[atte]

I'm fairly new to the Bitcoin world, but it seems to me that ultimately (in 10 years or so) one of two things will happen:

1) Bitcoin will gain large-scale adoption. As a result, the value of Bitcoins will greatly increase from what it is today.

2) Bitcoin will fail due to government regulations, better alternatives, or other unforeseen reasons. As a result, Bitcoins will become effectively worthless.

Am I oversimplifying so far? If I'm not, then it seems like investing substantially in Bitcoins (purchasing coins) now will either make me very rich in 10 years, or I'll lose my initial investment.

By the same logic, if I earn coins by mining now and hold them, I will either be rich in 10 years, or I'll lose my mining investments.

I'm not interested in diving into mining to earn a quick 10-20k while the market fluctuates, so as a long term strategy it sounds like investing is the more sensible and less time consuming option. Thoughts?

[nullc]

A lot of people agree with this thinking.

It's not the only possibility— e.g. Bitcoin could putter around for a long time basically where it is now, maybe acting as a very mild threat the keep the alternatives on their toes enough that Bitcoin never gets widespread adoption.

Right now it's possible to make a decent amount _today_ with mining as a small / hobby business, supplying coins to people who don't want to get into the mining stuff, without engaging in major speculation yourself.

[ams6110]

I see this "puttering" as the most likely possibility, since if they do hit some level of adoption that starts to threaten sovereign currencies, the GP's option (2) will come into effect.

[mrb]

Maybe some non-democratic governments will become hostile to Bitcoin, but democratic ones will most likely not try to stop it because they eventually do what the people want.

Case in point: even the US Treasury Department's FinCEN bureau recognized enthusiastically that Bitcoin offers "potential" and "holds great promise" to US economy: http://www.fincen.gov/news_room/speech/pdf//20130613.pdf

[ISL]

Puttering would still be inflation-corrected.

[nullc]

Maybe. Puttering could still have a small positive or negative slope.

[tlrobinson]

That sounds pretty much correct. I compare investing in Bitcoin to investing in an early stage startup.

Regarding mining, each time Bitcoin mining technology improves there's a mini gold rush. If you can get your hands on the technology before everyone else you can make quite a bit of money for a few months. But there's also the chance your preordered miner won't be profitable by the time you get it. This may be why hardware manufacturers prefer to sell hardware (i.e. pickaxes) rather than mine themselves.

Long term, once Bitcoin ASICs catch up to the state of the art Bitcoin mining will be very a very low margin business. Only the most efficient hardware located in places with cheap electricity will be profitable.