Topic: 2013-03-14 New Statesman: Bitcoin: This is What a Bubble Looks Like (Read 1458 times)

I'll print this and put it on the wall over my desk.

Just under one of my public Bitcoin addresses

Ahahahahahaha 

 

I would say error in the sense of considering only the short-term and not seeing the grander picture.

If those bitcoins I'm hoarding are ever going to have long-term value then they need to be circulated.  Buying goods/services now with bitcoins supports the long-term value of bitcoin.  

Now I buy with bitcoin if I can, then simply buy more bitcoins with that fiat I would have used to buy goods/services.  Doing that maintains my bitcoin position, and also supports the long-term value of bitcoins.

Win/Win!

What error?  That is an economicaly rational decision.  Bad money (fiat) chases good money (bitcoin) out of the market, but only sofar as the relative exchange values are artifically controlled. To some degree, the sheer difference in market sizes implies that US $ do, and will continue to, have an outsided influence on this.  People will favor saving in the sounder currency, so long as the less sound currency is still accepted without a risk premium.  But only favor.  Not all players will, or even can, continue to favor one over the other.  There will always be those cases wherein the conditions of the trade dictate the use of one or the other.  Bitcoins will continue to circulate regardless of the common price sentiment simply because it serves a niche function that US $ cannot evenly compete with bitcoins, namely distance renumeration for online transactions.  Sorry, but Paypal still has to pay their employees and shareholders from the transaction fees.

The 'deflationary spiral' is a falsehood.  This theoretical strawman assumes that all economic actors across the entire market can indefinately choose to wait for lower consumer prices, but that is impossible.  If you are looking to buy a new refrigerator, you can shop around until your current one actually dies, but not much longer.   A deflationary environment encourages thrift, this is true; and that is exactly what has been lacking in our modern consumer driven economy for too long.  It is the thrift that accumulates the capital to make the wise investment decisions required to drive human progress.  And while money can often buy captial, money is not capital, and this distinction is important.

While blatantly biased, he makes one valid point:  The hording of Bitcoins because of the appreciation in value.

I found myself doing it too.  I could have bought some domains in Bitcoins, but decided to get rid of some fiat instead.  Then realized the complete error of my ways.

I propose we start a more formal Bitcoin user code of conduct, or ethos if you will.  Part of that ethos should be that if it can buy bought in Bitcoin we buy it in Bitcoin regardless.

And make it practically unthinkable to do otherwise!

Wow.

Probably.  The last coins that I bought, I was whining that I had to pay $14 apiece for them.  Now I'd buy 20 or more for double that rate.  I have a nephew that I told about bitcoin years ago, and for a time he was mining on his laptop in the days before the rise of GPU's.  He succeeded in finding three blocks, but because this was also before the automatic encryption of wallet.dat files and he was running windows on an insecure machine, I convinced him to copy his wallet.dat file to a thumbdrive and reinstall over his current client.  He did this and eventually got tired of it all, and stopped mining.  The other day, I asked him if he wanted to sell any of his bitcoins, as I was running low (I actually buy things with them, and have not paid for my cell service in any other way in over a year).  He said, "oh, that.  I lost that drive." 

YOU LOST IT?!

I've been thinking wishfully for a while now but I doubt I'll get the chance to buy more in the teens, 20s or 30s, let alone single digits.

Wishful thinking, hein?

Oh, let it be true!  I don't even care that this guy is ignorant about Bitcoin, just let this be a bubble!  If it pops, it would drop back into a price range that I could buy more!

So the blockchain fork earlier this week that caused a 23% decrease in price before bouncing back to nearly the previous value burst the bubble, would that be enough? 

If this were nothing but a bubble, the price would have continued to drop.  It didn't.  So not all of the price is caused by a bubble.

At least they got most of the facts right, even if I don't agree with their opinion.

Profoundly senseless.

I enjoyed reading this fiction.

Two thumbs up, backed by this article -- must be a thumb bubble.

Everyone sell your thumbs!

First sentence:

"That's the market capitalisation of Bitcoin, an innovative fiat currency..."

Stopped reading.

http://www.newstatesman.com/economics/2013/03/bitcoin-what-bubble-looks