That or they are certain they will get burned sooner or later, and therefore even if they tank the value of their holdings it's at a time of their choosing and with an amount that's predictable.
Contrast with the scenario where they keep doing it, steadily increasing their bitcoin holdings and even seeing the proportion of sales using bitcoin increase… and THEN hit a wall, not of their own choosing, and see the value collapse.
Even if they are not dumping their holdings at all, there's still a case to be made for pulling a plug at a time they control, over an amount they control. If it collapses, they can put a hard limit on how much they lose: that being, the previous value of their entire bitcoin holdings.
It's also eventually they're going to hit a ceiling and be worthless once they're all mined. It seems like a huge bet, trying to guess when Bitcoin value will hit 0.
Only the people who are doing the pumping are going to dump at that point. By the point it is valuable, there will be many more people who (probably) stay around - bitcoin will hopefully be well established by then.
This is basically what happened to Bitcoin itself in the early days, isn't it? People hoarding them, then the value crashing as a scare causes people to try and dump their stash.
To expand on your comment: when a small number of users with a large store of bitcoin sell out, they are selling into the hands of hundreds of small scale owners who have diverse motives for holding the coins. The chance that they all cash out together diminishes because they are using the coins for individual purposes. You're witnessing the growing spurts that will shortly settle down.
Nothing stops them from doing that. It's already been done a few times, in fact.
What generally prevents tons of fracturing is the same thing that always has for currencies with no backing- perceived value of the currency. Your bitcoins are only worth what other people think they are worth.
See, this logic makes no sense to me, unless you bought way more bitcoin than you could afford. Every bitcoin I sell now (without topping back up, as I would normally do for my spending bitcoins) represents a potentially massive amount of future wealth. The downside is limited to the amount I put in to begin with.
If bitcoin crashes to nearly nothing, I will be sad that such a brilliant experiment has failed. I'll also be bummed that my money is gone, but I won't be destitute and it won't make my life worse off.
I think once people start cashing out a large amount of bitcoin, the value will drop (due to additional supply). I'm afraid with all the latest hype and new investors, a drop off would trigger a massive selloff.
So there'll be a deflationary spiral where the value of bitcoins goes up and up, until the only people who have bitcoins are the idle rich who won't sell them at anything less than extortionate prices. Which is not a situation I see as sustainable; at some point the actually productive people making economically valuable things will realize that rather than funding this bunch of freeloaders, they should stop accepting bitcoins as payment.
A lot of the Bitcoin are owned by early adopters that no longer have access to them. Bitcoin loss is happening at a pretty high rate because of that. It won't take 24 years.
included in this is, if bitcoin doesn't fall to zero (as people wouldn't use coinbase if bitcoin was worthless). in a way I guess, it's kind of like owning some bitcoins, because if bitcoin tanks, coinbase will be worthless
But as the amount of people hoarding it goes up, the value of bitcoin will eventually drop. You can't have a market that climbs indefinitely on the basis of speculation alone.
It's the conservation of momentum that prevents bitcoin from flopping. All those bitcoin owners holding a massive amount of wealth today won't just go home because someone said bitcoin is not optimal.
Confidence may come gradually but it can vanish very suddenly.
If a number of investors have enough invested in the system that their investment become worth more to them than maintaining the bitcoin system and some event decreases the confidence in the system, then those investors will attempt to "liquidate" their holdings. Whether they succeed or fail, the impact on the system will likely be terminal since there wouldn't be any entity ready to step in and buy unwanted bitcoins.
That's the rational thing to do if you expect the value of bitcoins to keep skyrocketing.
Ultimately, people will want to cash out. If they cash out by trading for dollars, bitcoin will fail. If they cash out by buying stuff, we'll have a new currency on our hands.
Contrast with the scenario where they keep doing it, steadily increasing their bitcoin holdings and even seeing the proportion of sales using bitcoin increase… and THEN hit a wall, not of their own choosing, and see the value collapse.
Even if they are not dumping their holdings at all, there's still a case to be made for pulling a plug at a time they control, over an amount they control. If it collapses, they can put a hard limit on how much they lose: that being, the previous value of their entire bitcoin holdings.
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