My reaction to Gary North’s Bitcoin-Ponzi Scheme article

I have no ego tied up with being right on this. I’d rather be successful than right. Criticism is important.

But I do think Gary North gets a few things wrong:

– “Nobody is going to be getting rid of an asset that has moved from $2 to $1,000 in one year in order to buy pizzas. People want to hang onto it, refusing to sell, in the hopes that it will go to $2,000.”

According to the data reported by merchant processor Bitpay, they see an INCREASE in commercial transactions when the price rises. Not a decrease.

– “In order for Bitcoins to become an alternative currency, there will have to be millions of users of the currency. There will have to be tens of millions of users of the currency. They will have to develop in a market on their merit as money, not as an investment of dollars in order to get more dollars back.”

There are currently hundreds of thousands, and I think that’s enough. It’s often easier to spend bitcoins than dollars. The albeit small market during the libertarian conference “Porkfest” has changed from using silver coins to bitcoins. That’s the free market choosing, though admittedly, it’s a small example.

– People are not buying it to serve as money; they are buying it because they are in the midst of a mania,

I’m sure this is true for the latest rally, but if you look back a year at what the bitcoin community thought the price would be, their predictions are actually pretty modest. It seems clear to me that they prefer bitcoin for its properties as a unit of account/medium of exchange. Not as an investment.

– “Bitcoins are not increasing the division of labor.”

I issued stock in a book. I did it without an army of lawyers and a small fortune. Bitcoins hugely increase the division of labor. You don’t need a paypal or western union in between you and the recipient of your payment.

Anyway, that’s just my two c̶e̶n̶t̶s̶ satoshis.