Bitcoin Hits $1 Billion
spectrum.ieee.org
spectrum.ieee.org
This is analogous to being present at the creation of the World Wide Web, but instead of getting excited about its obvious potential, one decides to stay on the sidelines because it's still unproven technology, almost no content has been made available online, commercial opportunities are virtually non-existent, etc.
As hockey superstar Wayne Gretzky said, "a good hockey player plays where the puck is. A great hockey player plays where the puck is going to be." Judging Bitcoin based on where it is today, instead of where one thinks it will be in the future, is shortsighted.
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PS. My full thoughts on Bitcoin's potential: http://cs702.wordpress.com/2011/05/29/on-the-potential-adopt... -- I wrote this almost two years ago, but my views haven't changed since then.
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Edit: In hindsight, I see how my quoting Gretzky could come across as arrogant, which was not at all my intention. The only point I was trying to make is that new technologies like Bitcoin should not be judged based on what they look like today, but rather on how one thinks they will look in the future.
The phrase that really resonated with me was https://www.youtube.com/watch?v=7fvSYT7vhQY#t=404s : "When a few get something for nothing, at some point in a zero-sum game most will get nothing for something". That point may not happen anytime soon, but I think that's a very legitimate concern.
But lets say we accept its argument anyway, is it really applicable here? Would you really argue that the creation of a new cryptocurrency is a zero-sum event?
Couldn't it instead be the case that enormous new wealth is created due to the existence of a new payment infrastructure, and that the people who get something are capturing some of this new wealth?
I'm not saying Bitcoin is a sure thing by any means; just that its flawed to evaluate the wealth apparently coming from it as a zero-sum process.
It's similar for the people who "get something for nothing" by mining bitcoins: they're getting paid for making the proof-of-work chain function correctly, and for distributing the initial bitcoin supply in a way that's not based on some central authority handing out bitcoins.
Moreover, the argument that the cited video makes about criminals using the currency (i.e. "honor among thieves" doesn't exist) is fundamentally at odds with the concept of the infinitely iterated prisoner's dilemma. That's why the whole concept of "reputation" envolved (in Nature and online). Someone with 98.7% positive feedback might screw you to save $50, but doing so would not be beneficial in the long run.
What am I supposed to present to the user during this time? Am I supposed to tell them that their payment may or may not have been accepted, please check back in ten minutes or wait for an email? How would you handle this if it were a real person in a real store, at a register checking out?
https://coinbase.com/merchants : "Confirmed in 1 hour"
Underlying issue not addressed
Which is faster than any credit card gives money to a merchant. As is a one hour final confirmation.
What Coinbase (and other bitcoin payment processors) offer is instant confirmation that the customer has the funds available and that the payment is allocated to you. This is all a credit card is 'confirming' for you in seconds as well. It's the same thing. "Payment is available and is coming your way".
What's different is that Coinbase is saying that within an hour, the funds are 'confirmed' as yours. They are available to you in your wallet. You can do with them as you will. You literally have money in the bank.
Now, converting those funds to USD and having them show up in your bank account takes a few days, but that's the legacy banking system that's at fault there.
If you want to spend the Bitcoins at Bitcoins, however, you have only to wait an hour.
The difference between waiting a month for your money and waiting an hour is absolutely tremendous. The fact that our business ecosystem has evolved to work with the delay doesn't mean that removing the delay is not desirable.
Removing that economic friction is revolutionary. It can facilitate new business models and accelerate the pace of commerce. That's the real importance of Bitcoin, or of whatever cryptocurrencies follow on after it.
They reduce friction and increase economic velocity.
> However, the problem is that the amount of time it takes for a transaction to become "verified," i.e. be part of the official block chain, can take up to 10 minutes.
coinbase is pretty cool but fails completely at solving the posted problem. The soonest I've seen payments settle is in about an hour.
The problem is that all the advantages of Bitcoin is now lost, and you have transferred control of Bitcoin to the Bitcoin bank.
For example: you can gather Flexcoins, which allow instantaneous transfers and so forth. But by doing so, you no longer have Bitcoins. You only have Flexcoins, and if the Flexcoin bank goes under... you lose all of your bitcoins.
IE: Using Flexcoins (or any other form of Bitcoin bank) completely defeats the purpose of Bitcoin.
This exists now with charge cards. You load up a card, and you bear risk that the company could go under.
"IE: Using Flexcoins (or any other form of Bitcoin bank) completely defeats the purpose of Bitcoin."
I'm not talking about an alternative coin. I'm talking about something akin to what happens now with CHIPS and FedWire, where the dollars are shuffled at a later date but the transactions are approved before it happens.
That isn't a loss of the advantages of bitcoin, because you got to choose which organization to trust, if any. With government currencies, you don't get to choose.
Bitcoin actually provides a new choice: government or no-government. People that want government/cb currency are free to choose it. People that want no-government money can choose Bitcoin.
https://upload.wikimedia.org/wikipedia/commons/7/70/US-%245-...
Which is the entire point of this thread of discussion. People are not liking the restrictions on Bitcoin (ie: wait X number of hashes before the transaction is complete), and are recreating "alternative currencies" for Bitcoin. Which to me... seems against the point of the medium.
Anyone can keep spending money in a "Green Address" which is guaranteed by the eWallet provider.
There are no problems without solutions. We have an over abundance of solutions just begging for problems. This is the age of abundance.
"In startup we have great of capability for churn out solution. Please send problem, we are pay good money." - https://twitter.com/DEVOPS_BORAT/status/315549020326088704
But, 1) Bitcoin isn't cash, and 2) you're not paying in-app with cash.
Any time you need to rely on external systems (which is always the case, with electronic payment), as much of that reliance as feasible should be made asynchronous.
Or could you run a dedicated miner to only process your own txns (or does mining not work that way?)
The higher txn fee ups the chances of your txn being in the next block (it's up to the miner that wins the block which txns are included - some set a minimum fee). Once your txn is placed in a block, it is included in the future blocks too. A confirmation is generated by each block your txn is in, and a block is generated every ten minutes, so for 6 confirmations, you still need an hour.
Running a dedicated miner wouldn't help since you'd have to be the one to win the next block to be able to process your txns.
You actually can accept transactions instantly just fine; the term "confirmation" is slightly misleading here. Try actually paying for some web service or product with Bitcoin - they all confirm the payment instantly. Sure, there is now a very slight possibility of fraud instead of a negligible one, but given that nearly all businesses still do this it's clearly not a problem.
Assuming everything else goes as expected, the merchant then issues a "Capture" which finalizes the transaction, and they receive the funds once settled (within 24 hours).
If the CC # details were stolen or the customers otherwise feels that it was a fraudulent transaction, they can call up the bank who will do what's called a "chargeback" and take the money back from the merchant plus a $25 "fuck you" fee.
Fraud rates are expected to be less than 1%, if they get higher than that you get in trouble as a merchant.
But the thing that's absolutely not happening is blind shipping of goods or delivery of electronic goods with a guess that the customer will probably pay, even below any amount.
Bitcoin:
* funds transfer: instant
* fraud vulnerability window: 1 hour
* fraud exposure: reversal of transaction
Credit card:
* funds transfer: 24 hours
* fraud vulnerability window: 60 days
* fraud exposure: reversal of transaction + $25
And while a shorter "fraud vulnerability" window is good for the merchant, it's terrible for the consumer. People have come to expect that they can get their money back if they get scammed or get their CC details stolen, it's a huge part of what's attractive about credit cards vs. cash.
Would you carry $50,000 in cash on your person? No. But you wouldn't mind carrying a credit card with a $50k balance on you, because you know you're protected.
Actual Bitcoin transactions on the block chain would only be used to refill the other currency for day-to-day transactions, or for large transactions that don't have to be instant, like buying a car or a house.
Disclaimer: I own Bitcoins.
There's almost nothing you could be selling online that couldn't be reversed within an hour or so of the sale in the relatively rare cases of fraud, with the possibly exception of wire transfers of cash.
It's true that it would be hard to get a lot of value this way, but it's still the case that the person accepting the payment must be wary of the possibility and, as you say, be able to reverse the transaction if the coin ends up double-spent.
It actually can take a lot more than 10 minutes. For all you know, it could take forever. 10 minutes is the average.
> What am I supposed to present to the user during this time? Am I supposed to tell them that their payment may or may not have been accepted, please check back in ten minutes or wait for an email?
That person is paying you with Bitcoins. They already have an idea of what a network confirmation is. Tell them you're waiting for N network confirmations. Send them an email when the transaction is verified by your node, and a second email when the transaction has enough network confirmations.
> How would you handle this if it were a real person in a real store, at a register checking out?
It depends on what you're doing. If it were a Starbucks, for example, I would serve the coffee right away, without waiting for blockchain verification. It's unlikely that someone who has more than 50% of the Bitcoin network is using that massive power to double-spend on a Chai Tea Latte.
If I needed more confirmation, I could send the transaction to some trusted miner nodes, and see if there's consensus. If those nodes say they will include the transaction in their next mined block, then I can close the deal without waiting for the blockchain to verify it. Of course, this can be done automatically.
So you're okay with a currency that has shifted a huge portion of its value in a day and insecure exchange after insecure exchange getting hacked (and thousands of dollars worth of Bitcoin getting stolen)?
Right now, Bitcoin is like the stock market before it had any regulations. I feel like the people that tell me not to worry about these issues are the ones that invested lots of money in it (and don't want to lose it).
Q1. We can differentiate between fiat currencies by looking at the qualities of the issuing authority, and thus determine that it's better to have savings in Swiss Francs rather than Zimbabwean Dollars. With Bitcoin, Litecoin and other forks, how do we differentiate apart from popularity of the network?
Q2. I've heard the argument that Bitcoin is valuable because there is scarcity in the system, a limit to the number of coins, thus it is similar to gold. However, if tomorrow somebody discovered vast amounts of pink gold, with exactly the same chemical and physical properties as gold, except for the colour, it's likely the price of gold would fall. As Bitcoin is facing this exact scenario via forking, what are the potential consequences, and does it even matter?
[1] http://litecoin.org (changed the hashing algorithm from SHA256 to Scrypt)
Currencies are all differentiated based on their ability to be spent. Qualities of the "issuing authority" is one measure of that, when there is such an authority. But even for dollars there are other properties: difficulty of counterfit, number of merchants who accept the currency, etc. Merchants in Argentina don't accept dollars because they can pay their taxes in dollars, or because the U.S. government is insuring their accounts. They accept dollars because they can be readily, stably traded for value in their country.
Cryptocurrencies can be spent in places where no other currency can (international transactions, politically sensitive transactions, etc). Transactions can never be reversed. You can store them in your brain. You can keep your bitcoins in your brain while you are imprisoned in Iran, and spend them whenever you are released. These are all aspects of a currency's spending power.
You may think that government deposit insurance, or promise to accept tax payments in a currency, or promises to stabilize prices by issuing debt are the Be All End All of spendability measures, but that's you. There are lots of other concerns people other have.
As someone schooled in economics, I have to point out the fundamental difference between technologies and economic "innovations". The key thing is that any currency or investment scheme or similar phenomena is going to always contain risks as well as rewards (the US dollar contains risk right now, it's main virtue is being perceived as having less risk, not that it's "solved" the risk problem).
If the Internet as it exists today, was able to "crash" tomorrow in a way that left everyone with less than they had before, it would be ambiguous, even twenty years into the project, whether it was a good thing.
That's the distinction between an upsurge in a technology and an upsurge in an economic phenomena. Housing prices and Internet usage increased substantial in the period 2002-2007. Internet usage brought information and utility that pretty much couldn't go away and leave you worse off. Housing prices could and did.
I hate the fact that it can be used by child pornographers or terrorists but hey, so can gold, a Ben Franklin or a €500 bill. A feature of technology is that it's neutral, it can be used for good as well.
I have no problem with the idea, I think cryptocurrency and electronic money is the future but in my view bitcoin will just be one among many.
I suspect holders of the Zimbabwean Dollar would disagree, as would the holders of many other hyperflationary currencies going back many centuries. Such currencies were all legal tender, but it didn't make any difference.
There's nothing wrong with that. For every WWW, there are a thousand technologies that looked similar when they were young, and were a flop.
As an asset class it's far too volatile even for someone who plays naked options. Imagine putting $10,000 into an asset class that swings 20-30% daily on a regular basis. Trading curbs eat your heart out.
As a currency it's too impractical and there are serious hurdles involved with turning central bank currency into Bitcoin and vice versa.
We think Wall Street plays a rigged game. Manipulating the Bitcoin market would not only be possible for someone with a small amount of capital, but the regulatory boards(SEC/FSA) don't seem to be interested in coming within 50 parsecs of the stuff.
Bitcoin is an interesting idea with the potential to change the world, sadly the world just isn't ready. More importantly the people running the world aren't ready.
The moment Bitcoin starts to worry a Government or a big bank they'll simply manipulate the market. Oh, and you wouldn't even know.
Even if they were, take a look at what happened yesterday when someone dumped 5k bitcoins onto mtgox.
My personal (amateur) theory is that people were hovering over their "sell" buttons, looking to cash out as we approach the landmark $100 point. Once they thought someone with a lot of coins was bailing, they took that as a sign to head for the exit.
I also think that MtGox's horrible lag factors into the dips. Their trading engine was running as much as 8 minutes behind during this event, which causes people to not be able to modify or place orders. Along with not being able to see actual "current" trading info, this causes a certain segment of the trading population to go into full panic mode.
Placing market sell orders in an engine that's showing you ancient data during a crash seems suicidal, but for some reason people do it.
I'd love to see Gox upgrade its engine. I honestly think it would make a notable difference in price stability.
Even better, I'd like to see the market grow strong enough to support 3 or 4 primary trading sites. There are a number of others now, but the rest have such low volume that you should only use them to pursue specific opportunities (arbitrage).
For example, let's say that the exchange rate is 100 USD per bitcoin at the moment and that you have tons of people who would absolutely sell their bitcoins if it went below 90. I'm not in the bitcoin game, but I think mtgox offers "stop on loss" features so that people could get out of bitcoins automatically.
If you're sure that you want to be in bitcoins, but you think that there are a lot of scared players who put their "stop on loss" too high, you might be able to provoke some kind of selling avalanche by selling sufficiently many bitcoins at once. The price drops below 90, which triggers a lot of automated selling. This makes the price drop even further, triggering other stop on loss barriers, driving the price to 80 and so on.
With your $5 millions you buy up all those bitcoins at a rate of 50 USD per bitcoin when the avalanche stops. Then people realize what just happened and the price of bitcoins crawls back to 100 because that was more or less the fair market price.
The point is, with $5 million dollars you might have the power to create digital panics, a "flash crash", and use that to your advantage.
I don't know if $5 million is enough for that, and it's not a guaranteed return.
Someone sold off 5k bitcoins (~USD $450k at the time).
That's exactly what happened. Big sell off from 95 to 80ish, and then it sprang back to ~$90 today.
There's low confidence in it right now, but that's because most players are actual players. They aren't using bitcoins for groceries, like a bank reserve (yet). They're playing them like stocks.
Imagine a hedge fund with an order of magnitude more monetary mass trying to provoke those kind of sell offs and benefit from them.
That just shows most people are hording it / not really selling or trading, and a few people are buying it, probably the majority of which are doing so because they need to spend it on SilkRoad or a gambling site.
The moment that goes away, or a few big holders decides to cash out, watch out.
Likewise you could hack the computers of early adopters who own a lot of bitcoins (back when mining was easy). For example, someone paid someone else 10,000 bitcoin for a pizza a few years ago.
You now own a significant portion all all the bitcoins.
Alternatively, hire security professionals and finds bugs in the bitcoin protocol or client software. You may be able to force another fork.
Facebook has indeed proved to be much more successful than MySpace but I still think its valuation will settle far below what it is today.
BitCoin may always be more volatile than other currencies. That doesn't actually matter much as long as it's liquid with other commodities and currencies. Its primary purpose is transfer, not store value. It will however stabilize the more broadly it is held and the more real commerce it is involved in.
As someone who was actually involved in ecommerce in 1995, I can tell this was one of if not the biggest concern for consumers.
In 20 years, perhaps you will tell us BitCoin was not a big leap since we were already used to electronic checks and fiat currency.
It was very comparable to bitcoin. Everybody has been complaining about bitcoin while the entire time it's been growing and growing and growing. It's still growing and people are still acting as if it's nothing.
Of course banks are worried. If bitcoin grows just two more orders of magnitude (how many has it grown so far?) It will become a serious threat.
Volatile, sure. Depends if you want to invest long term with it, and you understand the risk.
> As a currency it's too impractical and there are serious hurdles involved with turning central bank currency into Bitcoin and vice versa.
I found it pretty easy. Coinbase was lovely; getting verified on Mt Gox was a bit of a pain.
> We think Wall Street plays a rigged game.
Yeah, because it does. On a personal level I find the finance industry as a whole too difficult to gain any insight in to. I wouldn't know if my bank was collapsing or not, or if the housing market was in a true bubble. I can fully understand bitcoin. Maybe it's a false sense of safety, but I don't think it is.
> worry a Government or a big bank they'll simply manipulate the market.
Possible. We'll see how it plays out.
Most importantly though,
>I just don't understand the purpose it serves.
Very low fee, near-instant, world-wide monetary transfers. It serves a purpose.
This is what gold used to be used for. But gold is not liquid, and Bitcoin is. It appears that hackers have made something better than gold, the longest standing store of value in human history. What an incredible achievement! For the first time in history, I can somewhat safely make the argument that we now live in a post-gold economy. Gold is still there, but we now have something even better for storing value.
This is getting deep into the economics of mediums of exchange, which are important for understanding what is going on here.
I did a talk on Bitcoin a while ago where I went into describing Bitcoin from a medium of exchange perspective rather than a technology one. It may help you to understand what is going on here, and why I think that this will continue into the future: http://www.slideshare.net/KyleDrake/bitcoin-the-cyberpunk-cr...
I think that depending on what the future looks like (no zombie apocalypse, massive wars, etc.), there will be some kind of cryptocurrency that basically replaces gold. It's very exciting.
At the current time, though, given that bitcoin hasn't withstood the test of time, it's a bit hard to claim that gold is outdated. It's not hard to convince someone that gold or silver have value because of all the historical precedents. That counts for something when considering in which money to invest.
From my point of view, bitcoin is an even more stupid investment. As little as 5000BT makes the rate plummets. Nothing could stop a young Soros from pulling out a mini-black Wednesday. Add the fact that the market is completely unregulated and you have a pretty risky situation. I see Bit coin has a step backward. It's like current currency without any of the warranty provided by governments (security of trade is one of the main reason we instituted government after all). To the people who will argue that Cyprus is currently stealing its citizen, please think about what would have happen to them if there was no way to get a bailout and the banks actually collapsed.
"For a bit of perspective, that's how much Facebook spent on its acquisition of Instagram last April."
Some might argue that the comparison employed distinctly encourages a lack of perspective.
EDIT: To be clear - this quote is not intended (by me) to be a knock on BTC. It's just an elegant statement of my own opinion that the value of 1 BTC is not all that indicative of its value to the economy.
Personally, I'd prefer my money to increase in value.
I'm not going to avoid a currency for the benefit of the economy, nor would that be consistent with expected economic behavior.
If you're a Good Person, however, you should be interested in becoming rich by creating real value. And you should be interested in promoting an economic system that encourages people to create value rather than hoard assets.
You don't have to be a Good Person, of course. And no one has to like you, either.
I'm thinking all kinds of startups should spring up from that, but I haven't thought of any yet. What are your thoughts?
So far, every transaction get processed. Eventually.
I've seen some no-fee transactions take several hours recently.
But there's also currently some issues with the overall load of transactions, due to a gambling site spamming tiny "dust" transactions as part of its system. That's caused there to be a lot more transactions, which means sometimes you'll have to wait a number of blocks for a no-fee transaction to process.
A block is supposed to happen an average of every 10 minutes, but it's not deterministic and there's a variance. It can take an hour or more for the next block to come up, in rare cases.
Eventually it will matter when mining dries up. There will need to be "transaction exchanges". Personally, I am designing a coin that never mines out, because I believe it to be a superior design.
Basically, you can do "tip $0.50" on reddit and a bot will parse your comment and process the transaction.
I'm genuinely not sure how it would be received in this community. It would certainly be something to put past the moderators first.
I wish someone would make a drop in widget for me to sell android apps for bitcoins and PayPal on my website.
Sure, similar arguments can be made about using cash but there are fundamental moral issues with Bitcoin I can't agree with. I would like to believe a better model is possible. Thoughts?
Or, are you implying that there is something fundamentally immoral about Bitcoin itself, which cannot be affected by having more honest users? I admit that this could also be the case, for example, if Bitcoin turns out to be such a massive success that it destroys the ability of nations to collect taxes, affect monetary policy, etc.
What I see as "fundamentally immoral" about Bitcoin is the fact how so much of it has been acquired by black hats through bot-net and hacking of exchanges. They OWN a fixed percentage of this economy thus their net worth increases every time fresh "real" money is brought in anywhere in the pool. There is no way around it that I can see.
To give an analogy, I would personally not eat in a restaurant if I knew it is co-owned by local drug dealers even if the food was delicious.
Obviously I can see the positive side of having the ability to process payments without going through the government. This discussion is not black and white for me at all.
Looks like 1.64 GH/s = $10.66 a day roughly, compared to a cost of $400 a day.
The hash rates are order of magnitude faster than what's currently out there for the price, and most importantly they'll drive up the difficulty quite a bit.
They have:
https://news.ycombinator.com/item?id=2566365 http://www.bitcoinplus.com/miner/embeddable https://bitcointalk.org/index.php?topic=9042.0 https://github.com/progranism/Bitcoin-JavaScript-Miner
But these are all best-case assumptions. Your visitors might not average 5 minutes per page. Your JS mining tool almost certainly won't be as efficient as the specialized GPU rigs that can mine bitcoin for less than the cost of electricity (and drive up the cost per unit for everyone else who's mining bitcoin). Or your users might not have an extra 100W of power to throw at your mining operation. Taking these factors into consideration, I'm guessing you'd be looking at CPM equivalents that you would never touch.
Also, I suspect it would be considered malware by many. Still, it's an interesting idea.
GPU rigs have even been greatly surpassed in hashes/sec by the ASIC rigs (of which only 1 real batch has gone out, all the other providers are probably scams).
(And what do you recommend I read to learn this kind of stuff)
Everything is in here: https://en.bitcoin.it/wiki/Protocol_specification
Or read the source code for the standard client: https://github.com/bitcoin/bitcoin/blob/master/src/main.cpp
It's on the first page, last sentence of the original paper on Bitcoins...
"The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes." [1]
That said, I think bitcoin is super exciting and want to see it succeed. But it needs to be much more heavily traded, regardless of its dollar exchange rate, for that to happen.
Based on what? Are you seeing something that suggests it's capped out for now? I'm asking because I'm at a complete loss to explain BTCs charts; all seems like gambling to me at the moment. That said, I haven't seen any numbers that really suggest the gambling is over.
From the article and from the valuation/volume charts that are available from MtGox and elsewhere. Having watched a number of things become the object of speculation (stuffed animals[1], old computers, internet stocks, real estate, Etc) if you look at their value over time and their trading frequency the traffic develops a quick jump and dump mode when folks are speculating. I attribute it to people buying, capturing gains, then buying again to capture more gains.
I don't think its "capped out" what I think is that a bunch of people are jumping into the currency to make a quick buck. And the way speculation works is very much like musical chairs, you jump in and sit down, jump in and sit down, and hope that when the music stops you were sitting down and not standing. If enough players have the stomach for it (it can be both exhilarating and scary to gamble a lot of cash) then the run will continue, once it crosses some threshold, it will come crashing down.
[1] Met a person at a garage sale that had over 1,000 "new in box" Beanie Baby(tm) stuffed animals, including some of the "really rare" ones. They were selling them for a dollar each, it was kind of sad.
greece in 2010, portugal in 2011, spain and greece in 2012, and cyprus so far in 2013.
2 more for 2013 before it starts to look like a Fibonacci sequence :D
Also the valuation might go over and under $1B multiple times in the future.
Number of Transactions
https://blockchain.info/charts/n-transactions-total
Transactions / Day:
https://blockchain.info/charts/n-transactions
Trade:Transaction Ratio:
https://blockchain.info/charts/tx-trade-ratio?showDataPoints...
156,779.62 BTC in the past 24 hours
What I think you're looking for is known as Estimated Transaction Volume - https://blockchain.info/charts/estimated-transaction-volume
https://en.bitcoin.it/wiki/Bitcoin_Days_Destroyed
Here's a chart of BDD per week (log scale is best in this case):
http://blockchain.info/charts/bitcoin-days-destroyed?showDat...
Here's an attempt to track transaction volume, minus change transactions (the Bitcoin client almost always performs a transaction to issue change back to the sender whenever he/she sends money to someone): http://blockchain.info/charts/estimated-transaction-volume-u...
Both of these metrics point to a slow but steady growth in the number of Bitcoin transactions conducted -- this in spite of a huge increase in their exchange value against the USD and other fiat currencies. So people are spending their Bitcoins. And this trend will likely continue as more companies accept Bitcoins.
In a sense, its a more granular way of looking at money velocity.
Under BDD, if i understand it correctly, the single dollar case would result in a nearly 100% BDD while the billion dollar case is much more modest. It looks at each bitcoin independently. The dollar analogy would be if we kept track of every single dollar bill etc.
The increasing number of bitcoins means that there are more and more days to destroy, so I'm having trouble relating it back to behavior.
The price of most goods is currently tied to some other currency, because most businesses have expenses in traditional currencies. But you get similar price fluctuations in international trade.
Instead, we print money and give it to Wall Street and the super rich.
(BitCoin is doing well right now because of the Cyprus crisis.)
I have no clue about its directional future, but I can see it being, for the next 10 years, a way of betting against the world-- a distinction that gold used to have.
Either a major calamity like government intervention will end BitCoin, or it will be supplanted by different technology, or BitCoins will appreciate for decades. They will either be worth zero, or a lot in my estimation.
Disclosure: I own 20 bitcoins.
If you buy BitCoin, you're betting on the prestige of its being the first. Do people even know what the first fiat currency is? Or care?
People who sell at the top of BitCoin are going to make a lot of money, but for the long-term value, I'm betting on zero.
It is a fair point that there could be other competing, but not dominant currencies, which could lead to a non-zero, but low price for bitcoins. So perhaps, 0, a lot, or anywhere in between for the value of a bitcoin.
As long as the number of things you can buy with bitcoins rises over time, the value of bitcoin will rise. I don't think it is unreasonable that the momentum, including technology and community (not just brand around BitCoin) will make it a favored son in digital currencies. So it's not just buying it based on the prestige of being first, it's buying based on the value of being first. I actually bought my coins when YC invested in CoinBase, because I thought that was a strong signal.
It will be an interesting future where people buy currencies based on their mathematically-dictated value profiles, as opposed to whichever currency is sold by the local government, and _seems_ to be the most stable.