By the time bitcoin becomes worth a million dollars, there will be a sufficient ability to transact with bitcoin alone and sufficient adoption of it for its dollar value not to matter. Projecting the long-term value of bitcoin or any other cryptocurrency in fiat alone is useless. Still, even among the cryptocurrency community, we see a bizarre fetishization of the dollar.
Traders constantly compare cryptocurrencies to their dollar valuation. If cryptocurrency truly becomes a new monetary standard, this will have been equivalent to people at the advent of the US dollar comparing dollars to their value in sheepskins.
There are two especially flawed and sadly pervasive philosophies surrounding cryptocurrency today (among other flawed philosophies in crypto, however these are the ones which piss me off the most). They are approaching cryptocurrency purely as speculation and seeing [insert name of cryptocurrency] as a new gold.
The Gold Standard Has Always Been Inherently Flawed
The amount of gold which is mined and put into circulation constantly changes. Gold’s scarcity and demand to use gold is constantly changing. This makes it volatile and a poor store of value.
The value of gold has been fairly inconsistent historically. As a commodity it is firmly dependent on the demand for and supply of gold, as well as speculation.
This means gold is not correlated to economic strength, while a currency almost always is.
The demand for currencies goes up when there is more demand to use the currency as a means to buy and sell goods and services. This means (when ignoring inflation and currency debasement) a currency is more valuable in a stronger economy.
Therefore, if bitcoin (or any other cryptocurrency without a specialized purpose beyond serving as a currency) is to be a real currency, it should be up in up markets, something which in recent years is often already true (despite black swans and other events which sometimes breaks the correlation).
No cryptocurrency (if its goal is to replace fiat currency) should seek to be a new gold standard. The gold standard worked when currency debasement by empires and fraudulent money printing by banks was rampant across the world. However, it is a poor and deeply flawed standard for a modern economy (not because fiat currency is not still being debased, but because both gold and fiat currencies are horrible, inconsistent stores of value and in the current century we can do much better). If cryptocurrency is to replace the dollar, it should seek to do so. All the talk about cryptocurrency as a "new gold" is a distraction, and detrimental to cryptocurrency in general.
The Problem with Speculation
The greatest gains in the cryptocurrency realm will be from being able to purchase everything in a store with your coin, rather than your coins having a large dollar figure. There is nothing wrong with speculating on a rising technology, but it doesn’t make sense to try to get a large number of dollars when betting on phasing out the dollar.
Cryptocurrencies have value in the demand to use them as a means of exchange and their limited supply. They are superior to the dollar in many areas: they are vastly more secure and it is easier to verify their transactions, they have a predictable supply (in most cases), they are less likely to be debased, and the whole of crypto-economics means cryptocurrency is modeled to best serve economic activity and incentivizes efficient mining and exchange activity (There are of course numerous other benefits including no centralized control of assets, privacy, etc. but I only have so long to write).
Don’t give up your coin for fun bucks.
In summary;
• Gold is overrated.
• Bitcoin and coins without a specialized purpose should be up in up markets.
• Cash is trash. Purchasing power matters, not dollar value.