Topic: When in 2013 shall Bitcoin break its all-time-high of $31? - page 3. (Read 8877 times)

Do I assume correctly that your underlying premise is therefore that that price follows cost of production - or more indirectly that price follows difficulty which follows cost of production?  Many would argue with you that it works the other way round.  I get the impression it is more generally believed that price is determined by the balance between supply and demand and that when the price goes up difficulty goes up as more hashing power comes on line until cost of production is near BTC price.  You'll also find some technical analysis on this I have found to be persuasive.

For me the next interesting price milestone is $17.

At that point, we can well and truly put that awful Wired article "The Rise and Fall of Bitcoin" behind us.
The one that stated:
"... but the damage had been done; the bitcoin never got back above $17."

http://www.wired.com/magazine/2011/11/mf_bitcoin/all/

Do I assume correctly that your underlying premise is therefore that that price follows cost of production - or more indirectly that price follows difficulty which follows cost of production?  Many would argue with you that it works the other way round.  I get the impression it is more generally believed that price is determined by the balance between supply and demand and that when the price goes up difficulty goes up as more hashing power comes on line until cost of production is near BTC price.  You'll also find some technical analysis on this I have found to be persuasive.

Do I assume correctly that your underlying premise is therefore that that price follows cost of production - or more indirectly that price follows difficulty which follows cost of production?  Many would argue with you that it works the other way round.  I get the impression it is more generally believed that price is determined by the balance between supply and demand and that when the price goes up difficulty goes up as more hashing power comes on line until cost of production is near BTC price.  You'll also find some technical analysis on this I have found to be persuasive.

I don't think it'll go beyond $20 again, at least until the next reward halving. It hit $31 because of a whole lot of hype and attention out of nowhere, then it quickly went back down as the difficulty did. I actually expect its price to go down because of how affordable and efficient ASICs are in comparison to GPUs.

There is a third option you're not really considering, which I find strange. There is the possibility that Bitcoin really finds some uses that make it lift off and enter mainstream.

Actually, I think the intention of the mainline developers is to lower the transaction fee over time as the value of bitcoin rises relative to other currencies.

Bitcoin won't scale to very high prices (adoption) yet, the blockchain size will explode and transaction fees will be very high if BTC adoption (and thus price) is going to grow tenfold. Adoption growing hundredfold would break the network.

Bitcoin is not a mature technology yet.

What are the m-of-n transactions? 

m-of-n transactions are available, we just need the apps to be built

Bitcoin development is going pretty fast even though it will probably be a few years before it is ready for mass adoption. At that point Bitcoin will be worth several orders of magnitude beyond current value. All it will take for speculators to kick it up a notch is a killer app. These will be plethora when m-of-n transactions become available.

IMO me.ga (if accepting bitcoins) will have a much greater impact on bitcoin. compared to me.ga wordpress is tiny

There are 3 likely possibilities for Bitcoin. The first option is that Bitcoin continues to be a currency of the niche. Most of you are thinking along those lines. That is the route of slowing growth rate. Even in that case Bitcoin can break the all-time-high quite easily but it will take some time. The second option is that Bitcoin gets destroyed or fails somehow during the next couple of years.

There is a third option you're not really considering, which I find strange. There is the possibility that Bitcoin really finds some uses that make it lift off and enter mainstream. I believe the possibility of this is not insignificant. If that happens, we will see a growth rate far beyond of 2012. The price would go through $100 like a knife through butter. Instead of 100's of millions, the market cap would be in the billions.

Remember that the spike in 2011 was basically Bitcoin becoming known at all. Mainly in the technology & libertarian circles. If Bitcoin hits mainstream in usage, the spike in 2011 is a blip that will look like a straight horizontal line in the graph of the future. We don't know if this will happen or when it will happen but I think that 2013-2015 is the time it will likely happen if it is to happen.

So in conclusion I'd say that if Bitcoin starts to really show its potential in 2013 we will break through $31. Like it's nothing. However that might not happen or it might happen in later years. In that case there will be a slowing growth rate that is fairly linear, for a while longer at least.