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I have an honest question, since a lot of your predictions have been wrong so far. Why are you not interested more in some alternative explanation/theory that

I have an honest question, since a lot of your predictions have been wrong so far. Why are you not interested more in some alternative explanation/theory that would better fit data you have at hand ?

AnIdiotOnTheNet 6y ago
I am, but as of yet I find other theories unconvincing and difficult to disentangle from the propaganda besides. For instance, people claim that cryptocurrencies have real utility, and cite their use of moving money out of countries where traditional international currency transfer is difficult. While that is true, since the function of those transactions is to use the currency as a medium of exchange of other currencies it cannot explain the volatility of the exchange rate, as the current exchange rate is irrelevant if your purpose is simply to convert to and from other currencies. The volatility is due to speculation, but without real utility it is difficult to see what anyone could be speculating on. One could say "belief that the value of the currency will continue to increase", but that's essentially admitting to it being a pyramid scheme. If people ever stop believing and refuse to buy, which would be easy to do since it is nothing to spin up another coin, the price collapses. Now admittedly I am not an economist, so I make no claim to the correctness of my assessment other than that it makes sense to me. However, the vast majority of people pushing cryptocurrencies aren't economists either.
- milesvp 6y ago
  I think a lot of the volatility could be attributed to moving money around. When you want to move money out of a country you need to find someone willing to sell bitcoin in the currency you have. Then you need to find someone willing to buy the bitcoin in the new currency you want. Since it’s difficult already to move money between said currencies, the friction is likely to be seen as volatility in the price. You’ll also see big swings just from moving a lot of money. I’d be more skeptical of the moving money around hypothesis but I know people who looked into it when thinking about leaving the US. So at least people are honestly looking at bitcoin for that purpose, even if it may be impractical.

I have an honest question, since a lot of your predictions have been wrong so far. Why are you not interested more in some alternative explanation/theory that would better fit data you have at hand ?

AnIdiotOnTheNet 6y ago

I am, but as of yet I find other theories unconvincing and difficult to disentangle from the propaganda besides. For instance, people claim that cryptocurrencies have real utility, and cite their use of moving money out of countries where traditional international currency transfer is difficult. While that is true, since the function of those transactions is to use the currency as a medium of exchange of other currencies it cannot explain the volatility of the exchange rate, as the current exchange rate is irrelevant if your purpose is simply to convert to and from other currencies. The volatility is due to speculation, but without real utility it is difficult to see what anyone could be speculating on. One could say "belief that the value of the currency will continue to increase", but that's essentially admitting to it being a pyramid scheme. If people ever stop believing and refuse to buy, which would be easy to do since it is nothing to spin up another coin, the price collapses. Now admittedly I am not an economist, so I make no claim to the correctness of my assessment other than that it makes sense to me. However, the vast majority of people pushing cryptocurrencies aren't economists either.

milesvp 6y ago
I think a lot of the volatility could be attributed to moving money around. When you want to move money out of a country you need to find someone willing to sell bitcoin in the currency you have. Then you need to find someone willing to buy the bitcoin in the new currency you want. Since it’s difficult already to move money between said currencies, the friction is likely to be seen as volatility in the price. You’ll also see big swings just from moving a lot of money. I’d be more skeptical of the moving money around hypothesis but I know people who looked into it when thinking about leaving the US. So at least people are honestly looking at bitcoin for that purpose, even if it may be impractical.