Bitcoin and Why I See Bad Future for It Jing Li

Big Picture 1: Price of Bitcoin (Check Trade Volume by Yourself)

Big Picture 2: Google Trend (Revealed Preference)

Big Picture 3: Is It Legal?

Eco201: Demand and Supply

An Easy Problem Demand side: speculator, risk-lover, criminal….. Supply side: Ripple, Bitcoin, Ethereum, LiteCoin…. Question: what happens to price if demand curve shifts to left, and supply curve shifts to right?

Why Demand Curve Shifts to Left? Google Trend Governments hate it---China has cut down the majority of Bitcoin trading; India is reported to take steps to make cryptocurrencies illegal as a payment system; South Korean has banned government employees from crypto holding and trading……. SEC is planning more regulations; Banks are now moving en masse to prevent customers from buying Bitcoin on credit cards… Asymmetric Information---People will not buy a used car in fear of getting a lemon. Here, risk-averse persons like me are scared away because Bitcoin (and blockchain) is so hard to understand

Why Supply Curve Shifts to Right? There are a lot of nerds out there… In theory, everyone (not just central bank) can supply. This is how https://www.wikihow.com/Mine-Bitcoins Remember, Bitcoin is not the only cryptocurrency---the list of its competitors is growing, fast! After a trip to San Francisco, some Miami professors want to start mining “MiamiCoin”. Yes, I will leave Miami if the university decides to pay me MiamiCoin. I am serious!!

As Currency, Bitcoin has Fundamental Drawbacks Unit of Account: the value of Bitcoin is too volatile. When people see change in price, they do not know it is due to the goods or Bitcoin. Store of Value: the is the part of Bitcoin criminals like most. At this point, it is hard to track the Bitcoin transaction. So Bitcoin is ideal for money-laundering or tax evasion. No wonder governments hate it. Medium of Exchange: this requires people have faith in the currency-- -they know later they can use the currency. Personally, I do not have faith in Bitcoin because of its uncertain future

Technical Stuff https://en.wikipedia.org/wiki/Blockchain https://blockgeeks.com/guides/what-is-blockchain-technology/ https://www.blockchain.com/ My advice is, don’t invest in Bitcoin until you understand Blockchain, the elephant in the room Another technical note: mining in Blockchain becomes exponentially more expensive with each link in the Blockchain. In that sense, mining Bitcoin is self limiting, and eats a lot computing and electrical energy.

History Repeats Itself https://en.wikipedia.org/wiki/Tulip_mania

Bubble? https://www.cnbc.com/2017/12/14/bitcoin-ether-litecoin-ripple- differences-between-cryptocurrencies.html