As with all assets, you risk its value dropping precipitously due to events outside of your control.
Specifically, I worry that decreasing supply and the corresponding upward pressure on prices will cause transaction fees to increase and therefore volume to decrease. Decreased volume might lower liquidity and allow an event like an old wallet coming online to trigger a price shock and maybe even a broader crisis of confidence in bitcoin's ability to serve as a store of value.
We've already seen what happens when there are legal hurdles, activities move to other countries, or people find legal loopholes. This has already happened a few times, and bitcoin is doing just fine.
Comments
Saving in bitcoin to escape inflation works fine for me and is perfectly legal.
That sounds like a strategy that's going to work really well until it doesn't.
Perhaps I'm wrong. Good luck!
What do you think could make this "not work"?
As with all assets, you risk its value dropping precipitously due to events outside of your control.
Specifically, I worry that decreasing supply and the corresponding upward pressure on prices will cause transaction fees to increase and therefore volume to decrease. Decreased volume might lower liquidity and allow an event like an old wallet coming online to trigger a price shock and maybe even a broader crisis of confidence in bitcoin's ability to serve as a store of value.
Regulations prohibiting possession or trade, for example.
If you think this is very unlikely to happen, it's worth remembering that this has happened with gold in the past, in the US.
We've already seen what happens when there are legal hurdles, activities move to other countries, or people find legal loopholes. This has already happened a few times, and bitcoin is doing just fine.
Sure, but does that matter if you have to sell to the government, possibly at a rate lower than what you bought it for?
Doesn't matter to me as I'd just leave the country.
Bitcoin not actually being inflation hedge, but an other correlated asset.
So "it doesn't work if it doesn't work". Thanks, but I already knew that.