I have made some slight revisions to the forecast.
[...]
How do I know I am right?
I do not and can not know that. I only know that it is similar to what has happened before, and the current phase in the cycle represented by the forecast seems to correlate to where we are now. I am just putting it out there so the method can either fail or succeed publicly... It helps to keep me focused.
If we zoom out to the big picture, we are undoubtedly looking at a "phase transition" type of graph -- a sigmoidal S-curve (
https://secure.wikimedia.org/wikipedia/en/wiki/Sigmoid_function).
This is common and normal for the uptake of popular new technology -- the same basic graph is found if you plot the adoption rate of many things (e.g. cell phones, Twitter, whatever). Once it hits the exponential growth phase, it rises very quickly (sometimes the graph can be nearly vertical), until it finally tapers off when it reaches the point of saturation. For example, there are now around five billion cell phones in use, so you can understand why it no longer has explosive growth (the world's population is seven billion).
Even if the new thing is much less popular (say 0.001% of the population cares about it, so it peaks at a few million users), the graph looks much the same, and it tends to find its saturation point fairly quickly. It is a power law, and fractal (i.e. similar across scales). Even if two such processes are substantially different from each other, they tend to look pretty similar when plotted with our usual linear bias (we weren't built to see those differences clearly).
The short story is that it will probably grow fast, then level off (and stay there unless something else replaces it).
So the real question is whether bitcoin has reached its saturation point yet.
I don't think so. I believe there are many big stories and broader markets yet to come. There is even a chance that it becomes ubiquitous (i.e. the most common currency exchanged in the world). The chance of that doesn't need to be very high to have windfall potential. For example, a 1000-to-1 chance of increasing 100000-fold in value is still a fantastic wager, and a 10% chance of increasing 100-fold is still a good bet. [Unlike other commodities, the price will go up because there is only a finite amount. 21 million is a small number, so we're really talking about 21 billion mBC, or 21 trillion uBC. Imagining a market cap 1000 times bigger than now is very easy -- and that still wouldn't be as big as World of Warcraft, nevermind a Samsung, or a Norway.]
The whole bitcoin idea could also flop and go to zero, as we've seen with many new technologies that never caught on. I don't think that's very likely though, given the passionate following of people who crave freedom. (Not to mention the support of the black markets -- it can't go to zero if arms dealers start using it!).
I would look for the basic patterns that chodpaba has identified to repeat for at least a few more cycles before they taper off (not repeat
exactly, mind you, that's not how fractals work). And it will be good news for everyone once the adoption phase is complete, as the hoarding will stop, and the currency will start acting like a currency should.
. 
