Emma Lawson, Senior Currency Strategist for National Bank of Australia, has written a lengthy analysis of Bitcoin. Predictably, given her allegiances, she finds it to be an unsuitable alternative to AUD.
Her (foregone) conclusion is ostensibly based on a laughably inaccurate data-point:
“1723 registered businesses worldwide advertised as using Bitcoin (no doubt there are more in reality), [which] suggests there may be something in the idea that there is [sic] currently more people buying Bitcoin in anticipation of an increase in Bitcoin value, rather than buying Bitcoin in order to use them as a payment method. That strongly suggests a bubble in the present value of Bitcoin.”
In reality, an alternate and parenthetical dimension to the banking elite, there are at least an order of magnitude more businesses accepting Bitcoin – and that’s only counting businesses using BitPay for payment processing!
Including Coinbase’s reported 16,000 merchants, plus smaller payment networks like Coin Payments, not to mention all the folks accepting direct payments, 1723 is an absolutely ludicrous figure. My initial suspicion was that this number was pulled from CoinMap, which currently reports 2152 primarily brick and mortar Bitcoin merchants. Emma Lawson later states the figure was culled from “the Bitcoin website.” No further mention is made as to which Bitcoin website is the Bitcoin website.
Next in NAB’s analysis, we have this gem:
The above chart is meant to further illustrate that Bitcoin is nothing but digital tulip mania. Clearly the inclusion of volume is meant to underscore that price is shooting to the moon on vapour. Again, this is laughably bad research, especially considering the report’s previous pie-chart shows Bitcoin China holding 47% of exchange volume. Indeed, anyone with even a passing interest in Bitcoin knows there was a tremendous surge of volume in China accompanying the last rise.
The Estimated USD Transaction Volume on Blockchain.info illustrates this pretty clearly:
There are other howlers in NAB’s analysis. The usual Keynesian deflationary bugbear is trotted out, whereby personal savings rising in value is deemed the ultimate economic catastrophe. What could possibly be worse than falling prices? Why, the ever-widening gap between elites and everyone else might actually narrow if that were to happen!
Presumably the value of savings approaching zero, as bankers debauch the people’s money through endless printing, is the preferred scenario. Certainly the inflationary results of money-printing spur the infernal consumption engine, as consumers dash to convert their depreciating cash to material trash. But is this economic model even remotely workable in a world of rising populations and diminishing resources?
Bitcoin also comes under fire as a currency for being dependant on social trust.
“There must be trust in the system, for Bitcoin to retain any value. This is how it differs from other payment methods like credit cards and PayPal, which have a pool of funds backing them.”
Of course, that the fiat money “pool of funds” depends solely on trust in the omniscience of central planners passes without mention.
Another ‘highlight’ in the report is the following:
“In a discussion about Bitcoin with a computer engineer I asked “how is it created?” and had the spiel about computing power, energy and the resources needed to identify prime numbers. Ok, that’s great, I may never understand the maths but I get that it requires substantial resources to compute. The next question “so what does it produce that is valuable?” answer – nothing.”
It seems to me that a Senior Currency Strategist who can’t be bothered to grasp the underlying maths in the course of investigating the workings of a new competitor currency needs a more suitable job title.
If this is the best anti-Bitcoin argument that can be mustered by the 17th largest bank in the world then, contrary to the bank’s conclusion, it bodes extremely well for Bitcoin replacing fiat in the near future.
NAB’s full report can be viewed at this link on Zero Hedge. Amusingly, the first comment links to MayorLar’s first article on this site, in which he really came out swinging at the bankers. Those bankstas will need to put up a better defence than this silliness by NAB or they’re going to get beaten to a pulp in 2014!
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Last modified (UTC): December 29, 2013 15:55