> If you shut down Bitcoin mining it's immediately worth nothing.
Except that it is impossible ever shut down Bitcoin mining at once(). It might be more similar to gold than what you think.
There are too many incentives to keep it up. The holders want value to be kept, the miners have vested interest in the system to continue to work. If you shut down, say, half the miners, this will create opportunity to other miners to invest and expand. If it drops too much, people inject money into the system, which gives liquidity to the miners again, that can continue to trade their work for goods and services with Bitcoin or by trading Bitcoin for fiat.
It is very similar to Visa, Mastercard, Stripe, Square and other centralized systems. The fees you pay for transactions keep the centralized finance business working and profitable as well as they invest back in software and hardware. For miners the Bitcoin fees, based on Bitcoin price, keep their systems profitable too. Not to mention some mining companies started to get listed on the stock market too.
(): Yes, you can shut down Bitcoin eventually, bugs, attacks, etc., but those have been tried and not very relevant to my point.
This is like arguing that the Beanie Baby market will never die. It's precisely the belief that the bubble will be eternal that helps inflate the bubble.
It's true that the Beanie Baby market never totally went away. And I'm sure that some die-hards will keep Bitcoin going for decades after it ceases to be practically relevant. But however much the bubble incentives keep major players aligned during the bubble, that doesn't mean the prices will stay up forever.
The Beanie Baby market on eBay is useful to study because it shows much the same behavior as NFTs. Beanie Babies are non-fungible - each one is different. So there's no "market price", just lots of individual offers. On eBay, you'll see asking prices around $5000. But if you look at completed transaction info, prices are around $50. That's what an illiquid market looks like. NFTs behave the same way - high asking prices, few transactions. Such markets don't crash, they stall.
Interesting! I see that there are grading/authentication services out there for Beanie Babies. That makes sense, as a lot of commodities have systems for taking unique objects and making them tradable. E.g., the CME wheat contract definition is extremely specific: https://www.cmegroup.com/content/dam/cmegroup/rulebook/CBOT/...
I wonder if we'll see things like that in the NFT market.
Except that it is impossible ever shut down Bitcoin mining at once(). It might be more similar to gold than what you think.
There are too many incentives to keep it up. The holders want value to be kept, the miners have vested interest in the system to continue to work. If you shut down, say, half the miners, this will create opportunity to other miners to invest and expand. If it drops too much, people inject money into the system, which gives liquidity to the miners again, that can continue to trade their work for goods and services with Bitcoin or by trading Bitcoin for fiat.
It is very similar to Visa, Mastercard, Stripe, Square and other centralized systems. The fees you pay for transactions keep the centralized finance business working and profitable as well as they invest back in software and hardware. For miners the Bitcoin fees, based on Bitcoin price, keep their systems profitable too. Not to mention some mining companies started to get listed on the stock market too.
(): Yes, you can shut down Bitcoin eventually, bugs, attacks, etc., but those have been tried and not very relevant to my point.