Bitcoin Forum

This is the logic I used to reach that conclusion, please state which part is incorrect if you disagree:

1)   Bitcoin’s main technological and paradigm breakthrough – and the main source of its value is as a fluid currency that allows quick, anonymous, and nearly free transactions anywhere in the world.
2)   Currently Bitcoin is not being used as a currency – you would be crazy to spend it when its rising so much in value and when you could much more wisely sell it at a huge premium on a local bitcoin marketplace and buy the product in USD instead.
3)   Bitcoin is rising because people expect it to be a major currency of the future and that there will be huge flows from fiat money into bitcoin as financial crisis panic in Europe spreads.
4)   Bitcoin will keep rising as long as this assumption gains ground.
5)   If this assumption fails, and Europe is ‘saved’ (or can is kicked down the road) as it has countless times, new money will stop to come in, speculators will cash out feeling the party is over and price will drop.
6)   How low will it drop? Based on its intrinsic value as a currency that it had built over the past couple of years with perhaps an added premium thanks to the extra coverage it got over the past few weeks and new ‘believers’ added to the mix.
7)   Therefore, the true value of a Bitcoin, if financial armageddon doesn’t unfold before our very eyes, should be the value that it had before this whole Cyprus thing + some additional worth based on drawing more loyal users.

The main assumption here is that a lot of the new investors over the past 2 weeks are speculators hoping to make a nice profit, instead of people who swear by Bitcoin as a practical currency. BY the way I’m one to hope that there is some kind of financial Armageddon so don’t shoot me for hypothesizing an alternate scenario.

What's the difference of buying in BTC directly and exchange them, then buy with USD? In both cases you will end up with the same amount of bitcoins.

It's crazy to spend it until you already have an alternative currency, but when you run out of it, you have to spend your bitcoins.

Isn't it unfolding right now? It's already noticeable to untrained eye, but you do need to squint, and tilt your head in a certain way, in order to see it ;)

It would seem that way, I bought tons of gold a year ago thinking we were on the verge, but those bastards in charge always seem to manage to delay the problem or make everything seem ok and the general population just buy it up -> just look at US stock prices :S

US stocks are up because investment banks are getting 0 interest loans and have a promise to be rescued if they fuck up.

Soon enough they will need rescued again.

ok bootlace, go ahead and sell, we don't care! :)

Since you think the fair value is below $50, I'm willing to make an amazing deal with you:  I will buy all of your bitcoins for $50 each. 

You're right. The thing with Armageddon is that people don't appreciate that it happens very slowly.

Now Cyprus is over there will be calm, stocks continue to rise and Bitcoin will fall back. Then in six months or so the next crisis will arise, and people will panic and it will all settle down again.

BTC below $50? short/medium term ... Yes I reckon so.
BTC to hit $1000 long term.. yes

If today is any indication, stocks haven't reversed the current downtrend just yet.

I think your assumption has some merit, that much of the rise is induced by speculators. But Some of the rise has been because of people who really beleive in bitcoin putting more money into it. You could say the price rises (or drops) quickly based mostly on speculation and equilibrates slowly based on what people are saving in bitcoin and how much it is used for transactions. Whether the price drops depends on whether the users of bitcoin are able to offset the amount taken out by the speculators. If they do not, and the price starts falling, we could see the price overshoot downward and users of bitcoins will get a discount again (like anybody who boutght below 5 USD).

Even if the financial Armageddon is post-poned or avoided somehow for 50 years, Bitcoin (or alternate successful cryptocurrency) will become seen as 'the ethical currency', rather ironic given it's origins; but there is more to the to the financial crisis than just finance. The problem is with governments controlled by banks having power to send nations to war and to oppress their own people with oppressive laws such as the warn on drugs, which have tragic and unnecessary costs.  Bitcoin has the power to help with many of these huge problems.

Bitcoin takes power away from the banks and long term I actually propose it actually takes money away from drug cartels by resulting in their eventual legalization, regulation and taxation.  It shifts the balance of power in a favourable direction, therefore it will succeed.

If bitcoin survives for another good number of years and does not get overtaken by something like a hypothetical bitcoin2, its prospects are, indeed, bright.

However, at the moment this rather extreme price bubble is about to severely damage its fair reputation.

Currently it is not the Cypriots or the Spaniards who buy bitcoin. It is only a growing bunch of newbie speculators and their mothers. The only reason why they buy bitcoin is because the price is rising. And the price is only rising because these people are buying bitcoin. This is how bubbles are made.

There has been no significant increase in real-world use of bitcoins. A few more companies are now accepting bitcoins, but very few customers actually pay in bitcoin. Therefore the price will sink back to pre-bubble levels within about half a year after this bubble bursts, which it may do within weeks.

As usual it is impossible to make any precise estimate about how high a bubble will go, because a single person can prick it by selling a lot of bitcoins and thus inciting a sell-off panic. If nobody does, such a bubble can grow to strange heights. But even then this one cannot grow to $1,000. As the Germans say, trees do not grow into heaven.

It is a bit difficult to say what the pre-bubble value is, because this one began before the previous one of 2011 was fully deflated. I am sure though that the bitcoin price will fall to some $20 level and quite possibly into the single digits. $50 is way out of reason. Let's talk again in half a year's time.

Thanks for this, I finally understand why everyone keeps talking about bubbles :D

honestly i think that the base value will be around 250. it will go up to maybe 600 tops but then a slide. it seams crazy now but just look at the past. bubble at eight dollars? time will tell but expect this to be the new apple but double or triple

This could be a bubble; bears could be right. But the "single digits" bears are just being ridiculous, barring the discovery of a fatal flaw in Bitcoin's design/protocol itself. I, for one, will buy like the clappers at $10 per 'coin, so there will never be single digits. :)

There are plenty of people besides the Cypriots and Spaniards (who ARE buying Bitcoin, as we have heard in first hand accounts) who want to use Bitcoin as a store of value to protect them against theft through confiscation and hyper-inflation. Increased demand for this utility of Bitcoin has and will continue to increase the price.

As for the rest of the statement, I'm not going to hold your hand through the last year's worth of developments and stories. But you must have been living under a rock if you think "real-world use" of Bitcoin hasn't significantly increased. That is just plain ludicrous.

What do you think these people will do when they see the bitcoin price drop like a rock through their buying price? Look at the 2011 bubble.


Where do you see any evidence for that? I could just barely believe a doubling of real-world use, but please tell me who buys which goods or services for bitcoin? namecheap.com or wordpress.com? Reddit Gold? Have you ever heard of anybody paying a bitcoin there?

I am actually a namecheap.com customer. I just filled up my account there from my credit card. That was before they started accepting bitcoin. Then I actually paid Ƀ1 to them, just to try it out. But I doubt that even I will do that again, because it needlessly complicates my bookkeeping.

The thing is - PayPal became a real nightmare as well as processing the credit cards. If you had a chance to run an online business you would know what I'm talking about.

If some folks use some ridiculous payment methods as paysafecard or webmoney then Bitcoin in comparison is true heaven. Wire transfer is always the alternative but it's so goddamn slow and very expensive.

In the end all roads lead to Bitcoin.

Say if this is all true and there is a huge excess bubble of speculation on top of the trade for goods/services, the bubble can get massively bigger, it can keep growing for years, most of the world still doesn't know about bitcoin.

The rise is currently roughly exponential. Therefore it is easy to estimate for how long this can still go on.

All historic price bubbles I have seen have a pointed peak. This bitcoin bubble will be no different. The only difficulty is that nobody can predict the height of that peak. What we can easily predict is that it will not take several months to burst.

Yeah I remember people saying Google is a bubble:
https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1364855186613&chddm=842996&chls=IntervalBasedLine&q=NASDAQ:GOOG&ntsp=0&ei=XwlaUdDoDMOHwAPHhgE

Why do you say that?  It has already been several months.

Yes, please at 2011. Now look at what happened every time the price went down 20% in the last 2 months. Take a good look. There have already been plenty of opportunities to panic.

Holy shit, are you serious? Can you possibly be serious? I see more evidence for it constantly. There was a reddit topic today about how 18k USD (at time of tip, not now) has been paid out through the reddit tipbot. That's 18k in just TIPS. There are new companies posting -every single day- now. Wordpress is big, yes. Expensify is HUGE. Bitpay has signed up thousands of businesses. I'm not going to sit here and spend 2 hours listing all the posts I've read in the last 6 months...if you're not bothering to keep up, then don't make ridiculous statements like "real world usage has not increased."

I'm posting this on my new monitor from BitcoinStore.com.

No, I mean from now. It will not take several more months from now until it bursts.

I agree, I've been researching and following the behaviors of the so called 'new investors' on this forum, on reddit/r/bitcoin, on Twitter, YouTube videos, comments of Bitcoin articles etc - and I get a general feeling that people feel excited because they are some kind of revolutionary changing the world and becoming a millionaire in the process (after Zuckerberg did it, everyone feels like 'why not me too!'). It's certainly a dream that would excite any person and could even lead them to think and act irrationally.

What I have NOT heard is of case studies involving businesses who are rejoicing that they started accepting bitcoins (in fact I believe the bitcoinstore.com is having lots of issues despite even providing cheaper prices), I have not seen any 'killer app' (Satoshi Dice is, sadly, the most used 'function' right now), I have not even seen people excited to even spend or send their coins anywhere despite the value and supposed myriad of things they can do with it.

I don't think this bubble will pop easily, the adopters are probably willing to go broke to get a chance to live that dream they have in their mind of being Bitcoin millionaires. It's going to be an interesting thing to observer, that's for damn sure.

I'm confused because immediately before that, you said "nobody can predict the height of that peak"

How can you accurately predict it will not take several months?  I don't think you can.  I was worried this might be a bubble too, but if the bubble didn't "pop" when the blockchain forked, what is going to take to cause it to break? 

I don't think a mere lack of inflation will cause it to burst, it's going to take some serious negative event, something huge and difficult to fix.  I'm not sure such a thing even exists, bitcoin seems to be a lot more resilient now.

Bubbles do not pop when something bad happens, they pop when there is no more money pouring in to hold up the price.

Why would there ever be a lack of money coming in, in the absence of something terrible occurring?  If price drops naturally, it just makes the long term enthusiasts more likely to buy up coin. 

If you look at the price curve, perhaps at a smoothed average, you will see that the growth is exponential. This means that the total bitcoin market capitalization will very soon grow beyond any attainable value.

This is typical bubble behavior. The bubble suddenly bursts when the price no longer increases, because there are also quite a few people who are fully aware that this is a bubble and will try to get out before it bursts. There will also be people who just bought and now see their wealth shrinking fast. They will try to recover some of it by selling their bitcoins.

That is because most experienced speculators know that it will be difficult to sell bitcoins immediately after the burst.

Your first part is true, growth is exponential.  The second part is not true.  We have seen value increase 10X over 6 months.  The total bitcoin market cap could increase at this rate for over a year without exceeding the market cap of Apple, just as an example.  If a stock can do it, bitcoin can.

I think hgmichna has a very worthwhile down to earth opinion. People who truly believe the value of BTC is fundamentally supported by retail because they bought a coffee from their local hipster coffee shop yesterday need to think a bit harder about why people are willing to pay more and more for BTC, not because they can buy stuff without the tyrany of the banks, but because they want in on the bubble. Greed prevails, and greed falls.

i'll just leave this here

http://bitcoinmagazine.com/bitpay-processes-5-million-in-march-eclipses-silk-road/

It is people who think like this who wonder why they are left holding an empty bag.

I'd like to go on the record again saying that Bitcoin price increases are just getting started. (https://bitcointalk.org/index.php?topic=7985.0)

For people who never look at the news:
http://uptweet.com/viewStory?id=1135
http://www.businessinsider.com/cyprus-bitcoin-atm-guy-responds-2013-4
http://bitcoin.travel/listings/pacific-tradewinds-san-francisco-hostel/
http://bitcoin.travel/listings/altamira21-real-estate/

Stories from today.