Other.
There is very little "bitcoin economy" other than its application to transgressive activities like the drug trade, money laundering, and maybe a little tax evasion. You really need to go out of your way to use it for "normal" purposes and it just limits your choices in the marketplace for normal goods, why bother?
OTOH, it's a pretty good online gambling game. The game aspect can cau
se $2 million in coins to move in a day's time. Take out the drug trade or not, there's no way anything near that much in coins is moving in goods and services on a daily basis.
The notion of a bitcoin economy is rather quaint sharing the room with a 500 pound gorilla riding an elephant, that is, gambling.
Same thing with "normal" economies where the gambling on currency is
massive compared to say GDP of nations using said currencies. Bitcoin is just a much smaller scale.
As such, it has been referred to as the market closest to the ideal of perfect competition, notwithstanding currency intervention by central banks. According to the Bank for International Settlements,[3] as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007. Some firms specializing on foreign exchange market had put the average daily turnover in excess of US$4 trillion.
Compare that to the actual economy and you could say there is very little "normal economy". A few days of Forex volume overtaking a year of the GDP of the richest countries in the world.
So bitcoin isn't differentiated from fiat currencies in this regard? There's a lot of whining going around about how gambling wrecked the world economy in recent years, e.g. credit default swaps, the total magnitude of which dwarfed *everything* ever before seen. Why would we not expect a similar outcome in the bitcoin microcosm?
Maybe it's time to start writing Bitcoinica default swaps looking forward to the day when no one can get their money out of BC because everyone is trying to do so at the same time? Naw, that's too simple, we would need to write swaps on the swaps, just like the CDS2, CDS3, and so on that were written on mortgage-based CDS. Naw, that didn't work out, but that's ok, someone could make some money at it for doing very little at least until the roof falls in.
What do think the total BWP ( Bitcoin World Product ) is? That is to say, goods and services exchanged for bitcoins?
The underlying problem that caused most of the stuff in your post is government intervention and machinations of the Fed. A lot of people don't agree with that statement, but it's a discussion I don't want to get into, because it's not worth our time if we disagree. And neither of us would change our mind anyway.
Gambling is fine if losers lose and winners win. When losers win, shit gets all fucked up.
I have no idea what the total yearly BWP is, but would guessing a few days volume on the exchanges be unrealistic?
We do disagree. I was deep in the banking business during the period from 1999 to 2009, I got to watch the whole thing unfold like a bad accident in slow motion. It was the madness of crowds feeding itself into a frenzy and can't be laid on just governments, just the Fed, just banks, just borrowers, just politicians, just real estate developers, just house flippers or just any one or two other of the usual whipping boys. It was one of the most interesting pieces of behavioral economics I've ever seen but making sense of it is not something that has taken place yet, for one thing there's way too much denial around the subject still and too many blind men feeling up the elephant and calling out the all the textures they know favorites first.
I do tend to say that at the simplest level, when the criterion for writing a loan or not ceased to be the borrower's ability to repay and instead was the ability of the lender to lay off risk ( so it seemed ) via securitizations, swaps, etc, that's when the train started leaving the tracks.
You said "Gambling is fine if losers lose and winners win. When losers win, shit gets all fucked up." Losing and winning are definitional, how can a loser be a winner? Did I miss something?
Your estimate of the BWP doesn't sound terribly off but I have no clue as to what would be on. If you are correct, there's plenty of headroom for more gambling based on comparative ratios, you want to write some Bitcoinica default swaps with me? Tell ya what, you BDS me and I'll BDS2 you, then you can BDS3 me back, then....
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