Looks like someone noticed the immense information gap between China and the rest of the world, based on how much confusion the PBOC announcement caused, and is exploiting it to manipulate the market during this slow holiday season. Yet another round of cheap coins for those astute enough not to fall for it. Enjoy!

I don't think that's a useful definition of "backing," because it just means utility. If people mean utility they should just say utility. If there are people who use "backing" to mean simply utility, they are either using an ahistorical/nonstandard definition for something much simpler, or they are confused by analogy with centralized currencies.

The term "backing" is completely meaningless in the context of Bitcoin. Backing means that a FIAT currency CAN BE REDEEMED for some commodity, since that fiat currency is nothing more than a promise not to inflate too much.

Bitcoin is not fiat, it can't be inflated, and it doesn't rely on promises, so it is meaningless to ask what it is "backed" by.

Backing is about people pathetically pleading to their government to please not destroy the value of the pieces of paper they are forced to use as legal tender, to please ostensibly allow people to trade it for gold or some other store of value in order to build more TRUST. It has absolutely nothing to do with Bitcoin, and that's GOOD.

It takes time for people to research Bitcoin and learn how to store it, etc. You think people are just going to see the news and know what the hell to do to make a secure wallet? That they even comprehend what Bitcoin is after seeing it in a news article? It takes several weeks at minimum, and the price just rose nearly an order of magnitude. These are seismic wealth increases for holders so they are being sold into, as should be well expected. Do you expect an early adopter to maintain a 90% crypto portfolio, and then a 99% one, without rebalancing!? Until the media hype overpowers that effect, and it does look like this past week may be getting there (meaning a boost a few weeks from now), the price will consolidate.

Not included are all the efficiencies Bitcoin will introduce into the economy if it goes mainstream. A fully internationalized, frictionless division of labor will be an incredible boon to the economy. And there's so much more. I think a price target of $100 million, conservatively, is more realistic.

If Bitcoin goes big, it pretty much has to go whole hog. We are witnessing nothing less than a global transition from physical goods and trust-based money to an unimpeachable universal asset ledger. Anything else will look archaic by comparison, and the value added to the economy in the next 10 years will blow even these first 20 years of the modern Internet out of the water.

Yet more smart money understanding that Bitcoin is a store of value more than a currency:

Paypal President David Marcus Owns Bitcoins, Says Bitcoin isn't (Yet) a Currency but a Store of Value

The accelerating part of the S-curve is only ever exponential growth. It just starts to feel "vertical" to us humans at some point. It doesn't ever go faster than exponential growth (in the ideal curve). The first half is exponential growth and the second half is logarithmic leveling off.

Not exactly a new paradigm, but if China had never exploded (in its own much faster exponential move) we would still expect the exponential trendline to hold. But China did explode and is now a major player. Unless we expect China to go back to where it was 8 months ago (x4 for slower exponential gain on the main trendline), shouldn't we count China's jump-in as a one-time bump to the trendline? Perhaps 30% up? That would mean we're still less than 2x the trend and could go much higher in this bubble.

Anyone who follows the SSS should move up in the ranks versus those who don't (except lucky ones who forget or are unusually bold, but those people have to be pretty rare).

On China's Bitcoin strategy:

http://www.reddit.com/r/BitcoinSerious/comments/1sbtke/chinas_recent_guidance_great_for_bitcoin_in_china/

A recurring theme: http://archive.freecapitalists.org//forums/t/32931.aspx

Billing Bitcoin as a currency may not have been a mistake at the beginning, like in 2009-2011, but ever since then it has been. Oh well, more money for the people that get it, like Barry Silbert, Chamath Palihapitiya, and the Winklevoss twins.

Also, I don't recall hearing that people couldn't do trades for goods and services with Bitcoin. It sounded more like they meant Bitcoin should not be considered legal tender, or should not be considered official government currency. Which is pretty much a non-announcement.

Thanks for the input, gents.

I was thinking the goal was to maintain 80/20 ratio, but actually it should be to bring your holdings to this ratio on the way up, but not on the way down.

Anything else is getting into trading and should be left to advanced traders, or perhaps with a very small percentage just for fun.

He missed one of the best positive effects: distribution of coins to new people.

Yeah but the interesting thing is it's probably individual officials buying mostly, rather than having some kind of government treasury hold wallet data for the government as a whole or any department. Bitcoin is so good at what it does that it could rip these bureaucracies apart, since for the first time each individual's wealth isn't contingent on the web of trust in the political world. It's a way for even government officials to opt out. And of course not just in China.

I'm not the only one who was predicting "go to quadruple digits, crash, then level out in the mid/upper hundreds." Looks like we're getting better. Crash to $266-ish hasn't happened yet, though.

Holy shit that's the missing puzzle piece (in the conspiracy theory)!

It's well known that China has been encouraging its citizens to stockpile gold, probably so they could confiscate it if needed and as a way of making their citizens richer (a sort of leveraged play on gold).

I was thinking they might be doing the same thing with Bitcoin now. But the problem with the theory was always that they can't really confiscate bitcoins. However, they can sort of do it by manipulating the market and media, laws, etc. It's exactly what you'd expect a powerful and strategically cunning government to do.

It's actually a pretty great strategy. Get your citizens to buy, and if the price goes down it's the same as if they gambled it away in Macau. The government loses nothing much. If the price goes up you get more tax money and economic growth, and then with your strong control of media and everything you can "shake the tree" and still be able to buy in yourself at decent prices once Bitcoin is more solidly a thing.

Lower risk and higher reward than just buying in with your own money right away.

I had a bid at 560 on Gox, just missed it :/

In other words people can use it but not require anyone to pay with it. Same as gold, silver, etc.