Topic: 2 economists just eviscerated bitcoin, saying it should be trading at $20 (Read 729 times)

Did you read my post, huh? You obviously don't get it. The authors don't follow false premises. They make assumptions, they don't claim these assumptions are true or false because this is not what you would expect an assumption to be anyway. For your information, assumption is "something that you accept as true without question or proof". In other words, an assumption cannot be false by definition since it is just an assumption.

It's not them that will decide on that matter but the market itself. We did not go $20k and then down to $6k because someone just said it should be, it happened because it's the reaction of the investors affected by the news or on their own beliefs.

You've read things the way you want to in order to say it's based on a false premise. No where in the article do they say it's "only" used as a currency.

Regardless, it's just another group of people throwing their hat in the ring to try and make sense out of the experiment known as bitcoin. No one is capable of doing that as it's a completely different beast.

Let people speculate bitcoin has never stopped or discouraged anyones opinion about its price from their predictions it is clear they just hate bitcoin for whatsoever reason or still doesnt know how blockchain or bitcoin has made a significant change in the world economy and peoples life

Typical BBC rubbish. Don't they say that we ( the UK ) would be better off staying in the EU, and continuing the decline and asset theft that started when we joined.

They make no account of the fact that Bitcoin is undergoing a change in users' perception. It's apparent use as a payment system is in decline, and it's acceptance as a store of worth is increasing. This means it is substantially undervalued in my opinion. Economists don't seem to understand this, they probably still link Bitcoin to the use of cowrie shells.

From wikipedia https://en.wikipedia.org/wiki/False_premise
'A false premise is an incorrect proposition that forms the basis of an argument or syllogism. Since the premise (proposition, or assumption) is not correct, the conclusion drawn may be in error.'


It is a false premise that currencies are only used as such when we know that no major currency follows that pattern, every major currency is used to speculate with the strength of the economy of the country or with other factors, the scenario pictured could be correct but it does not change the fact the premise is false and as such it is never going to happen and the conclusion is mistaken.

Well, these two points of yours don't actually disprove the authors' argument. Because it is not a false premise, it is just an assumption, basically "what if". You may accept it or you may discard it. In the first case, you could then argue what Bitcoin price would be. Though it would be hard to say since we don't know and can't correctly assess what Bitcoin adoption might be and what technologies like LN and its likes would be used by now.

The problem with the assumption of the economist is that he creates all this mental exercise from a false premise, he says that if bitcoin was used just like any other currency it will be worth 20 dollars, and there are two flaws with that kind of thinking, the first one is since when currencies are only used as currencies and not as a source of speculation? Look at the Forex market, and second bitcoin is in no way or form an ordinary currency so all what he is talking about can be disproved with just those two points.

There is nothing new in this. The speculative nature of Bitcoin has been known for ages. Anyway, speculation is also an important part of it whether someone likes it or not. And as the "but" part suggests, if we remove speculation, Bitcoin's use as a form of payment could actually expand. Speculations add dramatically to volatility, but volatility is the major roadblock to wider Bitcoin adoption as a means of payment.

They are a bit out of the era I think, because according to their logic, obscure fiat currencies from countries with high population should have a big value, since there are many exchanges... Also how could fiat money devaluation work with such an idea ? They are stupid from A to Z, like most of the time with specialists...

Do really anyone believes what these economists announce or say? 20$ - price of bitcoin? Lol, people they just lie you, their aim is this.
Just imagine if bitcoin is 20$, how will miners profit? No way, so this will destroy bitcoin. Also if we forget miners and this fact of destroy, one very reach man can easily buy all bitcoin.
It's a shame to say something very shit for money, especially when you are famous.

What a load of crap ....

OK so a store of value is based on transactions ?!?!?!?
Following that logic I can say that a Picasso painting isn't worth anything because no paintings are being sold 

Maybe I'm not an "economist" but a store of value should be based on work. But since money is printed at will those "economists" probably forgot the basic principals.
If you can create a bitcoin for $20 I'm buying your product

And 5 years from now will you be doing the same amount of work for that $100.00 (piece of paper you can do nothing with) ?

You can not compare your example above, to someone buying BTC and wanting to sell it higher in 5 years time.

In fact, I would expect to be able to pay someone less BTC to mow my lawns in five years from now.

I'm defining it.  I have the right to define a notion in an argument, right ?  The notion of same fool is like the notion of greater fool, except that the coefficient of foolishness in same-fool systems has an expectation value of near 1, while the expectation value of the coefficient of foolishness is a large number in greater-fool systems.  (and I suppose that you won't be able to find "coefficient of foolishness" either).

The point is that you can have a finite set of fools, and they can maintain indefinitely a system of same-fool belief ; however a finite set of fools can never sustain a greater-fool system: they run out of greater fools at a given moment.

Here, the definition of coefficient of foolishness A in such kind of games is the following:

 "an entity is willing to buy the asset at price X, on the condition of expecting to find buyers at A.X."

I have the right to define notions.  I thought it was obvious, and it didn't need explanation.

If we have a finite set of entities, the above game can be played only successfully for a long time if the expectation value of A over that set is near 1.  That's what I call a "same fool" system.  For instance, I know that a $100 bill is intrinsically worth nothing.  I can at best light my stove with it, physically, I cannot eat it, it is not beautiful.  So this quite useless piece of paper isn't worth anything intrinsically.   Wanting to work a few hours to obtain such a piece of paper is foolishness.  Except that I'm willing to do so, because I believe that I will find another fool, accepting it against similar value.  And the very next day, that fool (who also accepted a piece of paper he can do nothing with) will find a third fool that ALSO is EQUALLY foolish.  And in the end, that third fool will propose that bill to me for a few hours of work, and lo and behold, I am again as foolish as he is to accept to do work for a silly piece of paper. That game can  continue indefinitely, because each time each of us is satisfied in our expectations.

However, if there's an asset X within a finite set of people, of which the people only want to acquire it for price X, if on average, they expect to sell it for 100 X to another player (bitcoin and co must be of that kind), then you end up ALWAYS having a large portion of the players totally frustrated in their expectations.

In as much an asset can continue to go around with people expecting more or less the SAME value when they sell it, than when they buy it, an asset cannot continue to go around with people expecting more or less a much higher value when they sell it, than when they buy it.  This always ends up frustrating a large majority of the players, unless the set of players is infinite.

You can classify speculative assets (that is, assets which are intrinsically worthless, such as a piece of paper that is a $100 dollar bill) in two sets: the set of assets where most of its users are in the "same fool" game ; and the set of assets where most of its users are in the "greater fool" game.  Crypto users are in the last kind.

By far most crypto buyers are ONLY buying crypto, because they want to sell their crypto for MUCH more than they acquired it. There is only a very, very small fraction of crypto buyers that are NOT buying crypto with the idea of selling it higher.  So the average A in this game is much higher than 1.  I don't know how much it is, but ask yourself: if someone buys bitcoin at $10 000, do you really think that his motivation is to sell that coin at about $10 000, 5 years from now and that was the real motivation ?

The fact that Bitcoin got it's foot in the wall-street door with futures bodes extremely well for it's future.  No pun.  Economists should be running countries ..not reality TV stars.  I love economist, freakonomics may be the best book I've ever read.  But they are NOT financial analysts.  Many simply don't know how financial products work like say an advisor/CFA/CFP etc would.  Speaking of advisors, I've seen the likes of Buffett speaking poorly of BTC.  Dude is likely the best investor we've seen..but that only means so much.  He knows everything there is about traditional products but I HIGHLY doubt he even has the time to study Bitcoin well enough.  He's old school.  An advisor myself, I can't count how many old traditionalists (and great advisors often) will simply balk at new products without even giving it the time of day or even when they're game changing products (see Equity Linked Notes).  It's just how it is.  Let's not forget the baby boomers whom still think Marijuana is a drug equal to LSD and Alcohol are often the biggest pundits.  They resist change no matter how much sense it makes.

My point-don't read too much in to that.  Also, a lot of people like to say things for press or ulterior motives (Jamie Dimon).  To be fair Jamie made a walk of shame for the ages backing up on his highly pointed and emotional hate for BTC (even as he continues to see millions fly out of his bank every day to purchase crytpo).

Live in the past die in the past. Let's not forget people once thought it crazy gold money was turned in for "worthless pieces of paper". 

Bitcoin is not something you learn in school and I don’t believe these economists are predicting such low prices for bitcoin all in the name of causing panic and AFAIK bitcoin will never be worth anywhere near the $20 margin.

Many of the worlds smartest humans have touted Bitcoin and vice versa.  However more often than not the pundits are always missing key factors.  First off BTC is the newest hedge asset.  Volatile hedge, but what financial anything isn't in it's infancy?

Two important reads my buddy wrote that I will share that everyone and anyone can read and make sense of yet very informing and written extremely well.  

BTC as a payment system ..the day is near again with the Lightning Network-  https://medium.com/@melik_87377/lightning-network-enables-unicast-transactions-in-bitcoin-lightning-is-bitcoins-tcp-ip-stack-8ec1d42c14f5



Let's not forget many of us here live in 1st world countries and very lucky because of it.  World Bank Group’s Douglas Pearce says he’s most intrigued by the number 2 billion. That staggering sum represents the "unbanked”; people without access to transaction accounts. That lack of access is especially a problem for the poor, for women, and for people in rural areas.  Bitcoin to many of these people and many more to come..is their bank!

No miner wold give away his coins for 20$.
I think they would rather let it stay in a wallet for all eternity. The investments that are necessary to create a bitcoin these day are so high, it does not make a difference to give it away for free or sell it for 20 dollars.
In both cases they would go bankrupt in days. And without miners, we have no new blocks, and without new blocks.. well, you know the game...

Indeed. Anyone remembers the PhD economist Nobel Prize super expert calling an under $10 bitcoin back in 2013?



He failed so much that he became a meme, now know as "professor bitcorn."

This is what happens when you call bottoms, you can be wrong and then miss having a position for the next bull run. If the bottom was $7500, the people expecting way cheaper prices will be left out for the next bull run which could peak anywhere from $50k to $100k as people realize that the bottom was a long time ago and they FOMO back in. This is how bitcoin grows, I've been seeing it since day 1.

100% agree there is no fixed cost for generating a coin.

However there is a cost, a variable cost, at the time of production. Someone has to pay for all that electricity. The depreciation of hardware etc etc..

Hence, It is currently costing approx. $2400-$3000 to generate 1BTC.

During 2013-2014 the difficulty just keep rising, people were not turning off their mining equipment, but rather adding to the network. We went from 23TH to 290,000TH (290PH).

Also, I was merely giving an example of what would happen if 1BTC was worth $20.00 at this current time. It just wouldn't function as a payment method, due to the limiting supply.