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Comment by tpeng | Hacker News Reader

We could debate what the velocity of bitcoin is/will be, but the relationship between velocity, money supply, and transaction volume is definitional.

http://en.wikipedia.org/wiki/Velocity_of_money

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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.

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.

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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