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The EMH applies when there is a robust market, as there is in bitcoin. How assets get their value to each participant or what valuation methods are used is irr

The EMH applies when there is a robust market, as there is in bitcoin. How assets get their value to each participant or what valuation methods are used is irrelevant -- the point of the EMH is that the market price is correct because of the market. I don't believe the EMH is accurate, but it's worth understanding exactly what it is if you're going to say it is wrong. The EMH is routinely applied to currency trading, as well as asset trading (i.e. gold/silver/natural gas). It doesn't matter whether you view BTC as a medium of exchange or a store of value -- the EMH is reasonably applied against BTC because there is a robust market.

enoch_r 14y ago
It looks a bit silly to accuse me of not understanding what EMH is while simultaneously changing your working definition of its applications from "market-traded securities" to "liquid markets." I accepted your scope for EMH and showed that the author's argument was still incoherent--currencies are not securities[1]. But if you'd rather go back to a scope for EMH that applies to BTC, that's fine. The author claimed that: 1. EMH applies to BTC. 2. This means that the price of a BTC should be the value of its underlying asset. 3. The value of BTC's underlying asset (nothing) is 0. 4. Therefore, EMH is wrong. And as my original post argued, 2 is wrong. In cases where an asset has value external to its backing, EMH says nothing of the sort. A corrected version of the author's logic: 1. EMH applies to BTC. 2. This means that the price of a BTC should capture the present value of a BTC from several sources--the value of its underlying asset, its utility as a medium of exchange, and the any expected appreciation in the future. 3. The value of BTC's underlying asset (nothing) is 0. 4. Therefore, either BTC has positive utility as a medium exchange, BTC is expected to appreciate in the future, or both. Or EMH is wrong. Either we apply EMH to market-traded securities, in which case it doesn't apply to BTC, or we apply EMH to anything with a liquid market, in which case it doesn't say that BTC's true value is the value of its underlying asset. Either way, the argument falls flat as a refutation of EMH. [1] http://en.wikipedia.org/wiki/Security_(finance)#cite_note-1 http://en.wikipedia.org/wiki/Security_(finance)#cite_note-1
- thatthatis 14y ago
  I'm not saying your conclusions are wrong. I'm only saying that your application of the emh is off by a few degrees. The emh applies to liquid markets. The market for cars is illiquid and therefore the emh doesn't apply. There is no contradiction in these, I never said the emh only applies to securities. I'm sorry if how I said it was unclear or confusing. There is a robust market for BTC, therefore the EMH is reasonably applied. This doesn't mean I'm agreeing with the author (I agree that the premise that BTC has a knowable zero value is tenuous). My argument is very limited in scope.

enoch_r 14y ago

It looks a bit silly to accuse me of not understanding what EMH is while simultaneously changing your working definition of its applications from "market-traded securities" to "liquid markets." I accepted your scope for EMH and showed that the author's argument was still incoherent--currencies are not securities[1]. But if you'd rather go back to a scope for EMH that applies to BTC, that's fine. The author claimed that: 1. EMH applies to BTC. 2. This means that the price of a BTC should be the value of its underlying asset. 3. The value of BTC's underlying asset (nothing) is 0. 4. Therefore, EMH is wrong. And as my original post argued, 2 is wrong. In cases where an asset has value external to its backing, EMH says nothing of the sort. A corrected version of the author's logic: 1. EMH applies to BTC. 2. This means that the price of a BTC should capture the present value of a BTC from several sources--the value of its underlying asset, its utility as a medium of exchange, and the any expected appreciation in the future. 3. The value of BTC's underlying asset (nothing) is 0. 4. Therefore, either BTC has positive utility as a medium exchange, BTC is expected to appreciate in the future, or both. Or EMH is wrong. Either we apply EMH to market-traded securities, in which case it doesn't apply to BTC, or we apply EMH to anything with a liquid market, in which case it doesn't say that BTC's true value is the value of its underlying asset. Either way, the argument falls flat as a refutation of EMH. [1] http://en.wikipedia.org/wiki/Security_(finance)#cite_note-1 http://en.wikipedia.org/wiki/Security_(finance)#cite_note-1

thatthatis 14y ago
I'm not saying your conclusions are wrong. I'm only saying that your application of the emh is off by a few degrees. The emh applies to liquid markets. The market for cars is illiquid and therefore the emh doesn't apply. There is no contradiction in these, I never said the emh only applies to securities. I'm sorry if how I said it was unclear or confusing. There is a robust market for BTC, therefore the EMH is reasonably applied. This doesn't mean I'm agreeing with the author (I agree that the premise that BTC has a knowable zero value is tenuous). My argument is very limited in scope.