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Author Topic: BTC $140+ RISK FACTOR ANALYSIS  (Read 1145 times)
bobmarley666
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April 03, 2013, 08:28:29 AM
 #1

BTC is experiencing exponential growth.

PLUS: we can keep them & profit
MINUS: the risk is growing


Risk enlarging factors:

1. More "newbie" investors attracted - without understanding of the currency, without knowledge about its uses. They buy BTC as long as it grows, they sell BTC when it falls.

2. "Big game" attention attraction. Banks, news corps, hedge funds & large market sharks are attracted. Many $1M USD trades occuring now.

3. The hype - BTC is a hot topic in media, it's like a life sustain drip. When it's cut off, it's gonna fall.




Potential risks:

A. Bogus news, e.g. "A team of M.I.T researchers published a paper, in which they claim, the Bitcoin protocol has been compromised." Even if it's bogus & draws international attention (it surely would sometime soon when most news-vultures know about BTC), it would make the price plummet.

B. DDOS attacks - for around $120 anyone can rent a gigabit botnet, down the most popular BTC marketplaces/exchanges. This already HAD and still WOULD make the price plummet.

C. Exponential growth - many startups experienced this, it usually takes several days of exp userbase growth until a site is overloaded. Most sites operate withing 10-20% of their potential. MtGox operates within 80% of their potential (my guess based on lags). This would be even worse than a DDOS - it wouldn't end. It would need severe IT architecture redesign. This would last & cause the price to plummet.


D. Probably many more - feel free to add in your thoughts.



IMHO the situation becomes very unsafe - it would be better for a small crash to happen now, than a MAJOR CRASH to happen around $350. The latter could totally discredit BTC in the eyes of the newbie public. A small crash would be a warning sign - that BTC needs some time to develop infrastructure & long term trust.

What are your thoughts?
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April 03, 2013, 08:29:26 AM
 #2

there is no risk in a currency of the future my friend

bitcoin's truly measure value is about 900 $ per bitcoin at current usage rates
bobmarley666
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April 03, 2013, 08:30:56 AM
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And your opinion is based on what? Anything to back it up?

Please stick to facts & argument based discussion.
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April 03, 2013, 08:37:13 AM
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Why don't we merge this thread with     ' IDEAS HOW WE CAN ACCURATELY PREDICT BITCOIN VALUE CHANGES BEFORE THEY OCCUR'' and figure out comprehensively all influencing factors of bitcoins value and work out the chance of them happening
bobmarley666
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April 03, 2013, 08:41:44 AM
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+1, can i repost this in that thread?
muyuu
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April 03, 2013, 08:42:30 AM
 #6

New shill account?

GPG ID: 7294199D - OTC ID: muyuu (470F97EB7294199D)
forum tea fund BTC 1Epv7KHbNjYzqYVhTCgXWYhGSkv7BuKGEU DOGE DF1eTJ2vsxjHpmmbKu9jpqsrg5uyQLWksM CAP F1MzvmmHwP2UhFq82NQT7qDU9NQ8oQbtkQ
bobmarley666
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April 03, 2013, 08:43:57 AM
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don't know about shill, but yes, long time BTC user, first post in forums.
Grouver (BtcBalance)
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April 03, 2013, 08:47:18 AM
 #8

there is no risk in a currency of the future my friend

bitcoin's truly measure value is about 900 $ per bitcoin at current usage rates
So your buying things with Bitcoins now?
No ofcourse not, everybody is hoarding right now since where in a rally. Thats why almost nobody is selling and the price is rising like a mad man.
This price risiing is pure speculation and nothing more.
If Bitcoin becomes stable for a couple of months around this price the statement above is wrong though.

Zachary
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April 03, 2013, 09:00:26 AM
 #9

if people keep buying I don't think they will go down anytime soon.
bobmarley666
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April 03, 2013, 09:02:48 AM
 #10

if people keep buying I don't think they will go down anytime soon.

Oh man, that sentence is always true for all goods. In a supply-demand economy "if people keep buying, the price grows"!
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April 03, 2013, 09:23:03 AM
 #11

BTC is experiencing exponential growth.

PLUS: we can keep them & profit
MINUS: the risk is growing


Risk enlarging factors:

1. More "newbie" investors attracted - without understanding of the currency, without knowledge about its uses. They buy BTC as long as it grows, they sell BTC when it falls.

2. "Big game" attention attraction. Banks, news corps, hedge funds & large market sharks are attracted. Many $1M USD trades occuring now.



3. The hype - BTC is a hot topic in media, it's like a life sustain drip. When it's cut off, it's gonna fall.




Potential risks:

A. Bogus news, e.g. "A team of M.I.T researchers published a paper, in which they claim, the Bitcoin protocol has been compromised." Even if it's bogus & draws international attention (it surely would sometime soon when most news-vultures know about BTC), it would make the price plummet.

B. DDOS attacks - for around $120 anyone can rent a gigabit botnet, down the most popular BTC marketplaces/exchanges. This already HAD and still WOULD make the price plummet.

C. Exponential growth - many startups experienced this, it usually takes several days of exp userbase growth until a site is overloaded. Most sites operate withing 10-20% of their potential. MtGox operates within 80% of their potential (my guess based on lags). This would be even worse than a DDOS - it wouldn't end. It would need severe IT architecture redesign. This would last & cause the price to plummet.


D. Probably many more - feel free to add in your thoughts.



IMHO the situation becomes very unsafe - it would be better for a small crash to happen now, than a MAJOR CRASH to happen around $350. The latter could totally discredit BTC in the eyes of the newbie public. A small crash would be a warning sign - that BTC needs some time to develop infrastructure & long term trust.

What are your thoughts?


Thoughts - for risk enlarging factors 1,2,3, I think they all have possible positive flip sides.

1. More people buying coins when supply is finite - will increase value

2. If the banks and wall street felt like bitcoin was going to spread massively and threaten their profits and control of the economic system, they will either try to find a way of destroying it or perhaps try to work with it and find a way to profit from it, which could seriously increase its adoption, raising value.

3. People who have started using bitcoin due to media coverage should mostly remain bitcoin users because its the best way to store money anonymously, with all the attractions that brings and I think as long as it remains the best at this its growth will not slow, the trend for the past few years has been steadily building higher and higher media coverage, and I believe this might be the moment its use skyrockets worldwide and in within two years matching their volume then balancing out.


on A -

Lots of bad thefts have happened that has not stopped people being scared away ---


BTC is experiencing exponential growth.

PLUS: we can keep them & profit
MINUS: the risk is growing


Risk enlarging factors:

1. More "newbie" investors attracted - without understanding of the currency, without knowledge about its uses. They buy BTC as long as it grows, they sell BTC when it falls.

2. "Big game" attention attraction. Banks, news corps, hedge funds & large market sharks are attracted. Many $1M USD trades occuring now.



3. The hype - BTC is a hot topic in media, it's like a life sustain drip. When it's cut off, it's gonna fall.




Potential risks:

A. Bogus news, e.g. "A team of M.I.T researchers published a paper, in which they claim, the Bitcoin protocol has been compromised." Even if it's bogus & draws international attention (it surely would sometime soon when most news-vultures know about BTC), it would make the price plummet.

B. DDOS attacks - for around $120 anyone can rent a gigabit botnet, down the most popular BTC marketplaces/exchanges. This already HAD and still WOULD make the price plummet.

C. Exponential growth - many startups experienced this, it usually takes several days of exp userbase growth until a site is overloaded. Most sites operate withing 10-20% of their potential. MtGox operates within 80% of their potential (my guess based on lags). This would be even worse than a DDOS - it wouldn't end. It would need severe IT architecture redesign. This would last & cause the price to plummet.


D. Probably many more - feel free to add in your thoughts.



IMHO the situation becomes very unsafe - it would be better for a small crash to happen now, than a MAJOR CRASH to happen around $350. The latter could totally discredit BTC in the eyes of the newbie public. A small crash would be a warning sign - that BTC needs some time to develop infrastructure & long term trust.

What are your thoughts?


Thoughts - for risk enlarging factors 1,2,3, I think they all have possible positive flip sides.

1. More people buying coins when supply is finite - will increase value

2. If the banks and wall street felt like bitcoin was going to spread massively and threaten their profits and control of the economic system, they will either try to find a way of destroying it or perhaps try to work with it and find a way to profit from it, which could seriously increase its adoption, raising value.

3. People who have started using bitcoin due to media coverage should mostly remain bitcoin users because its the best way to store money anonymously, with all the attractions that brings and I think as long as it remains the best at this its growth will not slow, the trend for the past few years has been steadily building higher and higher media coverage, and I believe this might be the moment its use skyrockets worldwide and in within two years matching their volume then balancing out.


on A -

 Large negative events have happened regularly but its usage has continued to grow anyway, future bad news may likely only decrease the userbase minimally and not effect the upward growth.

--- some examples



    On 19 June 2011, a security breach of the Mt.Gox bitcoin exchange caused the nominal price of a bitcoin to fraudulently drop to one cent on the Mt.Gox exchange, after a hacker allegedly used credentials from a Mt.Gox auditor's compromised computer to illegally transfer a large number of bitcoins to himself. He used the exchange's software to nominally sell them all, creating a massive "ask" order at any price. Within minutes the price corrected to its correct user-traded value.[77][78][79][80][81][82] Accounts with the equivalent of more than USD 8,750,000 were affected.[79]

    In July 2011, the operator of Bitomat, the third largest bitcoin exchange, announced that he lost access to his wallet.dat file with about 17,000 bitcoins (roughly equivalent to 220,000 USD at that time). He announced that he would sell the service for the missing amount, aiming to use funds from the sale to refund his customers.[83]

    In August 2011, MyBitcoin, a now defunct bitcoin transaction processor, declared that it was hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more than 78,000 bitcoins (roughly equivalent to 800,000 USD at that time) unaccounted for.[84][85]

    In early August 2012, a lawsuit was filed in San Francisco court against Bitcoinica — a bitcoin trading venue — claiming about 460,000 USD from the company. Bitcoinica was hacked twice in 2012, which led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.[86][87]

    In late August 2012, an operation titled Bitcoin Savings and Trust was shut down by the owner, allegedly leaving around $5.6 million in bitcoin-based debts; this led to allegations of the operation being a Ponzi scheme.[88][89][90][91] In September 2012, it was reported that U.S. Securities and Exchange Commission has started an investigation on the case.[92]

    In September 2012, Bitfloor, a bitcoin exchange, also reported being hacked, with 24,000 bitcoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor suspended operations.[93][94] The same month, Bitfloor resumed operations, with its founder saying that he reported the theft to FBI, and that he is planning to repay the victims, though the time frame for such repayment is unclear.[95]


______________


As long as there is a growing number of exchangers it will become harder to slow the market if there are more sites to use


Lastly I think MTGOX will do everything it can to stay the number one exchanger and it should be straightforward for a big company with large amounts of money to be able to upgrade their systems/software quickly and properly if ianything was a significant threat to their revenues.
bobmarley666
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April 03, 2013, 02:27:48 PM
 #12

Told ya. Exponential user base growth = MtGox down.

"Database access error, please retry later"
jrlichtman
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April 03, 2013, 03:06:50 PM
 #13

There was a poll on the LinkedIn BitCoin group regarding potential risks. The responses made for some interesting reading.

Nobody really knows how the economics of this will play out long term.

There's (hypothetically speaking) a built-in deflationary curve to BTC and many other virtual currencies, which hasn't really been proven to work in practice. Most of the current run-up is due to the "fear index" effect, combined with plain old greed.

I don't think you can put an inherent value on BTC any more than you can on fiat currencies or gold. It isn't like a stock, say, where you can decide to buy or sell based on a price multiple of earnings - and even that is a questionable basis for inherent valuation.
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April 03, 2013, 03:14:05 PM
 #14

I honestly don't know if BTC or LTC is a bubble that is going to pop. The more people who accept it and use it, the more it is worth. There may be times when it falls very low, but it will always rise, and soon enough, I think it will find a spot to stabalize at.
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April 03, 2013, 04:04:27 PM
 #15

LTC is a bubble for sure, no one uses it for purposes other than speculation.
BitBrian
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April 03, 2013, 05:12:28 PM
 #16

No one in this thread has mentioned how much all the toal bitcoins are worth; $1.25 billion or €1 billion euro

someone who buys €10 million worth takes up 1% of total bitcoin worth. that's a massive stake for a small amount of money thats used to buy any currency/commodity available worldwide.

Yes Bitcoin has risen astronomically (from 20c in July 2011 to a massive $130+ today)
In my opinion, the bubble is only beginning to rise. Why? More people are finding out about bitcoin whether they be millionaire criminals looking to statsh their money somehwere or everyday people looking to do something with a few hundred. On top of this, more retailers are accepting bitcoin, bu that still doesn't mean that bitcoins are easy to spend.

I can't see the price collapsing in the next three months because even with more people aware of bitcoin, still a very small percentage actually know about it. The people sitting on hundreds or thousands of bitcoins know this and will sit tight because as more people find out, more people will buy, and more the bitcoin will go up in price.
jrlichtman
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April 03, 2013, 05:44:53 PM
 #17

I only know of a small number of really large holdings. There's a fund out of Gibraltar that claims to have a big holding, and there's that infamous one at MtGox that might be mafia-related.

The big question is how many people are using BTC. My guess is that its roughly 1 million people at this point, with a median holding that's less than $100 USD. So there's a bit of concentration at the top of the pyramid, and a lot of little accounts (like mine - I originally obtained some BTC from the free fountain back in 2011).
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April 03, 2013, 05:50:59 PM
 #18

there is no risk in a currency of the future my friend

bitcoin's truly measure value is about 900 $ per bitcoin at current usage rates
So your buying things with Bitcoins now?
No ofcourse not, everybody is hoarding right now since where in a rally. Thats why almost nobody is selling and the price is rising like a mad man.
This price risiing is pure speculation and nothing more.
If Bitcoin becomes stable for a couple of months around this price the statement above is wrong though.

There will be sellers when the price is right.
Hopefully the price being 'right' isn't a 15 minute period where the price drops by $20/min.

BitBrian
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April 03, 2013, 06:05:27 PM
 #19

https://bitcointalk.org/index.php?topic=160292.0

Didn't realise Cyprus was that bad.  Undecided
jrlichtman
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April 03, 2013, 06:07:23 PM
 #20

Cyprus was very very bad for Cypriots, and potentially set a bad precedent for elsewhere. Ripple effects could take a while to play out.
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