If someone buys Bitcoin today, they'll be lucky to see a 300%+ ROI.

[GoWest]

For the record, I just sold all of my Bitcoins.  I bought my first Bitcoins in June 2011 at around $28 and continued buying all the way down to $2.  I actually bought about 8000 BTC around the time I made this post: http://www.thebitcointrader.com/2011/10/im-calling-bottom.html.

Needless to say, my return on investment was massive. We're talking 25,000% plus.  For someone to see that kind of ROI today, Bitcoin would have to hit $125,000 each, or a market cap of $2.6 trillion on 21 million coins. Which brings me to my first point:

There's significantly less incentive for someone to speculate on Bitcoin today. To see a return comparable to what we've been seeing over the last couple of years, the amount of capital that would have to be injected into the markets is exponentially more than it was just over a year ago. This is going to cause investors to really do their homework before buying Bitcoin, and recent news events are exactly the sort of thing that will deter new investors.

Next, the vast majority of merchants are using Bitcoin as a protocol, not as a store of value. Anytime we hear of a new merchant choosing to "adopt Bitcoin," what they're actually doing is two-fold. One, they're getting free advertising for themselves, especially local businesses that find themselves on the front of the business sections of their local papers. Two, they're not adopting Bitcoin, they're adopting BitPay or Coinbase. These merchants care about lower fees and irreversible transactions, not so much the value of a Bitcoin itself. There are a few exceptions where the merchants retain some or all of the Bitcoins, but they're the minority, by far.

Third, Bitcoin early-adopters are cashing out. When you hear about Overstock, TigerDirect, Fancy, and others doing hundreds of thousands, if not millions of dollars of business in Bitcoin, those are old Bitcoins that are being sold. No one is going out to buy Bitcoins so they can make purchases they could already make with PayPal. It's inefficient and expensive.

Finally, there are better protocols that are being derived from and have improved upon Bitcoin. If Bitcoin is more useful to businesses as a protocol, then why wouldn't a better protocol oust Bitcoin in the long run? The Bitcoin 2.0s of the world (Ethereum, Open Transactions, Ripple, etc) will eventually unseat Bitcoin. Some say that Bitcoin will remain an ideal store of value, and the other technologies will become the ideal "payment rails," but is Bitcoin really a good store of value if 35% of Bitcoins are held in only 500 addresses?

Anyway, suffice it to say that I'm not done in the crypto-currency space. I've divested into Bitcoin 2.0 technologies, and look forward to seeing the space grow. I expect to see better returns on those investments than I would if I simply held Bitcoin.

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[bennybong]

Good points and well said. Hats off to your investment too! The whole time I was spending my coins I thought it was fine because I will just buy back when I have fiat again.... Until the price shot up 100x!

[Cyberlight]

The Bitcoin 2.0s of the world (Ethereum, Open Transactions, Ripple, etc) will eventually unseat Bitcoin.

I had to laugh like hell , come on... centralized premined scamcoin Ripple?  I hope you're trolling, i can't take you seriously.

[mmitech]

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

[Peter R]

For the record, I just sold all of my Bitcoins. 

Given the viewpoint you expressed above, I'm surprised that you didn't sell your bitcoins in November to January for over $1000.  Why did you feel they were worth holding at a higher price a few months ago, and worth selling now at a lower price today?

[Dalmar]

Ripple's chart just follows bitcoin and its liquidity is ridiculously poor. Don't see how that could go anywhere unless they convince big banks to accept their system. As for Ethereum, it lacks the elegance of bitcoin and nobody really even understands it.

[Cyberlight]

For the record, I just sold all of my Bitcoins. 

Given the viewpoint you expressed above, I'm surprised that you didn't sell your bitcoins in November to January for over $1000.  Why did you feel they were worth holding at a higher price a few months ago, and worth selling now at a lower price today?

Weak hands.

[GoWest]

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

[pungopete468]

If I want to buy something online I will only pay in Bitcoin unless it's not available with a merchant who accepts Bitcoin.

I buy on Coinbase and then use those Bitcoins to pay for my order. I think there's a large enough community where if more did this it would greatly affect the Bitcoin economy.

Honestly I think Bitcoin can easily hit $125,000 per coin in a few years. Considering the sheer size of the mining infrastructure, the scope of the new innovations on the horizon, the ones that we know about...

I think the exchange price is irrelevant right now; it doesn't reflect any weakness or limit it's potential growth.

I guess we'll see how it turns out. I wish I had the opportunity to get in when you did. I hadn't even heard about Bitcoin until November 2013...

[GoWest]

For the record, I just sold all of my Bitcoins. 

Given the viewpoint you expressed above, I'm surprised that you didn't sell your bitcoins in November to January for over $1000.  Why did you feel they were worth holding at a higher price a few months ago, and worth selling now at a lower price today?

I should have clarified.  I didn't sell all of my Bitcoins just now.  I've been gradually selling them on the way up, and sold the last large chunk in the last 48 hours.

[Cyberlight]

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

You definitely not understand market capitalization , you dont need 63 billion dollars to get 5,000 dollar coins.

[Peter R]

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

Why, because 12.5 million coins x $5000 = $63 billion?  I'm surprised someone who's been here since 2011 could still think this. 

[Peter R]

For the record, I just sold all of my Bitcoins. 

Given the viewpoint you expressed above, I'm surprised that you didn't sell your bitcoins in November to January for over $1000.  Why did you feel they were worth holding at a higher price a few months ago, and worth selling now at a lower price today?

I should have clarified.  I didn't sell all of my Bitcoins just now.  I've been gradually selling them on the way up, and sold the last large chunk in the last 48 hours.

I think most investors slowly divest as the price climbs.  This is a logical way to diversify. 

But what I wanted to know is why did you feel the "last large chunk" was worth holding at a higher price a few months ago, and worth selling now at a lower price today?

[chesthing]

Thanks for the newsflash, captain obvious.  

[Mitzplik]

Ripple's chart just follows bitcoin and its liquidity is ridiculously poor. Don't see how that could go anywhere unless they convince big banks to accept their system. As for Ethereum, it lacks the elegance of bitcoin and nobody really even understands it.

If was already awesome, it wouldn't be cheap.
Its similar to when the OP bought his BTC

EDIT - Grammar

[Vitalik Buterin]

Is Bitcoin really a good store of value if 35% of Bitcoins are held in only 500 addresses?

As much as I don't like paraphrasing Paul Krugman, I think you're conflating normative and positive analysis here. You are basically making the argument that Bitcoin has a socially undesirable element to it because it has high wealth concentration. However, that does not mean jack to someone looking to preserve the value of their own wealth, and people who have wealth will not put their money into media that try to wash wealth disparities away. Bitcoin has among the lowest inflation rates of cryptocurrencies, with the exception of 100% premined/presold coins like MSC, XRP and NXT, but most importantly it has the Schelling point aspect of being the first cryptocurrency out there. Bitcoin is temporally antecedent to every other crypto, and that is one property that it will never lose; hence, it will always be "special" amidst a sea of innumerable other cryptos no matter how powerful they are. That's why I can see it maintaining its value for quite a long time as a digital gold.

[Ekaros]

The needed numbers don't match, but the scales do.

The amount of money to 3 times the current price is 3 times the amount invested thus far.

And it's very questionable if bitcoin is going to be THE currency... It has users now, but just considering how easy it would be for a new alt-coin to get in if the really big players would go with it, like Amazon, Paypal and Google.

Just consider those 3 would start offering it as option for payment for all the sites they are now available... Why would they, because they would be early adopters in that case and gain the benefits form it instead of giving it to current early adopters...

[mmitech]

yes you do make really valid points there, but again who though that bitcoin could go to $1000 in one year when buying at $10 ....

It took $6.8 billion to get from $10 to $500.  It would take $63 billion to get to $5000/Bitcoin.  A lot of people are counting on Wall St. and institutional investors to make that happen, but $63 billion is A LOT of money, even for Wall St. How likely is it that investors will come up with $63 billion to put into a speculative currency?

while I really appreciate the math you did there and while you have a strong and valid point regarding the growth strongly slowing down when reaching some point (I think this is what you are trying to point out)but again, you are ignoring a really important fact, let me point out few things out.

-there is more than 12 million BTC on existence (without ignoring lost bitcoins or satoshi's coins...) now you don't need to dump all these coins to bring the price to 0, I was discussing this before on the wall observer, if you have around 100K available for instant dump on all exchanges, you can bring the price to 0 and kill confidence... but if you had that amount of coins you wouldn't do that because this is plain stupid, why sell for 30  millions or less when you can sell for 5 or 10 times that in batches.

- we would never reach the $1000/BTC if all coins on circulation were traded daily in other words if we had that volume.... there is no demand near that point yet not even near 5% of that, we are far and so far from that point.

[FierceRadish]

Aside from all the possible counter-arguments, there's an implication here that 300% is a poor rate of return. Tell that to the average stock investor.

[GoWest]

For the record, I just sold all of my Bitcoins. 

Given the viewpoint you expressed above, I'm surprised that you didn't sell your bitcoins in November to January for over $1000.  Why did you feel they were worth holding at a higher price a few months ago, and worth selling now at a lower price today?

I should have clarified.  I didn't sell all of my Bitcoins just now.  I've been gradually selling them on the way up, and sold the last large chunk in the last 48 hours.

I think most investors slowly divest as the price climbs.  This is a logical way to diversify. 

But what I wanted to know is why did you feel the "last large chunk" was worth holding at a higher price a few months ago, and worth selling now at a lower price today?

The top was not obvious until it was passed. I was hoping to see a return to the $800 level before I sold the remainder, but the Mt.Gox fiasco has motivated me to sell earlier.