A Response to Professor Bitcorn: I Wager 1 Bitcoin that you are Wrong

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In late 2013, at the peak of Bitcoin‘s price, many economists started making wild accusations and predictions about the future of Bitcoin. One prediction that stood out among the others was the prediction of Boston University economist, Mark T. Williams, affectionately known in the Bitcoin community as “Professor Bitcorn.” He said that Bitcoin was a completely unsustainable and foolish idea as a monetary system, and that its value would fall to $10 within the first half of 2014. Then, in January of 2014, he narrowed his prediction even further, saying that Bitcoin’s price would be at $10 by June of 2014. Williams stated that:

“To assume currency can be computer generated, run in a decentralized manner and outside of the central banking system and controls is farcical and economically dangerous.”

The fact that Professor Williams believes that Bitcoin is unsustainable due to it being “computer generated” while simultaneously denouncing it for being “decentralized… and outside of the central banking system” is laughable considering the fact that the world’s central banks create money out of thin air by pressing a button on a computer. Most of the money in bank vaults today is not physical paper, it is a collection of numbers on a computer screen. To say that Bitcoin is “farcical and economically dangerous” because of its existence in the digital world is hypocritical at best and shows the pure arrogance of the mainstream economists. Pressing a button on a keyboard and spontaneously bringing limitless amounts of money, and therefore inflation, into existence is perfectly fine because the beloved central banks do it. However, algorithmically mining a scarce amount of bitcoins in order to sustain the currency’s purchasing power so it will remain useful is just utterly horrifying and unthinkable because it is done by individuals voluntarily working together, trying to achieve a more prosperous society.

June has now come upon us and, contrary to Professor Bitcorn’s overly-confident and completely unfounded prediction, the price of Bitcoin sits well above $600. Bitcoin has a long way to fall this month if Williams’ prediction is to come true.

A few days ago, Professor Bitcorn did a new interview with Coindesk. In this interview he stood partly by his prediction that, by June of 2014, bitcoin would be below 10 dollars per BTC. And by “partly,” I mean that he ignored his very specific price prediction of $10 by June and said that:

“I continue to stick to my 2013 prediction that bitcoin is grossly overpriced and the price will eventually adjust dramatically downward as the priced-for-perfection expectations set by bitcoin promoters cannot be met.”

No longer does Prof. Bitcorn say that we will be at $10, or any specific price, by any specific date, he merely says that at some point the price will go down. Hark! The prophet has spoken! And at some point in time the price of Bitcoin will go down! Clearly, Prof. Bitcorn is trying to stay away from the content of his actual prediction in 2013, and its narrowed version that he advanced in early 2014– which now he likely realizes was painfully inaccurate. Rather than admit his mistake, the professor is attempting to twist his own words in order to keep up his appearance as an expert economist. But making the general statement that Bitcoin’s price will drop at some point in the future is hilariously unscientific, which is ironic coming from a mainstream economist who likely believes in positivism in economics and ignores the core principle of human action. I suppose that if I say, “at some point in time during the course of human history, it will rain,” then I shall be able to call myself an expert meteorologist? It isn’t news that the price of Bitcoin wildly fluctuates; in fact, these fluctuations have become a way of life in the Bitcoin community and have been the source of grossly inaccurate and spurious trend “analyses” and predictions. However, volatility isn’t a sign that Bitcoin is not a viable monetary system. It is merely a symptom of a currency that presently lacks a wide rate of acceptance by the general population. Because the current user-base of Bitcoin is relatively small, a single transaction has a much more substantial effect on Bitcoin’s purchasing power than the effect that one transaction would have on the Dollar’s purchasing power. Additionally, the lack of acceptance isn’t an inherent characteristic of Bitcoin. And recent Bitcoin news shows an upward trend in its acceptance.

There are several more completely fallacious arguments made by Prof. Bitcorn for which we have no room to discuss here. These arguments involve beliefs that The Bitcoin Foundation is completely responsible for Bitcoin’s price trajectory and that international regulation is needed for Bitcoin to be “safe” for consumers to use. These arguments further show Professor Bitcorn’s ignorance on the subject of crypto-currency and allude to his ignorance in economics in general. However, that is no reason for sympathy. As long as Prof. Bitcorn continues to publicly make unfounded and invalid arguments on Bitcoin, he will be subject to the harshest criticism of the Bitcoin community; and rightly so.

However, I will attempt to give Professor Williams the benefit of the doubt. Yes, it is June and the Price of Bitcoin is well above $600 and continues to soar. But it is only the beginning of June. It is possible, although highly unlikely, that the price of Bitcoin could end up at $10 by June 30. So I propose a friendly Wager: If the price of Bitcoin is at or below $10 by June 30, I will pay Professor Williams the current dollar equivalent of 1 bitcoin, which is $672.21. If Williams’ prediction is wrong, however, and the price of Bitcoin is still above $10 by June 30, he must pay me 1 bitcoin as the price stands on June 30. If Professor Bitcorn somehow sees this article, and he truly believes in his economic expertise, then he should have no problem accepting this wager. What will the price of Bitcoin be at the end of June? Only time will tell.

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