Bitcoin – How high can it go?

http://simonwinder.com/2013/11/bitcoin-how-high-can-it-go/

by flippyhead • 13 years ago

70 37 13 years ago

simonwinder.com

GigabyteCoin• 13 years ago

coinrx.com - this domain is parked..?

ddon• 13 years ago

in theory there is no limit!

VexXtreme• 13 years ago

Great analysis.

Although, I have to chuckle when I hear about people buying fractions of a Bitcoin, expecting to become multi-millionaires in a few years. Bitcoin has had a great run and the exponential growth it has experienced is extremely unlikely to repeat again. It's an issue of scalability and you don't just go from $1K to $1M the way you did from $1 to $1K, simply because the large scale implications are different. The implications of $1 to $1K were pretty insignificant, whereas to get to one million, entire governments would have to abandon their currencies in favor of Bitcoin or something else really drastic would have to happen.

I personally own BTC and hope to see it succeed, but some of these people are delusional, plain and simple.

rallison2• 13 years ago

Indeed. If bitcoin were to go from $1K to $1M in the near future, we would be talking a 12 trillion USD market cap - roughly on par with the US GDP. Not to say it is an impossible scenario, but like you said, the implications are much greater.

The other interesting aspect is the existence of other alt currencies. For example, the so called "silver" Litecoin (as compared to the "gold" bitcoin), has increased almost 1000% in the last two weeks. Litecoin itself is up to a $1 billion market cap. Basically, we now have an alt currency at 10% of bitcoin's already impressive market cap.

I do wonder if some of these alt currencies will be where some of the big gains will next be seen. If crypto currencies become widely established, I imagine the environment would support multiple currencies.

judk• 13 years ago

Wow. I haven't seen one news item or mention of anyone using litecoin, except comments like this that mention the existence of litecoin when folks discuss bitcoin.

As always, though, market cap isn't really the current share price times number number of shares. It is the accumulated sum of all the buy offers over the top N share bids (N = number of shares in existence), not all of which are max price.

baddox• 13 years ago

Your claim makes sense to me, but at the same time, how many people would have said similar things five years ago about Bitcoin? I suspect a lot would make essentially the same analysis and conclude that no one could possibly become a millionaire from Bitcoin holdings because of how extreme and unlikely the necessary series of events would be.

ivanca• 13 years ago

Digital currencies will eventually be the only kind of currency there are; "plastic money" (AKA credit cards) were created to ease the handling of personal and business finances; digital currencies are one step further, were we don't depend on a piece of plastic but paying via web or by proximity and confirming on your personal phone (similar to the way two-factor authentication works).

"Real" money is just a piece of paper that represents value supported by the government behind it; so representing it on bytes supported by the open-source cryptography behind it is less dramatic than most people would assume.

fat0wl2• 13 years ago

i don't think many people expect to use plastic money forever -- they are already comfortable buying things by scanning an iPhone. And I don't think the lack of government endorsement is so much the issue with Bitcoin either, though it certainly will be if things don't go smoothly.

i think it really comes down to the crazy hyper-distorted-redistribution-of-wealth-dispersement/adoption scheme (early adopters have wild fortunes for pennies compared to those spending thousands today), liquidity issues, extreme market volatility, not a ton of evidence of use in transactions aside from being siphoned immediately back to traders via 3rd party processors

describing its problems in a way that can be summarized as "its so revolutionary its blowin minds too quickly and needs time to settle in" is really sugarcoating it to an extreme degree

yen223• 13 years ago

The way I see it, the technical aspect of Bitcoin is fascinating; the economic aspect, less so.

cheesylard• 13 years ago

Please, someone, get this trash off of the front page. Not only is this entire article completely content-less, but the number of fallacies in it is palpable.

I wasn't going to waste my time on this, but after skimming for 20 seconds I came to this:

In many ways, Litecoin is looking like a better investment. For Litecoin it is still early days because the infrastructure is not quite there. However, it looks to be a more promising currency from the technical standpoint, e.g., allowing faster transactions and a longer time until the end of the mining cycle.

Faster confirmations DON'T MEAN SHIT. Just because it takes 2.5 minutes for a Litecoin confirmation doesn't mean it is any better. Yeah, a Litecoin confirmation is 4x faster than a Bitcoin confirmation, but all that means is that a Litecoin confirmation is 1/4 as secure as a Bitcoin confirmation. Which is actually worse, when you think about it because the blockchain is more bloated.

Its current market capitalization is $215 million, giving a factor of 45 potential growth to simply catch up with Bitcoin.

Are you fucking serious?

jafaku2• 13 years ago

Just to clarify, the transactions are actually instant in Bitcoin. What takes ~10min are the confirmations, which like you said, take time for a reason: security.

Litecoin adds nothing to the table.

jquery• 13 years ago

Article was a transparent attempt to pump Litecoin.

ericb2• 13 years ago

Litecoin is just a me-too bitcoin clone. I see it as analogous to PhpOnTrax, Groovy on Grails, or Castle vs. Ruby on Rails. Although, it is actually worse than that as it is mostly a fork stealing the original codebase and repurposing it for spurious reasons, I believe.

For some reason, with open source projects like this, the real innovations usually continue to flow from the original project, not the clones.

vinchuco• 13 years ago

myspace, facebook

ericb2• 13 years ago

Litecoin is much less innovative than either of those.

A better analogy is me downloading the ark source that runs Hacker News and launching mycombinator.com with "bigger upvote icons."

randartie• 13 years ago

I think litecoin will do better in the long run because of faster transaction times. I can't buy a soda with bitcoin because I would have to stand around for too long.

If people opt to pay with a digital currency, it will be LTC.

jafaku2• 13 years ago

It doesn't have faster transaction times, only confirmations. Do you even know why confirmations take time? Security.

Anyone who understands this new technology knows that Litecoin doesn't have any significant improvements over Bitcoin.

Besides, you wouldn't wait 10 minutes, but you would wait 2.5 in average? I know I wouldn't, nobody would. That's what 0 confirmation trades are for, and you can do that with Bitcoin just fine.

If you want to gamble you should as well put money on Tenebrix, Infinitecoin, and Vaginacoin. I've heard they are great.

dwaltrip• 13 years ago

The large majority of transactions are completely safe with zero confirmations. For those less common situations that require additional security, it generally doesn't matter much if you have to wait 2.5 mins or 10 mins, especially considering it takes a couple litecoin confirmations to achieve the same level of security provided by a single bitcoin confirmation.

flycaliguy2• 13 years ago

It's a smart way to diversify your portfolio, at least it was before they went up to $40 today. I bought $40 worth at $4 based purely on my gut feeling that Snowden is going to drop a bomb on bitcoin.

possibilistic• 13 years ago

Could you elaborate on the Snowden bit? Do you think Bitcoin is being monitored (or was designed) by the NSA?

im3w1l• 13 years ago

While I love bitcoin and have some myself, I think the number of stories is approaching spammy. Not complaining about this story in particular.

ashray• 13 years ago

Great write up! Only fools think that a $100 investment in bitcoin today will turn them into millionaires. This has to do with risk vs reward. A $100 investment in 2009 may have turned people into millionaires but at that time the chances of losing $100 were quite high. Now, with a lower risk than back in 2009 you're going to have to have greater skin in the game. $10,000 may see you with some good returns. You may still lose it but the chances are lower than back in 2009.

How high can it go? While your analysis based on market cap is mostly correct, unfortunately it's just a good guess. Bitcoin has the potential to replace currencies, MasterCard, Visa, Paypal, and more! Which of these will it do (if any)? Nobody knows. But if it replaced stuff, it's market cap would be way higher than the conservative 1% of X niche that you've estimated.

Personally, I'm optimistic for $10k. That's 10x now vs the 10,000x gain already seen since '09.

I have no clue whether it will go to 10k, 100k, or 1MM per bit coin. I'm on for the ride though and it's been pretty fun so far. I'm excited to see which problems bitcoin will solve and which industries it will disrupt.

alandarev• 13 years ago

In 2009 it would be an investment. Now, it solely is speculation.

Nobody is going to be surprised, if next day the Bitcoin will evaluate at $100 a unit.

Though I am just as you excited on what is going to happen. Sadly, my ignorance and scepticism were a result of not invseting into Bitcoin in 2010, moreover I feel it is being too late to invest now.

kilovoltaire• 13 years ago

    9. Bitcoin has a mining system that produces a maximum
       number of 21 million coins at the end. Its really not
       clear what the long term viability of this exponential
       drop in mining activity will be and whether it will
       cause problems in time.

This last point is completely wrong I think.

There won't be an "exponential drop" in mining activity, because mining rewards exponentially decay anyway, so the system involves no sudden changes at all.

conception• 13 years ago

Plus miners get them transaction fees.

iamjustin2• 13 years ago

There may not be any sudden changes in the rewards, but that doesn't change the fact that the rewards are decreasing, and with more people involved, the competition is increasing.

It's also pretty much impossible to CPU mine anymore, and with the addition of ASICs to the mining pool, even running a GPU miner is no longer profitable after calculating electricity costs.

I understand that you don't have to be mining to assist in verifying transactions, as simply running the bitcoin-qt client aids processing of transaction, but there no longer is a financial motivation to do so.

With an increase in the rate of transactions as the Bitcoin market continues to grow, it seems that the transaction speed will certainly slow down, and the security of the network will decrease.

If there is anyone here that can explain to me why I shouldn't be worried about this situation, I'd absolutely love to hear it. I'm bullish on Bitcoin, and I think there is still a good future for the currency, but I'm worried...

zvrba• 13 years ago

I understand that you don't have to be mining to assist in verifying transactions, as simply running the bitcoin-qt client aids processing of transaction, but there no longer is a financial motivation to do so.

Indeed, what will happen if most of the people end up firing up their bitcoin-qt client only to do a transaction, and shut it down immediately after?

sfjailbird• 13 years ago

Miners will make money from transaction fees. As with everything else in the bitcoin protocol, this is a beautiful self-regulating mechanism: Transactions attach a fee of any size (or no fee), to motivate miners to process the transaction.

If there were to be fewer miners to the extent that transaction time becomes a problem, people will attach higher fees to transactions to get them to complete quicker, which increases the profit from mining, which makes more people want to mine, etc. etc.

b1daly• 13 years ago

Can anyone comment on the implications of the sub-divisibilty of bitcoins? Is it practically infinite? This would seem to be totally new territory for "currency."

It does seem to be a near perfect vehicle for pure speculation right now, and I see no reason an alternate like Litecoin couldn't join the party. It obviously already has!

corysama• 13 years ago

Bitcoins are divisible to 0.00000001

anupshinde2• 13 years ago

Bitcoin will come down to near 250 by Jan (end)/Fed(mid), if we go by the patterns shown in forex/stock markets. I'm not very sure if the patterns for Bitcoin/USD can be compared to the forex markets or stock markets.

anupshinde2• 13 years ago

On a second thought – I think a significant crash like this can be destructive to bitcoin and make it slide much further – considering that the sentiment towards bitcoins is still that of a “bubble” or a “ponzi scheme”

Bitcoin – How high can it go?

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