I have new thoughts about this part of the conversation tree:
I thought of a counter-counter-refutation. (edit: what I’m about to say has a lot in common with the point made in this post but I forgot about it until now).
BTC does indeed have this “second order” value coming from the fact that it’s already valuable (see the quote above or this post), but it occurred to me that as the price of BTC decreases, BTC will have less and less “second order” value. A corollary of this is that for a rational market actor who is not a speculator, his demand for BTC will decrease as the price of BTC decreases. I know of no mechanism that would cause the price of BTC to naturally* go back up if it goes down, so therefore** I expect the price to decrease to zero in the long run.
Contrast BTC with gold, which has “first order” value (it looks pretty, it can be used in high-end electronics, etc), in addition to having “second order” value. If the price of gold goes down, its “second order” value goes down, but its “first order” value is unaffected. For a rational market actor who wants to use gold for “second order” purposes, his demand for gold will decrease as the price of gold decreases; but for a rational market actor who wants to use gold to make things, his demand for gold will increase as the price of gold decreases. I suspect that these two forces roughly balance each other out in the long run.
TL;DR the discussion tree looks like this now:
- In the long run, the value of BTC will NOT go to ~0.
- Continuity matters. If something disrupts the network of BTC miners for—say—100 years, there is no good reason to think that people would stick with BTC.
- If BTC still has value after a 100 year disruption, then miners will still have an incentive to mine it. Therefore, the reason to stick with BTC only goes away after a disruption if the value of BTC also goes away after a disruption. In other words, the argument in the node above is circular: it assumes that the root of the tree is false.
- BTC doesn’t have any value as a commodity, so there’s nothing to stop demand for BTC from going to zero.
- The first clause of this sentence is false. Although BTC has far fewer uses as a commodity than gold, BTC actually does have some value to people as a commodity, because BTC is already valuable. E.g. someone could use his BTC to flaunt wealth.
- The type of value described above decreases with demand, so it does not protect demand for BTC from going to zero.
- The first clause of this sentence is false. Although BTC has far fewer uses as a commodity than gold, BTC actually does have some value to people as a commodity, because BTC is already valuable. E.g. someone could use his BTC to flaunt wealth.
- Continuity matters. If something disrupts the network of BTC miners for—say—100 years, there is no good reason to think that people would stick with BTC.
*What do I mean by “naturally”? Something like, a price goes up naturally if something other than peoples’ ignorance caused it to go up.
**I just wanted to note that this “therefore” is not even close to being obvious. It’s hiding a pretty complicated argument and some extra assumptions, which I spent a long time trying to write out but ultimately deleted because what I wrote was bad and unnecessary.