dragonfish

no doubt Pepsi is in liquid state :)what I was trying to point out is... there is enough supply and demand of the goods and the sales kept growing from zero to several billion dollars.But the revenues can't keep growing on forever just because they reached a critical mass. As per Surda if just enough people are involved in exchange (liquid) it should create more demand. This will set an exponential demand on Pepsi with given customer base... if you understand exponential growths, soon Pepsi may need entire oceans of water to make Pepsi! 'having critical mass or having enough people as buyers/sellers (here seller is only one guy:Pepsi)' has not magically created exponential growth to Pepsi. Its growth *must* get saturated and there are practical constraints that are not allowing Pepsi to have a easy management life. They can't bank on Surda's wisdom of "more customers in our base means more demand and things can self sustain!"... there are practical constraints that can drag Pepsi's demand down (eg: people may forget Pepsi and fall for next shiny thing, certain beverages may go out fashion, a law suit...etc etc).I know the analogy is slightly off the marks, I have equated 'market liquidity (i.e availability of buyers/sellers of an instrument)' with 'demand and supply (availability of Pepsi buyers and sellers)'. I think if you replace Pepsi with Pepsi Shares... analogy may get closer to my point.What Surda is missing from his 'liquidity will create demand' assertion is:* Practical constraints will always set in and demand can't keep growing on... no one should be surprised if the demand gets reset to zero due to some other practical constraints. Having sufficient liquidity now is NOT an insurance against demand going to zero in future. To sustain a demand...a thing must have more attributes than just liquidity factor.In our topic, we are talking about sustained demand for 'medium of exchange'. st434u points out few attributes a money must have and some people think either bitcoin already have such attributes or bitcoin can fly even without those attributes! So far am with st434u... may be some new ideas or new data can shift my conclusion, am trying to think few such ideas..for instance:we never had a public ledger with global consent prior to Bitcoincan this factor eliminate the need of intrinsic value and set up an economy based on Bitcoin?In game theory when 2 strong dogs and a weak dog fight with each other for food, surprisingly the weak doghas a better chance of surviving without scratch and getting the food.Similarly can some kind of counter intuitive game theory construct help bitcoin to beat Regression Theorem?am just thinking...

"Once a medium of exchange is sufficiently liquid, it can, hypothetically, sustain itself through the network effect even if it does not have non-monetary uses, as liquidity creates demand" --Peter Surda This claim is outright absurd, every bubble in history had enough 'network effect' and strangely 'liquidity' never kept on creating demand. If liquidity creates demand, Pepsi can fire all its board members/marketing teams etc and simply keep producing Pepsi infinitely and run out water after depleting all oceans on this planet! Clearly this is absurd. @st434u I can clearly see your point, I don't have any math/economics Ph.D... how come these economics students cook up things like this!

In any of the top 10 GDP countries:(from wikipedia)1 United States 2 China 3 Japan 4 Germany 5 France 6 United Kingdom 7 Brazil 8 Russia 9 Italy 10 India --------80% full salary in crypto currency with 80% shop acceptance for 5 years.

Okay, I will try to propose a concrete test:In any big country with decent GDP. 1. When 80% people are ready to accept their salaries fully in bitcoin. 2. When 80% of all shops accept bitcoin.and the setup is stable atleast for 5-10 years.

Sure, crashes and recoveries have been happening in bitcoin price chart. All recoveries could be easily explained away as speculative bubble. New speculators are jumping in as the bitcoin news is catching up, google search frequency chart for keyword 'bitcon' clearly reflects the bubbles and crashes in bitcoin chart! When no more new speculators are jumping in, old speculators *must* bail out... I think that's when a big down movement *may* happen... When the supply of speculators and their interests fade, do we have any other better reason that can avoid down move i.e provide resistance level in price chart? In case of commodities, price of one commodity is correlated with others, so the resistance price level is always there, can we say the same thing to bitcoin?

@Wesley, @aeonicentity > "I would just like to point out that this isn't an argument..." sorry, if I had sounded sarcastic! >> 1) Commodity currencies can be devalued by supply, or inflated by demand. okay so what? All values in a market fluctuate and seek equilibrium, this is a good thing! If there is a golden asteroid shower tomorrow filling earth with gold stones, price of gold will collapse to its supply and another metal say silver may take the lead... Technically no value has been destroyed or stolen except new equilibrium of values has been calibrated with respect to gold supply. This is precisely because gold is a commodity. With bitcoins we have fixed coins but how does bitcoin withstand million different alt coin clones, leeching its value? Here supply seems to be infinite , which is worse than gold asteroid shower! >> 2) Commodity currencies can be consumed rather than exchanged. excess productivity (atleast in one area) is what allowing the growth of trade. If someone can't produce/specialize atleast one item in excess of his consumption, we can start to worry on this point, so lets move on to next point. >> 3) Commodity currencies all inherently have a restriction on fluidity. I agree on this point. > "What would cryptocurrencies have to do to change your mind?" Lets talk about "the race to bottom". Assume there is panic sell or simply bitcoin went out of fashion someday, what will prevent the value of bitcoin from reaching zero dollars. When "the race to bottom" begins do we have an alternate reason, which make economic (and game theory) sense and halt this down move? The race to bottom can be abrupt or slowly bitcoin losing its steam... doesn't matter. This is my falsification test for Bitcoin.

Richard Nixon... will be smiling from his grave I guess... "Another dude, thinking just like me!"

@Josh F am not bitcoin hater. I just can't comprehend bitcoin as currency thing, starting with premises I hold in my head (i.e Mises Regression Theorem). I admit am not economics pro, but wanted to make baby steps in right direction applying the principles of critical thinking. I am 100% sure bitcoin is going to change the world for good in profound ways, so am not discrediting bitcoin either. Clearly I can see these implications because bitcoin has achieved something which was thought as impossible in history: i.e decentralized contract management without third party. Think what it means to have an autonomous agent to trade values in a market which can be programmed with triggers! Think what if a bitcoin represent 100 stocks of a company...I think colored coins are going in this direction... so its all pure awesomeness waiting to happen! well, some of those miracles have already been blooming eg: decentralized DNS system, escrow transactions, smart properties...etc. etc.

> " It really worries me to think of what will happen to the world of economic and political ideas when Bitcoins die." Even if bitcoin dies as a currency am sure its here to stay in different forms with profound implications. Here are such ideas * Smart Contracts without 3rd party * Using block chain as some sort of public asset register enabling asset trading in brand new ways... ... and lot more!

When ever people say 'bitcoins proved this or that' they actual mean 'people started believing in this or that'.People can believe or convince themselves to any kind of crap but as the saying goes, "reality sets in and pops all stupid fantasies, sooner or later". I can get bunch of my friends to do any kind of retarded activities defying basic economic sense, but can we generalize that as 'sustainable socio economic reality'?We are talking about people interaction with volition, not mere billiard balls, if one billiard ball disproves a physics law, the law is gone, we can't say the same thing in social interactions. People should ask, "Whats the social & mathematical reality here, why reality should or shouldn't pop the bubble sooner or later? Can the math support social hysteria?" instead seeing events from the mindset of physics lab.

youtube.com/watch?v=HSpBfXCu024 wanted to talk about 'bitcoin' part of this big video. I think Stef is mixing categories in his arguments for bitcoin's intrinsic value. The categories being: commodity and currency. Commodity: something we can consume directly or indirectly or enough people want to pay for it Currency : A thing that can be used as medium of exchange. Mises Regression theorem as I understand says before a 'thing' becomes 'currency' it must be a 'commodity'. Eg: Gold, Cow, Goats, cigarets... any of these things can act as 'currency' as they are a commodity first. The currency status comes only after someone respects it as a commodity, this keeps the value of currency from becoming zero. The caller rightly said, bitcoin can't be used as a commodity (i.e you can't consume it). but bitcoin is used as exchange medium i.e currency On Stefan's side, he explained how bitcoin can be an awesome low overhead currency... but wait...before currency it *must* be a commodity. Stefan explained how blockchain can provide wonderful services (such as time stamping and novel contract managements). But the catch is, to treat a service as commodity someone must be willing to pay for it. I think these time stamping and other services all can be implemented for free in p2p opensource setup. I agree with most of Stefs argument about bitcoin how it can be an excellent medium of exchange. But... am not sure how a bitcoin ever be a commodity first! I am surprised Stefan never said anything about "Mises Regression Theorem" in his bitcoin podcasts. any thoughts?