Economics Questions

Re: Why the Mtgox Prices for Bitcoin are Phony.

jfrega — Thu, 18 Apr 2013 02:21:22 GMT

Well at least it's not a link to a Master's Thesis that no one will ever read.

Re: Why the Mtgox Prices for Bitcoin are Phony.

Smiling Dave — Wed, 17 Apr 2013 18:22:22 GMT

Baxter,

Thank you for that important link.

So bitcoin is a ponzi scheme, after all. Whoda thunk it?

Re: Why the Mtgox Prices for Bitcoin are Phony.

baxter — Wed, 17 Apr 2013 17:37:21 GMT

Dave, surely MtGox fixes the historical, objective exchange value of a single BitCoin? Arbitrageurs would ensure conformity among all such exchanges.

But MtGox does not fix a value for all extant ~11 million BitCoins. You are right that the hoarders liquidating their holdings would quickly cause a precipitous drop in the price. Based on the work of Adi Shamir, one of the world's top cryptographers, it seems like the wealth is highly concentrated among BitCoin's one-percenters.

See http://www.loper-os.org/?p=1009

"People who have invested serious time and wealth in Bitcoin ought to feel angry. Not from any abstract sense of fair play, but from the simple fact that Ron and Shamir’s findings reveal a serious – and quite mathematically-certain – flaw in the sytem. The total number of bitcoins in actual circulation is much smaller than previously believed. If the early adopters were to cash out and place their hoards on the market, the exchange rates (as denominated in anything) would dive through the floor, never to recover. The hoarders, in effect, possess an off switch for Bitcoin"

Re: Why the Mtgox Prices for Bitcoin are Phony.

Smiling Dave — Wed, 17 Apr 2013 16:24:07 GMT

Alan,

Read the article.

And reread the title. It says markets, plural.

Re: Why the Mtgox Prices for Bitcoin are Phony.

Alan Aversa — Tue, 16 Apr 2013 23:10:23 GMT

Do the Bitcoin Markets Like Mtgox Set a Value for Bitcoin?

Viz., does the largest market determine a currency's value? Is that what's being asked?

Re: Why the Mtgox Prices for Bitcoin are Phony.

Malachi — Tue, 16 Apr 2013 23:08:01 GMT

all I see is a link to some blog nobody reads. is there a topic here to discuss?

Why the Mtgox Prices for Bitcoin are Phony.

Smiling Dave — Tue, 16 Apr 2013 21:16:30 GMT

https://smilingdavesblog.wordpress.com/2013/04/16/do-the-bitcoin-markets-like-mtgox-set-a-value-for-bitcoin/