And Bitcoin speculators are pricing in the frictional impact of changing to another arbitrary, fragmentary currency "when we need it"...where, exactly?
Who's better positioned to move to the next better currency than Bitcoin than Bitcoin speculators? And it won't be changing, there can, are, and will likely continue to be multiple working crypto currencies each attracting a following from those who believe in its core principles. As long as they're easily exchanged for the others as they are now, they can all win and one will just be considered the reserve currency because it's the biggest most stable one, just as in the real world with real currencies. Gold bugs will always like Bitcoin, but not everyone's a gold bug.
Is that like "Real Estate only goes up?" Remember that one from circa 2005?
This problem really does lead to crypto currencies having no floor like Krugman points out. At some point everyone decides what the next hot crypto currency is, and suddenly Bitcoin turns into Friendster and there's a rush for the exits and the price collapses.
It really does seem like cryptocurrency fanboys have bought into a form of "this time its different" because... crypto. And they're ignoring the fact that it is a currency with zero to backstop, and its clearly dependent upon fashion and popularity, since there's a growing marketplace now of competing cryptocurrencies.
This thread has been very useful to convince me that bitcoin is a classic bubble. I have no idea when it'll pop, but it appears almost certain that it will.
No, it's saying that Bitcoin has the feature that people who like Gold like, the supply can't be artificially inflated. That's all. Keynsian's won't like that because that means it's deflationary.
> This problem really does lead to crypto currencies having no floor like Krugman points out.
Krugman is wrong because he doesn't see the inherent value in them yet, and there is value in shopping online without giving the retailer my credit card details and without the retailer being worried about charge backs and banking fees; but he didn't see the value in the Internet either.
Brilliant people are often wrong when stepping outside their domain, and he clearly doesn't yet understand the technological advantages of crypto currencies.
He's right that deflationary currencies won't function well as currencies in the end, which is why Bitcoin could be MySpace and a better designed crypto may ultimately win, but network effects give Bitcoin the chance to fail before someone else can win. However Bitcoin need only become stable enough to be used to move money around and it'll have a ton of value to lots of people whether it's deflationary or not simply to avoid banks, fees, and chargebacks.
You admit that some other crypto currency may win. That means that bitcoin may lose.
Lose.
LOSE
What happens when it LOSES?
Like Krugman points out, there's nothing to backstop it and no floor.
Oh right, but he's just an economist, he doesn't see the "inherent value". He just doesn't understand...
You so easily swap contexts completely between all of this "inherent value" nonsense when you're addressing Krugman, and then a marketplace of cryptocurrencies which clearly is 'libertarian' and is going to have clear winners and losers -- without, obviously, thinking that last word through very clearly.
I'm clearly going to need to load up on popcorn, this is gonna be fun to watch...
> You admit that some other crypto currency may win. That means that bitcoin may lose.
Your thinking is very binary. It's possible that another crypto currency becomes the biggest one, that doesn't mean bitcoin loses, it means it's not the reserve currency that it is now. You don't seem to understand that people have different ideas about how a currency should function and each crypto that comes out will attract those that agree with its rules. Bitcoin is designed for Austrian economic fans who think inflation of the money supply is the worst thing ever. They will never abandon it for another crypto, it's already exactly what they want. Keynsian's will eventually move to something that includes built in inflation.
> Like Krugman points out, there's nothing to backstop it and no floor.
Yes there is, it has utility; even if another crypto becomes the more favored currency, Bitcoin will remain the digital gold it is because it's deflationary, easily tradable, and aligns ideologically with how many people think money should work (they're wrong, but that doesn't matter).
> I'm clearly going to need to load up on popcorn, this is gonna be fun to watch...
It's already fun to watch. That neither you or Krugman see inherent value in crypto currencies is something both of you will come around on eventually. He certainly changed his mind about the Internet being no more useful than a fax machine.
Hey, I love Krugman, we agree on much, but on this, he's simply wrong and he's been very wrong very publicly before. Your appeal to his authority is not a valid argument for why Bitcoin is a bubble, if you can't make your own, then move on but don't get snarky with this "he just doesn't understand" b.s. you're slinging; it's unbecoming.
