So you are saying don't just measure dollars but relative dollar, you can still measure in dollars.
More than that: the loss/gain in "real wealth" (or quality of life, or hapiness, whatever) is not linear in the dollar amounts.
In those examples, consider a 100 k$ investment that has 60% change or returning 200 k$, 40% chance of returning 0$. For the millionaire, value is pertty much proportional to dollars. So his expected return over investment is +40 k$, so he definitely should take the chance.
For the guy with the 200 k$ house and no savings, the life improvement that he would get from an extra 100 k$ profit is nowere comparable to the consequences of a 100 k$ loss. For him the real expected returnover investment is negative, so he shoudl not take that investment.
As for your opinion I'm curious, what do you define as e-commerce?
Lots of things; but my skepticism applies to any reasonable defintion, from "consumers buying things through the internet" to "all payments in the world".
[ ... ] over the following 12 months Bitcoin went from $10 to $1,000. The shock (lost opportunity) made me reconsider my assumptions.
I finally reconciled my understanding with the fact Bitcoin could be used as a currency for e-commerce, if it's price collapsed.
I am not sure I understand. Its supposed "deflationary" character is a substantial argument against its adoption as a currency, but that is not my reason.
Actually I have no strong feelings about what its price will do in the medium term. Its price is not tied to anything, there is no argument that would justifify why its price now is 500$, why it was 800$ two months ago, why it can't be 5,000$ or 5$ tomorrow. It is the result of suply and demand, sure, but the demand is due to perceptions of future prices that are not based on anything. "The market" thinks that it is worth 500$, but no trader can convincingly explain why.
I would love to know what it is about Bitcoin that has entrenched you skepticism ?
To make the point clearer, consider the "extreme libertarian" scenario where Bitcoin (THIS bitcoin) is the only currency in use for all payments.
In that scenario, every person in the world is forced to keep his money stored in one single "bank", the Bitcoin Network. That "bank" is different in many ways from the banks we have now, publlic or private. One may argue whether these differences are advantages or disarvantages, but that still is not my point.
In that scenario, the money held by every person in the world is determined by its balance on that "bank"'s ledger, the BTC blockchain.
In that scenario, the BTC blockchain is still the same blockchain that Satoshi started and is in use today.
But, in this blockchain, all the BTC that exist now, which is more than 50% of all the money that will exist in that scenario, are already assigned to a few thousand people. And the coins that are yet to be found will be given exclusively to the "bankers" -- the miners who keep the "bank" running.
Moreover, the vast majority of the existing coins are in the hands of people who did nothing more than run an algorithm in their laptop for some time, or invest a few thousand dollars. Worse, the owners of those coins include all sorts of scammers and sleazy entrepreneurs, criminals, corrupt officials, and common thieves -- such as the MtGOX Thief, be it Mark or anyone else -- who have amassed large hoards of bitcoins by unethcal tricks, or worse.
Now, do you think that, if the world decides that cryptocoins are a god idea, they will create their "global universal bank" with a ledger that, right from the outset, assigns all the money in the world to those people?
Granted that the "extreme libertarian" scenario is extremely unlikely by itself. But the problem remains even in more limited scenarios where bitcoin is used only for some fraction of the e-commerce. Anyone who adopts BTC as currency will be sharing his real weatlh with the current BTC owners, just as anyone who uses dollars is sharing his real wealth with the US government (or US citizens, if you wish). Will people accept that? Will governments allow that? (Why is it that they don't allow private money?)
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