^ I think you answered your own question



In case it's still not clear: http://www.youtube.com/watch?v=NG1qooBzE2w

China went beyond exponential this week (see weekly chart below), so it probably should correct to around 1150 or 1200 for a bit, or at least stay at its current level for a while (a day? a week?), before going higher. It could also overcorrect, or it could just plow ahead without caring. Anyway, too much watching the short-term charts will fray your nerves.



Here's the 30-day chart for a bit more perspective. (Anyone have a log chart for BTCChina?)

OK, but don't be the guy who chickens out and sells when the price crashes 80% on its way there, because that kind of rise will be gut-wrenchingly volatile.

The rising price and stronger infrastructure attract more people and capital in a self-feeding cycle of exponential growth. There are plenty more factors that have yet to open Bitcoin to the masses, such as wallet security (Trezor, etc.). Second Market opened exposure to the wealthy less than a month ago. A year ago Second Market wouldn't have done the BIT, because the price and infrastructure weren't there. Each achievement unlocks several doors and reveals many more. Almost everything in the Bitcoin world, most notably the price, is mutually reinforcing.

Differentiation-wise, it seems Bitcoin is differentiated out the wazoo from fiat currencies, so no issue there.

As for differentiation from altcoins, first there is network effects, history, first-mover advantage, the strength of the development team, and inertia (including standardization). Inertia can be disturbed in some extreme cases, history can eventually become relatively more equal but the speed at which that happens is very limited compared to the speed at which the cryptocurrency revolution is happening or the speed of network effects. Bitcoin has such an overwhelming lead in all these areas, and there is so little innovation in the altcoins so far (and any new ones would start with no history) that it would take an amazing development for one to overtake Bitcoin - and Bitcoin users would be better off in that case anyway, since they would be among the first to recognize the investment opportunity, as well as having a better system in the end. That's supposing its features weren't just incorporated into Bitcoin or added on top of it like Mastercoin.

Good money drives out bad when there is a free market, so the best coin will always be dominant, and the great importance of track record in the cryptocurrency world will ensure that the leader cannot change easily.

EDIT: Here's a decent summary of why altcoins aren't anything to be worried about.

Well, that's a government-subsidized bubble. If the Chinese government is backing Bitcoin, of course all bets are off. We are going to Pluto.

This is a major one I think. There was a huge contingent of people who thought Bitcoin was powered by SR. Probably everyone suspected it to some degree. There was another big contingent in more official/business circles that worried about the SR association. The shutdown of SR greatly soothed the latter group's concerns and the price action following the shutdown pretty much obliterated the former group's concerns.

More big reasons.

The sting of $266 is still relatively fresh (about 4 times as fresh as the sting of $32, though that sting was much worse as price slid slowly to 1/16th and stayed very low instead of just a flash-crash to 1/5th and consolidation around 1/2).

However, if we trust zhangweiwu's analysis this thing could go huge for a few days then crash in China, taking the rest of the world along for the ride. All just a side show along the exponential highway to $10,000 and beyond.

This recent price action reminds me of early March, so maybe we consolidate for a week around $200, double a couple of times to like $800, crash to $250-300, then consolidate for a few months in the $500+ range. But of course history won't repeat so exactly.

Remarkably accurate. Not just the price target but the speed at which we cleared 150-200.

Now that a bit of sanity has been imposed on the China rally they may continue in a more sustainable fashion. This is what price discovery is all about.

A clue to this little correction was available: I was watching Bitcoinity and noticed exponential curve shapes on the 30 day, 7 day, 3 day, 24 hour, and even 3 hour chart. When it goes exponential at all scales, that's when it's cruisin' for a bruisin' and any little thing will tamp it back down (usually only temporarily). That's something I'll keep an eye out for in the future.

How can it not be volatile when it grows this fast? That's the thing, slow steady exponential growth may happen for other technologies, but with Bitcoin there is actual money on the line for everyone, so it follows human psychology and has mini-manias where it gets overheated then smarter people step in and correct it. With Bitcoin you have to up your tolerance for volatility to match the speed at which the price is moving.

Looks like China's still very cognizant of the MtGox price, as of course they would be know it's a Western phenomenon and many getting their first exposure in MtGox pricing. Nevertheless, China wants to blow.

Finally a healthy correction. It's expected.

As China drags us upward, this is the kicking and screaming part as we get whisked past the big psychological barriers on China's terms, not ours.

It is when you're still tiny and have network effects via myriad channels.

This post shows what a bubble looks like, when the price is going parabolic not only on the linear chart but also the log chart, when the time between doublings is getting exponentially faster.

In short, a bubble in an exponential growth pattern looks like double-exponential growth - that is, exponentially increasing rates of exponential growth. For example, doubling every month would be straight exponential growth (a straight-line slope on a log chart), but doubling in a month, then two weeks, then one week would be double-exponential growth (exponential curve can be seen even on the log chart).

If you want to know when we're in a bubble, learn to recognize double-exponential growth. Study the four-year log chart daily to keep perspective. If you see curling upward even on that chart, you know people are getting carried away.

Yep, "kicking and screaming" hopefully through the ATH, though a correction and break before that seems likely.

Oh god, imagine a 2011-style bubble in China. Bigger and faster than the 2013 bubble (which is now looking more like an exponential upward correction).

So what you're saying is, panic sellers mostly only sell so they can get more bitcoins? Sounds good to me.

This fallacy that deflation means people won't spend is very persistent, even though briefly thinking it through demonstrates it isn't the case, at least not for very long. Deflation takes holders from (relatively) poor to wealthy. What do poor people do when they become wealthy? Keep living in their cheap apartment or car? Or BUY better stuff? They splurge. That is why bitcoin tips go up when the price rises and merchants do better when the price rises.

Exactly.