The EMH says that market prices are approximately "correct" and you can't expect large gains. Yet many Bitcoiners expect large increases in the price of bitcoins. Is the EMH failing in the Bitcoin market, giving us a true free lunch? Or are Bitcoin investors deluding themselves by not recognizing the likelihood of loss?
Efficient compared to what? Free markets are certainly more efficient than:
1. Zero trade - each person attempting to create/supply all his own needs/goods/services
2. Barter - direct trade with no medium of exchange
3. Regulated trade - prices set and/or resources allocated by gov't bureau-Rats based on a) severe lack of information, b) incompetence, c) corruption
But despite being more efficient than the alternatives, free market pricing is really only efficient (in the sense meant in the EMH) on the average and in the long run. In the short term there is often volatility around the mean due to innumerable factors including people's changing wants & values, unforeseen events, etc.
You're not factoring in the risks. If bitcoin fails we lose all our money. Secondly you're not factoring in time preferences, lots of money now is worth more that lots of money later (this is why you get above inflation interest rates on savings).
The value of bitcoins at the moment is:
(Value of bitcoins when successful) * (Chance that bitcoin will succeed) * (Time preference factor)
Excellent points made here. The fact that Bitcoiners expect bitcoins' value to rise dramatically doesn't indicate a failure of the EMH. Bitcoins are likely priced about right for their value today
. Bitcoiners are simply doing what every good entrepreneur / speculator does. We are making a prediction / educated guess / bet about what will happen in the future, i.e., that as time goes by many others will become more knowledgeable about the nature of money and currency and will come to value bitcoins much more than they do now. If our prediction is correct, we profit; if not, we lose. C'est la vie!