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assuming you invest in a currency of country which has a limited supply of money and you can be pretty sure that it will never be changed.
assume further that this country has the possibility to fill some niches in the global economy
you think it is insane to invest in the currency of this country?
If the currency is inflating @ 10% a year, and its dollar exchange rate has fallen by more than 50% in 2014? Let's just say "not very smart."
the dollar exchange rate has increased by around 150 times in the last one and a half years - very smart investment
induction as an indicator over time is stupid.
you can argue that my assumptions are wrong or that the niche is very small but arguing over charts is beyond stupid
if these assumptions are true and the niche is big enough you can say that investing in this "currency" is sane.
Bitcoin's exchange rate has gone up infinitely over the past five years. There once was a time when it was worth exactly nothing. Extrapolating from that, your future profits should also be infinite.
If you wish to get back to reality, you may consider Bitcoin's performance in recent past. Since December of 2013, the price has been steadily declining.
If your reasoning proves anything, it proves entirely too much. It proves that any investment which did well in some distant past is bound to be profitable in the future. Regardless of its recent performance.
I hope I do not need to dwell on the folly of such assumptions.
Re. "induction as an indicator over time": wat?
what I said is that you cannot take the price as an indicator of the quality of an investment - you cannot build a theory from observation if the observation is constantly changing (as the price or the chart of bitcoin).
So much for watching walls and all the TA silliness... Sadder still, so much for the notions of price reflecting the market sentiment.
what you can do instead is build a set of assumptions and say if they are valid or not valid.
If price does not reflect worth now, assuming that it will in the future requires an irrational leap of faith. If you like that logic stuff.
to be fair you need a point of reference - according to this
http://www.reddit.com/r/Bitcoin/comments/1sowur/how_is_a_2600000000000_market_cap_for_btc_possible/the market cap of gold is 8 trillion, the one of us bonds is 35 trillion - bitcoin at this point of time is 5 billion [I think most people do not realise how small this on a global scale].
so golds market cap is more than 1000 times higher than the one of bitcoin - I assume that bitcoin never catches up, but to assume that there is place to grow is definetely not insane.
at this point we do not know how big the niche of bitcoin in the financial will be and let us not end arguing about pascals wagers, but that the niche is potentially existent is reasonable.
But Pascal's wager is exactly the fallacy you're leaning on. You are ignoring all recent price data (showing that demand for Bitcoin is declining) in favor of extrapolating from the potential upside.
By that logic, I should invest in any d00d who tells me he'll conquer the world. The upside is limitless, the downside finite.
Here's the problem with your reasoning: The likelihood of Bitcoin becoming world's major currency is slim enough to make me (and my Lizard Overlords) laugh. If it does become a threat to the status quo, it will be banned--already talk in Russia of criminalizing it. It won't vanish, but it certainly won't thrive.
