That is a reasonably strong counter-point. I have also thinking there would be a rush into crypto-currencies to avoid the coming wave of confiscations as the global sovereign debt crisis reaches the SHTF end game.

However, I am observing that the vast majority of investment money in Bitcoin is from people who expect gains, and do not expect the doomsday outcome of confiscation. Thus they will exit and since the float is so minuscule even they were a tiny minority, it won't take much cashing out to prick the bubble and send a stampede to the exits.

So our concept of holding value as a safe haven won't work if the value is collapsing.

Thus I am speculating that a collapse of Bitcoin circa 2015 +/- 1 year, will send massive stampede into gold and silver (the capital that wasn't already in Bitcoin when it collapses), assuming there is no viably superior altcoin.

Ponzi-bubbles eventually return to their intrinsic value. The logic is presented in that linked thread. I don't know why it is so difficult for readers to comprehend that investors only stay invested while gains accrue. Eventually the supply of greater fools ends, then the value has to be supported by those who hold it not for gain, instead for use as a currency, i.e. its intrinsic value. An investor would sell that point (retaining only enough needed for spending and rest moved to an investment which can accrue more gains), because gains would not continue to accrue and Bitcoin pays no dividend because it has no income (note BitShares is an altcoin that claims it will have an income and pay dividends).

If you could argue that the masses will use it as a currency (which I think is impossible), then that value could be higher than the current price. However, you are asking what the valuation will be otherwise.

Edit: I did an estimate of Bitcoin's intrinsic value earlier this year.  Compare with the past performance of wider-eyed estimates.

Because that would be an incredibly small market cap. One fact is the richest 3% control most of the money, but the masses (the 97%) spend most of the money that is spent.

 "Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States" by A. A. Dragulescu and V. M. Yakovenko

No. I think computer scientists are also not capable of doing due diligence on bitcoin. Only an economist who is also a computer scientist can. I believe I have that rare combination (MoonShadow would of course pounce on this and try to attack my credibility as an economist, and I will let my posts on economics stand on their merits for each reader to judge).

Do you really think Bitards would listen to me even if I tried my best to sugar coat what they don't want to hear?

I believe that judgment of arrogance is for the most part "this is the only guy telling us what we don't want to hear, thus he must be arrogant".

I state what I believe to be correct. I correct myself when I am shown to be wrong. Like any human I am fallible and not omniscient. For example, look at this mistake I made last week. See the overall discussion.

What I don't appreciate is arrogant novices who litter me with nonsense arguments (argumentation by ignorance = filibuster) because they don't have the capability to comprehend, yet they think they do. This is the Dunning-Kruger effect. I don't have this problem usually with a knowledgeable developer such as JoelKatz because of the objective difference between objectivity and subjectivity. I would think they would appreciate the DD I am doing for them, and appreciate the opportunity to weigh all arguments. Instead they are so emotionally and financially fixated on the Bitcoin dream, they will aggressively resist any counter-balancing DD.

I am not referring to you. I am thinking more of some of the posts in Transactions Withholding Attack thread or some of the posts I deleted from the ponzi-bubble thread. You did not go on and on asserting your certainty without a logical argument or argument by ignorant filibuster.

No.

Amazing you would throw all your confidence into something that you are incapable of doing due diligence on. DD is a fundamental requirement of value investing.

I don't know yet either if the problem in the OP is widespread or not. I read many threads in the Bitcoin discussion subforum about delayed transactions. And most of the replies appear (on quick glance) to be of the sort, "you dummy, you need to include a transaction fee".

A full client was not run thus have no way of knowing if localbitcoins actually propagated and what transaction fee they included if any.

I do know that the same transaction worked between all the same parties before the recent increase in price. So appears that what changed was not the parties but rather the Bitcoin network! That is a fairly strong circumstantial evidence. However, circumstantial evidence is not proof.

As for people rebutting me for example on the Transactions Withholding Attack, no one has. Only JoelKatz was knowledgeable enough (an actual developer) and he conceded.

The rebuttals from non-developers are basically useless, they don't have enough technical knowledge and thus they have holes in their analysis.

I may have holes in my analysis and it will require a developer to debate it with me. So far, I have posted all the counter-balancing caveats I am aware of.

The world is seeing the introduction of a new currency. To understand what this can do, it is useful to look at the 'ad absurdum' argument of radically changing the currency asset.


Imagine a pretty island economy. Everyone goes about their business as usual. For as long as people remember they have been using black shells as their currency. Some people that have worked hard and done well have hoarded socks full of the black shells. They feel pretty secure they can live out their lives wanting for nothing.

Now shock horror! The people of our island wake up the next day and suddenly only white shells are accepted in the economy. People still working can expect to be paid in the new white shells and life will go on pretty normal for them. But those people that had hoarded the black shells can find themselves poor overnight. And other people that just happened to live on top of a pile of formerly useless white shells are the new wealthy elite.


Bitcoin has the potential to create a big change the worlds wealth distribution. Like a reshuffling of the cards. But don't expect those with a big stash of the old currency to take it lying down. Soon they will realize a switch is going on, and they will rush to get into the new wealth asset. This will be the great tipping point where the future distribution of wealth is decided.

Only a technical neophyte would make such a nonsense proclamation.

Programmers know that we must verify what is causing the problem, before we can pronounce if the problem is due to contagion of issues in the protocol itself.

That is not as meaningful as a bonafide report of a problem between the two major third party transaction services for Bitcoin, localbitcoins (100,000+ customers?) and bitpay (10,000 merchants).

Even if 95% are not having any problem, that would still be a fail for Bitcoin. 5% failure rate is not tolerable. Even 1% is arguably not tolerable.

What would be meaningful are some statistics on the failure rate. If anyone has them, please share. Especially recent stats since the price and volatility went crazy in nominal terms.

This economy does not deserve to be saved.

It's a centrally-planned murder machine designed to enrich Manhattan and DC while bribing the Baby Boomers with the auctioned-off livelihoods of their grandchildren.

Isn't the US dollar already a "digital currency"? It's not backed by anything.
The biggest difference between the USD and bitcoin is that it's government controlled and there's a paper version of it.
If a government creates it's own cryptocurrency, what difference would there be between their current currency and their new cryptocurrency?

i know there are a few solutions out there already for ATMs
do you think it makes sense to release an open source solution? i've created a working one over a weekend at a conference i run http://www.geekcon.org/geekcon-2013/bitcoin-atm/
wanted to know if the community sees it as something sensible to be released as open source
if it's an open source ATM any shop can have one at lower costs, self management, and most important - can't be shut down by the regulator b/c it's not a company...

would be happy to hear your thoughts

Can't you read what I posted 3 posts above yours?

3) To get to prices like $10,000 is possible in the not to distant future, but for it to happen international transactions have to become the norm using BTC. For that to happen, good price stability is required. You can't make a transaction if it's going to change 10% by the time it's delivered.

4) To get to $100,000 it probably needs to deal with most internet transactions and the holdings of a large portion of peoples personal bank accounts. (Think most people with balances under $10K).

if you need to write a prenup then you have failed already.

not just the fact that the 'other half' may leave you someday to think a prenup is needed, but also that you dont have a separate bank account/ paperwallet to put YOUR hard work into.

most successful marriages are where both people only put in a percentage of each of their personal earnings into a single pot. then if divorsed its easy to manage who owns what and what needs to be split by checking which account paid for it.

EG my new car paid with my bank account = mine after divorse.
the house paid for using the joint account meaning the house gets split.

if you manage your funds right from the start there are no need for special contracts, only trust. and if you cant trust someone.. dont marry them