Bitcoin Forum

I have a friend of mine at the conference this weekend and he has been speaking to a few people who think a $5000 + bitcoin could be possible.

Thoughts ?

This is how its gonna look 2014

Yes, it is possible.
If Bitcoin keeps growing it's bound to happen due to the limited supply.

Take 21M coins and multiply it by whatever number suits your fancy. For $5K, that's $105B. The US money supply is around $3T currently. Gross domestic product was $15T a few years back.

Knock yourself out. :)

Let's do some math. 3600 new coins mined a day (for next 3 years) at $5000 per bitcoin would mean that network operation would cost $18 000 000 daily. Is it likely? I think not.

5 thousand dollars isn't cool. You know what's cool? 5 million dollars.

 ???

It actually wouldn't take much to reach 5k. It could reach 5k by the end of the year if the right media and circumstances occur. But the infrastructure cannot handle it yet and hackers would probably DDOS the exchanges to make sure that it doesn't get that high before they get some. It's going to be a challenge in terms of infrastructure not in terms of getting demand. Demand will come on its own.

Ultimately, there's 21M coins x 100M satoshi's/coin right? That's a couple of quadrillion units I think. There's a lot of room for infrastructure growth as you note. If a Satoshi was worth a USD, then a coin would be worth $100M. And now back to our previously programmed reality. :)

I don't think that calculation you did is the daily operating cost.

What a lot of people seem to forget is that for the time being, bitcoin is still inflating.  Yes IN-flating in the sense that more of it is newly mined each day.  Despite the eventual hard limit, 3600 BTC are created out of nothing each day and that number correlates with about 12% inflation per year (exponentially decreasing over time, yes)

This correlates with the amount of "sell pressure" that can exist for BTC at a given price.  Run this little thought experiment:  

If the bitcoin is equivalently traded for $100 USD, then 100*3600= $360,000 equivalent USD is made each day.  The global market effectively needs to cumulatively buy or hold more than 360k each day in order to sustain or raise the BTC price.

If the bitcoin price is traded for $5,000 USD, then 5,000*3600=  18,000,000. The global market effectively needs to cumulatively buy or hold more than 18m each day in order to sustain or raise the BTC price.  Notice that this is harder to sustain.  As the price gets higher it becomes harder to buy the amount required to keep up with inflation.  It also gets more attractive to sell.  So an equilibrium is roughly reached.  

Then let's examine what happens in the next 4 years as the mining reward is cut in half.  
$5,000*1800= $9,000,000 equivalent USD mined each day.  Now that BTC is more scarce it becomes easier to sustain a price level like $5,000 .

Let's go ahead and think longer term.  Past the year 2025 only about 450 BTC will be mined each day.  

$5,000*450= $2,250,000  Bitcoins will be much more scarce by then, making the $5000 USD/BTC price level even more likely to be sustainable or able to be surpassed.  

And then hypothetically if no more bitcoins were to be created ever as of today, then there would be no inflation ever and the price would be subjected entirely to demand.  

So to answer your question OP will the price of BTC be $5,000 someday?  If bitcoin goes long term the answer is a very likely yes, but I myself am not banking on it anytime soon.  We need to be much more scarce before we can sustain those levels.

Let's wait for the reward halving in 2016 then it's likely to happen.

Well it is. If such prices are sustained for some period of times competition among miners will make sure that all of revenue from blocks would be used to pay for hardware, electricity, return on capital and human labor, so it is effectively cost of keeping network running.

Guys, this doesn't mean stop spending, for Bitcoin to grow we need to show that Bitcoin is a actual currency, and not just a savings account. For Bitcoin to grow, we need to show the media that there is use for Bitcoin, buy whatever you can with Bitcoin.
Otherwise, if we STOP spending, Bitcoin will become useless, lose value. If WE keep purchasing it shows strength.

But. remember, don't spend too much.

I wish you all good luck, in the next few years, I hope to see you all happy you are part of the Bitcoin community.

Bitcoin will have growing pains at certain dollar thresholds.

the lack of an organized and useful futures market is one thing keeping it from growing its market cap above a few billion dollars

the lack of ways to move over $100k daily from btc into cash is also obviously going to make it impractical for anyone doing real trade trying to settle a balance

Is there a way I can move it myself? Guess not?

Quite possibly.

Try to play with this tool (http://www.btcglobe.com/tool/calculate-future). You can argue the assumptions are wrong, but it can open your mind.

very interesting feedback guys, this is why I am growing to love this place.

That's cool. It would be nice to see a $ value for % of the world economy to give oneself a sanity check. And if you wanted to refine it further, you could add sector values for those sectors which Bitcoin might uniquely be suited for.

If mass adoption takes place then this is indeed a possibility. I don't see this happening within the near future however. The key to this will be through making bitcoins more consumer friendly and the only way I could imagine a price like this is if major fiat currencies fail.

I agree.

I recall paying 50 cents a gallon for gas back in the late 90s.

$5,000 a bitcoin compared to $120 today is not that big of a stretch at the dollar's current pace.

Bitcoin has a lot of room to grow. Hell, even of Bitcoin supporters only a handful use it for more than 75% of their spending. How many of your friends have bitcoins?

Compare that to the amount of people you know who have used PayPal.

I expect we'll reach $5,000 this year. It's less than 50x the current price, and we already had a more than 20x run over the past six months. It feels like we're finally reaching critical mass, as we must in order to maintain exponential growth.

Its these kind of speculations thats driving people to buy and hold bitcoins.. for bitcoin to grow you need to actually use them.. buy stuff etc.. But with everyone speculating that the price will reach 5000 or 10000 or a million nobodys willing to actuallly use them.. if this goes on in the long run it wouldnt be good for the currency..  :(

Bold expectation to have and I don't think it will but I hope your right so I can buy a new house :p


You sure about that? The more people that show interest and buy in, the greater the demand right?

Yes more the demand.. But you have to use the currency to buy stuff for it to be sustainable in the long run.. frankly people are expecting a huge rally somewhere in the future so that they can cash out. fiat.. i mean the whole idea of bitcoin was to get rid of banksters and their manipulated fiat.. kinda defeats the purpose of the whole thing when you convert coins back to fiat.. well its my personal opinion and most people tend to disagree with it..

For bitcoin to be useful for spending more people need to buy and hold.

Give me the ability to buy with my BTC and I will happily replace all my fiat. I hate the shit along with the thieving governments that control it.

That is an assumption I'm not seeing.  Certainly there are many expecting a huge rally but on what basis do you believe people will be wanting to 'cash out'?  Some, certainly, but far from most I suspect.  And the reasoning behind my speculation is that anyone expecting another big rally is likely to believe bitcoin is not a flash in the pan and is therefore likely to be looking at it either as a long-term commodity investment as part of their portfolio or is holding onto it until such a time that more day-to-day transactions can be done in bitcoin.  In the meantime if things they want to buy start becoming available and good value in bitcoin the likelihood is people will buy more bitcoin to spend rather than bitning into their long-term stash.

My point is 'hoarding' bitcoin is better for bitcoin than hoarding pm, bonds, stock etc.   Spending bitcoin is better for bitcoin than spending fiat.  And should Bitcoin's long-term deflationary nature lead some to save a bit more and spend a bit less, whilst this may not be ideal to fledgling bitcoin-dependent businesses right now I'm tending to think it can't be a bad thing for the Bitcoin economy further down the road.

I need to have your friend's drug dealer contact details. He is buying really good shit.

I guess you're right..

Bitcoin are scarce.
Userbase growt is faster than the rate at wich bitcoin are generated.
Big pocket, big companies and a lots of average joe should join Bitcoin in the years to come.

5k$/BTC ?

It more than possible, IMHO, it's inevitable.

Before 2016 is my bet !

Everyone has opinions. So what do I think about someone elses opinion? Dunno, lack of interest, cause there is so many going around.

Current Bitcoin can't be sustainably much over $400.

Justification: the 1MB block size limit and the fact that the price has pretty much grown hand in hand with the number of transactions per block (in the long time trend). We have free transactions now (for old enough coins). Eventually a minimum transaction fee for ANY transaction will be several dollars, when the block space scarcity really starts to constrict usage. If BTC adoption grows at the current rate, in a couple of years this scenario is going to be real. This will mean, by the way, that the block subsidy will be insignificant far sooner than most people think. At 20,000 tx/block and $1 fee per tx, assuming $400/BTC and current reward level, fees will be two thirds of total miner revenue.

I do not expect doing away with the block size limit until we've seen its economic consequences. Many influential people have gotten stuck in early 2011 and the "everyone must be able to run a full node in their cell phone" mindset.

This.

+1, mp420 summarized my thinking exactly.

$400 is the most we will get until the block limit is made flexible or removed. The fear-mongering about nodes disappearing (centralization) is not shown with recent stats, which identify up to 350,000 active nodes.
http://bitnodes.io/
Many more than two years ago when it was more like 20,000

I only want to see whether we can cross $500+ within recent years.

:D :D :D

Yeh f**k it, 5 million please.

$5000 is a long shot. Judging from the price log scale, bitcoin will be 1000$ by the end of year. When do you think bitcoin will reach $1000 ?

September.

Infrastructure will limit the price. As demand increases, price will rise. Assuming the increase in demand is correlated with an increase in the actual network usage (sending txs), there will be an eventual increase in tx fees. Even assuming the average cost for getting a tx through in reasonable time remains at 0.5 mBTC, I don't think users will accept fees of anything much higher than 5% on transactions. Let's say the minimum value in USD we want to send through the network is $5 (cup of coffee?), end users are likely to balk at transmission fees higher than $.25, which would be equivalent to 1 mBTC = $0.50, or 1BTC = $500. At least in the short term, I don't think the ninfrastructure will support prices over this level because new users will start balking at the cost of sending a tx.

Of course, that is a lot of assumptions, but generall sustained higher prices means higher network traffic, which is ultimately limited by physical network speeds and ability for miners to process and include txs. The recent updates to bar small transactions support that conclusion also.

I think the feeling that came from the weekend was that bitcoin may become more of a reserve currency, for big trades etc.

I think 1000 is a more reasonable guess by the end of this year. There must be more bitcoin service and app launched to support the unit price.

mp420


This is really interesting. Where can we verify this information easily?

Even if that trend is true, I would think supply and demand would set the price as a commodity. As BTC gets more use as a transaction/purchase means, then perhaps the point you mention would be more true?

Thanks for the post,
IAS

note - Mods - When I tried quoting the above text with the quote button in the original post it said to log out and back in again. I just clicked reply and manually inserted the quote that way. Weird???

If this statement is correct, then I think infrastructure absolutly will limit adoption and price. I feel a 5% ($0.25) fee is unacceptable in real world transactions at least for small purchases, this is similar to or more than what we currently have to pay massive and inefficient banks. I see no reason why it should require 5% of transaction value to sustain the network. IMO, bitcoin will innovate to improve this or will succome to some other payment solution.

All that said, I have strong faith bitcoin will indeed innovate and we will see a strong future.

remove the block size limit.  fees will drop to whatever people are willing to spend. add more precision to the protocol.

I don't think it will ever hit $5000

I sure hope I'm wrong though.

Why is this not done/considered an option that most ppl expect will happen?

http://keepbitcoinfree.org/

Great info, thanks.

umm no, why would it cost this to run?

the miners would be making a profit, its not as if power/asics and gpus cost 10x once you have them. Further new hash can't be added that quickly to spend.

only a fraction of the 3600 will need to be sold

well no, say price goes up to 10K a bitcoin.

All of a sudden I can spend many fractions of a bitcoin to buy lots of stuff, while being able to hold other bitcoins. I posit the higher it goes the more spending you will see, because BTC will have more buying power.

$5000 assumes that Bitcoin doesn't really get adopted outside the Silk Road and online gambling worlds.  If it does start getting "legitimate" use and is widely adopted in even a small country, you would be looking at many times that. 

agreed.
people like to spend way more than they like to safe. buying with bitcoins is even more fun (as long as you bought them cheaper) you keep telling yourself that you could actually not afford this, but... hell, it costs so much less because of the value gain of bitcoin. it´s like getting constant bargains. soon enough you start spending more coins that you have actually bought cheap. bitcoin is THE BEST excuse for shopping..

It's possible eventually, but I don't think until the next halving at least.

Does anyone still believe this is gonna happen by the end of 2013, after the stagnation of May?

There needs to be Gox alternatives that ppl can send USD in, to buy coins and hold good liquidity. Now, if my mom want to buy bitcoin, I have no damn clue how to get it. Since, there's no easy USD pumping into Gox from dwolla, the price can't go up, but I'm sure the demand is there.

When ppl exchange bitcoin thru localbitcoin, it does not reflex price on exchanges.

Bitcoins may rise or fall in value.

I recently have been collecting these Goldcoins and each Goldcoin only costs me fractions of a penny.
I think Goldcoin will have much larger percentage gains than bitcoin will have.

gldtalk.org (http://gldtalk.org)  - Goldcoin forum

I feel this depends on how well adopted bitcoins become. At the moment, I don't think bitcoins can reach mass adoption like credit cards because of problems with blockchain size, and TPS limit. Also, Frankly, and sadly, I just feel the average person can't be hassled to deal with bitcoins. People can't even take control of their health, day to day finances, and debts and now you expect people to safely secure their bitcoins, spend time getting verified, moving money and buying bitcoins? If there's one thing that credit card company's did right is they made it easy for people (at least in comparison to bitcoins or cash) to secure and transfer their money, while at the same time extending credit. Lose your CC? call the company they can get it deactivated. identity theft? most companies will refund. Need points, cashbacks, rewards, Cash withdrawal around the globe? we got you. Heck I don't even bother with cash most of the time unless I'm going to chinatown (those guys are always cash only, maybe bitcoins would work for them?)  because the convenience of using a credit card is just that much higher

The other argument is over anonymity. In most cases anonymity is pretty overrated. While I want my purchases and transactions to be private, I also don't want my money to not be under my name or traceable when stolen. Just like you wouldn't keep thousands off dollars in cash under your mattress, but instead rather have the bank hold it in your name, where consumer protection laws can help a great deal to alleviate any crises, you wouldn't want to keep thousands of dollars in such a manner where they can't be effectively traced back to you.

Ultimately, even though I love bitcoins, I wouldn't see myself using it to buy items which break easily, such as electronics, or for large purchases, like airplane tickets, cars, electronics, nice dinners etc. using a card gives me more flexibility, rewards, and consumer protection. 2.5% is a small fee to pay to get all these advantages ( I pay everything with credit card and just pay it cash at the end of the month, the benefits are just too good to pass up).

The other argument is over anonymity. In most cases anonymity is pretty overrated. While I want my purchases and transactions to be private, I also don't want my money to not be under my name or traceable when stolen. Just like you wouldn't keep thousands off dollars in cash under your mattress, but instead rather have the bank hold it in your name, having tons of bit coins, whether in an offline wallet or otherwise, leaves it with little way of connecting the bitcoins to you.


I guess what I mean to say is, bit coins, and its current state, just isn't scaleable and as convenient to use as other forms of purchasing.

So what do I think bitcoins are good for? I think bit coins is good for large transactions or transactions where anonymity is crucial or transactions where being able to dispute payment is high. Of course instead of trusting your credit card company to handle in any issue, one of the persons in the transaction would have to go first , so trust is not in a large organization which can have tons of reputation on the line.  

Overall. Bit coin is a currency that fits a very  specific niche and is, as many have already said, and experiment, one that has highlighted how dated and cumbersome banking currently is. Hopefully, banks around the world find a way to standardize transfers and make the available 24/7 within the next 10-20 years. If banking systems cannot catch up to the current globalized 24/7 high paced, instant communication world we live, then maybe, maybe do I see bitcoins becoming worth 1000$+

Stop making these retarded unrealistic post about $5k or $1M BTC.

Speculations are only Speculations without theory.

It dont believe it's likely but I do believe it could happen. All it would takes is for some backward country to start adopt it wide scale and I believe that would be enough. Like Kenya:
http://www.thegenesisblock.com/guest-post-kenya-primed-for-wide-scale-bitcoin-adoption/

Once Bitcoin grows, bitcoin gets more attractive and even more people want to use it, like neighbouring countries for trade. And it would legitimize it so even more countries would look to try the same experiment which would drive speculation which could take bitcoin above 5k.

Bitcoin today is very small, any non-small application of bitcoins would drive the price skywards.

I believe in Santa, and $1M BTC.

Impossible. Bitcoin does not scale to over 7 tps at the moment, and there's a significant controversy among influential people on whether the limit should ever be altered. Many influential developers do not want bitcoin to scale up.

At the very most, Bitcoin could replace some "official" fringe pseudocurrency, such as the SDR.

At the moment...
https://en.bitcoin.it/wiki/Scalability

From the "Current bottlenecks" of your own link:

This is the optimistic viewpoint, but as mp420 points out, there is likely to be a lasting hard fork if anyone tries to raise this limit.  Unless the new, unrestricted chain takes a new name there will be fighting and confusion over which chain is "bitcoin".  The good news is if such a fork happens any coins you have at the time of the fork will be spendable on both chains.

The "Scalability" wiki page is overly optimistic in tone and it's written from a very MAX_BLOCK_SIZE abolitionist viewpoint.

There are people who actually are trying to retcon Bitcoin's history so that the 1M block size limit would have been meant as a fundamental, eternal part of the protocol. Others think that Satoshi made a mistake when he said that the limit was a temporary measure.

While I support replacing the hard limit with a more organic limit (maybe something like "raise the limit by factor f if average size of last n blocks > k times MAX_BLOCK_SIZE AND difficulty is larger than last difficulty") I fear that my opinion is not shared by a large enough supermajority of influential Bitcoin people that it could actually be implemented at least until we have seen the economic consequences of hitting said limit hard.

I've been thinking of the block size limit question as analogous to when Bill Gates said nobody would need / have a use for more than 640K RAM (not sure if that # is exactly correct but it doesn't matter here)... What happened when Microsoft chose to keep that limit, and what might have happened if they chose to extend that limit?

If I remember correctly, developers had to use either their own original memory extension drivers (or whatever they were officially referred to as:  EMS, XMS, etc.) or use third-party tools.  I don't know if Apple ever ran into this problem (or Commodore) ... point is, at the time, there was not really a viable alternative to Microsoft's Windows if one wanted to use a home PC for gaming or productivity software.

Right now the only real competition to BTC is LTC (I think of BTC as Microsoft and LTC as Apple in this analogy), so if the analogy were to continue, I'd guess that BTC core developers will choose to keep the block limit size as-is, and rely on extensions (Open Transactions, Ripple) to implement these extensions (in the form of providing transactions off the blockchain).

$5000 will happen if bitcoin catches on. But it is likely years away. NO WAY will we see $5k by the end of this year. We won't even see $1k by the end of this year.

In fact, I'd be honestly surprised if we were at $200 at the end of this year. I think a reasonable high for the rest of this year is $160-$170 perhaps.

sub'd

It finally got its mass media hype this year, and then quickly deflated. GG

 Reality is socially constructed. "Retarded" people are respected and valued in many cultures as having insight into spiritual dimensions that those of us wrapped up in phenomenal reality cannot perceive. For more information check out Aldous Huxley and Silk Road.

My opinion is Bitcoin will be between 100 US$ to 3.000$ at the end of this year.
If I should restrict the range, I would say between 300$ to 1.000$.

https://dl.dropboxusercontent.com/u/722536/20130615%20Bitcoin%20chart%20long%20term.png

If USD/BTC go sideway until it touch the lower line it could be 100 around years end, but the pressure to raise would be astounding as more people use the network, new services are added and more value the network capture.

If there is a repeat of 2012 we could just go from a low 5 to an 10 high visiting 2 and 15., so we could go anywhere between 10 to 266, but I do not think so.
During 2011 the internal inflation rate of bitcoin was 4%/month to start, for a composite inflation rate of 50% YtoY, so no surprise there was a lot of pressure to lower the price (and it got the first parabolic spike).
As 2012 the inflation rate was 33% YtoY, so it explain the stable price. You have increasing adoption pushing the price up and greater inflation than the US$ pushing the price down. It managed just to grow 2x-5x (depend on when you look at it).
The current inflation rate of Bitcoin (B0) is around 10% where the current inflation of US$ (M0) is around 20% (Uncle Ben is printing 1 trillion YoY as part of QE to Infinity).
So, halving of the reward, halving the inflation rate, halving a major force pushing the price of BTC down. And this justify the spike in price, the overshooting and readjustment.
Without the halving of the reward, the price of Bitcoin would just raise as much as the users adoption (in 2013), now it can raise because it work way better than the US$ as a store of value.

In my opinion, USD/BTC is forming a bottom just now, around 100, in the worst case scenario around 90. In the absolute worst case scenario it could go to 32 now, but the rate on growth would push it to 100 by the year end. Given what we see when the price go under 100 US$, a lot of bid come out of the hood, and  lower would imply a lot more buy. There is too much people hoping to buy a 50 or less that the price will never go there.

As the BTC internal inflation continue to fall from 12,5 to 11,1 next year to 10% in 2015, the advantage to hold BTC will become even more evident. (inflation is a little higher than this because blocks are mined faster than 1/600 seconds as designed but, at worst it add 1-2% inflation that will be recovered in the not so distant future). As holding Bitcoin instead of US$ (and many other currencies like € and the stuff they use in Pakistan, Brazil, Argentina and so on) become more useful, the exchange rate will raise to balance the price of the demand and the price of the demand to hold. Why keep something inflating 20% or more YtY when you can hold something inflating 10% Y2Y and reducing the rate of inflation continuously?

As people holding on bitcoin will preserve their purchasing power better than people holding US$ (or US$ denominated assets), more people will see holding bitcoin as desirable. In the same way as more argentinians owning US$ preserve their purchasing power better than argentines holding the local currency that inflate a lot faster than the US$ (sic). They do not need to understand it to believe if they can see it happen.

The fact Bitcoin is more friendly and useful to transfer purchasing power from a person to another than Credit and Debit Cards, wire and in some cases cash, gold and silver will make sure the adoption rate will continue to grow.

If the user base continue to grow 15X in two years, as in the past, we could be around 4.5 millions nodes (say people) using it in any moment of the day. The means say just 3 btc for any of them (if all BTC were spread equally). Probably there are not enough available to allow 0.3 BTC for head. If everyone wanted to have 100$ in bitcoin , a BTC would need to  be, at least 300$. As people would like to save, they would keep 90% of their bitcoins and spend only the last 10% (and replenish with fiat the earn). And this would push it to 3K $ in two years.

If the user base grow faster than before or people prefer to keep more than 100$ (say 1.000$) in Bitcoin, because their fiat money is very shitty, then the price in US$ will be a lot higher.
With a 10% inflating currency you lose 65% (2/3) of your purchasing power in ten years. You are left just with 1/3 of it.
With a 20% inflating currency you lose it in 5 years (the US, for now are spreading this over all the world as the US$ is hold as a reserve currency, so in the US people feel just half of it).

Given the choice people will try to hold more of the less inflating currency available as practically possible. And this is a rational binary choice.
Who choose wisely will preserve or increase its purchasing power, who doesn't will lose it and will become irrelevant.

The adoption of Bitcoin can be very fast, so we could see the price raise a lot in response of any disturbance of the economy (and there will be a lot in the near future as this monetary system collapse)

I always enjoy these kind of analyses so thanks for sharing.

You do however appear to be conflating money-supply inflation with price-inflation (https://bitcointalk.org/index.php?topic=140793.0).  And whilst I am not trying to claim they are unrelated there are many potentially wildly moving variables that would need to remain constant for a 10% money-supply inflation result in a 65% loss of purchasing power in ten years.  It wouldn't matter by how much Bitcoin's money-supply inflation is slowing down year-on-year if people stopped using it, gradually or suddenly for whatever reason.  Price-inflation is the determinant in retaining or losing purchasing power, not money-supply inflation.

For the record though my opinion that Bitcoin is more likely than not to end up at a price orders-of-magnitude higher than it is today remains irrespective of price behaviour in the last couple of months.

I know there is no direct relation to money supply increase and specific price increases. But there are plenty of indirect relations and more time passes, more it is probable the increase of money supply become a generalize increase of prices.
In fact, as the money supply increase and the people (miners or central bank) obtaining the new money use it, the money spread out of their control influencing all prices in different and often difficult to foresight ways.
For example: when the Fed lowered the interest rate it caused the dot com bubble, because the new money flew to the stock market and this caused a lot of wealth transfer; the wealthier people started to buy homes in some places and the prices there grew faster than in other places. When the dotcom bubble popped, the Fed lowered the interest again and caused the real estate bubble. Again wealth was transferred to the people receiving the new money first from the people obtaining the new money later (directly or indirectly).

The way new money is created in Bitcoin make more probable the increase of the money supply become faster a generalized increase of prices, because the new money is spread to a lot of people, so there is not a dominant group deciding where the new money will go. It is like the Fed. starting to give money not to the few big banks but to pop and mom business all around the countries or just using a real helicopter to shower it down the people. In this case the money inflation would cause a diffuse increase of prices for all types of goods and services (but again not completely even).

Anyway, price inflation is different for every individual, because everyone have different spending pattern than anyone else, so any price index is misleading if people do not understand what it is describing.

Just as the butterfly in China affects the weather in Florida, so too do exchanges done on localbitcoin affect the price on Mt Gox and other exchanges.

+1

So this is why the price dropped from 135? ASIC miners released causing too many coins to be on the market. It's certainly a theory worth entertaining...

     You are much more likely to see 1 million BTC than Santa... saint nicholas the turkish/anatolian priest died more than 1600 years ago. There are probably 20 churches or so claiming to have chunks of his bones around the mediterranean, as is the case with many figures revered in Christianity. You can visit them while waiting for btc to hit a million. By the time you get back from your trip your meals, plane ticket, bus and taxi fares, hotel bills and souveneirs will have cost $0.12 cents at todays exchange rates.

Maybe I should leave my Facebook-Analogy here once again:

Fact: Facebook currently has a market cap of 50 Billion USD and a userbase of 1 Billion users.

Assumptions:

• Bitcoin does not have any serious flaws, which allow stealing of coins without knowledge of the private key.
• Bitcoin won't be banned by governments before a critical mass is hit (whatever the critical mass may be).
• Everyone who has the technical means to access Facebook also has the means to use Bitcoin.
• On average every participant in the Bitcoin-Network wants to store 1000 USD of wealth in Bitcoins.

So the simple math is:
a) Facebooks value (as agreement of the stock market) expressed in Bitcoin would yield in ~ 2,400 USD / BTC.

Calculation: 50,000 Million USD / 21 Million Bitcoins


b) Facebooks userbase completely using Bitcoin would yield in ~ 47,600 USD / BTC.

Calculation: 21 Million Bitcoins / 1,000 Million Users = 0,021 Bitcoins per User = 1000 USD wealth stored per user


I think hoping or assuming that Bitcoin might get only 10% of Facebooks userbase (which would yield in about 4,760 USD / BTC, close to what the thread title suggests) is fairly reasonable.
Also keep in mind, that Facebook provides the world with a tool to exchange gossip, while Bitcoin provides the world with a tool to transfer wealth.

Your assumptions are prudent:
1) 1.000$ is a lot and not near enough.  If Bitcoin work and is validated by time (it last), people will want to store more than 1.000$ in BTC, just because it is liquid and not inflatable, easy to use.
In my case, just to say, 1.000$ per user imply there will be other 20 users with just 500$ in BTC.

2) on the other side, there are not, just now, 21 M BTC, they are 11 M. There will be 16 M BTC in the next 4 years (2017) and 20 M BTC by 2021.
For now, we play with what we have

3) A lot, and they are really a lot, of BTC are stashed away and never touched by anyone.
This imply the real cap of bitcoin is a lot lower. Probably just 2-3 M of BTC are available on the market.
This imply, IMHO, if BTC is adopted by a large chunk of people, it can skyrocket again (and again and again).

He wasn't a Turk, he was a Byzantine Greek. The Turks hadn't even settled there when he died.

   You are correct. I was conflating modern political geography with ethnic and linguistic identity to locate the regional center of the historical Santa's physical remains to make the point that seeing Santa and a bitcoin valued at $1 million are both distinct possibilities.

   If there was something wrong with conflating regional national sovereign boundaries with ethnic and linguistic identity, I'm sure the Turkish Kurds would have taken issue with it by now. Oh...

   And by the way, the Byzantine legacy is a big part of modern Turkey in every sphere of society. Modern Turks are by no means pure blooded descendents of their nomadic Turkish forebears from the Central Asian steppe. Therefore, someone whose genetic material is primarily derived from Byzantine ancestors who today lives in the sovereign territory of Turkey would also be called a Turk.

I am a strong believer in at least a $5000 BTC, as long as BTC survives (and it has already overcome impressive hurdles as it is).  How long will it take to get there?  Well that is the question isn't it!?

What I have missed in this thread in the calculations is the theory that some of the early BTC has been lost, or will be lost, which in turn will cause the number of BTC divided among the population to be even less, which in turn makes the value go up even more. 

Is there any way to look up the number of BTC that has never been "used"?  I would wonder if there would be a way to find out if those had been potentially lost?  Even knowing the number that had never been used could be interesting for sure.

There are, at least, a couple of millions of BTC never touched.
Someone call them the Satoshi Retirement Stash.

We know, for sure of at least 20.000 BTC lost, some others stolen from some exchange by hackers, but apparently none of these are ever touched.
And they will probably remain untouched for a long time (I suppose until the crime law limitations kick in).

So, we could suppose at least 2 M BTC frozen or lost, probably something more.

I wrote:
"A lot, and they are really a lot, of BTC are stashed away and never touched by anyone.
This imply the real cap of bitcoin is a lot lower. Probably just 2-3 M of BTC are available on the market."

The rest, IMHO, is sleeping in long term addresses or lost.

here have a graph
http://i44.tinypic.com/2ql6akm.png

Good job jubalix.

Ideally, the lowest line bring us to 10K in April 2016, 100K in May 2017 and 1 M$ in July 2018.
The "median" line to 10K in June 2016 and 100K in July 2017 and 1 M in August 2017.

confirmed.

I hope this is correct. :)  I am patient enough to wait until 2016, 2017 or 2018.  Maybe some others are not though?  I guess there are reasons why some need to sell earlier than that.

Well, if he bough enough BTC he could sell/spend them a bit in 2015, a bit in 2016, a bit in 2017 and by 2018 he will have enough to need help to spend them.

I'm pretty much certain that the scalability issues can't be solved soon enough for the exponential trendlines to hold. My old back-of-the-envelope calculation suggested a max price of $400/BTC in the long term, unless the MAX_BLOCK_SIZE issue is solved. Of course it can momentarily shoot to 10 times that.

um what scale ability issues? Its just moving a decimal point for price. I think it will go the other way, price will go up which will drive solutions, because there is more money on offer. Also processing fees will drop as the price goes up because btc it worth more.

finally block size can be increased

As of now, the maximum block size that's going to be relayed by Bitcoin nodes is 1MB, which corresponds to about 7 transactions per second. If there's demand for more than that, fees will start to limit who gets to use the blockchain.

If Bitcoin's popularity grows tenfold, we'll actually hit the limit and see its consequences. If bitcoin is deemed useful despite this restriction, expect to see a minimum fee for ANY TRANSACTION of several dollars.

Currently there is no consensus among developers on whether this restriction will EVER be lifted.

I agree scalability is an issue, but its mainly an issue for bitcoin as a medium of exchange, if people mainly want to use bitcoin as a store of value, you don't need that many transactions.  Regardless, resolving scalability problems would obviously have a positive impact on price.

Can you explain why a minimum transaction fee of the equivalent of several dollars would be necessary given a tenfold increase in transaction volume and why there would be no possible alternative? Please be as technical as possible.

A hundred million people using Bitcoin as a savings plan and making each one monthly transaction would mean a transaction rate of 38 tps. With the 1M limit we can sustain only some 18 million such savers.

Actually it won't be necessary because I believe if the limit is not raised bitcoin won't be considered useful and most people will get out of bitcoin, thus lifting the pressure to raise the limit.

The 1MB limit is a part of the protocol, as it now is. Changing the limit constitutes a hard fork, and it does seem that several very influential people in the Bitcoin community are set against any alteration of the limit.

I don't want to get to the technicalities here, just search the forum for MAX_BLOCK_SIZE and you get an endless argument over this. Changing the limit (my current opinion is that the best alternative is to make it a function of both recent average block size and difficulty) is necessary to allow bitcoin to grow. Many people seem to want to centralize bitcoin into the hands of a few big enough organizations that could act as banks and could actually use the blockchain and let the general public just trust those bitcoin banks. Just because they want everyone to be able to run a full node with a ten year old laptop and substandard internet connection.

The "very influential people" don't decide alone. Every user of a bitcoin-client decides which blocks are relayed. Every miner decides on which blocks expansion of the blockchain will take place.

Which will still be possible with approaches like this: https://bitcointalk.org/index.php?topic=204283.0

Incorrect. Progress is being made on it:


This, plus the blockchain optimization work, once live, will enable the next leg of growth for Bitcoin and see the widespread market usage which is needed to justify a four-figure fx rate.

i think increasing processor power and internet speeds makes larger blocks ok.

I watched the Bitcoin 2013 conference talk on YouTube (https://www.youtube.com/watch?v=K7LQu-eIOO0&list=PLUOP0P68GJ3BGjfqoLLnzAefk3ZzXQtJ7&index=9) earlier today about why you should invest in bitcoin.  In it, Demeester said that if bitcoin becomes the world reserve currency, replacing the dollar, the price will end up being $500,000 / Bitcoin.  So that's likely the upper limit on bitcoin price.  I certainly wouldn't complain if that happens, it'd make me a millionaire and I don't even have all that many bitcoins.  But I'd be very surprised if it ends up being THAT successful.

I watched that talk a month ago and it is certainly worth watching for sure.

I think that is why, even if some consider BTC a risky investment, that it is actually smart to buy at least a few.  It is much cheaper than a trip to Vegas if you like to gamble and there are some pretty good odds, especially compared to playing the lottery.  At this point the risk of not investing is something I think people should consider.

That super-high dollar value is very possible provided that some key software improvements are done to Bitcoin for scaling, also that governments continue to abuse their fiats to death with zero interest rates, a bankster-controlled shadow-banking system, CB money printing and stomach-churning annual sovereign deficits.

Seems to me like all of the above are baked in the cake.

Scaling isn't the only issue with bitcoin going mainstream.  I think the scalability issue is a solvable problem.  It's not trivial, but it's solvable.  I do kind of wish that people would stop coming up with proposals to stuff more things into the blockchain though since that's only going to make the scalability problem harder if it becomes a way of trading stock as well (as has been suggested).

To me, the harder problem is security.  I'm a geek and I think especially with Armory, I can handle securing my bitcoins.  I suspect 90% of the Bitcoin userbase right now are people who are also geeks and could solve this problem on their own.  But when it goes mainstream and random people who aren't geeks and don't think about security will need to be able to have security somehow too.  Ironically, the easiest way of solving this problem is for these people to store their bitcoins in either an online wallet or a bitcoin bank.  Which, of course, just shifts the security problem from the people holding the wallet to the banks or companies with the case of Coinbase.

Yes. I use Armory as well and although it is good software, it does demonstrate that securing bitcoins is going to be a big problem for most people. I think there are hardware wallets being designed that are offline until needed when they can safely plug into a computer like a usb drive. I am optimistic about this area because it does not tinker with core Bitcoin software like the blockchain optimizations. As market-share of Bitcoin increases there will be larger companies working on consumer components to make bitcoin management seamless and secure.

Hardware wallets definitely seem like a good solution for taking bitcoin mainstream.  Not sure how they would work technologically, but I'm sure it's possible to do it well and I'm sure there is, or at least will be, money to be made in making a good product that solves this problem.

Check out Trezor: http://www.bitcointrezor.com/  , very important development imho.  I just hope they can make them somewhat cheaper in the future, so that it is also interesting for people with few bitcoins.

Sounds like a great product.  I tried to watch their product, but our internet connection sucks too much to watch videos on Vimeo, sadly.  But I agree, it would be ideal if they can make it significantly cheaper than that.  I can see them selling well at half a bitcoin, but at that price?  I'd rather pay a little more and just having an offline computer that I'd also use for the wallet, since that I could at least use for more things than just keeping my bitcoins secure.

I guess it (how cheap they can make it) might depend on whether bitcoin takes off again or not.  If the bitcoin market cap becomes much higher, then there will be a lot more money available for security devices (say you are willing to give 1% of your stake to security), so there will be a lot more devices sold, so you can produce at larger scale, so it becomes cheaper etc. ...

Oh, now I get Trezor.  I just watched most of the presentation about it on YouTube and it's basically the equivalent of the second computer that does the key signing in Armory.  Looks like a great and much needed device.

$5000 / BTC? Definately sometime, but maybe not this year.

Before the end of the next (31/12/2014)

5 year's ago but coin was worth 2c.  look at how  any times it has doubled in that space of time, this is with a small user base as well. now if you look at all the people who are beginning to see the true value of bitcoin and the amount of people it is safe to say bitcoin will have some strong price hikes.

I wouldn't quite say it's safe, but the possibility for value increases in orders of magnitude are possible.

its amazing that it takes 'geek' to be able to understand this and is a testament to how dumb-ed down the general population is, either that or we are underestmating them

It not that hard to keep BTC secured. Just priv key and address + some form or encryption eg truecrypt and your done.
if you you want cold gap's then signed transactions.

I have found electrum to be excellent so far...worry abit about the 128 bit seed/deterministic though, rather than the 256, or even 512 should be used imho

5kk for 1btc plox

transaction fees aren't a problem if more people start using off-blockchain transaction networks like coinbase and (soon to be) bitbanc ;)

It could be nill...... Anyway, according to pirate bay's owner calculation, the range for BTC should be around 10,000USD-100,000USD>

A lot of people just aren't that tech savvy.  My parents would probably have a hard time understanding the concept of Bitcoin.  It's not that they're dumb, they just aren't the least bit tech savvy.  I doubt a lot of people even understand how the current banking system works, let alone this brand new one that is Bitcoin.  It's pretty complex.  I actually think Bitcoin is much less complex than the existing financial system, personally.

Hopefully there will come a day when people will be able to use bitcoin without even realizing the complexities behind how it works! Who knows, maybe some company will come along and have people investing in bitcoin for the purpose of transferring money without them even realizing it? They could provide all of the storage of the coins and transfers and the people using them would just be putting in fiat to get the service provided?  Not really sure but it could potentially happen.  I know it took years for my parents to even use Paypal and buy things on ebay.  Finally they do now though.  If someone provides an easy way for people to get money in and out of Bitcoin and makes a simple payment system, there is no stopping it.  It could be more secure then other payment systems and there are many other benefits as already discussed repeatedly here on the forum.  Hopefully the infrastructure comes soon.  We need "Bitcoin for Dummies" to be put into action! ;)

You could see how optimistic people were at that time...

I am still optimistic! Maybe even more so now!  ;D

It's only likely going to be a lot slower than these first 4 years. You should prepare to be in it for the long haul. Expect not to buy an apartment with your investment in BTC in 2017. See it as a long term savings.

when deep pockets start pouring in money, when institutional investors start jumping in, when it hits mainstream and everyone wants to throw some money in - the expansion will not be slower. long haul is correct, but do expect to buy several apartments with your investment  ;D.
it has been estimated there are 340 k bitcoin holders currently but there are 12 mio millionaires in the world. so there´s  p l e n t y  of room.

We should dress like bulls for Halloween tomorrow.  ;D

It is exciting times for sure.  I think it will be like the Gold Rush pretty soon.  Articles like the one just posted about someone forgetting their BTC and in a few years buying an apartment will only help fuel the fire. 

Hubby and I are only putting in what we can afford to lose ALL of though.  No mortgaging the house or anything.  It is still a risky investment but I think it is less so than a year or two ago for sure.  That seems fair enough to me.  The risk takers get greater rewards.

What a lot of people undervalue is the inflation differential between bitcoin and the USD, € and the other currencies.
For example, this is the M0 money base of the USD
http://research.stlouisfed.org/fred2/data/BASE_Max_630_378.png

It is expanding like crazy like five times in 6 years (2008-2014) and probably will expand even faster.

Why keep your savings in devaluating USD when you can keep your savings in revaluating bitcoin, gold, silver, whatever?

As the price grow and the use of bitcoin increase, more and more people will find obvious to move from fiat  and fiat denominated assets to commodities and bitcoin.
Who don't will lose and be lost. I suppose you know the partabe about the house built on sand and the house built on rock.
A lot of people will follow the example of the people investing in Bitcoin. They will do it after the first have positioned themselves and the second have lost a lot of purchasing power.
And when the second have lot a lot of purchasing power, the first will be there with a lot more purchasing power than before.
And the second will buy bitcoin from the first and will sell houses, shares, daughters, land (be careful with all of these because could be lousy deals).
And the first will become wealth and wealthier and the seconds will work for the first as it must be.

 8)

I think the people arguing about technology S-curves are correct.  Pretty soon it's going to go vertical.  As soon as bitcoin funds show up for your 401k/IRA in the US, it's gonna skyrocket.

Looking back to this post, those days were full of joy and hope, mixed with doubt and fear.

I am still optimistic and even more excited than I was in October!  :)  Bitcoin is a fun "ride."  Half the fun is just aticipating the next rally I believe.  It is like waiting for Christmas morning.

 ;D

Rinse...repeat!

ZB, so close.

When the breakthru happen, the last two times, 30 days were enough to double the price.
So 900 in 30 days from now, if we break decisively over resistance at 455$

5 million a coin is impossible, even if every single person on earth would instantly start using BTC.

GDP of the entire world: 71 Trillion.
Number of coins: 21 million -> value per coin: 3,4 million, enjoy

Agreed. If the exchange rate of one BTC crosses $5,000,000, then the USD will be having no more value than the toilet paper (it will become similar to the Zimbabwe Dollar).  ;D

It is not an impossible quote.
Just think about Forex Market.
Falkvinge computed 1 M $/btc is the Forex market used bitcoin for 10% of the trade's volume (with 25% of BTC used and the other kept in reserve/hold).
If you make it 100%, it is around 10 M$/btc.

Trace Meyer just got 2.8 M $/btc if all usd in offshore accounts (fiscal heaven) are converted in BTC.

If you add the two together, you get 25% of BTC used for Forex exchange, 25% kept in tax heaves (something like it), 50% for everything else (in reserve in the pockets of companies and people and used for common transactions at the grocery stores and likes).
And this is just for 10 M $/BTC

gdp accumlates over years.....eg 20 years = 20 x gdp worth + interest/inflation

5000$+ per bitcoin isn't impossible, I'm almost sure btc will reach those values in a couple of years.
With the reward halving in 2016 the selling pressure will be lower, the adoption is growing
every day between people and merchants, the future can't be brighter.

We may see it this year.

Yes this is something more realistic.
Not sure what advise can give, but the thing i am sure about is that BTC is not predictable!
BR

by the time we hit the reward halving in 2016 we're more likely to be deep in the 6 digit territory.

I like the cut of your jib.

This thread has me all hot and bothered.. this is a good thread.

What's "more realistic" is bitcoin going up 10x every year since the beginning.  Since we are still pretty soundly in the early adoption phase, what's "most realistic" is that it continues to do so this year.  Since we started the year over $500, it's very realistic that we will exceed $5000 this year.

+1 this

I have tried and tried and tried to not acknowledge the realistic evidence that bitcoin goes up 10x every year since the beginning

it is unrealistic to think this can occur on an investment, we are always told if it is too good to be true it is not real

but there is the evidence

are there any statistics showing if userbase, merchant adoption etc, are increasing by 10x a year?

http://blockchain.info/charts (http://blockchain.info/charts)

great charts all types of trends

not sure if they show 10x merchant adoption etc

I think these trends would have a different adoption, unsure

for instance overstock adopting btc would result in a far lot more transactions and increase in the transaction trend than the merchant trend

is this right

thanks

the transaction one seems like a factor of 10x every 2-3 years. So maybe $5000 this year, $10000 the year after...

Their "my wallet" user stats are growing at a crazy rate.

Sure, absolutely. Look at it:

1. FIAT MONEY created at zero difficulty by a central bank. For example ECB creates unlimited EUR, a scamcoin that is now equipped with negative interest rates, to make people take more EUR

2. BTC, a highly useful private money, with a limited supply and very hard to mine, difficulty 10 billions and rising.

Why should a BTC not be worth 5000 scamcoins?

Even a devcoin is harder to mine than a EUR (for ECB, that is)  :D

euro,dollar,yen are all the same shitcoins 8)

http://www.trueactivist.com/gab_gallery/the-biggest-scam-in-the-history-of-mankind-debt-ceiling-truth/

You're crazy.
Your friend is crazy.
The people your friend talks to are crazy.
I'm crazy.
We all have two things in common.
We're passionately crazy, and we know it's going to happen. :)
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By the way:
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you misspelled 2014

Measures of usage seem to be growing at roughly 3.2X per year, inline with Metcalfe's Law (http://en.wikipedia.org/wiki/Metcalfe's_law) that states that the value of a network is proportional to the square of the number of connections.

https://i.imgur.com/QD4JG9w.gif

5000 could totally be ath of this current rally if history repeats itself

Between 4K-8k, more probable 4K-6K,

The greatest potential will be seen in the future, when closed loops will establish and there will not be need for converting all BTC (or a large part of them) in fiat for the nodes in the loop.

My guess: Possible this year but I would rather think around $2500 this year and at least $5000 next year. For 2016 we could see $25000 or even more.
From there who knows. If we get mass adoption and the US dollar crashes then so does EUR & GBP. Then we'll go to a moon in another galaxy. So I will be hodling an buying for at least 5 years.
Even if BTC wont be "the final global crypto winner", it's not a problem for us. Surely most of us will see such development early and exchange our BTC to the new global standard in due time and possibly make even more by being even earlier adopters then we are now.