[panarky]

Thank you, this is the kind of well reasoned argument that makes HN worth it.

I don't pretend to know whether Bitcoin is going to $5,000 or to $0, but I do see a big market opportunity along with some very large risks.

Here are a few more:

* Positive: increasing mainstream interest and investments -- Coinbase, Silicon Valley Bank, Wordpress, Reddit, Mega, Tradehill, etc.

* Positive: greater public awareness of the risks of government monetary systems -- Cyprus confiscating bank deposits, central banks printing money, etc.

* Negative: online exchanges and wallet services frequently compromised.

* Negative: association with conspiracy theorists, fringe media personalities, etc.

Let's have a fact-based discussion. Speculation about exchange rates based only on gut instinct is just noise.

[modeless]

You're missing the biggest risk: Governments are likely to declare Bitcoin illegal as soon as it shows any signs of threatening their control over the global financial system. Of course they can't stop people from trading Bitcoins online, but they can come down hard on the exchanges, which must exist as brick-and-mortar institutions with deep ties to the existing financial system, and thus can't be hidden or decentralized in any practical way. That would cause Bitcoin to crash to 0 overnight, as Bitcoins are worthless if you can't exchange them for other currencies.

[frisco]

While I grant you that this is possible, it's probably risk #971 on my list of Bitcoin risks right now. China has already forbidden buying real things with virtual currencies, but I think it's very unlikely that many Western governments, especially the United States, will do so. It's almost certainly constitutionally protected, though it will trigger complex tax questions. I can't guess what will happen with China, but I don't think that it's a game breaker.

[modeless]

I think "fighting terrorism" in the form of preventing "money laundering" through Bitcoin will be more than enough justification to push a bill through Congress, and even if it is unconstitutional it won't really matter at that point, because Bitcoin will crash long before any constitutional challenge could possibly make it through the courts.

[w-ll]

Just like alcohol use crashed with prohibition, or the drug market? Previous attempts to stop these have resulted in larger market shares of those willing to still do related business and almost always increases demand.

[ufo]

Illegality doesn't increase demand. It just means that the supply gets provided by shady criminals instead of legal business that follow the rules.

[erikpukinskis]

It increases the per-vendor demand as experienced by the vendors who stay in the market.