- Aug 4, 2007
- Reaction score
- London, England
Yup, although I think that my comment about value fluctuation was directed to INT21 rather than to anything you said.For clarity: I did not argue that value fluctuation is a sign of a scam. Values of all sorts of legitimate commodities fluctuate.
This is true. I just take this as "life as normal".I argued that a number of factors make Bitcoin a ripe opportunity for scammers.
Fair enough. I am also not an economist but I prefer to think of a bubble as being when an asset, commodity or currency is valued way beyond what its underlying, fundamental worth suggests should be the case (and I think this can entrap seasoned investors just as much as amateurs).As for the definition of "bubble", I am not an economist, but I draw the distinction between:
1) Normal fluctuation in value, both up and down, due to the informed speculation of the normal players in the market.
2) The situation in which the reputation of a commodity comes to the attention of people who would not normally be players in the market and new, unskilled, investors hoping for an easy profit increase the demand. With increased demand comes increased price, which causes a number of "feedback loops" which cause the value to increase substantially faster than would be the case in normal circumstances. Wise investors ride the wave and bail out in time; unwise investors stay in too long and when the crash comes, they lose out. This is what I would call a "bubble": the accelerated inflation in value caused by a sudden increase in investment by people who would not normally be in the market. This may not be the standard definition, but it describes a phenomenon that can be observed to exist.
One could argue that the underlying worth of a Bitcoin is nothing at all (or is perhaps the cost of the energy that went into making it) but my view is that, like other currencies that are successful in terms of having people agree to view them as a store of value, there are potential economic factors that can tell us what the real value of a Bitcoin could or 'should' be. In this context, Bitcoin is still hugely undervalued.
I agree. To my mind, it's just how it is. Buyer beware, as the old saying goes. Where there is opportunity there is also risk; and yet opportunity in general means that risk must be tolerated and accepted.Bitcoin is essentially a good idea, but as with all financial commodities, greedy and ignorant amateur investors are likely to be a target for scams riding on the back of the phenomenon. This is why so much of the spam that I receive has "B1tc01n" in the title, and comes from hidden email addresses.