Lunar Fallacy

There is a theory that hoarding bitcoin guarantees to perpetual profit. The theory is based on the following economic laws.

• One money is better than two (Metcalfe’s Law).
• Better money displaces other monies (Thiers’ Law).
• At fixed supply, price, rises with demand (Law of Supply and Demand).
• Potential increase in demand is unbounded (trade is positive sum).

Hoarding is purely speculative, with all returns constituting profit or loss. The money is not lent to another for interest and so is always available for exchange, a benefit that offsets interest forgone.

A corollary to the theory is that no investment in production is required to profit from it. Capital is required for all production, and lenders (investors) earn interest in exchange for time without their capital. Production is the source of trade and therefore all economic activity results from investment. A hoard is defined by its lack of consumption in production. If all people hoarded their capital, there would be nothing to trade and therefore no demand for the money. It seems that the theory is irrational, supporting the idea that Bitcoin is indeed Magic Internet Money.