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Bitcoin is a perihelion of rational speculation

Cryptographic trading probably creates the most irregular of all verbs. I invest reasonably, you guess roughly, she lost the key to her bitcoin wallet, we launched a new joke coin, they to solve the probe I paid a penalty.

Regular readers think that the significant price fluctuations in Bitcoin and other cryptocurrencies on Wednesday support both the first two interpretations of rational price behavior and barbaric speculation. You may be surprised. After all, he points out that when Bitcoin is treated as a currency in 2017, Bitcoin has virtually no value, and frequently mentions the fact that there are no fundamentals on which to base a rational evaluation. Did.

A reasonable case for Bitcoin is that it will be digital gold. This was something I used to think was unlikely, and now I thought it was clearly more reasonable, but it’s still unlikely. If Bitcoin could replace gold as a government-independent world value backstop store, it would be far more valuable as many institutional investors would switch.

If not, it’s worth close to zero. Its actual usefulness as a currency is nothing more than hacker extortion payments and drug trading, thanks to slow and costly transactions. There are other digital currencies (including those being considered by central banks) that may solve this problem, but the founder of the pseudonym who wanted Bitcoin to be used as a currency for small online payments. The chances of achieving Satoshi Nakamoto’s goals are zero.

A 30% drop in Wednesday’s price and some rapid rebound fits to some extent the Bitcoin pricing model that failed to be a digital gold or crypto criminal currency. The market finds it difficult to price binary results. As a result, startup biotechnology stocks, usually either going to the moon or disappearing, are very volatile. Small changes in the probability of success or failure are amplified by large changes in price.

Bitcoin is a perihelion of rational speculation

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