Post
Topic
Board Bitcoin Discussion
Re: Watching amateur finance types flail
by
jerfelix
on 24/06/2011, 19:09:10 UTC
The OP was entertaining, to say the least.

First, you can look at Bitcoins in a lot of ways.  But to compare it to Digicash and Beenz really shows that you haven't done your homework.  Probably a lot like predicting "the dot-com crash over the last Decade".  (That would have been a little more impressive if done in 1998, and not over the last decade.)  Digicash and Beenz have only a very little bit in common with Bitcoin.

If you look at Bitcoins as analogous to the Gold Rush of 1849, it might provide a better parallel.  Early miners made a lot of money, while later miners "made a living".  If you had never heard of a gold rush, and 1849 hit, and you heard of a lot of people getting rich on gold, you (as an uneducated person) might be tempted to buy gold.  This, of course, would be silly, except that a lot of people buying gold drives the price of gold up, and so as gold gets attention, people see that others have made money buying gold, and so you get the bubble.  People buying Bitcoin is a lot like people buying gold in 1849 - it doesn't make a lot of sense, unless you believe that it either is a) a good store of wealth, or b) going to rise in utility /value in the future.

Bitcoin is going to get more attention primarily because it has solved a problem that has never been solved before - Beenz and Digicash didn't solve it.  Paypal and Mastercard didn't solve it.  Cash doesn't solve it.  Bitcoin has a very clever solution to a very difficult problem.  And it's the first to solve it.  So Bitcoin is going to get attention.  And with attention comes investment.  And with investment comes a rise in value.  As long as Bitcoin continues to GROW in the attention it gets, chances are good that people will try to figure out how to invest in it.  And to see that there were only 61,000 accounts in the Mt. Gox leaked database, that shows how truly tiny the Bitcoin community is.  In fact, there were less than 10,000 prior to May 15th or so.

It will take YEARS for the Bitcoin infrastructure to approach that of regular currencies.  That's obvious.

Many people who have taken a close look at Bitcoin from a mathematical standpoint see the beauty of it, and instantly want to "invest".  Unfortunately, there's no "Bitcoin Corp" that is a reasonable investment, so the best they can do is buy the currency.  This will continue until some obvious leader becomes "invest-able" at which time, a significant amount of "Bitcoin speculative investments" will go that route.



Currency speculation isn't the best way to make money in Bitcoin.  Building the infrastructure is.  (There's a reason why the remnants of the Gold Rush of 1849 are Wells Fargo and Levis Jeans.  They made sound investments "around" the gold rush, not in it.)  But there's a short term opportunity to make some cash on speculation, and there's nothing wrong with that.

If Bitcoin reaches Paypal's level of success in a decade, then you can do the math - there's a limited number of Bitcoins, and that number needs to support the sort of environment that Paypal supports.  So that means they will be worth over $100 in about 7.5 years.   Not thousands.  Not mllions.  But between $100 and $200.

But if you build a nice Bitcoin Company that will benefit from this trend, and go public, the public will flock to you (assuming you have a decent plan, and Bitcoins keep gaining in mindshare.)