Bingo.

Too much attention is being directed toward regulation. There is a very small subset of society that is even familiar with Bitcoin, let alone truly understands the potential as related to finance. Even fewer comprehend the impact the blockchain can have in fields outside of money.

With the complex, multi-faceted nature of Bitcoin, there is a great deal of room to engage in obfuscation. There was more said in the hearing yesterday through what wasn't said.

The core of Bitcoin is young, resilient, and vibrant - for now. However, it can be shrouded just as derivatives masked destruction in financial instruments.

This. I'm finding myself to be... noticably uncomfortable.

Waiting to see what happens on the 19th, and will wait the six weeks until next year to allow the impact of these events to run their course.

It will be very interesting if Bitcoin and gold ETFs with no asset backing eventually blow up around the same time...

Remember this chart from the middle of last year?



The projections are exponential curves at discrete levels determined by empirical data, and there are four that I've focused on. At the bottom is an approximately 4.40% weekly growth rate from the beginning of market price availability (sourced from Bitcoincharts.com MtGox data). Next up is ~5% weekly, followed by the post-2011 bubble at ~5% as well (not shown). I found the latter level intriguing because it was the first external use (Silk Road) with a significant impact on the system.

Finally, the current weekly growth rate. That happens to have accelerated somewhat since I made the above chart, from just under 6% to about 6.7% per week.

At the end of December 2012, the above levels for the week of November 11th were:

• 4.40% $101.27
• 5.00% $266.74
• 5.00% $389.56 (post-2011 bubble)
• 5.95% $1224.52

As of this week, the current growth number puts the value at:

• 6.74% $4,298.90

My estimates have been particularly conservative because there's a lot that could still impede growth (not stop it), and after watching gold for so many years I find it best to allow for extended listless periods. However, even pessimistically we should see $100k within three years.

It'll be interesting to see how the present regulatory coin validation fiasco flies with the dark wallet opposition potentially gaining major traction. In the end I have no doubt the Faustian gambit will crumble, but it'll be a vicious war. What will concern me is when western goverments promote Bitcoin...

Three points:

• Governments can change in the manner that businesses threatened by the open source software development model adapted. The long-term benefits far outweigh immediate negative reactions.
• Dollar supremacy is waning. Should other nations (Europe, China, Russia, etc.) mark their assets (esp. gold) to unleveraged markets, US debt would implode virtually overnight. Bitcoin stands to be a beneficiary of that event, as it has no debt foundation and does not recognize borders; likewise, it allows access to an international market simply by holding.
  
  Having XBT on the books would offset declining assets, particularly those held by the Federal Reserve and numerous other governmental agencies. While Bitcoin may be a risky asset, there is a certain catastrophe looming - any option to mediate that should be pursued.
• The nascent Bitcoin economy has the potential to create hundreds of thousands of full-time jobs and independent contractors that do not require relocation outside of the US. This could also attract and renew international interest in American investment.

The fact that Bitcoin will thrive with or without the USG may be too confrontational, but it is a relevant item as well.

The last dozen pages of replies from everyone have been phenomenal. A few comments as I see things:

• Exponential growth is indeed occurring, and wallets are approaching a point of usability and integration that will accelerate that rate
• Decentralization is the near future; a flat social model that does far more than connect geographical regions
• Bitcoin is one of several protocols that form a 'subconscious' of sorts for what humanity is creating through technology
• The systems that will enable growth are already in place, and expansion of them is on the verge of making traditional infrastructure irrelevant
• Velocity of available coin supply does indeed influence value, much as water pressure affects flow rates - the available supply ought to eventually grow in proportion to the total in existence

This is not so much about oppression and struggle, although those are elements of the process, but more about creation. What will potentially emerge is an immensely connected, hyper-dense fabric steeped in abstract realms.

We will probably end up thinking about this period as weeding out incompatible participants, which is why I see gold as still being relevant for a time. When crypto has won out, the physical illusions will finally fail - but that remains a ways off.

The systems and functions that emerge atop these 'subconscious' processes are yet to manifest. Those will make what we're speculating on into reality - singularity style, for lack of more descriptive terms. It may be possible to roughly equate routing protocols to RNA in biology, with Bitcoin and other crypto structures equivalent to DNA.

In the meantime, the more distributed precious metals ownership is, the less damage governmental control will be able to cause. Crypto ownership by government is less of a concern because their power rests in physical domination, and assets that are transparent remove the ability of such governments to maintain illusions of authority and control (which is why I think we'll soon see direct efforts to attack Bitcoin).

I've long held the view that the transition is an accelerating process, particularly as written over a year ago in Off-Planet Economics. There are sure to be significant milemarkers along the way, and they reinforce the transitional nature of what we're observing.

As gold gains industrial, medical, and other uses that were impossible prior to more advanced technologies, Bitcoin will encroach upon its monetary role. Gold's exchange value will continue to have tension and won't collapse, short of a situation like that postulated in the above article. So the monetary aspect isn't going to disappear anytime soon, even if it is eroded by crypto - I find them much more likely to rise together against all other forms of money until crypto eventually wins.

Gold's transition should eventually result in extensive industrial uses, as well as medical. I seriously doubt it will ever be worth nothing.

Those were tail ends of the time ranges that had been calculated - I just like being progressively conservative

Gold is behaving almost entirely as expected, only at a greater magnitude. It's a process...

And to keep it on the record from August 11th, 2013:

That may be the point where all out war on Bitcoin is unleashed. While the price might not fade, persecution could rise.

Yup. I still say it's impractical and borderline reckless to switch to crypto fully, though. It's simple enough to straddle traditional and crypto, rebalancing as per fiat risk tolerance.

Qubes OS may be of interest.

Absolutely. When I can say more than that it's a big project, I will.

Yes, network connectivity with no catastrophic events, including breakage of the crypto through any means. That would be solved by other methods, but there is enough flexibility to accommodate rapid updates.

Widespread proliferation expected within three years, regardless of which project takes the lead; who builds out doesn't matter, only that it happens. With numerous competing projects, some will undoubtedly be more prominent than others in certain areas.

It's developing rapidly, and will provide Bitcoin services in the near future. One sticking point is wallets - they still need to mature further before mass usage is realistically feasible.

If there are no catastrophic events, the "Internet kill switch" will be a moot issue within three years. There may still be the potential for continental separation, but methods exist for communication even at transoceanic distances without relying on cables or satellites. With geographically diversified mining resources, Bitcoin will be effectively unbreakable at that point.

That is when Bitcoin will start truly eroding gold's position as a monetary asset, after fiat currencies have been proven bettered by crypto.

West duped. East rising.

The DPR fallout continues.

While some wealthy individuals have hopped on board, it's still too new of a system for most as yet. This is where they, having thus far remained largely dismissive of Bitcoin, will really start to take notice. If Bitcoin continues to protect such a large amount of wealth from confiscation and taxation, there will be inflow. Hopefully DPR used an m-of-n method, or chose a truly random key/passcode to secure the wallet.

At the same time, the enormous dam holding precious metals back is crumbling rapidly. Of course, the gains in monetary metals will be less than Bitcoin because of the greater potential from growth of the latter. Regardless, diversification is a wise strategy.

The internal dynamics are having a large effect as well. We've entered the 100-200mm difficulty range; things are going to get very interesting from here on out.

From 2003-2005, a foundation of ~$7 was established. In 2008, silver was knocked down through the 18 level to sub-$10, right around $7 again.

During 2009, a grind up from $10-20 took place, followed by over half of 2010 spent breaking through $18 for the third time.

With the 2011 spike and subsequent two-year grind down to test $18, the same pattern of 2003-2008 is happening at a greater scale.

Trends are still the same, including fiat debasement. Fiat is also the most significant wildcard. Your perspective on buying declines is a long-term one that is well suited to this situation, even when working with paper prices.

Paper can go negative.

Physical can hit a discount to face value, most likely if the seller is ignorant of the market - many westerners.

Realistically, small sales not going through established dealers are a crapshoot at this point. I'd say high teens.