Oh boy... here I go!
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 $30 million a year in with that sort of limit imposed. Yes, that limit can be removed by providing verifying information, however, the scale we're talking about is going to take institutional investors. Will these institutional investors be willing to lose their anonymity to invest here? And even so, the next is my biggest concern....
Everything you have said there is true, but might lack some important information, or rather deductions.
For the sake of argument, I'm willing to assume the daily 1000$ limit will stay the same in a worldwide competition of exchanges, each of them in a different jurisdiction. (I hope you see how this is hard to believe.)
Even if the amount of bitcoins to be sold was as high as you think (which I doubt, many are simply saving them), exchanges are only
one method of getting BTC. I got all my BTC by buying directly from miners.
Another method, which will not be shown when you look at numbers on MtGox or TradeHill, is to sell or work for BTC. This is at the moment wrongly overlooked, because it is way easier for a merchant to accept BTC
than any other currency. Once again: a merchant can setup is own business and start accepting payment without a single call to a bank. You want to try a little website project? Use Bitcoin! So in response to your first concern: you don't literally need new money to come in, but rather new value. What is the value of a monetary system without the need of a middle man? No overhead, no paper to fill, no delays, no frozen account. This is a good news for everyone producing something of value.
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.
The network effect is in play here.
Can I go and make a website identical to Facebook? Sure! (Please don't bring any intellectual property argument - there is more than one country in the world, many in which it is perfectly legal to do so.)
But if I make such a site, who will come? All your friends are already on Facebook...
The same thing is true with Bitcoin. The websites are being developed for BTC, the exchanges in place are for BTC, the
name Bitcoin is known! (Brand power)
The other argument in favor of BTC in this case is the blockchain. The longer it is, the harder it is to counterfeit. In addition, the current hashing power in the network is
huge, making it more secure than any other wannabe Bitcoin clone.
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.
There is no such thing as bad press for Bitcoin in the current stage of its development. All you can do is attract new users. Current users know when articles are BS.
The lack of merchant is temporary. If you have looked at the wiki merchant's list a month ago and compare it to what it is now... wow, simply wow!
If it isn't already done, you might want to look at this article:
http://falkvinge.net/2011/05/29/why-im-putting-all-my-savings-into-bitcoin/1PNxesEoWQViHZ8BSjpodqmBB9RpbWFVhT
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