SilkRoad On The Verge Of Collapse; Suffering Massive Hyperdeflation

Posted May 1st, 2013 by Deslock Darkstar

We’ve written on the hyperdeflation problem before. Basically, with Bitcoin prices surging, nobody wants to buy anything, you just want to hold onto your Bitcoins. Conversely, when they collapse, nobody wants to sell. So volatility means nobody wants to transact in Bitcoins, because there’s a good chance that the next day someone will feel like a fool.

I am amazed how cluless the author is about basic economics.

mackler 2 years 16 weeks 5 days 12 hours ago

Mr. Weisenthal writes, "with Bitcoin prices surging, nobody wants to buy anything, you just wnat [sic] to hold onto your Bitcoins." Apparently he doesn't understand how anyone can know that prices are surging. Prices can only "surge" when someone sells their bitcoin for that "surging" price, and if people are selling their bitcoins then obviously his claim that "you just want to hold onto your bitcoins" is not true, otherwise the price wouldn't be surging, people would be holding onto their bitcoins and there would be no market for bitcoins, and no price, surging or otherwise.

He continues his incorrect analysis by writing, "Conversely, when they collapse nobody wants to sell." Again, the only way we can detect a so-called "collapse" is by looking at the prices at which bitcoins are being sold, and if they're being sold then Weisenthal's claim that "nobody" wants to sell obviously is wrong.

In fact, Weisenthal is wrong both ways when he writes that, "volatility means nobody wants to transact in Bitcoins." If nobody is willing to buy nor sell then there can be no volatility because there can be no market price. The mere fact that there is volatility means there is an active market. Weisenthal gets it wrong both coming and going.

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