1) Holding bitcoin is not like holding cash in a bank. It is like holding cash. Measurements of BTC are BTC M0 and not at all reflective of M1 or higher.

2) BTC trade 24 hours/day on several exchanges on at least 3 continents, so there is no “night” during which hypothetical speculators must come to market to buy to prop up the price.

3) BTC spenders, like cash dollar spenders, may or may not hold BTC for only the few seconds it takes to make payments. This seems even less likely given its recent stratospheric rise (crossed $40 earlier today). Even if BTC/USD starts to go down, then you’ll have more spenders buying only what they need to get their pot, but that irreducible demand to hold BTC even if only for few minute intervals, makes a savage beatdown all the more difficult… and of course encourages long speculators.

So in the extant BTC market we find speculators not selling during the “day”, spenders holding over “night”, and few (if any) banks clearing accounts each “day”, which doesn’t really exist anyway. It seems as though the analysis almost doesn’t apply at all.

Bitcoins at the British Museum
https://bitcointalk.org/index.php?topic=122274.0

http://www.britishmuseum.org/research/search_the_collection_database/search_object_details.aspx?objectId=3451294&partId=1&searchText=g68%2f18&orig=%2fresearch%2fsearch_the_collection_database.aspx&numpages=10&currentPage=1

It seems that we’ve exhausted our subject, our host and each other, so
I’ll try to respond to your last post by summing up what I think I’m
arguing about. I’m no doubt missing some subtle point here, and the
appropriately labyrinthine–for a Nick Land blog–comment nesting
probably isn’t helping either.

Let’s say that we have a country which uses a particular currency, so
that most wealth held domestically is denominated in it. It could be
Bitcoin or dollars or marks or anything else. Say further that this
country experiences hyperinflation, or a crash in the value of its
currency. What happens–does everyone have the same amount of wealth
as before, relative to one another? No, definitely not. For one thing,
the magnitude of everyone’s losses are different. If I have 100 units
of wealth, and this is reduced to 1 units of wealth, that’s a much
bigger loss than someone who only has one unit of wealth being reduced
to one one hundredth. Why this changes relative wealth and not just
relative losses is that wealth is transferred from the holders of net
assets denominated in the crashing currency to holders of net
liabilities. The loss to the holder of the dollar or mark or euro
asset is equal to the gain to the holder of the liability. Only in the
case where there is no net position anywhere can there be no real
redistribution of wealth. But this is the case where there is no
financial wealth period, so hyperinflations would be impossible.

What I have tried to argue in the comments is that money has value for
two reasons: one, because it is “easy to sell”, i.e., it is the most
liquid asset available, which provides to the holder a non-pecuniary
yield or “liquidity premium”; and two, because money is a claim on the
assets of the issuing bank or fund, where those assets represent
future cash-flows (so that ultimately the bank liability is a
claim over future output).

Because Bitcoin is nobody’s liability, it is a claim over no future
streams of revenue. It’s not an asset at all, apart from in the
sense of its liquidity. Increases in the stock of Bitcoin
correspond to no investment in the capital stock of any
economy. Bitcoin do not represent real savings, from a macroeconomic
point of view. Just an abyssic black hole of capital. A chain of
financial intermediation that terminates, not with a borrower
financing the acquisition of some asset, but out in the void of
cyberspace somewhere–by design. And since the price of Bitcoin is
related to no underlying process that can be understood or predicted,
its price is indeterminate (although the money-supply growth rule
would prevent any attempt to stabilise the value of Bitcoin, even if
that were possible).

That is, Bitcoin might have the first property of money (to an
extent). But it doesn’t have any of the second property. (Any asset
can have the first property.) Not having any of the second
property, the degree to which it can possess the first property is
impaired.

To the charge that it is conceivable that money is more like art and
so the second property does not matter, well maybe, but I say two
things. Firstly, that there are no banks who operate in such a way,
there are no central banks who operate in such a way, there are no
funds and no financial intermediaries who operate in such a way. Any
bank or non-bank intermediary operates in the following way: it has
liabilities and it has assets. So there is no other money that
resembles Bitcoin. Secondly, that when we look at historical examples
of hyperinflations, what we see is the monetazation of government
deficits. When the central bank monetizes deficits, it backs its
currency with worthless assets, which causes the holders of
liabilities denominated in that currency to dump them. This is largely
the story of the Weimar hyperinflation, for example.

From the point of view money as art, none of this makes any sense. I
don’t think that’s totally decisive–as I said, I think the
money as bubble that doesn’t pop view is conceptually coherent–but it
does seem like strong evidence against it.