[MichaelDickens]

> If everyone is talking doom and gloom, buy in. If everybody is talking about how bitcoin is the greatest thing ever and people are starting bitcoin investing clubs and "the price is going to keep skyrocketing!!!!1"...it's time to sell.

Right now there are plenty of people in both camps. What do we do then? If we're just talking about predicting Bitcoin's price, I don't see that we have much reason to believe we can do better than chance.

[orthecreedence]

That's probably why the multi-hundred-dollar fluctuations lately. There's also not really enough chart data (or volume) to facilitate technical trading.

You're right. If you have your money in bitcoin right now, you are taking a pretty big risk. However, I personally think that if the past year is any indication, there's not really a cap to the value it has at this point. It could add another few 0s to it's value by next year (subsequently taking other altcoins with it).

At the very worst I think it could drop down to ~100USD, but to go past there would be really difficult as it spent a lot of time building that base between 100-150. Still, that's about 80-90% loss if you were to buy today.

You'd be stupid to put in your life savings, but if you like high-risk, high-reward investments, it might be worth it to throw a few grand in.

[mkramlich]

Agreed that in the long term Bitcoin will either add a few 0's, in terms of say USD/BTC price (and equiv gov fiat), or, it will go towards 0. But I think the 0 scenario will only happen if a massive exploitable flaw is found, or, if a clearly better replacement/successor (most likely another digital/crypto-currency) to Bitcoin comes along, and everybody clearly and can easily switchover to it.

I'm not sure if Bitcoin is perfect. But I do think it's like the Internet was to a lot of older tech, but with respect to money. That says a lot about its potential and its niches. I know that as an engineer it's been frustrating for years, if not decades, being aware that money is essentially just a score, just bits of information, a number, and that moving money around is just like incrementing/decrementing two money fields in a database, but somehow the government banking and paper monetary systems seemed to make it so much more complex and slower and bureaucratic that in needed to be. (Also taxation has been made ridiculously over-complex, partly by malicious intent, I think, and partly and innocently by the momentum of the less tech available in an earlier age, the age before electronics, computers and the Internet.)

In short, Bitcoin is one particular way of letting money be as simple as a shared distributed scoreboard, as just bits in a database. It's not perfect. But it's much closer to what money fundamentally is at its heart.

[MichaelDickens]

> But I think the 0 scenario will only happen if a massive exploitable flaw is found, or, if a clearly better replacement/successor (most likely another digital/crypto-currency) to Bitcoin comes along

What about something like this:

* A sufficiently large group of people decide for whatever reason to sell their Bitcoin.

* Prices drop.

* In response, tons of people start selling their Bitcoin.

* Positive feedback loop. Bitcoin loses almost all its value.

Since Bitcoin has no fundamental value, there's nothing to stop its price from plummeting. I think the above scenario is fairly probable.

[orthecreedence]

This happens in the stock market all the time. Generally what happens is buyers start challenging the sellers once the price drops enough.

I'm not saying a crash is impossible, but it's going to take a lot more than a lot of people selling to bring the perceived value down to 0. I think something like an exploitable flaw is a much more likely reason.

[MichaelDickens]

Right now, M1 money supply in the US is about $2.6 trillion (source: http://www.tradingeconomics.com/country-list/money-supply-m1). I couldn't find any data on world money supply, but extrapolating from US money supply, I'm guessing it's about $10-15 trillion.

The current market cap of Bitcoin is $10 billion (source: https://blockchain.info/charts/market-cap). In the absolute best case, Bitcoin will be adopted as the de facto currency of the entire world, in which case its market cap should rise to about $10 trillion—an increase by a factor of 1000.

That said, it's highly doubtful that Bitcoin will take over all world currencies in the near future. It may be reasonable to expect Bitcoin to grow, but it's almost certainly not going to increase its value by 100x in the next few years.