Who believes that Bitcoin is in a bubble? If so when when do you expect to see Bitcoin start to take a turn downward?
The only answer I can give to this is... maybe.
The obvious downside is that this is not widely adopted, and people around the globe avoid it or use something else. This could happen for one of several reasons. 1) There is a technical flaw that compromises the integrity of the protocol. Either this is caused by a compromise of the fidelity of the data, or possibly in scalability issues. 2) Government regulations get enacted globally that make it cost prohibitive or to risky with regards to personal liberty (e.g. jail for using it). 3) It simply doesn't become widely adopted as a storehouse of value or as a currency. 3a) A competing currency comes along and removes all value. If there are others, I'm willing to add to the list. But any of these could cause the value to drop back down to $0-10.
Now the upsides are that if there are no technical flaws discovered (it stands the test of time) and can scale up to handling mili- and nano-BTC transactions, that most governments do not make prohibitive restrictions (or people just ignore them), then it may become a generally accepted standard as a virtual currency. Effectively creating a wholly new type of financial transaction that really hasn't been seen on the planet before. In that case, it is revolutionary. In fact, it's not even that. It's just a different form of a storehouse of wealth. Hell, remember that swaps are only about 30 years old as an instrument. The Chicago Board of Options was established in 1973... and (quoting Wikipedia)
As of approximately April 11, 2007, the Wall Street Journal estimates that globally the market capitalization of the derivatives markets (futures, options, swaps, etc.) exceeds 450 trillion dollars (while US stock exchanges have approximately 30 trillion and the rest of the worlds stock exchanges total to about another 20 trillion, to a total of about 50 trillion--while the global fixed income markets total to roughly 65 trillion).
So what is its value?
The global economy (the value of all broad-based money supply in all countries either as cash or cash deposits or near-cash deposits) is 50-60 Trillion dollars. Gold is 8 Trillion. Google did 50 Billion in revenue last year, virtually all "online", and is valued at $235 billion. And right now, Bitcoin is valued at about 1 Billion. And bitcoin has unique advantages that other currencies do not. It can be anonymous, transfer instantly with little transaction fees, and can keep it's value at millions of dollars or to the fractions of a cent, and is set to be scarce by design. Merchants who accept it, through services like bitpay can make instant transfers into USD/EUR. Plus the protocol has built in features that haven't been used yet, such as contracting (only confirming some but not all of the transaction to put it in an escrow-like state) and the possibility of using it for banking in the forms of loans. It can be used worldwide, by anyone. .... Is there a value in that? And is that value only 1 Billion ... or more? There's 2.4 billion people who use the internet. How many of them might have a use for a virtual currency like this?
People want to look at this and say it's a bubble. But is it? Or is it the market is immediately starting to recognize the potential and it is (with as near instantaneousness that the market can achieve) automatically starting to price it accurately. Where would you price the value of not just Yahoo or Google when they IPO'd, but what was the value of the Internet itself in 1994?
I think it is still undervalued. I think 10B is still globally undervalued, on the assumption that more merchants start to accept it. That's if it becomes a defacto virtual currency.
And again, it could go down to $0.
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