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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

by 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.

by enoch_r 14y ago

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.