The Cryptocurrency Singularity

Completely agree. Thanks for bringing Gresham's Law into it. Now I'm terrified I need to diversify.

Excellent writeup! I came to the same conclusion a few years ago with Thiers' Law: good money drives out bad, http://nakamotoinstitute.org/mempool/speculative-attack/

Whenever I read articles like this I'm reminded of this quote by Richard Buckminster Fuller

"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete."

IMHO this is what Bitcoin is all about. Not a get-rich-quick scheme or whatever insults some people throw at it, but a sound, arguably better alternative to fiat currencies.

Aside: If you haven't yet gotten into the fancy dancy, drama sprinkled ICO, Scamcoin, and Altcoin world I cannot recommend it enough. It's hilarious, like the cambrian explosion of cryptomoney.

The argument makes some intuitive sense (more people buying X over Y makes the value of X go up, which makes holding X more desirable, so more people buy X instead of Y...), but if this effect actually happened I don't see why it would happen with a cryptocurrency and not, say, gold. Nothing about the argument seems specific to cryptocurrencies- it's used here simply as a commodity whose value has historically been going up for awhile, and which people feel pretty bullish about.

There are other reasons, also, why Bitcoin or it's ilk would be particularly bad commodities to show this effect- notably, that the Bitcoin system can handle only a finite volume of transactions efficiently, and while it's capacity can be increased, the community managing it is (so far) still too disorganized to do so quickly (and without dramatic measures like forks and such.) Gold trading, as far as I know, already has none of these limitations, so cryptocurrencies have catching up to do, on that front.

I thought the same thing, the core idea of this article is in direct opposition of its conclusion.

Bitcoin is going up in value, and according to the market predictions it will go way higher, so it's deflationary.

Bitcoin holders will prefer to spend cash money to bitcoins anytime in speculation of future gains.

I see bitcoin more of a speculative investment at the moment, than a type of currency. Only the ones that are riding the bitcoin trains seems to think this is the future of money. Outside that bubble nobody really uses it.