is pretty cheap now.
When considering the number of Bitcoins that will be created, and add the fact that a ton of people actually lose their bitcoin due to horrible mistakes, even at it's height, Bitcoin was undervalued. So, if Bitcoin can be expensive, it's definitely not right now.
But, yeah, it can't really be expensive, because you don't really NEED a whole Bitcoin. But admit it, you totally want a whole Bitcoin, don't you? I wouldn't mind a gold physical bitcoin that's as big as a gold bar. Then I want to drop it on a Lambo. Physically. I wonder if I dropped it from high enough if it would go through it.