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You guys don't get it - Bitcoin will act like a Ponzi scheme until Dec 2012
by
fastandfurious
on 13/12/2011, 06:52:24 UTC
This is a big issue, everytime Bitcoin price is going up it is at the same time working against it self with the high inflation that we have right now. This is just the way Bitcoin is constructed today. I know that Bitcoin isn't any ponzi sheme, but it will look as it is. The reason for this is very easy to explain, at $3 the inflation rate gives Bitcoin around $21 000/day of fresh capital (or miners that pay this amount by keeping their Bitcoins - the money has to come from somewhere) that is needed to hold the system intact and stable at the rate it is long term. If the price goes up to $10 or $30 then what is needed of fresh money at the exchanges is $72 000/day or $210 000/day to sustain a stable price at those levels. When the inflow of money doesn't come in at a stable rate, then it will act as if it was a ponzi scheme, because soon after it will fluctuate in a very disturbing way. As soon as the interest is gone for a couple of weeks the price will go down dramatically and vice versa.

So my conclusion is that every time anyone or group wants to start to bring in a bigger interest for Bitcoin they are facing a very very hard competitor. They can keep the price high for a couple of weeks, that is possible. But after that the inflation just hits the price every day, it acts today like a Duracell bunny and just gives those inflation numbers to the exchanges and it will not take a pause because the interest in down for a short period. And that will very fast show it self at the exchange price, and when the price goes down people sell in the trend. Exactly the same way they did when the price went up, a herd mentality.

One of my passions of life has been to really understand why the prices in the financial markets (and pretty much everything that is traded) goes up or down. I have been doing this for more then 11 years so what I am saying is my main conclusion why we have all these people that is right now tired of the way Bitcoin is acting, everyone should understand why this reason is.

And also, many super bulls are very blind and just see the positive signs, they really live in their own world. So for the super bulls, you don't need to comment.