I'm mostly objecting to the way he makes the argument, which essentially boils down a lot of pretty words, cherry-picked data, and implied correlation without even making an attempt to establish causation.tommyservo7 wrote:I have not watched the video, but why do you refute that the growth of a company slows down over time? After they are accepted by the market, a company's sales growth usually declines fairly quickly.Cubee wrote: If feel like that guy just made an excellent argument against bitcoin. Even if you follow the assumption that an individual company's growth slows down after a certain period of exponential growth (which is bogus, but that's an entirely different discussion), that doesn't change the fact that the economy, on aggregate, is expanding. When the economy produces more, people have more to spend their money on, and demand for real money goes up. There's my biggest problem with bitcoin: the supply is fixed, so a rise in demand can only serve to inflate the value. If bitcoin becomes widely accepted, there is no way it could follow the graphs he is presenting. The value will keep climbing, and people will want to hold bitcoins as assets rather than spend them like a currency. After all, why would I spend a dollar if I know it's going to be worth double tomorrow? What happens next is anyone's guess, but I imagine that at some point people will realize that the growth is being driven entirely by speculation, and the whole thing will come crashing down.
I think bitcoin is an awesome concept and I'd really like to see it succeed, but I've yet to see someone adequately address the problem of fixed supply.
I agree though, that no one knows what is going to happen. Its pretty neat experiment, I think, and should provide some interesting data for investors and economists.
He basically sets up a graph, where time is on the horizontal axis starting at t0. Then he puts Te (end time) on the vertical axis (???). Then he puts Facebook's market cap at IPO the vertical axis (which is still labeled Te), and starts talking about how user adoption rate has followed an exponential growth curve, and draws that graph. So, right now we've got time on the horizontal access, and end time, market cap at IPO, and users all on the vertical axis. Obviously the Te thing was a mistake, but even still we have market cap and user count on the same axis, which is just a basket of bad statistics in and of itself. How is he defining users? How is he converting users to market value? Not even a cursory effect at explaining that relationship. Oh, and all the graphs are hand drawn and there's no ACTUAL data (hell, he doesn't even cite any real statistics. I think at one point he actually said "FB grew about 1000%-2000% at this time"; everything else is just as fluffy) .
So he's basically drawing this poorly illustrated relationship with made up numbers and saying "See! It's normal!". And besides THAT problem, he's also just flat out wrong. A quick look at FB's market cap since their IPO shows growth, rather than the steady near-horizontal line that he shows. But then again, I can't even tell if he was wrong in that regard because I have no idea what the hell the vertical axis is trying to show. I honestly don't know what happens to a company's growth rate after an IPO as I've never studied that field of finance... but even if he was factually right on that point, the whole way he presented his argument was a load of *beep*.
I was going to type all that up for my original post, but then I realized it wasn't even relevant. Even if you accept ex ante that everything in his analysis is valid (and good luck with that), there's still no attempt to explain why we should want to see this sort of growth, and what it means for the future of bitcoin.
edit: .... that might have been a bit excessive, but implying causation through correlation and bad statistics really makes my blood boil.