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by Helianthus
4835 days ago
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I don't believe that you actually have any understanding of the supply/demand economics of booms/busts necessary to be skeptical of parent. Increasing demand of a finite resource drives the price up. This drives the demand up even more. The real value of a Bitcoin is still in USD, of course, so at some point it's going to cross over a line where the people holding Bitcoins want to get rid of it. Decreasing demand of a finite resource drives the price down. This drives the demand down even more. The fact that the price is accelerating so quickly indicates a runaway effect. What, do you _really_ think the real-world USD value of all the Bitcoins in the world has doubled in two weeks? |
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You are correct that I don't fully understand supply/demand economics, because as an Austrian theorist, my concepts relating to booms and busts use dynamic models and not the statics you are using to prove your point. In a static situation, increasing demand of a finite resource does drive the price up, which can drive up demand even more, but thats if you ignore the effect of substitutes, which for both the exchange and speculative value of bitcoins, there are several.
Do I really think that it has doubled? No. But I don't think that people expecting a large crash like before are doing so because they understand the fundamentals. I think, as in any market, you do have speculators, but I also think that the legitimate demand for bitcoins as a means for exchange has gone up since the previous crash providing a more solid basis for the higher price.