2013-11-16 Motley Fool: Is Bitcoin Really Going to $1 Million?

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http://www.fool.com/investing/general/2013/11/16/is-bitcoin-really-going-to-1-million.aspx

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If I'd once told you intangible coins would be the biggest gainers in 2013, you'd call me nuts.

But as we head toward 2014, Bitcoin has already put up 3,311% returns. In the midst of a bull market in Bitcoin, one headline reads "Why Bitcoin is Going to $1 Million."

A bit of reality
Even after rocketing to $450 per Bitcoin, the total market size is still under $5.5 billion. That's a tiny sum, smaller than the valuation of 969 public companies, and about the amount the government debt grew each day in 2009.

In the past 30 days, average volume at one leading exchange, Bitstamp, has been about $7 million. So it doesn't take much to swing the market.

And that's what has so many people believing that the price of Bitcoin can explode. As I write this, there are only 5,458 Bitcoins standing in the way of a $500 price per bitcoin. That is to say you could move the market more than 10% with a purchase of less than $2.5 million.

What happens if big money gets involved?
A big question among enthusiasts is what happens if conventional asset managers get behind Bitcoin. What if billions of dollars, not millions, were to flood into the market?

It's impossible to know, really. But what we can know is that the price would absolutely have to go higher. Right now, all bitcoins in existence are worth all of $5.2 billion. You couldn't buy $10 billion of Bitcoin at the current price right now. There isn't enough in existence.

The hedge fund industry alone manages $2 trillion. It only takes a few Bitcoin believers of the asset management industry to send Bitcoin to heights it's never before seen.

But at the same time, the opposite can happen. A single sale of 4,800 bitcoins would send prices falling all the way to $400, from $455. That's just the cold, harsh reality of an illiquid market. Relatively small amounts of money can swing values up and down with incredible force.

Bitcoin is the ultimate in speculation. It doesn't produce cash flow. There isn't any real way to value it other than to accept what someone else is willing to pay.

And given that it's a completely new idea, one never tried before, there's no way to know where it all ends. But for many people, it's become a way to dream -- a way to think that one day, maybe, just maybe, that $455 Bitcoin might be something more than pie in the sky.

[Carlton Banks]

But for many people, it's become a way to dream -- a way to think that one day, maybe, just maybe, that $455 Bitcoin might be something more than pie in the sky.

Buy, wait 12 months, dream comes true.


Nice little article, even though I would say that being a Bitmaniac (or whatever the latest jealous put-downs we're currently charged with  )

[exstasie]

But for many people, it's become a way to dream -- a way to think that one day, maybe, just maybe, that $455 Bitcoin might be something more than pie in the sky.

Buy, wait 12 months, dream comes true.


Nice little article, even though I would say that being a Bitmaniac (or whatever the latest jealous put-downs we're currently charged with  )

THat's pretty much my thinking when it comes to BTC.  Maybe, just maybe, one day they will be worth quite a bit and it will help me financial in the future!

[Carlton Banks]

But for many people, it's become a way to dream -- a way to think that one day, maybe, just maybe, that $455 Bitcoin might be something more than pie in the sky.

Buy, wait 12 months, dream comes true.


Nice little article, even though I would say that being a Bitmaniac (or whatever the latest jealous put-downs we're currently charged with  )

THat's pretty much my thinking when it comes to BTC.  Maybe, just maybe, one day they will be worth quite a bit and it will help me financial in the future!

Wait another 12 months, dream becomes absurd.

I always looked at it this way: what's 1/21 millionth of the fiat money supply? It's a fuck-load of money, that's what it is. Even if you're left holding 1 BTC after your paper backups burn in a fire and your buried plastic container with the USB stick in it gets ruined by water and mud, you'll still be doing the thumbs-up. The weariest thumbs up ever. Still thumbs up though. One thumb's a bit jittery from scrubbing the CD backup that still doesn't work with the clean cloth. Still, thumbs up.

[TraderTimm]

The overriding point that none of these articles want to make - or even acknowledge - is that Bitcoin isn't just a "new issue" or some currency pulled out of a politician's backside. Its a completely new way to have a medium of exchange that at the same time is its own payment processing network.

What we're seeing is two forces at work - one, the immediate gains being fueled by the periodic parabolic rallies we've all come to know very well, and second - we're tracing the even larger arc of a massive S-Curve which is "Hyper-monetization" as fiat flows back into something that will actually maintain/increase its spending power.

Think of it as a small hole in a submarine, deep under the ocean. The ocean - is bitcoin's potential. The hole is all the exchanges and local bitcoin traders, ATMs, etc.. It starts as a small leak, then it gets bigger, then the pressure is such that it eventually overwhelms the entire structural integrity of the sub, and rushes in all at once.

That's why when the USA or other foreign authorities focus on the exchanges, they're already too late - they should've killed Bitcoin back in 2009 - 2010 before it had a chance to build any distributed hashing power at all.

We're headed for $1,000+ by early December - and even if we fall from those heights in the usual fashion, we'll recover at higher valuations than the last parabolic to 266 and keep on going. Such is the strength of the network.