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0 pointsfoobarqux12y ago0 comments

The definition of velocity is not at issue, the relationship between "price" and transaction volume is. If tomorrow the US gov decreed that every $1 of USD will immediately be exchanged for $2 of USDX you wouldn't expect, in theory, for the USDX transaction volume, denominated in USD, to change.

Put another way, I fail to see how the BTC/USD exchange rate is related to BTC transaction volume except for tangential reasons like sentiment.

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tpeng12y ago

BTC value is directly related to its velocity and the value of the goods and services that are transacted in BTC. I held the purchasing power of USD constant, simply to derive a value of BTC in 2013 dollars. If USD experiences a large shift in PP (unlikely), that would affect BTC/USD. But either way that's not an inherent source of value to BTC.

This is my last comment, as I cannot possibly respond to an endless string of unfounded criticisms.

foobarquxOP12y ago

I'm not an expert, frankly I don't even have a passing knowledge of how to value currency. My "string of criticisms" is actually one probative question: How does transaction volume imply a given value of a unit of currency?

Obviously an increase in transaction volume increases the value of currency. What is not obvious, at least to me, is that it is in direct proportion.

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