Bitcoin Forum

There is a bundle of super-long-term trend lines that is going steadily up.  We've already plunged through just about half of them according to my diagram... you can see for yourself by graphing BTC on a log scale.
The question is, will we see the collapse of the markets?  The inability of the markets to go up is making me nervous.

I'm tempted to go all in right now below $5 where it's at, but the problem is not the volatility but the stagnation.  It might just stagnate below $5 for a week and since a lot of people need to get their money out at the end of the month, including me, I can't wait around for the chance it will finally stop stagnating.

Yes, absolutely. The price will go to $2, then to zero (because there are miners who will mine in the name of idea which will provide supply, and because there is no enough demand).

Gold, Silver and Stocks are DOWN. Why would bitcoin be different?

Lawl, all those bear preachers: Guess what there are hundreds with the same idea, get the price down to a ridiculously small amount and pump it back up. Before it will go anywhere near these numbers there are people who are willing to pay just a tick more than you, and so on, and on...

And so far the death of the long-term trend has been greatly exaggerated...  ;D
http://img819.imageshack.us/img819/8804/chartlargelog.png

Lawl, all those bull preachers.
You don't understand that it is not an attempt of manipulation. It is the reality.

Have you ever tried to convince other people to accept bitcoins as payment for a large hard work when bitcoins are fall in price ?
Have you had difficulties with finding specialists with the right skills on the thin bitcoin market?
Have you tried to setup an agreement which includes rate risks?

And the bitcoin has fundamental flaw (which is proven by the presence of namecoin):
Bitcoin doesn't track property (both physical property and intellectual property, and the rights of inheritance).
This mean in particular that enterpreneurs are unable to make startups (I already told that to the owner of GLBSE, but he ignores that idea)

I don't get where you pointing at by 'flaws'... Bitcoin is what it is.

But the whole issue will resolve itself pretty quick, as I interpret the chart we will have to wait at most till mid-October when the long & midterm trends meet. If the long term holds we would have to get a rise in price levels if not that means bitcoin would face a similar predicament as folding @ home.

You bears will probably say 'I told you so' while in the mean time we would approach the halved block reward which would bring a new hype cycle.
Either way I don't see 'the end of bitcoin' and will most likely buy a bunch when this forum is filled with these kind of statements ;)

My interpretation differs. Look at the difficulty. Earlier it rose because there was new miners.
Now it is another story - no new adepts, and the number of existing will reduce.

Yes, this is the harsh reality of the bitcoin -- it would be a true deflationary commodity if difficulty were able to not go back down over time with relation to the number of people mining it, but since it does it is neither a deflationary nor inflationary commodity but both depending on the direction of the difficulty and the hash rate.

An ideal digital, actual deflationary digital commodity would have variable block sizes based on hash rates (to ensure that even if network hash rate went down, transactions would still go through), would start at a very high difficulty, and would increase in difficulty based on the amount of it mined but never decrease in difficulty.  As soon as someone implements this, I'll stop mining bitcoin and start mining that because I think such a currency would hold its value over time much better than bitcoin.

If you like log charts, here's a realistic one.
http://bitcoincharts.com/charts/chart.png?width=640&m=mtgoxUSD&k=&r=180&i=&c=0&v=0&cv=1&ps=0&l=1&p=0&t=S&b=&a1=SMA&m1=30&a2=&m2=25&x=0
The brown line is a 30-day trailing moving average.

On a log scale, not only is Bitcoin in a screaming dive, the dive is accelerating.

On a linear graph, the 30-day moving average has been a straight line since the bubble popped in June.

That weirdo green line graph, extrapolating a straight line through the run-up and decline phases of a speculative bubble, is just silly.

how is that any more realistic?
since we are playing this shorter term trend reversal game here is another chart..
btw the lower trendline meets with the longterm trend..
http://img163.imageshack.us/img163/5370/mtgox2.png

No. Difficulty and the number of miners has nothing to do with Bitcoin's ultimate deflation. All that matters is that there is a finite supply in the long run. Gold is ultimately deflationary for the same reason; the planet will eventually run out at some point. Turns out that we know, pretty generally, when to expect deflation in bitcoins; it's built into the algorithm. Bitcoins, like gold, experience both short term inflation and deflation as long as there is an attitude that it's still useful to sell now (and produce). As production tapers off with ramped up difficulty, the likelihood of that sentiment remaining is low.

This, assuming of course, that at least one person is left to mine Bitcoins.

I think its possible that Bitcoins are going down, and will probably stay very low for atleast a year maybe below $2 or even $1.
People will sell many coins around christmas, and who will want to buy coins at that time? Its very likely we will get a crash at that time.

As long as Bitcoins are going down at this speed its also very hard, almost impossible to get people and business to use Bitcoins meaning less money buying new Bitcoins.

The legal issues with Bitcoins makes it impossible for any serious gambling company to use, since it will mean that they will lose their license.

However I see it as a possible very good investment longterm unless there is a better alternative but at this time its gambling.

Drawing lines connecting peaks or valleys for Bitcoin is pointless. Bitcoin's big excursions are mostly due to extraneous factors like thefts, rip-offs, or bugs in Mt. Gox.  This is a thinly traded market, and anybody with some cash can move it around for a day or two before they run out of money and the market reverts to the long-term downward trend.

The charts and trendlines work equally well for bitcoins as for other financial markets. No issue with the trading volume.

Then why are you unable to predict the price?

Well, I think not.
How much cash would one need to seriously change the market, at 72k peak volume that would be 300k USD @ 4.18. That is just one day...
What you call long time downward trend I call mid term correction...

PS: This rhetoric reminds me of gold around 2008, there was this big push that the bull market were over, and all it did was stalling for a few months. Just wait a few weeks and we will see the same thing now, at the double price  :D (Just a different scale in the case of gold it were the 'big players' as with bitcoin it are people with 'some cash')
I suspect a similar development with bitcoin, while here in addition it might even make mining profitable in the long run again :)

Why does the graph start in August 2010, when hardly anyone was using bitcoins and very few people even knew about them?  Why not start the graph in March or April 2011 when things really got going and bitcoins became popular?  August 2010 is an arbitrary date designed to make the long term trend look great.  Never mind that 80% fall in the middle.

Um, what are we looking at here, exactly?

(BTW, I love pylab.imshow, too.  It makes beautiful pictures.  Do you like this pretty graph (https://metta.bscb.cornell.edu/hapvardist.png) I made recently?)

???
Where is another graph which includes the prices in 2009?

But after which date do you think a trend is relevant?

Price, Popularity and Difficulty are of course all related in some fashion. However not trivial way, it's like those hunter/pray population graphs only with more parameters. One might say that difficulty follows prices as well as popularity while popularity affects the product of both. It's a non-linear feedback model and to get a better estimate of what we might see in the future we would need to find the right model along with the parameters.


@fivebells
This isn't my work I found this somewhere on the forums but find it quite useful:
http://sd-12155.dedibox.fr/~joel/btc/mtgox2.png

But thanks, I always wondered how this was made, it seems you have figured it out for me  :-*

I didn't ask about 2009. 


A trend is relevant when it contains relevant data.  To most people, data from 2010 isn't relevant as they didn't mine and didn't purchase bitcoins during that time.  There would be relatively few people with large holdings of bitcoins purchased or mined at cents per bitcoin.

You know what they say about statistics and lies.  It's possible to make almost anything look good.  I have yet to see someone quote a share's price on a log graph to show price trends.

because that is when the data I have from mtgox starts

price / volume heat map??

I like these heat maps. how did you make it?

Now nominating ElectricMucus as our official manipulator. ;D

The trend line is strong with this one. However if it's strength is broken I must agree it's possibly the last psychological barrier before absolute panic.

 *ElectricMucus I feel the same way as you and have "faith" Bitcoins long term trend won't be broken but may the USD protect us all should it fail. :-\

I'm looking forward to the extra coinage due to the difficulty fall :)

The whole ~15% decrease in the last ~2 months ??? Haven't been around that long myself (and have done my best to refrain from my useless posting, not saying yours was) but I remember when a 5850 made 3 btc a day. Just 9 months ago one could mine a whole block by them self every other day on a quad core cpu. Who says btc hasn't grown rapidly?

I understand what you mean. The highest total hashing rate I remember was around 18 Thash, now it's around 12.

For me, I don't have any immediate need to cash out. Surely, there must be some people who over leveraged themselves (maybe even on credit).

I asked my wife what she would do and she would say, if you think it's worth investing in it, do it over the long run.

At these prices the difficulty will continue to decrease, slowly but surely. At least for a while.

Anyway, I do think the long term is still good. The price hasn't even stabilized under $5, which would still not be a disaster. Only when the price stabilizes under $4 will I be really worried.

Now, from a long term perspective, it's a good time to buy. It's not guaranteed Bitcoin will succeed so it's a gamble, but it's a smart gamble taking into account everything Bitcoin has potential to do.

Looks like what you get with pylab/matplotlib, in particular the imshow function.

http://matplotlib.sourceforge.net/users/image_tutorial.html#applying-pseudocolor-schemes-to-image-plots

No, it's not a smart gamble.  The far smarter gamble is to go along with the trend.  Deposit money you'd use to buy bitcoins and wait until capitulation.   We're still in denial phase of post-bubble psych, when the fear kicks in it'll be time to start looking harder at buying.   When the last bitcoin bulls start throwing in towels is when you buy with half your funds.   Sell half into the post-apocalyptic dead cat bounce, buy again a bit later and THEN hold and accumulate if there's an uptrend.

We're still at near the peaks of hashing power on deepbit.  That means most of the community is still bullish, even if some are mining at a loss vs buying.  There is little to no bear sentiment as prices decline, let alone fear.  That's exactly what you see immediately before a penny stock post-bubble panic.

"I'm in it for the long term no matter what" bagholders are few and far between when you look at successful investors and traders.  Bottom fishing is an artform, and isn't as simple as catching every knife that drops.

Well, for one I disagree that it has any relevance whatsoever how many miners are still mining, as far as the price is concerned. I mine because it's still profitable to do so. It would require at least a months worth of mining at break even and then a few weeks without profit before I'd actually stop mining. Even then I'd just put my rigs on vacation for a while and wait a month or two before actually selling them. For fiat money. The amount of BTC sold increases because of this by exactly 0 BTC.

As far as speculating on the true bottom, even if your scenario is correct I don't really care. If one is mainly a long-term investor, like me, it's entirely irrelevant if the price drops to $0.1 next week, as long as it's up eventually, even if it takes years. Of course you can argue that I could have made "so much more" by working the market, but working the market and succeeding in it is not free money. It requires time, effort and knowledge. It's not free. As a long-term investor, if I think the long-term future is good, which I still do, then I can just chill out and let it play out.

I did worry a lot more before but recently I've just thought about what Bitcoin is and figured out that it doesn't really matter what the day-to-day, week-to-week or even month-to-month price is. As long as the long term is good I'm just happy to be in, that's it. I can spend my time much more productively by developing the Bitcoin economy than working the market.

I've made a few trading moves and probably will make some in the future if I smell a really clear trend, but right now I see no clear trends and am just chilling out and letting it play out, one way or another.

Agreed, I'm feeling myself chill out as I've watching bitcoin hover in the $5 range the past week. It's hard to get worked up about small price movements because it just feels like prices are at or near the bottom, and I don't want to get left behind when it does, finally, go up a $1 or $2.  So though I was tempted for like 5 seconds to sell my holdings and re-buy at $4.50, it might never go to $4.50, and so I'm holding.

That's your stance.  You wouldn't be mining if you expected bitcoin prices to tank, which means since you ARE mining you're bullish on bitcoins prospects.   Ditto 90% of the bitcoin community.

Also, the number of people mining DOES have an effect on the price.  Do you for a minute think $5 would be a "bottom" if difficulty hit 500k?  I know I'd be willing to sell coins for $1.50 at that point.   As soon as BTC get cheap enough that it's not profitable to mine at 1.7 million difficulty at even at 4.6c/kwhr (my rate) you won't see a 5% drop, you will see massive swings in difficulty every 2016 blocks.  500k for 3 days, 2 million for two months.  Repeat.

$6 is the new $9.  Which was the new $11.50.  Which was the new $13.  Which was the new... Well, you get the picture.

The changes don't happen in days - with normal operation the 2000 blokcs take about two weeks, but if people stop mining - then the change will take longer.  The problem is that if the hashing power drops massively then there will be a long time during which sending bitcoins will be slow.  Not much commerce is going on in bitcoins now - so it is hard to say how much such a speed drop would affect the businesses - but it certainly would further reduce the confidence in the system.

This is true but I think this scenario is very unlikely. It would require for the price to drop 50% really fast and then stay there for weeks. From the current price, that is. Because mining is still barely profitable for most, with a 50% drop it would become not profitable for most people and then we'd see massive difficulty drops and a big network slowdown. But only if the price stays there.

Much more likely is that the price drops slowly and the difficulty drops with it, and when the price starts going up again the difficulty starts going up as well.

My mining or not mining has really nothing to do with the prospects of Bitcoin, at least not right now. Mining is still profitable for me with the current price. When it is break even, then prospects come into the picture. Prospects have more to do with what BTC I sell or don't sell, be it mined coins or bought coins.

I could very well be bullish on Bitcoin long-term even if I have to stop mining. The fact that I'm bullish doesn't mean I believe that Bitcoin's price will skyrocket eventually with 100% certainty. It might not. It definitely might not. Being bullish means I think it's likely, but there's a limit on how much gamble I have in me. That's why I would eventually stop mining at least for a while and wait. Simply mining and increasing my holdings would be nice for the bull in me but there's a hard limit on how much more risk I'll take.

If difficulty hits 500k it's because the price has dropped significantly, not the other way around. Again the price doesn't increase or decrease specifically because of what miners do, miners mine the same amount of coins regardless and some sell, some don't. Price doesn't matter much regarding what they do. The price moves because the demand drops, investors and traders sell etc.

I have to make one important correction though, that might not be clear from previous posts. Many people are miners and investors at the same time. Or miners and traders. Every time a miner saves a coin for at least mid-term and doesn't sell, that coin is not regarded as a miner effect anymore in my book, that coin has been invested. Thus miners do have a significant effect in total but not nearly all of it as miners, could be as investors or traders as well.

I get the picture. I also get that the price drop bottoms out when demand meets supply, and the lower we go the more demand increases and supply goes down. The supply isn't going down very fast currently because there are miners like you who sell everything and are happy to sell at the current prices. And on top of that there's still no real uptrend for investors etc. But the supply is going down regardless. With the exception of panic selling, those situations can temporarily increase the supply significantly.

The demand has risen significantly after the price entered the $4-$6 range, which I anticipated. Now it might or might not be enough to stop another drop to below $4 but we'll see. Regardless, the price won't stabilize under $4 in a long time and if it does, it means Bitcoin has long-term issues. This is when I start to get worried, but not before.

Anyway, I think the much more relevant point to why this is happening is insufficient demand, not the fairly stable supply which has always been stable. Demand is the one factor that changes the most and has caused all the ups and downs in Bitcoin's price so far.

Do you sell your coins as soon as you mine them?  I think I know the answer to that one.   Like most miners you are bullish on the future prospects, being profitable (on paper) assumes price does not decline.  That's a bullish sentiment.



Difficulty follows price and price is affected by difficulty.  I've gone over this a million times.   When the cost to produce bitcions is 1/10th the cost of direct buying people have opted to invest in mining gear instead of buying, driving up difficulty and driving down the price.


NOW you get it!  Miners who don't sell immediately are speculators.  That's why I try to understand the miner community mindset, it's a good proxy for the entire bitcoin mental state which is far harder to measure objectively.


Exactly.  Bitcoin value is determined 100% by speculative sentiment.  Bitcoin does not generate any revenue directly, it's impossible to project an ROI or P/E since there ARE no earnings.  Nothing has changed since the $32 speculative bubble high, but the network does have a cost of $24,000 a day to run.  Some portion of that money does come from $ already invested and the rest comes from people "breaking even" on paper.

We are literally one 'early adopter' (read: someone who heard of bitcoins six months before I did) deciding they want a nice car or house away from shaving 50% off of bitcoin.   Going back to $10 (never mind $30) will take a lot more than that.

To be precise there are probably some earnings by the Silk Road folks - but I guess this is not significant in any way.

Well, I think I got it before as well. I feel this has mostly been a semantic issue.

A lot has changed. Bitcoin is known by a massively larger number of people than it was before the bubble. It's still fairly small but it has gotten way bigger. For the price this means that there is in general much more demand than there was before, even though the bubble from the hype was massive.

But a lot of small investors know about it at least and even some big players, which does make it very unlikely for the price to go very low (by very low I mean where it was in the beginning of this year when Bitcoin was still mostly unknown).

At the same time we've seen massive growth in the number of small businesses, especially online businesses, starting to accept Bitcoins. The list is not just slightly bigger, it is a lot bigger. All kinds of usages have come up, for example it is used in a pirate World of Warcraft server with thousands of players, as the main currency to buy stuff. We even have some physical stores accepting Bitcoin these days. A lot has changed. But this is likely to be just the beginning. One year from now and we'll see Bitcoin on another level entirely.

This is assuming that Bitcoin stays legal and the technical fundamentals stay robust. As long as this is true I'm quite sure Bitcoin will succeed at least as a niche currency. Which is fine enough for me.

Weren't you the same one saying there was no way bitcoins could stay below 5 dollars for a period of time?

I suspect those are a complete wash.   The dealers sell their received bitcoins as soon as they get them, and customers just buy at the market price.  End income to bitcoin community: nil.

No, it does not mean that.  At the peak of the hype (at $32) we had 60,000 users at mtgox.   Do you think we've gone to 120k?  240k?   A million users?  Ten million users?  A hundred million?  A billion?  I simply don't see the demand you speak of.  The only demand I see is the demand for exchanging bitcoins for dollars.

The $32 price marked peak interest, confirmed by google trends.


What an olympic logic leap.  Lots of people know about Amway, but for some reason they're not getting in.  Off the top of my head I can name a dozen stocks and commodities currently circling the drain.  Guess what, the same investors, big and small alike, are not buying them either.   And those issues are being traded on legitimate, accountable, regulated exchanges unlike bitcoin.

Bitcoin price absolutely can go lower, and it can even go to effectively zero.  There are far more scenarios where that happens instead of the world population suddenly waking up and going "You know, it's about time we made Satoshi and a bunch of other guys who heard about this internet funbucks pyramid a year before we did multi-billionaires."


The technicals remain as un-robust at $5 as they did at $32, $24, $20, $17.5, $15, $14, $13, $11, $9 and $6.  We'll talk legality and possible regulation after French courts decide whether bitcoin is currency or not.  As far as being niche -- well, I hope you're into items on pirate WoW servers, wire fraud, illegal drugs and child porn.  When those are the 'niche' use cases for bitcoin your $ exchange rate is not going to pay for a very impressive hash rate.

I agree that this is insignificant now - but in theory this is the mechanism that will make bitcoin profitable.  This is the same mechanism with every money, the exchanges enabled by it makes it globally profitable for humanity even if they do have a cost to produce and is not consumed in any way.

It's important to note the difference between a stable price and an unstable one. For example, I have stated that if the price stays below $5 for a significant period of time, which is at least a week, it's a sign of the long-term switching to "neutral". A price below $4 for more than a week, then I'd say down. Price below $4 for a month would mean abandon ship.

This is how I've seen it for the past weeks and so far none of those scenarios have happened so the long-term is clearly up. Instead of new lows we've actually had a couple of rallies which is a sign that we are getting closer to a bigger break-out.

Learn how to read. I compared to the situation before the bubble. It's obvious as hell that basically every indicator possible has declined after the peak. This is obvious and irrelevant. What is relevant is that Bitcoin is known by a lot more people, and even Google trends doesn't show this properly. This is because Google trends is interested in how many people search for Bitcoin, it doesn't show us how many people of the ones that searched in the past have remained interested in it.

I've been interested in it for months now and I don't go searching google for "bitcoin", not anymore at least. It doesn't mean I'm any less interested in it right now. Google trends is mostly an indicator of current new interest level, it doesn't really tell us much about the accumulated interest so far.

And the truth is, which you conveniently didn't comment on, that actual merchant activity has gone up after the bubble. We have way more exchanges, way more businesses and way more anything. It's true that the amount of users and usage of Bitcoin has declined from the peak but that is not a long-term view. The usage of Bitcoin has grown massively from the start of the year and is still at levels way higher than it was back then, which is a very robust indicator telling us that the price won't drop super low, not in a stable fashion at least, until the Bitcoin-economy declines way more. And this is unlikely to happen.

Well, nothing I can say to this other than you're greatly underestimating the usage Bitcoin has. You forgot one from the list which is one of the most potential possibilities for Bitcoin, by far, which is gambling. I'm a semi-professional poker player actually so this is interesting to me, those other things are not.

You also forgot the most important usage for Bitcoin, which is as a store of value. It's like gold, just more practical. Currently this functionality of Bitcoin is clouded by the fact that the market is small and speculation has caused the price to go all over the place, but in the long term Bitcoin will be very robust as a store of value, meaning very-long-term savings will be kept partly as Bitcoins, and this will raise the price very significantly.

Plus, I would happily use Bitcoin for my day-to-day purchases from physical stores, if that were possible and convenient. The advantage of only needing a phone, having low fees, having more anonymity and the fact that by using a fundamentally better monetary system (compared to fiat) I'd be supporting something good, if I used it. It's just a matter of getting stores to accept Bitcoin and make it as convenient as possible.

An optimistic view, I just don't see the demand though.  No new lows certainly (what was it, down to 4.20ish last week?), however the price hasn't stayed below 5 for this long before, it's always seen a lot of buying activity once it drops a bit, but not seeing it this time.  I think the stagnant pricing lately is scaring off investors.  

One more thing though, by your comment of abandon ship at below 4 dollars, are you into bitcoin as speculation or as a currency?  The price of bitcoin in fiat is irrelevant as a currency, it still works even if its a dollar each.  Just curious where your mindset is, nothing wrong with playing the markets while you can.  

Well, I'm an optimist as it comes to Bitcoin, that's for sure. As far as my market activity goes, I'm simply a long-term investor most of the time, but when I smell a really clear trend I do make moves. I've made a few and I'm up from those, enough that I'm actually at break even in $ for my Bitcoin investments. And this I consider a very good result, could be much worse. Considering that I've mostly been just holding.

So if I see very strong technical indicators that the price is going down I will sell. And buy back when it has gone down. But other than that I will remain optimistic as long as the legal and technical fundamentals of Bitcoin stay solid and the infrastructure continue to be improved. In fact I'm very surprised if my "abandon ship" scenario happens if all of these requirements are still valid.

And I do know that Bitcoin will function as a medium of exchange just as well with any price, but a constantly lowering price is not good. Merchants have said that they get more customers when the price is going up, this is probably related to the fact that price going up often indicates increased interest in Bitcoin.

Also, price going to really low levels would further undermine Bitcoin's functionality as a store of value. Even though I know that from a technical and economic perspective Bitcoin is really good as a store of value, and this will be evident in the long-term as long as the fundamentals stay solid, but the adoption of Bitcoin due to this feature will be slow and much delayed the longer it just keeps going down.

The market needs to be massively larger for people to be able to look at the price and see it's good as a store of value though, massive speculation creates so wild price swings. But the economic model of Bitcoin makes it very good in that respect so in the long-term it's going to be very successful as a store of value as long as one doesn't buy at the peak of a speculation super bubble.

So the price going to lower levels wouldn't really crush Bitcoin's very-long-term prospects, it would simply take longer to really recover, the lower we go. So far we've only declined to levels before the bubble. That's just a few months. If we decline to the levels of early 2011, it'll be a longer road back up.

"technical fundamentals" - isn't that an oxymoron?

Incorrect.  Money exists to provide a revenue stream to governments which issue the currency in the first place.  It'd be very hard to tax commerce without money.  So unlike bitcoin, yes, other currencies (or, more correctly, governments) DO have a business model.  At the moment the only way to fuel the bitcoin network is by fresh infusions of investor cash.

I agree and disagree with you at the same time. A break of the longterm trend could lead to a total "crash" of bitcoin interest and wipe it out from the landscape (apart from a few thousand of hardcore bitcoin-lovers.
Even if I do not like it - in the current world-, price development plays a dominant role, and if we enter a vicious cycle with bitcoins, it may never come up again.

Money existed long before any governments: http://szabo.best.vwh.net/shell.html

This is possible, I agree. That is the risk all Bitcoin-investors take. And even I will sell if the long term trend is clearly broken. Then I'd buy back much later if it looks like Bitcoin can still recover.

However I think it's very unlikely for the long term trend to break decisively unless there is something wrong with Bitcoin on a fundamental level. Bitcoin is only a couple of years old and has been growing very fast, with no really serious problems (legal or technical) yet, so I see no real reason for the confidence to drop that low. All the issues have been with 3rd parties so far. And 3rd parties are also becoming more robust because people are learning from the mistakes that have been made so far.

The bottom line is that I don't really believe in this vicious cycle of doom unless there are serious issues with the legality, reliability or functionality of Bitcoin. Price development does play a big role but it's not something that works in a vacuum, the real state of Bitcoin does matter. We have had serious decline from the peak, but it's not like things are looking any worse than they have before.

Even if the worst case happens where all we have left are hardcore Bitcoiners, it can still come up again if there are uses for it. But we'll see, I truly think we're at "calm before the storm" stage right now. Something is bound to happen soon.

 

I agree with you 100%. I do not see the doom scenario. BTCUSD has not even seriously tested the long term trend. As long as the trend is not broken, the 1.5 year rally remains the active scenario.

No one actually knows how money originated, and that essay doesn't do anything to illuminate the question.  It is rife with glib assumptions.   I like David Graeber's theory on the origin and original purpose of money (http://www.nakedcapitalism.com/2011/08/what-is-debt-–-an-interview-with-economic-anthropologist-david-graeber.html), as it is at least based on observations of actual human cultures, as opposed to the bold evidence-free theorizing Szabo indulges in.  But even it is highly speculative on this question.

OK - I linked that essay to support the thesis that money has a business case even without government - the theory you linked to is not contradicting this.  Once again what interests me are the total costs vesus the total benefits of the system - when it will start to break even?  With any startup this is the most basic part of the plan - but here nobody tries to make this calculation which worries me, maybe it is just a pyramid scheme?