My wild ass guess type prediction is that somewhere near 100 we see a shock. I think the shock may last a few months and scare people. How bad the shock is is a big mystery, but my guess is we see it in the 40-50 range. And I think by next year, we are in the 150-200 range.

Maybe we should make some predictions at specific time frames and see how everyone does. Give a guess and a 75% confidence range for each time period.

To make it simple:
July 1, 2013: Prediction of $90, range from $50-150
Oct 1, 2013: Prediction of $100, range from $40-200
Jan 1, 2014: Prediction of $120, range from $40-300
Jan 1, 2015: Prediction of $200, range from $30-500

Probably should have even wider ranges for 75% confidence since it's such a wild guess.

But what data is there that now is the bubble? Why do you think it is mostly being driven by weak speculators?

You've been bubble-warning for a long time now, and it has not hit the real growth in the BTC market. Even today you said the "pop" could be from $200 to $100 per BTC. Why does that even matter?

You're basically predicting that the unstable BTC will remain unstable. The exchange price dropped over 25% this weekend, which it has done consistently in the upward trend.

Nevertheless, I do think Bitcoin lends itself to bubble formations, but that doesn't make constant calls of "bubble!" warranted unless you believe in a permanent downward trend lower than the price you're calling "bubble!" at.

Holders of BTC should be aware of the speculation and the risks, and definitely be willing to lose it all as part of this experiment. But that doesn't mean the current data doesn't support the current price.

Please note my last post uses "you" but is mostly meant as a general response to the constant "bubble!" cries that will of course someday be right in some respects.

I think I'd be investing in BTC with predictions like those. It's certainly plausible and indicates +EV to me. Especially during the temporary shocks we've been seeing already.

Hope the lurkers appreciate the analysis here. Reading the bull and bear cases for BTC on places like Bitcointalk.org can probably lower your intelligence.

good stuff indeed

+bitcointip @Deep ฿1

The funny thing is that because so many people are hoarding them, if loads more people start using them then we could actually see the value go down because there'd be a lot more bitcoins actually being circulated. Of course that would only be temporary and it would be to the long term good for bitcoins, I just find it interesting.

I feel bad that I missed out on the real chance to make some money, especially since I've been aware of their existence for a couple of years (but never really looked into them until recently). For people looking to get really rich off these things, that ship has sailed but the concept of a decentralized electronic currency is a spectacular one and I think the signs are there that it has every chance of being a semi-permanent and 'legitimate' currency. It's quite likely that there will be a crash, but it's nearly as likely that it will only be temporary. Whether or not bitcoin is going to be a longterm thing (say, going strong 10 or 20+ years from now) or whether it will collapse for some yet to be seen reason or replaced by something else or whatever is anyone's guess.

Right now though, even people like me coming to BTC late have a chance to get ahead of the curve (bitcoins may be popular, but let's face it, it's mostly people who are in the top ~20% of computer literacy/nerdiness who are doing anything with bitcoins at the moment) and still make a likely +EV investment. We won't get rich quick, but +EV is +EV.

E: Also I'm not yet sold on the idea that your average semi-computer literate Joe is going to be using them. For example I can't see my mother understanding, let alone using, bitcoins, and she's not computer illeterate (well to most 2p2ers she probably is but compared to the average, no). They could become something more akin to Caiman and Swiss bank accounts, or current E-wallets, used mostly by business men and poker players. It's possible that some of the current popularity is purely reactionary. With so many banks going under and the recession dragging on, confidence in banking institutions has got to be at a low point.

that cognitive bias, though. i just can't get myself to buy more bitcoin at $70 when i bought my first ones at tree fiddy. (no, really)

Yeah, I totally get that. I still haven't been able to bring myself to pull the trigger. I think I'm going to wait to see if there's another mini drop (or a bigger one).

Noob here. Are paper wallets completely secure? Can I buy x amount of bitcoins and never have to worry about hacking/theft etc?

The biggest data is all of the people who are buying them simply because "they are going up in value". And it's getting to super casual people who don't know anything other than it being a good investment opportunity". I think there are a ton of weak speculators now. But it's possible they are accidentally correct.

Long time is very relative. I don't think I've been that concerned until the last month or two. After the last pop, the slow growth seemed plausible to me based on increased usage and opportunities. It's this very recent explosion with not anything *big* happening that screams bubble (or something big about to drop and insiders taking advantage). I'm reading stories of people getting their elderly parents to dump money into it since (it's gonna go sky high!). And yeah, there are many, many variables at play and predicting exactly how it will play out is impossible.


I'm talking more sustained than one person placing a big order and dropping the price a lot, then it going back up. That's just the nature of a thin market. We haven't seen any kind of pop or shock since the Mt. Gox problems 2 years ago.

It matters because the shock will scare off people. It might not be that bad if those people were never going to actually use Bitcoins other than to speculate.

I disagree. You can have short-term overpriced things, then conditions changing and pushing it up higher in the future. AAPL very well could have been in a bubble, but long term have growth. It's not really any different.

No one really has all of the data. Perhaps I am being warped by the loudest and most ignorant (who very well could be in the minority). There are a ton of irrational speculators right now. And I'm seeing more and more of them pop up. That is a worrying sign to me.

You are neglecting risk tolerances and other utility. I dumped a "gambool" amount in Bitcoin a while ago. Yes, it could be +EV. But it could require a very long ride to get that. That being said, it seems like it wouldn't be terrible to take a small amount and hide it away and not touch it for 10 years.

I think you are overestimating the importance of the shocks. They certainly aren't insignificant, but there is such a backlog of customers trying to get in the door, that it is easy to absorb. And they don't last long enough to scare anyone and they are small enough to be overcome by overly optimistic speculators. It has been impressive how fast they have back from the dips, although it hasn't been a true shock yet. You need to go through the five stages of grief for the shock to really have hit:

1) Denial - "This is temporary and it's going away, I better buy now while it's cheap!"

2) Anger - "WTF is going on, why does it keep going down? Someone must be manipulating it!"

3) Bargaining - "Maybe it will just go back up and I can ride it out"

4) Depression - "Oh no, it's worthless!"

5) Acceptance - "What do we do now to move on?"

We only reached 1. The psychology of the market didn't get damaged enough to cause a shock, as it most likely was down and back before most people even noticed.

You have to trust that whoever has the private keys didn't copy them. There are always dangers.

That's not very reassuring!

this is the scariest part of bitcoins. the more valuable they become, the more careful you have to be. i am scared ****less that all my btc will somehow be lost. this definitely limits the market, as some people will absolutely not be able to trust technology like this.

This is wrong. You can put a key gen on a disconnected laptop and send a test amt to it. If it works (lookup address on a block explorer) then you know you made no transcription errors. There's no trust involved.

You will be completely secure from digital threats unless the crypto is broken, in which case you'd need to transfer from that address to one protected by the new crypto.

The private key is what is used to submit your transactions and verify your ownership of the input (bitcoins) you're trying to send. It's technical in nature. If you have the private key used to encrypt the public address you control the bitcoins.

TomCollins:

I do think you're giving too much weight to the low-stakes, weak speculators. Some of the biggest VC firms are diving deep into Bitcoin startups. Kleiner Perkins (Twitter, Square, Zynga) among those already mentioned such as YC.

You're right to be scared of this and it is a priority of the core dev team to alleviate this.

For now, paper wallets or offline, encrypted wallets are one option. The other is using a major wallet involving zero trust and two-factor auth. plus local and cloud backups.

Also, a major selling point Coinlab stated for its control of US Mt.Gox operations was the desire to offer guaranteed, secure Bitcoin storage to large investors.

You are not understanding or I misunderstood what he meant by "paper". I was assuming it's one of those things that has a key underneath that you scratch off when you want to spend it. In that case, someone had to generate that key. You, of course, could scratch it right away after verifying the public key has the correct amount of coins, and then transfer to a secured wallet you control.

But this is different than paper other than you are the one who now owns the wallet.

Paper wallets are basically private key printouts that are then physically secured in a safe deposit box or two. They are almost always unencrypted and therefore rely solely on physical security.

Yeah, I do think something like this may be responsible for a lot of the drive up, which is why I think you may see the bubble pop might be later. It does not take a huge amount of orders to drive the price significantly higher. And a lot of these companies can improve the Bitcoin economy. And of course a small investment from VC would be monstrous compared to the mom and pops buying a few here and there. I said before that the price increase is either due to morons who think it will keep going up forever or someone who knows something and doesn't care about the price now. Or a combination of the two. But a lot of these people who are publishing this stuff will do so *after* they have gotten involved, as to not have driven up the price ahead of time. Unless they don't care about the price and aren't buying.

There are a significant number of coins that are controlled by die-hards and they stand to lose a fortune if the price crashes. How well they tolerate it remains to be seen. The market is so thin right now, a few spooks can drive it down and a few major buyers can drive it up considerably.

The biggest hurdle I see is making it easier for people to get Bitcoins for purchasing online or making that advantageous. However, the overseas markets seems like the biggest opportunity and seems like a great source of opportunity. Being prepared to swoop in and help people when there are financial crises is a huge possible benefit.

I am aware of this. If you are printing your own, you are probably fine if you have a disconnected computer. I doubt most casual users have this or will care.

If you are getting it from someone else, you must trust they didn't keep a copy of the private key.

Most of the VC stuff isn't really mainstream info at the moment. Many of the mentions are brief social media hits that stay within VC circles. Only the eventual launches tend to mention VC money at all. And like you said, one big investor negates A LOT of the vocal weirdos in blog comments or whatever.

Don't you think the first bubble and the following crash saw many of the weak early adopters exit already? If that didn't shake 'em out I don't know why $200 to $100 would.