His core point is still true - when the price is so volatile, it's now not a means of exchange, it's a speculative investment where the last buyer will get 0. It's kind of like the Palm/3com mispricing in 2000 when the subsidiary was worth more than the parent.
I don't understand this point of view. Is there some expectation that once bitcoin goes down it will never go up again? Why is there going to be a "last buyer"? We have already seen a couple of significant drops in the value of bitcoin and it has not deterred people from using it.
I think the point is that people aren't buying bitcoins like I might exchange my money for South African Rand.
When I exchange Dollars for Rand, I can more easily use the Rand to purchase goods and services in South Africa. I'm not speculating the Rand will be worth more in 2 weeks time. I just want something more fungible.
It seems people who are buying bitcoins now aren't doing so to purchase goods/services. They are buying and hoping the price goes up.
I'm just guessing but I'd bet most of the transactions happening now are for speculative purposes and not for increased fungibility which I believe to have been the point.
If people keep buying as an investment, they'll eventually start cashing out and the herd will follow to avoid losses.
Bitcoin may recover after a future crash but because nothing is really backing it, it's likely it'll fade into history.
> Bitcoin may recover after a future crash but because nothing is really backing it, it's likely it'll fade into history.
When bitcoin was first brought into existence it was worth nothing, and people invested anyway for mostly speculative reasons. Lets assume that at some point in the future it will be worth zero again, once the current batch of investors cash out. Why will it suddenly not have the speculative value it did before? If anything, it should have more, since it will have a more complete infrastructure and more momentum than it did when it was first created.
It'll always have some value and may always be traded. I'm sure people still own and trade pogs but I wouldn't call pogs a currency.
When I said that it'll fade into history I meant that sites like Amazon will never accept it. By definition, currency is "the fact or quality of being generally accepted or in use".
If it isn't widely accepted, it's just not currency IMO.
The primary benefit seems to be anonymity and the majority of people don't care about that. I live in the US and we already have an anonymous form of money (cash) and I rarely see that used.
Why would "normal" people start using a more difficult to use currency just to be anonymous?
I'm not so sure about this. That's like saying, "People will always have AOL accounts." Well, eventually they became irrelevant. In addition, there are other ways it could end. Perhaps a government finds a way to shut it down. Or there's some kind of fraud. Or perhaps they become a victim of their own success, and someone else creates a better version.
Of course I really don't know what's going to happen but my best guess with what I know is that it'll fade into obscurity within a year.
Probably my #1 reason for BTC failing is that it's not fiat. All popular currencies are fiat for good reasons.
BTC sort of reminds me of the gold standard being finite and initially "mined". Maybe it's fate is similar. People who don't trust state backed currencies will find use but it will ultimately remain on the fringe for everyday trade.
But bitcoins are more fungible than either USD or CNY, because it is cross-border and "offshore". That's why the Chinese seem willing to pay a premium, because BTC cannot restricted by capital controls.
The cross-border, "offshore", unseizable aspect was the biggest reason for my initial interest. Not the potential price gains (I always assumed price would top below $100 and remain a relatively tiny niche currency forever thereafter).
I cannot buy groceries, pay my mortgage, put gas in my car, etc as I do with the USD right now. Because I can't use BTC as easily as USD it is by definition less fungible.
It also seems seizable. Didn't Silk Road have their stuff taken?
It does seem more safe in BTC form but again to use it for most things requires an exchange back into a popular currency and state actors can easily control exchanges.
"USD" doesn't exist online, instead users are making payments online in paypal-USD, bankWire-USD, or visaDebit-USD. But what about the other side of the world, where payments are made in Alipay-CNY or Tenpay-CNY? If there's a chinese user of Alipay, how can you do business if you only have Paypal?
Paypal-USD is not fungible with Alipay-CNY, they are separate payment networks (if you don't believe me, try to find an exchanger). The situation is like the days before SMTP, when AOL and Compuserve had different e-mail networks and a user of one couldn't send an e-mail to a user of the other. But BTC is easily exchanged for either Alipay-CNY or for Paypal-USD, so it is more fungible than both.
