Okay, I’ve had a few beers and I’m sold - No corrections required, Bitcoin could go to $10,000/ea without a reasonable pullback.
The thing is, the supply and demand dynamic is horribly out of balance. The incoming rate of supply now being steady as it always is at around 25 new bitcoins added every 10 minutes, but the amount of money chasing those few new coins is much larger now than it was three months ago, so the price goes through the roof.
I wonder what % of new bitcoins are sold on the market compared to how many are saved for the increasing value. The more of this that happens, the more exacerbated the supply/demand imbalance becomes.
And that imbalance causes the price to go up. Dramatically.
Increasing value in a stagnant investing climate draws attention from the media and “everyday joe” attention, investment interest, this adds even MORE demand. Again, the supply does not increase.
The whole thing becomes a self reinforcing cycle that I would argue is past the tipping point - I’m now spending quite a bit of time explaining to completely brand new people how to use their first wallet.
With
Bitinstant.com it’s easy to tell people how to buy bitcoins, the last time the price spiked that was just not true and it was a royal pain in the ass to buy in. My experience involved two weeks, two payment processors and a bank, a bank error in my favor which I voluntarily corrected and then a three day delay for no apparent reason before the funds were made available in Mt.Gox, during which time the price spiked about 40%
Now the user experience is walking to the walmart and handing over cash, getting bitcoins in their emails.
We've designed an embeddable HTML widget that lets any content producer ask their audience for support, and display how much has been given as well as link to the "what is bitcoin" video
bitcointipper.appspot.comSo what all that leads me to, is people are having a good experiences with this, and we're created something that lets them monetize content that has never been productive besides advertisements. Now users can contribute .01btc to a video or article they enjoyed, and if 100 readers do that, that video has earned nearly $140 USD, and it can keep earning as long as people find it on the web and find it entertaining.
So.... What all this brings me to, I can't play the bear any more. I think we're going to the moon and I'm sick as can be that I haven't the financials to invest more than I already have. I have no idea how long this rally will last, but it will be unlike anything we've ever seen. The one pitfall to avoid is major hacking events, which are definitely baked in this cake the higher we go. We saw a flurry of criminal activity and viruses during the last spike, we're going to have a major issue in the near future at these values.
If something fundamentally goes wrong, and a lot of people feel like their money is trapped (as in a Mt. Gox issue) than things could get hinky, but not too bad.
Another potential disruption is attempted government regulation. The currency might hiccup and stall if the US Government drags volunteer devs before congressional hearings, any talk of ban will cause a panic for the exits as new holders don't want to be stuck with perceived illegal currency.
But even that is a short term setback, the market will shrink dramatically but it will settle and stabilize. The idea is too good to go away regardless of what laws demand, so barring the closure of the internet I think we're safe from a continuity of service perspective.
So the upside is a continuation of the trend - Higher prices feeding good news coverage feeding increased interest feeding new acceptance announcements in a virtuous cycle lifting the price up until we run out of dollars with owners who want bitcoins instead.
So there it is, we're in the middle of a revaluation. AND I SOLD HALF MY BITCOINS AT 35 FOR AMAZON GIFT CARDS
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