1.
/u/moral_agent actually questioned today whether we were still in the "struggling" phase, or whether we had entered the "going up" phase. Myself, I don't think the true "going up" phase will begin for several weeks.
2.
It's interesting to note how this sideways period of the cycle seems to produce more negative posts in /r/bitcoin than the downward part did. There is more despair there than ever. People are finding all sorts of reasons for despair, like the low transaction volume, or low Internet merchant uptake, and so on. There's even a post from a purported financial advisor who claims that Wall St people are not going to buy bitcoins becaues they aren't denominated in bits.
3.
I disagree with people who say that the infrastructure is not in place to support another bubble at this time. As I stated in a comment a few days ago, I think that the price of bitcoins is much higher than most people thought it needed to be given the level of penetration.
For example, some people say that bitcoin would capture the entire remittances market at a value of $6k. That clearly isn't the case, as it would imply that bitcoin would need to have captured almost 10% of all remittances now. All of these projected valuations are gross underestimates. It's difficult to determine why that is, but perhaps a larger number of coins have been lost than anyone thinks.
Therefore, the argument that a bubble won't occur because there isn't enough use for bitcoins yet is flawed. The number of uses required for bitcoins to reach any given price point is clearly much lower than people had thought.
4.
There are always speculators in every market. A large number of people trade other currencies for dollars, because they think dollars will appreciate in relation to those other currencies. They never have any intention to spend their dollars; they just don't want to hold the other currency.
Even when bitcoins reach equilibrium, speculators aren't going to disappear. You can't say that, at some point, all the speculators will be replaced by users. The end price of bitcoins will include a valuation based on uses of bitcoins, plus a large amount of speculation, just as there is now.
5.
One of the dangers of the 1MB transaction limit is that it requires a hard fork. One of the dangers of a hard fork, which becomes more significant as there are more people invested in the system, is that the old fork doesn't just go away. Instead, it retains value and reduces the value of the true fork by a certain amount.
There may be valid reasons why some subset of companies is unwilling to upgrade to a new bitcoin fork, so they would temporarily or permanently agree to continue using the old fork. Just as occurred with Mt Gox, the value of all bitcoins would be split: perhaps the price of regular bitcoins would fall by 10%, so the old fork would be worth about 11% of what the new fork is worth when value is split between them. There would then be two currencies calling themselves bitcoins. And, of course, every person who owns new bitcoins would also have old bitcoins, so speculators would appear and Cryptsy would add a market for people to trade between the two.
This is one of the reasons that a hard fork is almost impossible to execute successfuly at this point.
6.
If you doubt that there will be another bubble, pretend that it is eight months from now, and there are the following three scenarios:
- Bitcoins are worth $1600 after having crashed through another bubble cycle
- Bitcoins never moved more than $10 one way or the other and are still at $450
- Bitcoins are worth $100 because it turns out that they were never really all that useful to anyone and were just a fad
In predicting the future, one needs to consider all the alternative possibilities. In my opinion, the argument for bitcoins to rise in value is supported most significantly by the lack of a feasible alternate possibility.
Other
- Does anyone know why the namecoin daemon does not support getblocktemplate? Every single one of the other 51 coins we've downloaded supports it. Is there something special about that daemon that requires a different method that I'm not understanding?
- Days until July 24: 69