> The fact that every 2016 blocks (about 11 days), 100,800 new BTC are minted. That means that, to maintain the CURRENT price of $13.50, we'd need $1,360,000 of NEW MONEY entering the system every 11 days.
I don't know anything about economics - literally nothing - but that doesn't seem right to me.
It isn't right. It would only be true if every miner was immediately liquidating the bitcoins they were awarded. Such a massive oversupply would likely overwhelm demand and push the price much lower.
In reality this is not what BTC miners are doing (from what I can see). They are mining and hording BTC for later use meaning that the mined coins require $0 to enter the system to maintain equilibrium.
That doesn't mean the math is wrong. What he's saying is each day the total value of bitcoins is going up by that amount because # of bitcoins * current price. He's also saying that it doesn't make sense, he sees irrationality in the behavior. If more bitcoins are added than value created, prices should go down, but aren't, they are stable. Something seems to be out of whack, the market isn't behaving rationally. Essentially bitcoins are becoming more overvalued as more get unlocked because supply is increasing faster than demand but the exchanges aren't reflecting that (yet).
This is just the market cap effect. You can't buy or sell a company for its market cap; usually the real price is much higher or lower. Likewise just because you can buy or sell 1 BTC for $15 does not mean that 6.7M BTC are really worth $103M.
With a market cap there is still a finite number of shares, there aren't new ones being constantly created. We're also talking about a commodity, not shares of a company which is a value creating entity.
I think generating bitcoins is a way to have controlled inflation and to distribute new bitcoins into the economy as fairly as possible.
The value of bitcoins should (and hopefully eventually will) be worth their value in work/productivity/product beyond the effort it takes to create a new one.
Yes, bitcoins are overvalued due to media hype the same way hot IPOs are. Eventually the price will settle and the value will be determined by market conditions rather than gold rush demand.
I don't know anything about economics - literally nothing - but that doesn't seem right to me.