Ugh, why doesn't Coindesk just publish the tanscript of the interview, instead of paraphrasing what he said?
Bitcoin's price today is obviously determined by speculation. The projections of it "going to the moon" assume that people will one day buy it in order to use it as payment medium. Dividing the estimated volume of e-commerce by the number of bitcoins available in the market gives an astronomical price. But that demand -- "buy to pay" -- is still much smaller than "buy to hold" and "buy to daytrade".
And "buy to daytrade" is still mostly in China, where "buy to pay" cannot grow. If the Chinese speculators get tired of bitcoin, the price will fall at least to 350 USD. This is no theoretical prediction, it already got down there for a moment one day, when it seemed that the Chinese government was about to close the exchanges in China. How far could it drop below that?
Well, I'm back from the reservation, wherein I uncorked my bottled-up thoughts about this guy and what it means for Bitcoin. Thanks for the link.
That interview was revealing, as to the mindset of Prof. Wiliams. Fact is, guys like him make an excellent foil for Bitcoin bulls and crypto bulls like me. It's almost like going back to 2006, when gold first got into real trouble price-wise, and reading a gold skeptic as he explains why the good times for gold had ended when gold hit $650 before going south. If you can get past the entirely natural irk elicited by the fud, you'll learn a real lesson - although a lesson quite different from the learnings that the skeptic intends to pass along.
[Gold actually ended up marking time after going back to about $500 or so; it later resumed its bull trend. The good times in gold didn't end until 2011, when it topped $1900, and the subsequent flattening didn't drive gold down much below $1250. In the annals of burst bubbles, 1900 to 1250 is mild: the '74-75 bear market was worse, percentage-wise. More normal is the kind of carnage that knocks off ~two-thirds of the asset's price, which suggests to this half-grizzled, half-bemused fellow-traveller goldbug that we haven't heard the last of gold. But moving back to the subject...]
I pay attention to the words of people like Prof. Williams in part to see how the stopped clock "runs." In addition to being laced with fud, skeptics like Prof. Williams fit the behaviour pattern of all conventionalists during the rise of a new asset class. Like many people period, he relies on analogy to compare the new with the familiar old. You might say that he's the type that looks at a car a hundred years ago and sees a "horseless carriage" - and nothing more.
Note that he relies on the "unregulated" trope. That's classic analogizing, and itself is very revealing about the fud that forms the base for Bitcoin's Reputation-Management hurdle. If it's "unregulated" and rises too fast too soon, it's gotta be a scam or a bubble - riiiiight?
Now, we around here know that Bitcoin's sudden rise is more like discounting its future value as a cheaper and mostly quicker payment and money-transfer gateway, plus (eventually) the value in widespread use of it as a real cryptocurrency. But conventionalists like Prof. Williams - well, they just don't see it. As such, he fits a behavior pattern that's, in its own way, reassuring. If Bitcoin is destined to enter a real blow-off bubble, the presence and bankability of people like Prof. Williams is a sign that the blow-off phase is a long away coming. Just as conventional bull markets climb a wall of worry, bull markets for new or formerly 'obsolete' investment classes climb a wall of fud.
When people like Prof. William get excited about Bitcoin, I'd start to worry. He'd be like the Keynesian who suddenly starts talking like a goldbug. With respect to the latter, it's a sure bet that he's still a Keynesian. He's just talking that way because he just bought a haunch of gold and is hoping to make a killing on it. fud-spreaders turned late adopters are actually the worst kind of late adopter, de facto. When they jump on board, it's a red-flag warning of a real bubble in progress that's close to going the way of all bubbles.
But not yet, and not for a long time! In my own way, I'm glad Prof. Williams stuck to his old-fashioned but oh-so-bankable guns. I need all the time I can get to scrape up more fiat and stick it into the cyber-sphere.
With that off my chest, it's back to the reservation for me...
