

Krugman is wrong - Bitcoins not hoarded - Massive selloff - mrb
http://bitcoincharts.com/charts/mtgoxUSD#rg90zvztgSzm1g10zm2g25

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Sam_Odio
I'm not sure this proves Krugman is wrong.

Sell-offs (especially large ones) don't indicate that hoarding hasn't taken
place. In fact, if hoarding wasn't taking place I'd expect low variability in
trading volume (since the currency would be used by a number of parties for
small transactions). A large sell-off implies to me that a large amount of
value has just transferred from one set of hoarders (investors?) to another.
Either that, or someone just made a huge donation to WikiLeaks...

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fhars
A single large spike of stop-loss sales of a commoditiy that happens at the
moment the commodity touches its previous three month low during a long
downwards trend does not prove anything about the suitability of the commodity
as a currency and is irrelevant to Krugman's argument. Without additional
evidence that the exchanges are related to larger exchanges of bitcoin for
goods and services, large sales on an exchange only show that would-be
hoarders may be losing faith.

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mrb
It is not a single large sell. The graph I linked to shows that the massive
sell-off has been going on for 4+ months at least. Look at the graph time
axis.

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sp332
Yeah, I think Krugman tried to mix-n-match the dynamics of most (inflationary)
currencies with BTC which are designed to be deflationary. The supply of BTC
will drop off predictably. It's the _predictability_ that makes a usable
currency. For example, since everyone knows how the supply of BTC will change
over time, people who are buying now can take the future value of BTC into
consideration already.

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bsphil
Look at the trade data, one person made a large selloff that triggered a
cascade of automated responses. That, of course, could only happen if that
person was hoarding BTC. Maybe he read that article and decided to cash out as
a result.

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Steko
Whenever you think you're smarter then Krugman on economics take a step back,
apply Occam's Razor and realize you're probably suffering from a cognitive
bias.

Krugman's simply making a bigger and simpler observation: costs of stuff in
bitcoin over time haven't just been slightly deflationary over time, they've
been massively deflationary such that there is no incentive to ever use it for
actually buying things. This is sufficient to reject it as a currency on the
first pass without looking at anything else. Maybe it will stabilize at some
point and at that point can be evaluated on other merits.

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mrb
I know Krugman is more knowledgeable that me. I am simply suggesting he was
not given the right data, or he did not look at recent trends, before judging
Bitcoin. The system may be deflationary by nature, but people are sure not
treating it as is.

Or else you would not have seen the value drop from $32 to $4 in 4 months.

