Why do people think one Bitcoin will be worth $1000 (or more)

[greyhawk]

In my wallet, at Olivia Plaza, I have a 100$ bill and a American Express credit card. I also have one pound of pure gold. None of them are accepted by the Olivia Plaza Hotel to buy a pizza. I search through my other pocket : I find a diamond ring, a pound of pure silver and a some papers telling me that I own some parts in a company called Google.

According to you, they are worthless and can be throwed away. I can't buy a pizza with them at the Olivia Plaza Hotel…

Only the Olivia Plaza Hotel will have no problem at all accepting the 100$ bill and the AmEx card, so?

[BlackBison]

We have all seen this before. In the 17th century in the Netherlands: The Tulip Mania.

The crypto-currency movement is likely one of the greatest financial innovations in history and certainly the greatest financial liquidity innovation since the Bank of England issued paper notes back in 1694.

You are comparing this historic advance to a bunch of speculators and fools bidding up some perishable, low value flowers with no long term function whatsoever... yea great analogy.

[Technomage]

The crypto-currency movement is likely one of the greatest financial innovations in history and certainly the greatest financial liquidity innovation since the Bank of England issued paper notes back in 1694.

You are comparing this historic advance to a bunch of speculators and fools bidding up some perishable, low value flowers with no long term function whatsoever... yea great analogy.

Couldn't have said it better.

[ploum]

Yeah also explain to me why someone pays 30 million dollar on an Rembrandt painting

Exact same thing as for tulips and Bitcoins: Pure speculation, zero value.

The point is that Bitcoin might have a value as it enable to transfer money over the internet.

In fact, it is already used (just take the Silk Road example). So it has a value. Probably very low but it still has. It is obvious that, the more people use bitcoin, the more the real value is increased. (If it is not obvious to you, you have to start with the basis).

Speculation is thinking that more people will use bitcoins in the future, hence increasing the value.


There are two kind of scenarios. Either bitcoins is not used at all anymore for whatever reason and thus become a pure speculation tool (like the tulip bulb).

Either it is mainly used as a speculation tool but still has some value. Example : gold. Gold is used in many technologies but its main application is speculation.

Either it becomes widely used and speculation is only done by a minority (example: fiat currency).

Your reasoning is that people only see the immediate use. But if it was the case, gold would be hundred times cheaper. The reason is simple : even if gold was completely useless, people trust that gold can be accepted anywhere against real money. It's only historical but this means that there are some trust in gold. People trust its value and thus accept it.

With bitcoin, we are exactly in the same situation: we are building that history.

Now, you can believe that we will fail. Right. Then sell your bitcoins if any.

[Radacoin]

It's a rare newbie that doesn't understand that bitcoins can be divided to smaller pieces. It also has a positive effect on the value of bitcoins (that they can be divided sufficiently), so it's a very strange thought indeed.

I know lots of newbies that think Bitcoin is 100% anonymous and have no idea about the Blockchain, 51% attacks, etc.

Your average Joe on eBay buying "1 BTC" understands as much about cryptocurrencies as your average Joe buying one "Silver Eagle" knows about mining and metallurgy. He buys silver because it's the thing to have in times like these.

As for dividing Bitcoins:
People don't think in Cent, or mCent - they think in Dollar.
People don't think in mBTC or µBTC - they think in BTC.

[ploum]

In my wallet, at Olivia Plaza, I have a 100$ bill and a American Express credit card. I also have one pound of pure gold. None of them are accepted by the Olivia Plaza Hotel to buy a pizza. I search through my other pocket : I find a diamond ring, a pound of pure silver and a some papers telling me that I own some parts in a company called Google.

According to you, they are worthless and can be throwed away. I can't buy a pizza with them at the Olivia Plaza Hotel…

Only the Olivia Plaza Hotel will have no problem at all accepting the 100$ bill and the AmEx card, so?

It's in Barcelona so they won't accept the 100$ bill. And AmEx is not popular in Europe, most of merchants don't accept it (they prefer Visa and MasterCard). Of course, I don't know that particular hotel but you get the point. In most part of Europe, this would not be accepted.

[BlackBison]

Also Bitcoin will likely have many boom and bust periods, that doesn't mean anything in itself. Amazon share price for example went into a bubble in 2000, then collapsed by over 90%. It took years for it to recover and obviously now they are the world leader in their field and the share price is at record highs.

In addition Amazon should be worthless by your bad arguments since in 1995 'no one' used them to buy anything...

[greyhawk]

It's in Barcelona so they won't accept the 100$ bill. And AmEx is not popular in Europe, most of merchants don't accept it (they prefer Visa and MasterCard). Of course, I don't know that particular hotel but you get the point. In most part of Europe, this would not be accepted.

Have you BEEN to Europe? Any hotel with international guests will accept USD and AmEx. Individual merchants won't neccessarily. International hotels will. Hell, my name (as a German) is so American, I regularly get asked if I want to pay in USD or EUR when I'm on a business trip anywhere in Europe, including Germany.

[mobodick]

As long as Bitcoins are not used in "real life" (e.g. I can buy stuff from Amazon or pay a pizza with them) they have zero value. OK one could say they have at least the value of the electricity that has been used to create them.

So what, exactly, is not "real life" about the fact that i can buy 43 dollar for one bitcoin right now?

[Radacoin]

We have all seen this before. In the 17th century in the Netherlands: The Tulip Mania.

The crypto-currency movement is likely one of the greatest financial innovations in history and certainly the greatest financial liquidity innovation since the Bank of England issued paper notes back in 1694.

You are comparing this historic advance to a bunch of speculators and fools bidding up some perishable, low value flowers with no long term function whatsoever... yea great analogy.

You very much remind of people saying "this time it's different" in the late 90s - when they borrowed money to by tech stocks like Cybercash or Boo.com (that went bankrupt immediately after that).

There's a good book from Reinhart/Rogoff: "This Time Is Different: Eight Centuries of Financial Folly"

[Radacoin]

So what, exactly, is not "real life" about the fact that i can buy 43 dollar for one bitcoin right now?

I maybe can. Maybe 10 more people can too. But not 100, 1000 or 10000. Bitcoin is a niche market and it would collapse - or explode - if too many people trade.

[mobodick]

It's a rare newbie that doesn't understand that bitcoins can be divided to smaller pieces. It also has a positive effect on the value of bitcoins (that they can be divided sufficiently), so it's a very strange thought indeed.

I know lots of newbies that think Bitcoin is 100% anonymous and have no idea about the Blockchain, 51% attacks, etc.

Your average Joe on eBay buying "1 BTC" understands as much about cryptocurrencies as your average Joe buying one "Silver Eagle" knows about mining and metallurgy. He buys silver because it's the thing to have in times like these.

As for dividing Bitcoins:
People don't think in Cent, or mCent - they think in Dollar.
People don't think in mBTC or µBTC - they think in BTC.

You're making the erroneous assumption that people think at all..

[mobodick]

So what, exactly, is not "real life" about the fact that i can buy 43 dollar for one bitcoin right now?

I maybe can. Maybe 10 more people can too. But not 100, 1000 or 10000. Bitcoin is a niche market and it would collapse - or explode - if too many people trade.

Now you're just trying to hide.

Since i can sell a bitcoin for 43 dollar right now it means that a bitcoin has a value for me of 43 dollars.
There is nothing you can say to make that go away.

[nobbynobbynoob]

So what, exactly, is not "real life" about the fact that i can buy 43 dollar for one bitcoin right now?

I maybe can. Maybe 10 more people can too. But not 100, 1000 or 10000. Bitcoin is a niche market and it would collapse - or explode - if too many people trade.

This line of reasoning made perfect sense in 2011, and indeed the "collapse" scenario kind of played out, with the exchange rate falling by about 92%.

It makes far less sense today: if you dump, let's say BTC10k on Mt Gox it won't have a major effect on the exchange price. In 2011, however...

[Technomage]

I know lots of newbies that think Bitcoin is 100% anonymous and have no idea about the Blockchain, 51% attacks, etc.

Your average Joe on eBay buying "1 BTC" understands as much about cryptocurrencies as your average Joe buying one "Silver Eagle" knows about mining and metallurgy. He buys silver because it's the thing to have in times like these.

As for dividing Bitcoins:
People don't think in Cent, or mCent - they think in Dollar.
People don't think in mBTC or µBTC - they think in BTC.

Even the dollar can be divided to smaller pieces, so most regular Joes do understand that. On your point in general, I do agree though.

However, it isn't necessarily true that people will always think primarily in terms of BTC. It's certain that people don't want to think about decimals, they don't want to pay 0.0058 for a product. This is why Bitcoin will most certainly move, and people's thinking as well, towards using mBTC. This is destined to happen if the value of BTC grows.

It takes time to get used to the whole idea. There has never been a "gold-like" commodity that is convenient to divide to smaller pieces, convenient and cheap to transfer internationally, etc. Bitcoin is something totally new, and it takes years for people to really understand it.

[mobodick]

So what, exactly, is not "real life" about the fact that i can buy 43 dollar for one bitcoin right now?

I maybe can. Maybe 10 more people can too. But not 100, 1000 or 10000. Bitcoin is a niche market and it would collapse - or explode - if too many people trade.

This line of reasoning made perfect sense in 2011, and indeed the "collapse" scenario kind of played out, with the exchange rate falling by about 92%.

It makes far less sense today: if you dump, let's say BTC10k on Mt Gox it won't have a major effect on the exchange price. In 2011, however...

The thing is that back then there was a bubble IN the bitcoin economy and bitcoin survived and climed back up completely in non-bubble style.
The OP suggests that bitcoin ITSELF is a bubble, which i dont think is true and the OP has brougt no arguments for at all.

[Bitcoinpro]

you know fairtales dont come true not when it comes to you
i found a new thing call bitcoin im cool with laying high its
thursday night and im feeling rich im feeling good for the
first time and you can bets thats bitcoin and i wave goodbye
when you say hello woohooo im sick of these sleepless never
ending nights i dont care whos wrong or rich  im sick of the
rumours and the alabyes bbbiiittcooiinn biitttccooiinn

[imanikin]

New trolls and astroturfers, (might be same people under different usernames) such as the OP keep arriving with the same worn-out, debated, and redebated arguments, and you regulars keep wasting NEW time from your lives rehashing the same crap with them... 

Pathetic! Let Bitcoin, and other virtual currencies speak for themselves!

[Come-from-Beyond]

Why do people assign value to things? Because of the properties of those things.

What are Bitcoin's properties?

-highly divisible
-finite
-recognizable
-impossible to counterfeit
-fungible
-easily transferable (send and receive)
-easily and inexpensively secured and stored
-easily accessible, 24/7 (requires internet)
-can not be seized
-pseudonymous
-worldwide
-low fees (if any at all)
-distributed and decentralized (no central control, I don't need to ask permission to send coins, no central point of failure)
-irreversible (this is a pro for responsible users)
-voluntary (no one is forcing me to use Bitcoin, for anything, including payment of debt)
-apolitical (x country's choices won't affect Bitcoin except through free market forces)

Decide if any of those properties are valuable to you. Decide if having one thing with this particular combination of properties is valuable to you. Act accordingly. In the process keep in mind one additional property, experimental.

Or, you could just troll...

Fixed. For newbies who will see ur post in the future...

[Come-from-Beyond]

Who controls the addresses involved in this transaction? http://blockchain.info/tx/26e5b4458b03929da89679fb0d05f286e87c73e3da52f7e0490c1bd4440ede0c

http://eprint.iacr.org/2012/596.pdf

It's conclusion:

In this paper, we evaluated the privacy provisions in Bitcoin when it is used as a primary
currency to support the daily transactions of individuals in a university setting.
Our findings show that the current measures adopted by Bitcoin are not enough to
protect the privacy of users if Bitcoin were to be used as a digital currency in a university setting. More specifically, we rely on a simulator that mimics the use of Bitcoin in
a realistic university setting. Our results show that if Bitcoin is used as a digital currency to support the daily transactions of users in a typical university environment, then
behavior-based clustering techniques can unveil, to a large extent, the profiles of 40%
of Bitcoin users, even if these users try to enhance their privacy by manually creating
new addresses. Finally, we discussed a number of solutions that could be integrated by
Bitcoin developers to enhance the privacy of users.

Next time I won't bother clicking show/hide.

I posted for newbies. Click [hide] and lock it.