I think in order for Bitcoin to survive the volatility needs to disappear.  In fact, I would go so far as to say Bitcoins would need to be pegged to USD (or some other currency) at a certain value.  Otherwise it will be very difficult to entice merchants because they simply cannot price their goods accordingly.  

Even at these supposed "stable" prices we're seeing, it's not stable enough for a currency.  Even a change from $16 to $17 is a 6.3% change and we're seeing larger intra-day fluctuations than that.  To put it in perspective, the USD moved against the Euro by 0.265% today.  Over the last 3 months, it has moved 1.4%.  You'd have to go out SIX MONTHS to see a percentage change greater than what Bitcoin is witnessing in a matter of hours.

But no one wants to peg BTC's because speculation is the only place where the money making is at and probably the only place it will stay.  Sadly, I believe the long-term success of BTC is tied to it's acceptance in daily transactions.  It will never happen under the current conditions.

Believe it or not, they really are trying to protect you.  Had you sent your coins to the winning bidder and they filed a dispute with Paypal that the items were not received, you would lose every time. 

Dear MtGox:

pacifists?  LOL

THREAD LOCKED.

So you're telling me they can either get A) a consistent amount per month or B) some random amount that changes value by the second.  And they would choose B?  And then what?  Do they pay their models in bitcoins?  What about things like utilities and equipment.  Bitcoins?  No, they would have to go to the exchange and redeem them for dollars.

So either they can get dollars upfront which would provide a consistent revenue stream and be used to cover operating costs.  Or they can go about it the long inefficient way by using BTC's. 

In it's current state, this would never work for the big porn companies.  Maybe some tiny startup site but those are pointless in making BTC mainstream.

Yup.  Check the blockexplorer. Once you pass your block number you should see it show up.

When you open the Bitcoin app, at the bottom next to connections, how many blocks does it say?  If it's low (under 100,000) you probably need to leave the app open for a while.

You sound like you're trying to convince yourself everything is okay.  MtGox is not Bitcoin and I think in the long run BTC is better off with a legit exchange rather than going through that Mickey Mouse operation. 

Where are you getting 4% inflation?  TIPS just sold for a record low last week.  If the market (read: not the gov't) was pricing for inflation, TIPS would not be at the yield they are.  I'm curious where you're getting your information.

I'm just going to use your quote because it's hard to address everyone individually (although thank you everyone for your input).  I have to disagree with your assertion and it's what concerns me the most.  There are very low barriers to entry.  Bitcoin is open source, it's out there for everyone to see and replicate.  There are many barriers to entry but the primary ones are cost of capital, geography, and regulation.  I'm sure there are more but I'm just going off the top of my head.  Bitcoin has none of those barriers.  

My example of Pfizer would be a better example of a high-barrier-to-entry.  They are protected by patents, have to spend millions on R&D and have to deal with the FDA scrutiny/approval process.  THOSE are high barriers to entry.  Bitcoin can be recreated relatively easily by a saavy computer developer(s).

I'm also a bit surprised about the first to market and Facebook examples.  Facebook was most definitely NOT first to market.  Asian Avenue, MySpace, there were tons of predecessor social networking sites.  Facebook just improved on those concepts.  If anything, Facebook strengthens my point.  It's the latest and most successful incarnation of social networking.  But first?  Not even close.

Speaking of market cap (whether you feel it relevant or not) you simply cannot have an unprotected multi-million dollar concept, or whatever you want to call it, and not expect to see immense competition.  If a guy was selling hotdogs for $50 each, that costs him $2 to make, AND posts his recipe for everyone to see, wouldn't you or someone else come in and start selling hotdogs too?  Of course!  Because there's profit to be made.  That's why I say it's simple economics, to think BTC can go to $100 or whatever arbitrary number you want to use without factoring in competition is coming to a conclusion missing a very important variable.

I just want to finish by saying I'm not trying to sway people one way or the other.  I think it's been a great discussion.  But for me, this is the way I do my investing/speculating.  I play devil's advocate and see what type of responses I get.  

Let me start by saying that I do not know all of the facts, which is the reason for this topic.  The person who can provide the most convincing argument to my concerns will be given 1 BTC should I decide to invest.  That incentive is just to put out there, really what I would like is a civil and hopefully mostly troll-free discussion. 

From the FAQ, "in the first 4 years of the Bitcoin network, 10,500,000 BTC will be created."  So 2,625,000 BTC's per year.  BTC's fluctuate in price but lets use $15 per BTC as a baseline.  In order to sustain that price over a year period, NEW money would have to be injected in excess of $39 million per year.  Perhaps slightly less as not all will go to market, so lets say, $30 million.  First problem I see:

Where does this money come from?  We have very small scale exchanges, and the largest one has been hacked and isn't even open yet.  A further barrier is the $1,000 transaction limit.  How do you get $30 million a year in with that sort of limit imposed.  Yes, that limit can be removed by providing verifying information, however, the scale we're talking about is going to take institutional investors.  Will these institutional investors be willing to lose their anonymity to invest here?  And even so, the next is my biggest concern....

Bitcoin in unpatented intellectual property.  Everyone who has ever taken an Econ 101 class should understand the law of supply and demand.  Lets say BTC gets this $30 million investment per year, that sort of money is going to spur competition.  As long as there is demand and profit to be made, competitors will come.  The primary protection against competition is patents, trademarkets, etc..   Lets look at a company like Pfizer for example and their immensely successful drug Lipitor.  Lipitor is patented resulting in Pfizer being the only drug manufacturer allowed to produce the product.  Once that patent runs out, generic brands of the drugs will come online and Pfizer will no longer be making large gains on the drug.  They know this, everyone knows this. 

Bitcoin has no patent and in fact, is open source.  There is nothing to stop a competitor from coming in, copying the model, maybe even improving on it, and bring it to market.  Look at it this way, if you're an investor would you really invest multi-millions of dollars worth of capital in something that can be copied today?  Why not create your own?  Whose to stop Google from coming in and making Googlecoins?  Any profitable venture will result in competition.  This may be good for P2P currency's longevity but I'm strictly talking about BTC from an investment standpoint.  If it were legal to make an exact copy of Lipitor and bring it to market today, would it happen?  You're damn right it would.

I have other concerns, the bad press, the security issues, lack of merchants, etc. but really those are my two big ones and they sort've tie in together.  Again, I'm coming at this from an investment standpoint.  I see Bitcoin's value as rampant speculation.  I don't want to use the "B" word, but the price appreciation is unsustainable (LONG-TERM) in my view.

What are your thoughts? 

GOXED

He said June 25th.  He didn't say what year.  GOXED

If there was a night elf and/or paladin on that account, then you deserved it.

I'll provide the DeLorean if you provide the flux capacitor.

I'm clipping your post but you make a lot of valid arguments.  I think the biggest "infrastructure" Bitcoin needs right now is a reliable and secure exchange.  Somewhere that will provide volume and liquidity while at the same time giving investors confidence that their funds (currency or BTC's) are safe.

The Mickey Mouse exchanges we have in operation right now are just not going to cut it.  The first group to make a legitimate exchange will not only greatly increase Bitcoins chances of survival but likely make a nice profit as well.

Gold is tangible.  Bitcoin in intellectual property.  More specifically, intellectual property with no patent.  

For Bitcoin to be successful, it must not only provide a service that differentiates itself from other payment mediums, it must also protect it's business model or concept.  You can't create gold, alchemists have tried for thousands of years.  You can create an exact copy of Bitcoin and just slap some other name on it.  That's the real problem here, some of you are so amazed by this idea that you can't see the simple fact that while it may have been a really ingenious idea, it can be copied to infinity.

Gold has value because of its scarcity.  Everyone is so hung up on the fact that Bitcoin is naturally deflationary when in reality it's exponentially inflationary because anyone can copy this idea at any time.