... how will these high rates affect the overall bitcoin market? Someone had mentioned an investment of 25KBCT.
I won't go into the numbers much for now - the principle concept is more important. Two primary factors need to be acknowledged:
- The dynamics behind Pirate's business result in high demand for bitcoins in relation to other currencies, particularly USD
- Bitcoin's current supply inflation is about 25-30% per year
These are opposing forces that act to restrain the external exchange price rise (assume USD/BTC for this discussion).
What you seem to be concerned with is the internal mechanism. As long as supply is available through either inflation or willing sellers, high BTC/BTC returns are feasible. If the internal demand outpaces available supply, the exchange price will rise; that's the external influence (USD/BTC) which entices existing bitcoin holders to sell, replenishing the supply and allowing the high returns to continue.
At the inflection point where mining rewards are halved as we approach 2013, there may very well be a need to decrease the rates. However, that still leaves another four years of 8-12% base inflation, not including sellers (whether purely BTC sellers from within the system [mining, paid for work, etc] or foreign exchange [USD<->BTC] sellers). So the insanely high returns we're seeing now probably will persist for at least another six months, but will eventually decline as the percentage of total bitcoins held by FPS&T (I'll always think of it as First Pirate, not BS&T
) grows,
or if Pirate's external-facing side of the Bitcoin business slows down.
We're witnessing an
external speculative wave of wealth escaping overbearing, self-destructing fiat currencies by jumping into safer waters - right now it's only a trickle, and the internal structure is
extremely fluid. Still, the signs of basic structures are forming - banking, lending, storage and security, transaction facilitation, etc.
Pirate & Co. may be single-handedly enabling and funnelling external demand into the bitcoin system. If Pirate maintains the present course and quality of service (both inside the Bitcoin community/network and out), I expect no less than two years remain for rapid growth. By then, competition may have solidified and be acting as a limiting factor to enforce more sustainable levels of expansion.
Obviously this program wasn't meant to last forever. But as long as you get your principle back, no crying or whining allowed.
Exactly, and there's no reason to believe principle won't be returned in full - this isn't your daddy's fiat currency: it's a pirate's
