This line of reasoning works when you have a fixed number of shares that represent ownership in something real, but I don't see how it works with bitcoins that have no intrinsic value. Bitcoins only hold value by inertia. People think they have value because they're accepted by other people because other people think they have value. I see no rational mechanism by which this feedback loop should jump 5% when 5% of bitcoins are lost.
Again, flawed reasoning. If all bitcoins were destroyed except for one, how much do you think it would be worth? There is no intrinsic demand for bitcoins, only inertia behind perceived value. And it looks to me that the inertia is mostly behind the price per bitcoin rather than total value of all bitcoins.
The current bitcoin economy is worth about 1.5 billion, so that one coin would be worth about 1.5 billion, if that were to happen. Where is my flawed reasoning?
That would be a fun conversation to see. You with your 1.5 billion dollar bitcoin trying to haggle someone down from 0.2 bitcoins to 0.00000002 bitcoins for a pair of pants.
> There is no intrinsic demand for bitcoins, only inertia behind perceived value.
Not true; anyone who sells something for bitcoins creates some amount of intrinsic demand. Silk Road did, and was probably by far the biggest generator of such demand, but not the only one.
That's how all fiat currencies work. For example, to use your words:
People think dollars have value because they're accepted by other people because other people think they have value.
You accept your paycheck in whatever currency you accept it in and believe it has value because you have faith that other people will accept that currency for whatever goods and services you want. It all works as long as everyone believes the currency will keep having value in the future. Bitcoins are no different. As long as a group of people believe they have value in the future, and will be accepted as payment for goods and services, they will continue to have value.
