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Comment by dnautics | Hacker News Reader

I correctly called the peak at 1200 (although I did not think it would peak there twice), and I'm calling the bottom at 300. This article has a very poor opening:

Bitcoin is based on the idea that money gets its intrinsic value from its scarcity, which is a misconception since money gets its intrinsic value from the volume of transactions involving goods and services that use it

No, bitcoin is based on the idea that money gets its intrinsic value from its trust model. That's why it has advanced crypto-mathematics to establish verifability, and so forth. Now. Bitcoin promoters think that the scarcity can drive the value up to the point where it becomes widely adopted. Criticism of this model to spur adoption may be totally fair.

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Are you predicting it will bottom at 300 before launching into another growth phase, or that it will remain closer to 300 thereafter?

I think the latter is naive. I think bitcoin is the first currency whose perpetual deflation is ensured by the contract that defines it.

it is entirely possible that the bitcoin proprietors will change the protocol to no longer be deflationary; although that would cause some large-scale flight. I am not convinced of the keynsian model that inflation is exactly supply divided by velocity; nor of the 'crude austrian' model that inflation is function of supply only... If the demand goes to zero, so will the value.

While I think that bitcoin will recover, perpetual deflation is not guaranteed. Indeed, in general deflation of bitcoin depends on an increase in demand that outstrips the increase in supply.

Can you shed any light on why you think it'll bottom out at 300?

it just looks like it by eye. I'll probably buy in at 450 (or lower; whatever it happens to be when I bother looking) anyways, because it's incredibly difficult to get bitcoin timing correct or not taking into account a growth factor.

A full disclosure of my bitcoin history: I bought in at 150 and cashed out at 300 because I got cold feet and I needed the money - I'd have held on if I didn't need the money. I forgot that I had an autodraw, which kept buying at the 300-ish mark, which I sold off at 900, again because I got cold feet about my 1200 mark and I needed the money. This hasn't been entirely speculative work, I have used bitcoin in 'actual bitcoin' transaction. But not silk road.

The nonprofit that I am launching on tuesday will be accepting bitcoin donations starting on friday.

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