Bitcoin: Top economist’s views and predictions

Journalist:
March 26, 2014

Bitcoin is around since January 2009 and it has during that five-year period has climbed dramatically in value, but where is it going from here? Five years isn’t a long time in the greater scheme of things and indeed there may be a problem in analysing data this close to the source but on the basis that someone has to do it, in order to pay a bill or two, I’ll plough on.

We have watch Bitcoin travel from $13 in January 2013 to over $1,000 in early December and then again we’ve seen it drop back to $430 in February of this year so where is it going…. long-term. Let’s ask the great economic minds of our generation and use the expert analysis they provide to inform us.

The Australian Economist, John Quiggin, an academic heavyweight by any definition, writing in April 2013 in an article called, The Bitcoin Bubble and a bad hypothesis, published in The National Interest, stated: “bitcoins will attain their true value of zero sooner or later, but it is impossible to say when.” He was writing at a time when Bitcoin Value had ‘collapsed’ from $164 down to $90. One month later, in May, David Woo from no less an organisation than The Bank of America, forecast a maximum ‘fair value’ price would be attained of $1300 per coin, This was as reported by Samantha Sharf writing in Forbes magazine.

On December 1st 2013, Cameron Winklevoss in an article called, Bitcoin might hit $40,000 per coin, nailed his colours firmly to the proverbial mast, he stated that this was his ‘Bull’ position. Another professor, Mark T. Williams, predicted in December 2013, that Bitcoin would drop to under $10 by mid 2014. This is an individual who wrote at the end of February 2014 that Mt Gox is now a toxic tower of sludge. He was wrong: it has turned out to be much worse than that, it’s a toxic pool of radioactive sludge that has just exploded. I previously wrote about the relationship (Toxic) between Mt Gox and the Bitcoin Foundation.

On another front,  Al Gore, former Vice-President of the US and a man with a Nobel Prize in his back pocket, said: “I’m a big fan of Bitcoin… Regulation of money supply needs to be de-politicised.”  Indeed another Nobel Prize winner, in Economics, Milton Friedman, speaking many years before Bitcoin became a reality stated: “I think the internet is going to be one of the major forces for reducing the role of government. the one thing that’s missing but that will soon be developed is a reliable e-cash.”

Finally, let me end by looking at some quotations from history regarding various technologies:

“There is no reason anyone would want a computer in their home.” Ken Olsen, chairman of Digital Equipment Corp. (1977)

“Flight by machines heavier than air is unpractical (sic) and insignificant, if not utterly impossible.” Simon Newcomb, eighteen months. before the Wright Brothers flew at Kittyhawk.

“This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” A memo at Western Union,(1878).

For something to have value it must have usefulness and scarcity. There will be 21 million bitcoins created in total and merchants and investors are accepting it, therefore bitcoins have value. simple. They will not be increasing in quantity so therefore, having value, they must increase in price. Funnily enough neither journalists or economists are either useful or scarce, therefore we can make certain assumptions about their value…

Last modified (UTC): March 25, 2014 22:30

Tags: Bitcoin
PJ Delaney @P.J. Delaney@delboyir

Masters in Public Administration, Bachelors in Mgt., I live in Ireland, I have a bit of a background in Economics and lots of opinions on everything else.