

How and why Bitcoin will plummet in price - clarkm
http://marginalrevolution.com/marginalrevolution/2013/12/how-and-why-bitcoin-will-plummet-in-price.html

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Udo
Wow, this is probably the most ignorant thing I've read in a while:

" _Let’s say it costs the QuitCoin company $50 in per unit marketing costs for
each arbitrage of this nature. (Alternatively you can think of that sum as
representing the natural monopoly reserve currency advantage of BitCoin.) In
that case both the company and the buyers of QuitCoin are better off at the
initial transfer price of $400 and people will prefer that new medium. Over
time the price of BitCoin will have to fall to about $450 in response to
competition._ "

First, BitCoin (and pretty much any other crypto currency) is not a company.
It doesn't have to market anything and there is no bank-like entity necessary
to drive it. I'm not sure why that's so difficult to understand, but it seems
to be an issue.

However, the biggest WTF here is the idea that the "cheaper" currency will win
out. That's the reason behind someone arguing you should, say, only buy Rubles
and never Dollars: because they're so much cheaper!

Now don't get me wrong, BTC may well (and did) go down and up again
dramatically during its time, but the argument here is ridiculous to the point
of being indistinguishable from satire.

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VMG
I initially thought his arguments were more sophisticated and he was
describing a scenario where an alternative currency would win because it had
better incentives for the holders due to competing deflationary pressures, but
it seems that he really just fails to realize that Bitcoin is divisible.

Very surprising to see this coming for Cowen, something about Bitcoin triggers
a shutdown in the brain of economists.

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davidpaulkrug
He's predicted the crash before and got it wrong.... How many times does he
have to predict it before you realize he doesn't get it ?

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nbody
I guess he's following the logic of "throw enough mud at the wall, some of it
will stick".

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reedlaw
> There is thus a new theorem: the value of WitCoin should, in equilibrium, be
> equal to the marketing costs of its potential competitors.

Apply that to anything else and it easily breaks down. E.g. the value of
iPhones should be equal to the marketing costs of its potential competitors?
Luxury cars? Brand name clothing?

~~~
tapertaper
Those goods are all highly unique with no easy substitutes. One currency can
buy something as easily as another.

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hoers
This seems to become another Hacker News cliché

>Why bitcoin will [..] in price.

I'm full.

