Quote from: evoorhees on October 10, 2011, 07:59:55 PM

Quote from: tvbcof on October 10, 2011, 07:38:10 PM

Quote from: evoorhees on October 10, 2011, 07:17:46 PM

Quote from: tvbcof on October 10, 2011, 06:56:52 PM

If a small-ish group of people can buy the daily supply with a smallish amount of money, I would say that the system is in it's death throes.

According to your logic, Bitcoin was dead 2 years ago.

But let's examine something. If the price went back to $1, Bitcoin would be just like it was when it was previously $1, except for the following:
- many new exchanges
- many new merchant solutions
- many new vendors
- stronger hashrate
- stronger brand recognition
- longer lifetime (more reasonable to trust)
- stronger client software
- no displacement by multiple competing chains
- etc.

If Bitcoin was viable when it was previously $1 WITHOUT all those subsequent improvements, it'd be reasonable to think it's viable at $1 WITH all those improvements.

The enumeration of improvements is exactly why I consider the solution to be dying. It is a bad omen to me that even with all of those things you've outlined, the whole systems capital creation can still be purchased for a small outlay.

You're letting the massive speculative bubble up to $30, and the subsequent fall, cloud your judgement.

Consider the market price to be made of two components, the fundamental value and the speculative value. In an asset like Bitcoin, the speculative value will be a very large portion of the market price, because the investment case for Bitcoins is extremely strong (ie - if Bitcoin succeeds, the price of a coin will skyrocket, and if it fails, it will fall toward zero). The result is that the fundamental value component is obfuscated by the extremely volatile speculative value component - and thus the fundamental value may be far higher or far lower than the market price at any given time.

For evidence of this, consider that the fundamental value of Bitcoins didn't increase 30-fold when the price went from $1 to $30. Similarly, when the price fell from $10 to $5, the fundamental value did not halve. It is the speculative component which drives market price right now, and for the foreseeable future. Bitcoin is simply too disruptive a technology to avoid this phenomenon.

The price falling to current levels is indicative of a change in speculative assessment, not fundamental assessment. It takes a wise, patient investor with nerves of steel to understand this and act accordingly - buying when the speculative value has dropped the market price below the fundamental value.

The simple lesson is this: a falling price does not indicate a less valuable Bitcoin, and a rising price does not indicate a more valuable Bitcoin. Ignore the market price, try to discover the fundamental value of these things, and then act/invest accordingly. I think the fundamental value of this technology is massive, and until a serious security flaw is discovered in the protocol, my long-term outlook for the market price of a bitcoin is very bullish. Short-term, I have to take a shot of tequila sometimes to calm the nerves and like you said, don't invest more than you can be comfortable losing.

+1. Very well said.

Bitcoin is already a huge success in my opinion. Its success is not gauged by its price, but would be better served if its price was on par with its current "fundamental value".
I'm not sure where that exact value is, but my speculation is somewhere between $3 dollars to $4 dollars for the next several months. Anything lower than that I consider a steel and will be investing heavily. Also, it does make a lot of since for it to be driven lower than its fundamental value for that has always been the history of bubbles deflating. My guess (speculation) is the all time low will be somewhere between $2 to $3.

One thing I observed with the huge price increase to $30 was a mentality of the limited supply nature of Bitcoin. After going that high, reality started to set in that it couldn't be sustained with the current money injection rate and has continued a decline ever since. As the price starts to approach levels only seen before the huge bull run, I fully expect the "limited" supply mentality to start to kick in and create a very rock solid bottom. As for the the mining aspect, I'm fully confident in the miners like my self that will continue to support bitcoin even at a loss (call it a hobby). Why? Where else is there such a system that could compete with the federal reserve. It is truly a priceless technology.
The tragic thing would be if the prices deviated to such an extreme from its fundamental price for a second time. With the ability to short and mature bitcoin investing, I really hope relatively and sudden high prices do not happen again.

Bitcoin will not die, but will continue to live. Rid yourselves of fear and greed and find better reasons to support this. Government and Banking Cartels have really screwed us in so many ways. Bitcoin is truly a powerful tool for individuals to be free.