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If the market were efficient, it would already price in the dilution from newly minted coins, as it does for share dilution in the stock market (which is actual
by tpeng 12y ago
If the market were efficient, it would already price in the dilution from newly minted coins, as it does for share dilution in the stock market (which is actually quite common due to employee stock options). However, every indication is that the bitcoin market is not at all efficient. It is largely driven by speculators playing a greater fool game, not investors who are betting on intrinsic value per bitcoin based on a future estimate of coins outstanding. The result has been a series of manias and panics, which will continue until real buyers enter the market.
- enoch_r 12y agoAn alternative view: if BTC as a major currency is worth $100,000, and BTC that isn't a major currency is worth $0, the market price will be roughly $1,000 if BTC has a 99% chance of failure (ignoring the risk premium). As in reality the odds that BTC will become a major currency are difficult to estimate, volatile, and likely to be affected by the price of BTC itself, volatile prices for BTC, which we wrongly interpret as "manias" and "panics," actually tell us very little about the efficiency or inefficiency of the market.
- crdoconnor 12y agoIt's more than manias and panics (though they played a large part). The legal and institutional framework surrounding it is still in constant flux, and its future value will depend heavily upon that. Right now the institutional news all looks negative -- e.g. the failure of mt gox and the unfavorable tax treatment in Japan (and now the US).