Bitcoin Forum

From lightspeed ventures; http://lightspeedindia.wordpress.com/2014/01/13/bitcoin-2014-top-10-predictions/

With all the speculations about Bitcoin and the exciting 2013 behind us, I thought that a list of predictions for 2014 would be a good way to start this year. These predictions are based on growth patterns of similar networks, the traction in various ecosystem activities last year and my conversations with various Bitcoin enthusiasts. So here are my Top 10 predictions for Bitcoin 2014.

1. More than $100M of venture capital will flow into Bitcoin start-ups.

This pool of capital will be distributed across local/global exchange start-ups (e.g. BTC China*), merchant related services (e.g. Bitpay), wallet services (e.g. Coinbase) and a host of other innovative start-ups. A large chuck of the capital is likely to flow into start-ups which have emerged winners in their respective segment with a majority of the market share. Building exchange liquidity and merchant network is tough. Hence, these businesses are likely to command high valuations as well. That being said, there would be plenty of money available for start-ups trying to solve a plethora of other challenges (e.g. private insurance, security), that exist with Bitcoin growth and adoption today.

2. Mining ‘will not’ be dead

A lot of press notes and individual viewpoints state that mining is dead as we are already in the petahash domain and are restricted by Moore’s law from a technological stand point. I believed this until I heard Butterfly Labs and HighBitcoin talk about how enterprises can potential adopt mining. With transactions and transaction fees rising, it would be highly profitable for large enterprises to have data centers with mining equipment to process daily transactions. The medium enterprises, who cannot invest in capital expenditure, would resort to cloud based mining. Finally, the small enterprises would have to pay the transaction fees, to the network. This fees would still be lower than in comparison to Visa and Mastercard. In conclusion, we can potentially witness investment from large and medium enterprises in mining farms as early as the end of 2014.

3. There will be less than 5 alt-coins (out of the 50+ in existence) that will survive 2014

The open source nature of the Bitcoin protocol led to the advent of over 50+ alt-coins, most of which are blatant rip-offs with a tweak or two here and there. These can be divided into three categories

Coins which are Ponzi schemes, where the sole purpose of the inventor is to drive the price of the alt-coin up and them dump
Coins which can be mined easily and can have potentially more liquidity than Bitcoin
Coins, which are based on a fundamental innovation and can result in specific adoption or security led use cases.
In my opinion, only the category 3 ones would survive. PPC coin, which has introduced a proof-of-stake system in addition to proof-of-work is one such coin. It is in my list of survivors. It is also important to note that presently, other than Bitcoin, no other alt-coin has shown the potential for a growth in its acceptance network among merchants or companies. This is likely to remain true for 2014 as well.

4. Bitcoin community will solve problems including that of ‘anonymity’

One of the key roadblocks for governments and financial institutions to start participating in Bitcoins is the anonymous nature of its transactions. This has led regulators to believe that Bitcoin can potentially be used for money laundering, terrorist support etc. The good news that we have a very active Bitcoin community globally, which is constantly evolving the protocol. Hence, my prediction that in an effort to make Bitcoin more accepted, this community will come out with a solution to ‘anonymity’ that regulators can live with. One of the ways is it being done today is by forcing exchanges, wallet services and other Bitcoin companies to have KYC practices similar to those of financial institutions. As a side thought – Internet was and is still used for porn. That does not make it ‘not useful’!

5. US, China and other global forces will not be at the forefront of Bitcoin adoption

Fincen, PBOC and RBI’s reaction to Bitcoin in US, China and India points to one single conclusion – we are not going to let a ‘controlled’ and ‘vast’ financial system adopt a decentralized cyprto-currency, which can be anonymous and used for illegal activities…as yet. Countries which have had a history of currency issues and have not had effective monetary policies are the ones who will be at the forefront of Bitcoin adoption. With China out of the mix currently, one can look at Argentina, Cyprus and others to lead. These may be smaller as a % of the global base. However they are likely to have much more local penetration and most importantly more government support or less government intervention – whichever way you want to look at it. That being said, successful internet and mobile companies in the US/Europe are the ones, who are most likely to offer digital goods in Bitcoins. Zynga just announced their experiment. I would not be surprised if Spotify, Netflix etc are next.

6. Indian ecosystem will be slow to evolve; limited to speculators and mining pools

The Indian Bitcoin start-up ecosystem today is limited to less than 10 start-ups across exchanges such as Unocoin, wallet services such as Zuckup, mining pools such as Coinmonk and some other ideas – compared to 100s of them in each US and China. There is little evidence today to ascertain whether any of these start-ups are going to create a home market or serve an international market. In fact on the contrary, the Indian market is likely to be served by global Bitcoin companies. For instance, Itbit, a Singapore based exchange has already started targeting Indian consumers. Global services have demonstrated the capability to be credible especially when it comes to convenience and security by solving complex algorithmic problems. This also makes them more defensible in the long run (e.g. Coinbase’s splitting of private keys to prevent theft) and poses a big challenge for Indian Bitcoin start-ups. There is an active Bitcoin community in India (about 15-20 people), which is trying hard to create awareness among consumers and regulators. I sincerely hope to see at-least 1 world-class Bitcoin start-up to comes out of India.

7. The use of Bitcoin will evolve beyond ‘store of value’ or ‘transactions’

The underlying Bitcoin protocol makes itself applicable beyond the use cases of ‘store of value’ and ‘payments’. The Bitcoin foundation took a huge step in allowing meta data to be included in the blockchain. This will unlock a lot of innovation and maybe even prompt regulators to acknowledge the potential of Bitcoin, making it all the more difficult for them to shut it down or suppress it. As one can see from the current Bitcoin ecosystem map (http://bit.ly/1krEd0Z) that there are almost no start-ups, which solely use the protocol without using the ‘coin’ or the ‘currency’ as a function. 2014 will be the first year to see some of these.

8. The ‘browser’ of Bitcoin will come this year

Netscape browser made Internet happen. ‘Something’ will make Bitcoin happen. It is still very difficult for the average ‘Joe’ to understand, acquire, store and use Bitcoins. Though Coinbase and several others are working on innovative security algorithms and making it easy to store Bitcoins digitally, it is still not enough to make Bitcoin mainstream. Hence, what a ‘browser’ did to the Internet, a product or technology innovation will do it to ‘Bitcoin’ in 2014. This will make the transition to Bitcoins frictionless. Kryptokit and Eric Voorhees’ Coinapult are promising start-ups in this direction. Encouragingly, all the building blocks for that to happen – like mobile penetration, cryptography algos etc are already in place.

9. The price of Bitcoin is likely to range between $4000-5000 by the end of 2014

Well, though some people will argue otherwise, price is not the most important thing about Bitcoin. But given the interest and its volatility, it does deserve a place in this blog post. Speculators have predicted Bitcoin to go upto $100, 000; some say the maximum it can reach is $1300. Though, am sure that there is some underlying basis for these predictions; here is the one for mine. Bitcoin’s price is a function of supply and demand. While the supply is predictive, the demand is less so. However, the increase in the demand of Bitcoin can be compared to networks such as Facebook and Twitter, which have followed a ‘S’ curve of adoption. All such networks typically take 6-8 years to plateau out with year 4-5 being the steepest. Though Bitcoin was invested 4 years ago, I would say that 2013 was its 2nd real year. Given the nature of the ‘S’ curve, the price increase in 2014 is likely to be 3-4 times more than the one this year. Hence, the $4000-$5000 range, where the Bitcoin price is likely to settle down in 2014.

10. Last but not the least – Satoshi nakamoto will be Time’s Person of the Year 2014.

#9 is a disappointment


I was expecting S-curve growth.... at least $10,000/btc

5 FIGURES OR BUST ...if we can't even go to $10k I would rather see it go to $0










Jk.... $4000-$5000 would be amazing  ;D  hopefully that would mean LTC is at least $100-$200 by then.. still not enough to let me retire though

I don't think your predictions are too far off from what I believe! However, I do think that other countries (such as Japan, China, India, and probably even some European countries) will be using a lot more BTC than the US.

50+ in existence? Somebody didn't do their research. There'll probably be nearly 50 coins coming out a month this year.

And hundreds by the end of the year! But hey, I guess that's why he put the + sign right?!

Well thats good news, everything yo ustates is positive for BTC in a positive way, Great news to read,
i hope you are right about the btc rising to 5k tha would really help me.

I can definitely see a lot more venture capital investments for Bitcoin-related services and whatnot in 2014. I'd love to see the price jump to $4-5k by the end of the year, but that'll depend more on wide adoption I think... Which is still a mystery!

In any case fun read!

I wouldnt be surprised if Bitcoin was 5,000 by March.

What will you be doing with your tax refund?

Pretty much any money that I get that isn't from work or in cash, I'm going to put into bitcoins.

Beware!

This article is promoting two suspicious business.

I think a lot of people will be spending tax return money on BTC. The sheer growth of public awareness pretty much guarantees it.

There will be a lot of money invested soon by a lot of people who are expecting tax returns. I just don't know how much... But seriously I wouldn't be surprised at $5,000 per Bitcoin in or around March.

Great list.  I hope you're right.

Another big question--will we see the elimination of the 51% threat? :-\

There are nearly 50 salt bitcoins, and they went out in two months in the YEAR.

#2 is not true. The number of transactions are not increasing nearly as fast as they need to to overcome the the drop in reward when the block halves. The 2nd part about transaction fees rising is true however, and they are way damn too expensive! I paid $7 worth of btc when it was at $1000 and it cost me a fucking dollar (.001btc) to do it.

You realize, of course, that the _standard_ transaction fee is 0.0001, right? Sounds like you need to reconfigure your client - you're paying ten times over the going rate.

Hundreds is probably a conservative estimate. We'll be in the thousands with these currency generators popping up.

I would be happy even if the price reached $1500 this year. Any growth is good and a slow and steady one is even better  :)

I strongly disagree, there will always be alternatives.

Ouch. Configuration can be real hassle  :D

There will be hundreds if not thousands of 'alternatives' The market will become saturated at one point and most people wont bother mining any way.

Both miners are scams. This article is shit. Ignorant.

Well I think you'll be very happy. If even one semi-big retailer accepts it this will have remarkable push on the price. The slow adoptin of many smaller retailers will also have a creeping effect.

Overstock's acceptance didn't move the price up, some even say it pushed it down.

I'd never even heard of Overstock until they announced there involvement with Bitcoin, but let's change 'semi-big' to 'big' then lol.

It's not an instant event.

Overstock actually pushed the price down because they instantly sell for USD at whatever the current asking price might be. The force that drives the price back up is the people who want to buy a good or service and realize that they can save money by buying Bitcoin today and spending it in a few weeks.

I doubt the price falling had anything to do with Overstock. It was just a coincidence.

Of course it did; there's no way it wouldn't.

The people who spent BTC with overstock were not all likely to have sold BTC on other exchanges that day at the current price. The buy bids remained relatively unchanged while there was an increase in sell volume bringing the price down until the market equalized.

BTC has been all good news recently. It's not speculation that brought the price down this time. The price will go up as more people enter the market.

Right now bitcoin market rates are just ranging, relax.

Any evidence of this or are you just assuming that this happened? Overstock was not the only thing that happened with BTC around the world when the price fell.

I'm only asserting my interpretation of what I've read in the current Bitcoin world events and the overall market trend. I believe it's a reasonable interpretation.

I read dozens of comments across several articles about the acceptance of Bitcoin on Overstock.com where people were buying goods merely in support of the movement towards the acceptance of Bitcoin. I can't say for certain that these people weren't planning on selling on that same day. I can say that I bought something from Overstock.com with Bitcoin that I otherwise planned to purchase through Amazon, and I certainly have no intentions of selling my BTC right now. I'm merely extrapolating my own experience and the effect which that might have across the network.

Overstock sold 145 BTC on the first day at the highest existing bids in over a thousand BTC transactions. I just can't see any way in which that wouldn't lower the current price.

It's a possible sceanraio, but not certain.

And are you sure they sold them? Don't the Bitcoins just go to the payment processor and Overstock gets the cash deposited?

I agree it's not certain.

If they weren't sold Coinbase would be assuming a tremendous financial risk just by holding them. If I were a shareholder in a company who chose not to minimize risk I probably wouldn't appreciate that too much. Coinbase needs to profit from these transactions as well and they can't promise a return if they operate on speculation.

They might hold some. I have no idea how their business practices work within that regard. Do they even have shareholders?

They do.

It was a startup company funded by venture capital. Those who invested are shareholders entitled to returns on company profits.

I'm not certain of their business practices either but I do understand what's expected of them.

Ah, ok. Then I'd have to see their business plan if that was available. Maybe it includes keeping some BTC as an investment which they hope to reinvest, but I have no idea.

This video is a interview with Coinbase CEO, it will answer your questions, http://www.youtube.com/watch?v=ZwG1roO70co

Ah, ok. Then I'd have to see their business plan if that was available. Maybe it includes keeping some BTC as an investment which they hope to reinvest, but I have no idea.
[/quote]

Many of the predictions can be debated this way or that, but this calls into question the knowledge of the original author.  Firstly, "meta data" is data about data, so the only meta data would be about the blockchain itself.  What they mean is including data in the blackchain.  Why would this be a good idea?  There's already been data put in the block chain for giggles or malicious reasons (porn for example).  Filling up the blockchain with data would be a bad thing for scalability.  Maybe im not thinking wide enough, but the reason there is no startups using the protocol without the coin is there's no other purpose.  Use other, similar technologies directly, i.e. encryption, torrents (for p2p).  Namecoin shows that people have thought about other applications and not really come up with anything.

Could you provide some proof?

I think this year we need to see exchanges taking a more responsibility role with its clients trades and making sure the transaction between the buyer and the seller goes smoothly. Currently this doesn't happen so when people get ripped off by exchanges they simply stop believing bitcoin can really be something and rid themselves of it all together, these same people may also tell their other investment friends and family members to avoid bitcoin like the plague.

It sounds like the bitcoin exchanges (across the board) look at bitcoin as a hobby and don't take it serious enough.

I think that will always exist unless they put a 50.99% cap on Bitcoins so you can't ever hit 51%

"3. There will be less than 5 alt-coins (out of the 50+ in existence) that will survive 2014"

Lol, couldn't be futher than the truth. Yes, many will die out, and many will be born. I think we will see a couple of thousand by the end of the year. Currently we are seeing around 50+ a month and have been for some time...

I don't get the impression that that would solve the problem. As I understand it 51% is simply the threshold for the certainty of a successful attack. At 50.99% you would still succeed a good portion of the time. >:(

Really!?! Think!

'51%' is really just shorthand for 'more than half'.

Well, if one wanted to, for instance, record the deed to a piece of property, one could do it in the (a) blockchain. If one wanted to sign the text of their new novel, and record the signature in the blockchain, (thereby proving authorship on a date) they could do so. If, if, if...

If one wanted to perform such functions, would it not make sense to do so within the blockchain (i.e. the Bitcoin blockchain) that stood the best chance of living indefinitely?

The proof is in the pudding.