Topic: Price of bitcoin in 5 years? plus explanation not a gambling thread. (Read 4297 times)

“The market can stay irrational longer than you can stay solvent.” - John Maynard Keynes

If the value of bitcoin is the same in 5 years that it is now, it will likely have out-performed all fiat currencies.  If it is the same in 20 years, it almost certainly will have done so.  That alone makes it a bargain at today's prices.

How rational is the exuberance?

Er, why?  You do realize that, because 1MB is way too big to be a practical constraint at the moment, that it might as well not exist.  And yet, we've all been getting along just fine without a central diktat as to what we should be doing?

It's amazing how, when left to their own devices, people just figure things out and get on with it, like adults.

Missed the third reason?

Were getting to the next hurdle in the bitcoin dialogue.

1) The network hash rate is increasing tremendously, and looking at all the major players coming to market by December/January, we are looking at another 10PH added in the next several months.
2) This is going to push the difficulty up as well.
3) As the network hash rate increases, the PPS rate is going to drop dramatically. Whereas a few months ago you could be pulling in a few BTC a day with 100GHs machines, you are lucky to pull in 0.1 now. What this is going to do is push smaller miners to other currencies and the rise of pools like multipool and middlecoin. This is going to create a situation where there are a lot of hashes being pulled from the BTC network, and the difficulty is going to level back off - however because the rate is too high for most small miners (anything less than 0.001% of the hashing pool), a lot of them are going to stay away.
4) There is going to be a rush to liquidate hashing hardware, reducing the pool further, and consolidating the "generators" to a smaller and smaller group.
5) As the other currencies start to become as acceptable, BTC is going to come into the sites of day traders and forex investors - allowing them to make money day trading while the market is still young. This influx is going to boost the price of BTC phenomenally.
6) Disruptive technologies are around the corner which are going to push the hash rate even higher. Only those with BTC reserves at this point will be able to purchase the new machines.
7) A new class of BTC elites will arise and the hashing battles ensue. Other Crypto Currencies will start to look a lot more attractive, and the pool will shrink again.
As we near the 1M block size limit, transactions are going to become more and more costly, so BTC to other currencies will replace straight BTC to BTC transactions. Intermediary currencies will start to see their valuation rise the same.
9) At this point, it becomes cyclical - fully mined crypto currencies become the "gold standard" and other currencies are simply orders of magnitude smaller. You might see a structure something like this.

BTC as the root gold standard -> LTC as an intermediary fund for scryptcoins -> Next 3-4 fully mined cryptocurrencies -> next 3-4 fully mined scryptcoins -> Intermediary transaction mechanisms

You'll also see the generation of OTU wallets with fixed amounts of BTC, and the conversion from digital trading currency into physical trading bits - verifiable via local tools. The need for a BTC encapsulation mechanism is going to arise - something that allows these physical BTC to maintain their value and not be counterfit nor copied - something like a RFID inside with a read only verification combined with a biometric database and bitbook...

But before we get there, we still need to mine the rest of the coins. And $55k per coin is a very, very low estimate in my appraisal.

However, there are a few things which could damper this.
1) Disruptive technologies which break the encryption of the BTC wallet keys
2) More undergound trading haulted by regulation
3) Regulation and governmental oversight (two way street)
4) Passing fad where investors and money leaves the market - remember, BTCs are only as valuable as they can be exchanged for tangible goods (or means to get tangible goods).
4) Internet explodes, WWIII, Zombie outbreak

It bears revisiting this.

I'm with you 100% in this estimation.

It won't be a smooth ride but I am optimistic that Bitcoin will scale enough to handle a significant percentage of world transactions. Right now it is still clunky for the average person to use, consider 1990s websites compared to today's or 1990s cellphones compared to today's touchscreen smartphones. Wallet security is a concern. The zero-confirmation problem needs more work for face-to-face shop sales.

However, I expect a lemming-like stampede from fiat when a critical mass of widespread Bitcoin acceptance and usage occurs. When the average person realizes they risk being left holding the bag they will exit their fiat savings with a vengeance. There will be a massive psychological push as well if Japan explodes its yen or the euro finally cracks up.

I'm guessing around 1k a coin

If the trend holds it might be at 6.25. The transaction fees might make the difference between break-even and profit. What you are saying the problem will not arise because of altruism (which is running a node without a financial incentive)
People running a node because they provide some sort of service and do not mine might want to sell their transaction data.

Read the paper a solution to this problem along these lines is actually proposed in there. When it was published it was harshly criticized but maybe people have become more receptive.

Actually prices are more likely to go up by percentage - 7% per month would bring us over $10K in 5 years.

Yeah sorry, I'm being lazy, watching England beat Australia at Rugby and surfing at the same time was just too much for me 

Thank you kindly Sir.

http://research.microsoft.com/apps/pubs/default.aspx?id=156072

You could have googled it yourself though.

That sounds interesting. Do you have a link to more information?

Exactly. If you look at price charts for any commodity, equity or currency you won't find many straight lines. They move in patterns but never go from A to B without pullbacks.

it feels like we just got started, everyone is jumping aboard and we are ready to go! I can only imagine what the bitcoin world will look like in 2018

In 5 years the design flaw pointed out by Microsoft research can become relevant.

If you can't remember what that was about:
Without a sufficient block reward nodes will stop broadcasting transactions because by not doing it they increase their chance of getting the fees contained in them if they are mining.

Speculation about bitcoin price is really funny because if you listen what people say, they are certain (including me) the bitcoin price will be high. Lets assume $10000 in 5 years. It is doable. But it means bitcoin price should increase by $166 per month. Then why people are screaming about bubbles when price jumps by $30 in one month?

$10000, by then everyone would know Bitcoin and start buying it just for the sake of owning some....

Here's another scenario that I have been thinking about, based purely on adoption by the masses. Bitcoin has seen huge strides in adoption rates by number of businesses this past year, but there is a long way yet to go. As more businesses adopt it, however, the incentive for everyday users grows. Couple thus with the advances by the W3C Web payments group and initiatives from companies like Moneero in trying to provide a user friendly interface and I think we are likely to see adoption by the masses in the next few years.

What does that mean though? Current estimates of users range up to a million currently, so let's say the adoption in the next couple of years gets to 10,000,000. Each of them will need bitcoin, so let's say there are 1,000,000 coins liquid (not lost/forgotten/holding/invested). That averages to 0.1 BTC per user. Now what kind of purchasing power does each user need to justify wanting the bitcoin in the first place? No idea, but let's say $500 per person. So that means their 0.1 BTC is worth $500, or we have $5000 per coin.

Personally I think these assumptions are low. There will either be more than 10m users or they will average more than $500 per person. Liquidity is anyone's guess but I would presume as the value goes higher more people would sell. Interestingly if you use 100m users and 10m BTC you get the same result.

Max Keiser makes an interesting argument for why he sees 5-6 figures in a few years: https://www.youtube.com/watch?v=A2Cjo7CHh6w&feature=youtube_gdata_player

Basically around the 3 minute mark of the above video they are discussing hedge funds and how that will be driving the price. The whole opening segment though is quite an interesting discussion about price.