+1

Now THAT is the kind of example you can draw some conclusions around.
People that know about bitcoins aren't arbitrarily searching for the term "bitcoin". However, people that are looking to buy bitcoins would indeed search "buy bitcoins" and be taken to their respective exchanges. More buyers generally = higher prices, assuming that supply has stayed relatively equal, or at least has increased proportionately to the increase in demand without exceeding.

On the other hand, seeing a steady search for the term "bitcoin" could also allude to the fact that more and more people are learning about bitcoin, as mentioned previously, people that already know aren't going to arbitrarily search for the term. Therefore, to keep monthly search volume going on par requires roughly the same number of NEW people to be searching for the term, thus increasing the number of people that know about it and likely increasing the market (demand) for the product. Not only that, but with barrier to entry getting ever stronger, that same supply of people are not remotely as likely to become equal suppliers, thus keeping the supply capped while demand increases drastically.

+1

It helps to think of Bitcoin more as a commodity than a currency. As was pointed out previously, gold is a great "store of one's wealth" but that doesn't mean that all of the gold in existence is worth as much or more than the worlds money supply, and it likely never will. Bitcoin will scale in value to the amount of people that want it, and the amount of it there is in circulation.

Another good point that someone brought up is that the annual transaction value is more important than the market capitalization of Bitcoin. Should the Bitcoin "economy" be a 20 trillion economy, it's actually very possible that the total market capitalization could end up being less than 10billion, etc. (These were arbitrary numbers)

It all depends on what people want/use bitcoins for. If it were to become a common currency for digital purchases of all shapes and sizes, the market capitalization would not matter so much, because the "economy" would be an outstanding transfer of dollar value and fuel the market by momentum.

I'll cheers to that, mate.

There will always be a power struggle, definitely. However the only real way I can see them fighting back is by lobbying internationally to attempt taxing the living hell out of every bitcoin transaction while also imposing strict "trade" regulations for the acceptance and transmittance of bitcoins. Their goal of course, would be to make using bitcoins so expensive and such a hassle that users drop it all together.

Why this doesn't worry me: Look at what independent developers can do. They're always three steps ahead of any authority figure when it's a good cause. We've got more heads around, more interest, and more devotion. Just look at Amazon, and how much tax they have avoided (and saved their shoppers) by working around the rickety system. The central banks will be forced to stick to backwards regulation and taxation as well as a "safe and friendly" smear campaign, which would entail over-quoting scam rates and the caliber of loses to try and scare people off. Any direct affront to bitcoin would insight global unrest, at this point. If there was a chance for them to snuff Bitcoin quickly and quietly, I think that time has surely passed.

I guess we'll see though, I'm curious to observe what happens. Lord forbid they try "easing" the bitcoin market by buying up, leveraging, and selling mass quantities of coins to drive down the price. The easiest way to combat this scenario is to not have people use any future bitcoin "bank" that is federally affiliated, which there likely will be (because this would give them the resources at hand to work their magic sheets and a likely way to "control" the bitcoin market), thus choking their leverage funnel. If their leverage is properly canned, they would be little more than Market Makers which are actually good for the system.

The last "possible" scenario I can see is that they are currently buying up bitcoins bit by bit very slowly. Since they would have the capital (however fake it may be) the value of these coins would be the equivalent to grains of sand in your wallet. If they're smart, they are buying them up now and keeping it quiet so that when the time comes and is deemed necessary on their part, they would inject every last one into the market and crash prices. Countering this would be a bit harder, and really depends more on the resilience of the community. Most people can't stomach a drastic cycle like this and would sell off. However, if there were enough people with enough capital, we could buy up the ultra-cheap manufactured liquidity and prices would recover rather quickly as the majority of bitcoins returned to the people that respect them.

Curious, curious.

The cost to make something does not give it value.

My idea of bitcoin and the regression theorem is that maybe it applies maybe it's too much of a stretch, but it doesn't matter. Like the vaccine/evolution comment implies, just because there is a known route to something doesn't mean everything needs to take that route in order to work.
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Oh I know and I agree with you. I was just trying, and failing, at playing devil's advocate. Next time, Gadget.. Next time.

But couldn't you say that the resources were exhausted and therefore the remnant of them is the coin? I'm not referring in this case to an exchange, but that the bitcoin itself is an extension of the very things it consumed in being created.

Though I suppose on second thought that isn't a very good parallel, since we do not think of dollars as having any value for the paper they are printed on (though we theoretically could).

+2'd

Let's not forget that a fixed aggregate creates scarcity, which in turn fuels supply and demand from which (among other things) the value of the currency is derived. Having a moving target suppresses and in some cases destroys any chance of a stable market forming.

I don't see any facts that are wrong. In fact if he really wants to argue the idea that there is supposedly nothing backing bitcoins, you can pull the Ace and say that the original value of a bitcoin was equal to the electricity (electrons, copper wire degraded, silicon & chipsets depreciation) that went into the creation of it. On top of that, because of those qualities and the fact that they were packaged into a nice little electronic token gave a slight buffer not to the intrinsic value but to the perceived value which, again, can be traced back to what the perceived value of other commodity currencies were at their own times.

I think you're spot on.

You got the retail banks right, aside from a few details like proper savings and lending to the "average Joes" which, as you can see on these very boards nobody wants to deal with because of the quantity and quality of scammers which is not unlile the real world, we as regular people are just never directly on this side of the table. These services and options WILL be wanted by people using bitcoin as an every day currency. They WILL want a place to go that has the capital and the process and the discreet-ness (not even a word) to fund their private loans.

However, let me shed some light on what an Investment Bank really does, instead of what you read/heard on CNBC. Investment banks act as a sort of mediator bank similar to retail banks but for businesses. Of course there are some extra services unique to businesses but they handle large business transactions like acquisitions and whatnot as well as financing needs which become a lot more complicated for businesses. They do not operate in the holdings/savings portion of "regular" banks.

What an investment bank really does is help businesses expand and better themselves. Have a website that sells trinkets and you want to also sell widgets? Well, instead of spending years building a separate business that may fail, an investment bank will help to find a seller of widgets that may be willing to sell the business, everyone is happy! Someone made a lot of money, another grew/perpetuated their business, and the investment bank did the work of setting them up, detailing the terms, and almost acting like an escrow in a way. Think of the mining companies that good ol' James T. Everyman sank his life savings into buying a mining rig. Sadly, he didn't look at all of the expenses and is going under and will have nothing to show for it. An investment bank can connect him with someone that is wanting to expand and can show him how to run it better or just cash him out and he then has a safety net as opposed to before. There are countless GOOD things investment banks do, so don't believe that the bullcrap Goldman Sachs stories are how the whole industry is. That is one bulge bracket bank that had a grand total of five or something people that actually knew they were doing something wrong. Go look up how many boutique investment banks there are around and then do some simple math and you will see a really surprising percentage of investment banks that actually have records of "wrongdoing".

Lastly, bitcoins are no more a risk to central banks than gold is currently. People can own it if they want, they can trade it, they can do whatever they please so long as there are consenting parties. That is all currently. However, what will make Bitcoins a threat to central banks is people running around claiming and persuading others that Bitcoin should be the only currency, which will not be happening in our lifetime and probably a few more lifetimes (evidenced by the fact that the Euro is the closest thing to a "globalizing" currency, albeit confined to a smaller than truly global area).

The fact of the matter, regardless of what is currently happening, is that we need banks to live our lives the way we do. To quote the movie Margin Call: (this may not be exact, forgive me I'm out of pocket at the moment)"They need us, they need us because they all want their fancy cars and big houses, and the only reason they can have them is because we have our hands on the scale tipped in their favor." Banks "create" the artificial value that we use to conduct our daily lives in terms of spending outside of our immediate means like home and auto financing.

Long story short, the banks have zero reasons to want to "Destroy" bitcoin unless everyone was to abandon their currency entirely for bitcoins which is increadibly unlikely.
Moreover, if you want bitcoin to become a global force of significant strength and influence under the direction of free men that want to live their lives as such, we will need the banks, all of them sooner or later.

That very could well be, if you were looking for entry by piggy-backing off of the influx of used rigs being sold I could see that potentially being profitable. That is, however, dependent on your speculation for the time-frame of ASIC release which could totally end up being true and worse(or better?) yet -- it could take even longer. In this case, I would strongly suggest finding some deals being offered and analyzing each in their own right on the merits of the technology and the income over the time period you believe will be open to "exploitation" while people wait for ASICs.

I could definitely see it being "profitable" for you in terms of getting your hands dirty and, who knows, you could even make some cash from it. Good luck to you! I wish I had the technical know-how to get in and set some of these things up myself.

I'm an investment banker & financier, honestly I am here because I see the opportunity to get into something "big" while it's still relatively "small" and make some money while I help contribute. Particularly, I'm here because I want to be in on the businesses being made and conducted around bitcoins (did I mention that I'm one of those mean ol' investment bankers? ). These businesses need financing, they need to expand and develop, and I want to be here to help them and make the bitcoin network stronger.

As an investment banker and all-around financier, let me assure you that banks will never try to "destroy" bitcoin. In fact, as someone mentioned earlier in this post, banks will LOVE bitcoin, that is, if they don't already have a finger or two in the pond (you would be surprised what banks do under the table).

Let me explain:

Why were banks originally created?
People learned two things, one: that their money wasn't safe under the mattress, and two: it actually lost value sitting under their mattress due to inflation. Banks were created foremost as a "secure" place for people to put their money.

Doesn't this sound a little like something Bitcoin users could get behind? Hacking is all too common, and your wallet is all to unsafe no matter what you do. Of course, there are "extreme" ways to get around this, but most people (and I 100% assume "most people") aren't willing to put up the work to create these ultra-secure wallets. On top of that, they aren't exactly so secure when it comes to things like you dying with your life savings in it leaving your family with no way to access them. Were a big enough bank to come around with the financial backing to insure funds, a bank storing bitcoins would have plenty of users flocking to them, especially after being hacked once or twice.

Secondly, you're forgetting all of the money there is to be made with bitcoin. Bitcoin is more of a commodity than a currency, however, remember that all currencies either were or were backed by commodities in the beginning of trade. Any commodity will have a value tied with it, and it seems to me that Bitcoin is beyond dying at this point, with over half the amount that will ever exist already mined. Some big players are getting involved in the game, for instance: Bitpay just secured half a million in angel capital the other day. As we approach the limit of bitcoins that will ever exist, behavioral finance would tell us that we will react to the idea of scarcity more severely towards these upper limits. Banks, money managers, and investors have another commodity to invest in and that alone will keep the community going. That is the end-all be-all. As long as there is money to be made with  minimal risk of losing it, bitcoin will flourish. The first people to want in on this action? Banks.

You should look at this situation more as the rare opportunity to get into an investment before the really big players (i.e. banks) because when they decide to enter, you can both cash in a little to give them a stake as well as retain the rest as it appreciates while the institutions pump money and take liquidity temporarily out of the system. When this happens, the value of bitcoins will increase.

Howdy Fresca,

I agree, the limited options aren't exactly ideal but I don't foresee that changing anytime soon. As DeathAndTaxes pointed out above, the fraud/reversal rates are laughably high (I only say laughably because I'm a cynic). I'm also scoping out my options for getting into the mining business, so I will recommend you do as I am currently doing. Continue reading up on the ASIC market, the impending change is drastic which creates a large amount of unnecessary risk in terms of buying new equipment at the moment. I'm waiting for ASICs to hit the market, and even then will wait at least 1-2 months to see some stability in the market before attacking any sort of profitability numbers.

I am, however, doing some GPU mining on the side as a "hobby" while I wait. My laptop has just what it needs to make the operation a little better than breakeven, so I'm basically getting a slight discount on my coins. I'm a financier and an economist, but I don't have the technical know-how to predict what ASICs will do to the market and that is something that I don't want to be on the wrong side of.

Howdy, I'm an investment banker, financial planner, and venture capitalist. I actually was following the bitcoin community a few years ago but left when it looked to me as though there was no hope (boy, do I feel stupid now, I'd have quite a bit of money). In the past month or so, I've noticed that the community and mechanism has gotten a lot stronger and I want to get back into the game. Particularly, I have spent most of my time studying the markets and the mining operations. I'm hoping to get together people to invest, as well as provide my services to companies for financial reporting/business development (primarily in the areas of mergers & acquisitions, IPOs, etc)

It's good to be back.