12 ms·

Bitcoin’s roller-coaster ride gets wilder as Wall Street, China climb on

38 points by hkimura 13y ago

bitcoinnoob 13y ago
Question from one of the uninitiated: I heard that the Bitcoin block chain is already many gigabytes. How is this expected to scale over time and are there any challenges for the network if it becomes too large to quickly/easily share? (Or not since only the tail is really needed?)
- fragsworth 13y ago
  The block chain is designed to grow (roughly) linearly, while storage capacity grows exponentially. Also, the protocol can be changed to accommodate any technical limitations in the future.
  - lingben 13y ago
    I've often wondered how exactly the protocol would be changed. Who is in charge? who would make the change? how would it be implemented and enforced in a decentralized system?
    - base698 13y ago
      https://bitcoinfoundation.org/about/ https://bitcoinfoundation.org/about/ There have already been some interesting happenings with upgrades. The blockchain forked and everyone had to roll back to a previous version.
      - kens 13y ago
        I've been wondering about that exact thing - if incompatible versions could cause an accidental fork, and what would happen. If that has already happened, I would love to know the details.
        base698 13y ago
        http://www.reddit.com/r/Bitcoin/comments/1a51xx/now_that_its_over_the_blockchain_fork_explained/ http://www.reddit.com/r/Bitcoin/comments/1a51xx/now_that_its... Good run down, it was this year.
    - knowitall 13y ago
      People code bitcoin clients. People vote for a protocol change by using those clients instead of the old ones. A change can not be enforced. If a significant subset of clients decides on a different path (for example stay on the old protocol), a fork of the blockchain would be the result. I guess then if you would own 1 BTC before, you'd suddenly own one "old Bitcoin" and one "new Bitcoin". There are already clients that only download parts of the blockchain, trading storage and bandwidth for reduced security - for example the mobile clients, or Multibit (afaik). I suppose they rely on trusted nodes (not sure). But suppose SHA256 would be broken and the "vote" would be to change the mining protocol to scrypt. Why wouldn't the nodes and miners change? It's not so different from updating your web server when there has been a security bug. Some people forget to update their web servers and get hacked. The next time, maybe they won't forget to update. Maybe if you installed your bitcoin software with a package manager, it will be automatically updated. It would be interesting if there was an attempt to enforce "tainted coins" (forcing clients to reject bitcoins that are known to have been through criminal hands). I suppose governments could require businesses to only accept btc that are not tainted. I honestly don't know how things would play out - maybe the community would addopt it, maybe not, or maybe there would be a fork... All just from my limited understanding, please correct me if necessary.
  - ngoldbaum 13y ago
    It's easy to beat an exponential with a linear function, at least over the short term. Anyway, isn't that true only in the limit where the number of transactions per second remains roughly constant?
  - nerfhammer 13y ago
    what if the amount of transactions grows exponentially?
- gibybo 13y ago
  This is the size of the blockchain over time: https://blockchain.info/charts/blocks-size https://blockchain.info/charts/blocks-size. It's currently 12 GB and has a maximum growth rate of ~6 MB/hour. The hope is that storage and bandwidth get cheaper faster than the blockchain gets bigger. There are definitely challenges with its current growth rate. As currently designed, it's capped at about 25,000 transactions per hour. The developers are working on addressing this limitation, but the solution is complex and they aren't done yet. We went from ~200 transactions/hour in Jan 2012 to ~2,700 transactions/hour in Dec 2013, so it's conceivable we end up getting pretty close to (or hitting) the cap in the near future.
  - mynewwork 13y ago
    Does that mean someone can denial-of-service all of bitcoin just by moving a balance between a couple wallets repeatedly? Can one person (or group)'s activity crowd out other people so their transactions can't be added to the blockchain? What prevents that from happening? 25,000/hour is a shockingly small number to me. I feel like I must be misunderstanding something, or else someone from 4chan would have already DOS'd bitcoin for fun.
    - knowitall 13y ago
      There already is a transaction fee - miners will ignore your transaction if you pay too little or nothing.
    - teraflop 13y ago
      Transactions normally include a small fee, to incentivize miners and disincentivize abuse. You don't have to pay the fee, but if there are more transactions being broadcast than the blockchain can accommodate, the fee-paying ones get priority. (It's a little more complicated than that: when you generate a transaction, you choose whatever fee you want, and they get prioritized based on a combination of the fee, the transaction size in KB, and how long it's been since those coins were last moved.) Current transaction fees are typically in the range of 0.1-0.5mBTC, so in order to continuously flood out everyone else, you'd need to spend more than 2.5BTC/hour in fees.
    - 13y ago
- mediocregopher 13y ago
  As you say, only the tail (or really, the head, if you think in terms of cons-ing onto a linked list) needs to be present for a client to operate at almost full operation. The only entities that really NEED the full chain are those who are doing historical accounting, like the various blockchain explorers and those who run analytics. These people are already putting some investment into scaling and processing concerns anyway, so I'm not worried about them.
- feral 13y ago
  >I heard that the Bitcoin block chain is already many gigabytes. True. >How is this expected to scale over time and are there any challenges for the network if it becomes too large to quickly/easily share? This is debated. >(Or not since only the tail is really needed?) That's basically the first approach. If you trust someone else to tell you the state at time X (give you a 'checkpoint' basically), then the volume of data still grows with the number of separate accounts that have 'bitcoins' in them, but [where all the remaining money is as of recent time X] is a lot less information than [the complete set of previous transactions for all time]. Or you could have a thin client, that trusts some other service to maintain and monitor the current state of the system, which your thin client regularly queries. Both of these schemes cut down the data storage requirement a lot, and sort of solve that scalability problem. However, both require trusting some third party to supply you with an abbreviated version of the transaction history (or group or parties, or chain of authority, etc.), and its open to debate whether, if you do that, you lose some of the 'decentralised' aspects of the system that make it nice. Or you could say that's "just a philosophical concern" that doesn't really matter. I personally guess that the various developers will be able to engineer around this problem. I'd be more worried the system handling real time transaction volume, if it became mass adopted, and people tried to do all transactions on the blockchain. Check out https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability as a starting point.
- samwise 13y ago
  I would check out https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability . In the paper published by "Satoshi Nakamoto" he detailed a technique called pruning in which old transactions that can longer affect other transactions are drop from the blockchain
- knowitall 13y ago
  The original whitepaper already mentions a way to reduce the size of the blockchain using Merkel Hashes (iirc) - they show that it is sufficient to only remember parts of the blockchain. It hasn't been implemented yet, but I suppose if the problem becomes really pressing it will be implemented. I suppose some of the fun parts would go away then, such as the possibility to view every transaction that has ever been made - in the Merkel Hashed blockchain not all information would be preserved. Edit: I suppose it would still be possible to monitor all transactions and remember them by some other means, just not in the blockchain.
- wmf 13y ago
  https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability I agree with fragsworth that once Bitcoin is mature the blockchain will grow linearly; in the short term we may see more rapid growth. Most users are not expected to store the whole blockchain; using SPV or UBC a peer can store much less data.
deleted 13y ago
[deleted]
sillysaurus2 13y ago
I bought 0.4 BTC via Coinbase right when the price dipped to $900. Once the price climbs back to $1200/BTC, that'll net me $115 after fees. When the price suddenly dives, you may want to consider buying. It's always paid off so far. It seems like a solid investment strategy, because Bitcoin is still very young. Therefore it's probable that the infrastructure will continue to grow, and it will continue to become more popular over time. It's looking like the price is about to enter into a "slow'n'steady" phase of growth... I predict it will rise from $1100 to $1500 over the next month or so. Consider this: If you have $10k lying around, you can set up a Coinbase account and buy 9.5654BTC right now. Then you can set up an MtGox account and sell those coins when the price climbs to $1500 (which seems pretty inevitable). Therefore your $10k will become $14,262 after fees, which you can then wire back to your bank account. $4k is a pretty nice chunk of change, so you may want to seriously consider it. But you must be willing to keep your money in BTC if the price tanks. It requires a lot of discipline not to freak out and sell. The overall thing to remember is that BTC will almost certainly hit $1500; it's just a matter of when. So if you have a mutual fund, you may want to redeem it buy BTC instead. Something else to consider: the price of BTC won't be able to double very many more times. That means an opportunity exists right now; an opportunity that won't exist very much longer. In a year or two, I predict you won't be able to count on BTC steadily rising in value. Whereas you can pretty much count on it between now and then. Anyone who's interested in growing their money on a long-term basis should seriously consider investing now. EDIT: My comment was written mainly for historical purposes. A year from now I'm going to go back to this comment and see how wrong I am. This is the first time I've been confident in an investment opportunity of any kind, so it'll be interesting to see whether that confidence is misplaced. EDIT2: Don't invest any money you aren't comfortable with losing, obviously. But it's unlikely you'll lose more than half of it. I'd say there's a 95% chance that putting up $10k now will net you $4k sometime in the future, because BTC is only going to grow in popularity and capability, not diminish. Therefore the question is how long you're comfortable with waiting. EDIT3: Hm, I've hit a nerve. I wasn't trying to tell anyone what to do... but it probably sounded that way. Sorry. I was just doing a quick writeup of my own personal thoughts regarding Bitcoin's near future outlook. I'm nobody special, so please don't take financial advice from me.
- knowitall 13y ago
kolev 13y ago
I think the news about China is pretty bad as it cut off one of the arms of Bitcoin - being used as currency. With very limited use in e-commerce so far, I think it will stay as a speculation tool for a while. I personally think it will drop below $1,000 as it ran out of steam trying to break $1,200 several times without much success. The drop in transaction volume after it passed $1,000 speaks for itself, too. Also, a lot of speculators are now looking into altcoins, which hurts Bitcoin, too.
- nazgulnarsil 13y ago
  bitcoin can't really stagnate, inflation is still over 10%. $4.3+ million USD equivalent demand must enter the system each day to maintain a steady price. Maybe after 2016 when inflation hits 4%. Right now it's either up or down.
  - kolev 13y ago
    Well, it can't completely - even if it drops back to $500, it still will be better than USD or CNY. I just don't think there's much interest at the moment for price above $1,000 and Merrill Lynch/BofA pretty muched capped the price temporarily at $1,300. There's another dump happening right now - the temporary increase was nothing, but the typical "dead cat bounce" we've seen before. Too much bad news isn't always good news!
SwellJoe 13y ago
I find the coverage by Wall Street (well, one analyst on Wall Street) funny, actually. While I agree with the method by which he's assessing the current value, I think it's also amusingly conservative, which isn't surprising. There's a long history of old business leaders viewing the technology that destroys them through the lens they view all of their traditional competitors, and vastly underestimating what it's impact will be. Innovator's Dilemma is one way of looking at it, but in this case I think that's woefully inadequate of an explanation (i.e. comparing a new tech company against an old tech company). Here's the thing about Bitcoin, and the reason I've become really excited about it: If it succeeds, it means an end to banking and money as we know it. You can't compare that to Western Union, or PayPal, or Visa, or MasterCard, or even gold, or silver. It'd be like comparing the Internet to Time Warner Cable or Clear Channel or book publishers or books, in general. It doesn't make sense. They're wholly different levels of abstraction. If Bitcoin really succeeds, it is nearly impossible to predict its value, because it will change the entire financial world (and it will look like it happens overnight, even though it'll be 10-20 years before we see all of its effects). So, if this analyst is predicting what will happen to Bitcoin in January, he's probably right. If he's predicting what will happen a year, five years, and ten years down the road, he's gonna be in for a big surprise.
- foobarqux 13y ago
  How can you agree with method and find it "amusingly conservative"?
  - SwellJoe 13y ago
    It's probably my own conservativism speaking. The way I justified spending a bit of money on Bitcoin when all of this hype started up a few weeks ago was to imagine Bitcoin taking over Western Union's role in the market (which is a no-brainer...it's already happening, and is very, very, very likely to be the first casualty of Bitcoin...Western Union has no reason to exist in a world with widespread Bitcoin adoption and availability). That one little aspect of the financial industry alone justifies a several hundred dollar Bitcoin valuation (I was doing this math when it was trading at $200, so that looked like a no-brainer investment to me). Then, when you start looking further up the chain...PayPal, Visa and MasterCard, gold and silver for value store, and you try to figure out how PayPal could beat Bitcoin in a free market. I can't see any way for PayPal to win. There's nothing PayPal does better than Bitcoin. Literally nothing, and Bitcoin does it for less. So, if we assume Bitcoin subsumes Western Union and PayPal, it's actually looking undervalued by a lot. If we follow that line on out, it begins to look more and more undervalued. So, I like the method, but disagree with stopping at silver and money transfers. Those are the low-hanging fruit. Those are the things that will first feel the wrath of their customers for being more expensive and less convenient and more intrusive than Bitcoin. But, those aren't the only things that will be disrupted by Bitcoin. It just takes a little imagination to see that the market cap for Bitcoin is potentially the same as the market cap for every currency in the world. It's damned near impossible to predict how this is gonna play out, but if it succeeds, Bitcoin is gonna be huge.
pera 13y ago
> Digital currency gets investment bank coverage, and the assessment is largely bullish. So now Ars Technica is giving financial advices? ok...
msgilligan 13y ago
Greenspan calls Bitcoin a "bubble". He ought to know, he's inflated a few… (p.s. This should be read with your best John Cleese accent)

38 points by hkimura 13y ago

Question from one of the uninitiated: I heard that the Bitcoin block chain is already many gigabytes. How is this expected to scale over time and are there any challenges for the network if it becomes too large to quickly/easily share? (Or not since only the tail is really needed?)

fragsworth 13y ago
The block chain is designed to grow (roughly) linearly, while storage capacity grows exponentially. Also, the protocol can be changed to accommodate any technical limitations in the future.
- lingben 13y ago
  I've often wondered how exactly the protocol would be changed. Who is in charge? who would make the change? how would it be implemented and enforced in a decentralized system?
  - base698 13y ago
    https://bitcoinfoundation.org/about/ https://bitcoinfoundation.org/about/ There have already been some interesting happenings with upgrades. The blockchain forked and everyone had to roll back to a previous version.
    - kens 13y ago
      I've been wondering about that exact thing - if incompatible versions could cause an accidental fork, and what would happen. If that has already happened, I would love to know the details.
      - base698 13y ago
        http://www.reddit.com/r/Bitcoin/comments/1a51xx/now_that_its_over_the_blockchain_fork_explained/ http://www.reddit.com/r/Bitcoin/comments/1a51xx/now_that_its... Good run down, it was this year.
  - knowitall 13y ago
    People code bitcoin clients. People vote for a protocol change by using those clients instead of the old ones. A change can not be enforced. If a significant subset of clients decides on a different path (for example stay on the old protocol), a fork of the blockchain would be the result. I guess then if you would own 1 BTC before, you'd suddenly own one "old Bitcoin" and one "new Bitcoin". There are already clients that only download parts of the blockchain, trading storage and bandwidth for reduced security - for example the mobile clients, or Multibit (afaik). I suppose they rely on trusted nodes (not sure). But suppose SHA256 would be broken and the "vote" would be to change the mining protocol to scrypt. Why wouldn't the nodes and miners change? It's not so different from updating your web server when there has been a security bug. Some people forget to update their web servers and get hacked. The next time, maybe they won't forget to update. Maybe if you installed your bitcoin software with a package manager, it will be automatically updated. It would be interesting if there was an attempt to enforce "tainted coins" (forcing clients to reject bitcoins that are known to have been through criminal hands). I suppose governments could require businesses to only accept btc that are not tainted. I honestly don't know how things would play out - maybe the community would addopt it, maybe not, or maybe there would be a fork... All just from my limited understanding, please correct me if necessary.
- ngoldbaum 13y ago
  It's easy to beat an exponential with a linear function, at least over the short term. Anyway, isn't that true only in the limit where the number of transactions per second remains roughly constant?
- nerfhammer 13y ago
  what if the amount of transactions grows exponentially?
gibybo 13y ago
This is the size of the blockchain over time: https://blockchain.info/charts/blocks-size https://blockchain.info/charts/blocks-size. It's currently 12 GB and has a maximum growth rate of ~6 MB/hour. The hope is that storage and bandwidth get cheaper faster than the blockchain gets bigger. There are definitely challenges with its current growth rate. As currently designed, it's capped at about 25,000 transactions per hour. The developers are working on addressing this limitation, but the solution is complex and they aren't done yet. We went from ~200 transactions/hour in Jan 2012 to ~2,700 transactions/hour in Dec 2013, so it's conceivable we end up getting pretty close to (or hitting) the cap in the near future.
- mynewwork 13y ago
  Does that mean someone can denial-of-service all of bitcoin just by moving a balance between a couple wallets repeatedly? Can one person (or group)'s activity crowd out other people so their transactions can't be added to the blockchain? What prevents that from happening? 25,000/hour is a shockingly small number to me. I feel like I must be misunderstanding something, or else someone from 4chan would have already DOS'd bitcoin for fun.
  - knowitall 13y ago
    There already is a transaction fee - miners will ignore your transaction if you pay too little or nothing.
  - teraflop 13y ago
    Transactions normally include a small fee, to incentivize miners and disincentivize abuse. You don't have to pay the fee, but if there are more transactions being broadcast than the blockchain can accommodate, the fee-paying ones get priority. (It's a little more complicated than that: when you generate a transaction, you choose whatever fee you want, and they get prioritized based on a combination of the fee, the transaction size in KB, and how long it's been since those coins were last moved.) Current transaction fees are typically in the range of 0.1-0.5mBTC, so in order to continuously flood out everyone else, you'd need to spend more than 2.5BTC/hour in fees.
  - 13y ago
mediocregopher 13y ago
As you say, only the tail (or really, the head, if you think in terms of cons-ing onto a linked list) needs to be present for a client to operate at almost full operation. The only entities that really NEED the full chain are those who are doing historical accounting, like the various blockchain explorers and those who run analytics. These people are already putting some investment into scaling and processing concerns anyway, so I'm not worried about them.
feral 13y ago
>I heard that the Bitcoin block chain is already many gigabytes. True. >How is this expected to scale over time and are there any challenges for the network if it becomes too large to quickly/easily share? This is debated. >(Or not since only the tail is really needed?) That's basically the first approach. If you trust someone else to tell you the state at time X (give you a 'checkpoint' basically), then the volume of data still grows with the number of separate accounts that have 'bitcoins' in them, but [where all the remaining money is as of recent time X] is a lot less information than [the complete set of previous transactions for all time]. Or you could have a thin client, that trusts some other service to maintain and monitor the current state of the system, which your thin client regularly queries. Both of these schemes cut down the data storage requirement a lot, and sort of solve that scalability problem. However, both require trusting some third party to supply you with an abbreviated version of the transaction history (or group or parties, or chain of authority, etc.), and its open to debate whether, if you do that, you lose some of the 'decentralised' aspects of the system that make it nice. Or you could say that's "just a philosophical concern" that doesn't really matter. I personally guess that the various developers will be able to engineer around this problem. I'd be more worried the system handling real time transaction volume, if it became mass adopted, and people tried to do all transactions on the blockchain. Check out https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability as a starting point.
samwise 13y ago
I would check out https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability . In the paper published by "Satoshi Nakamoto" he detailed a technique called pruning in which old transactions that can longer affect other transactions are drop from the blockchain
knowitall 13y ago
The original whitepaper already mentions a way to reduce the size of the blockchain using Merkel Hashes (iirc) - they show that it is sufficient to only remember parts of the blockchain. It hasn't been implemented yet, but I suppose if the problem becomes really pressing it will be implemented. I suppose some of the fun parts would go away then, such as the possibility to view every transaction that has ever been made - in the Merkel Hashed blockchain not all information would be preserved. Edit: I suppose it would still be possible to monitor all transactions and remember them by some other means, just not in the blockchain.
wmf 13y ago
https://en.bitcoin.it/wiki/Scalability https://en.bitcoin.it/wiki/Scalability I agree with fragsworth that once Bitcoin is mature the blockchain will grow linearly; in the short term we may see more rapid growth. Most users are not expected to store the whole blockchain; using SPV or UBC a peer can store much less data.

deleted 13y ago

[deleted]

sillysaurus2 13y ago

I bought 0.4 BTC via Coinbase right when the price dipped to $900. Once the price climbs back to $1200/BTC, that'll net me $115 after fees. When the price suddenly dives, you may want to consider buying. It's always paid off so far. It seems like a solid investment strategy, because Bitcoin is still very young. Therefore it's probable that the infrastructure will continue to grow, and it will continue to become more popular over time. It's looking like the price is about to enter into a "slow'n'steady" phase of growth... I predict it will rise from $1100 to $1500 over the next month or so. Consider this: If you have $10k lying around, you can set up a Coinbase account and buy 9.5654BTC right now. Then you can set up an MtGox account and sell those coins when the price climbs to $1500 (which seems pretty inevitable). Therefore your $10k will become $14,262 after fees, which you can then wire back to your bank account. $4k is a pretty nice chunk of change, so you may want to seriously consider it. But you must be willing to keep your money in BTC if the price tanks. It requires a lot of discipline not to freak out and sell. The overall thing to remember is that BTC will almost certainly hit $1500; it's just a matter of when. So if you have a mutual fund, you may want to redeem it buy BTC instead. Something else to consider: the price of BTC won't be able to double very many more times. That means an opportunity exists right now; an opportunity that won't exist very much longer. In a year or two, I predict you won't be able to count on BTC steadily rising in value. Whereas you can pretty much count on it between now and then. Anyone who's interested in growing their money on a long-term basis should seriously consider investing now. EDIT: My comment was written mainly for historical purposes. A year from now I'm going to go back to this comment and see how wrong I am. This is the first time I've been confident in an investment opportunity of any kind, so it'll be interesting to see whether that confidence is misplaced. EDIT2: Don't invest any money you aren't comfortable with losing, obviously. But it's unlikely you'll lose more than half of it. I'd say there's a 95% chance that putting up $10k now will net you $4k sometime in the future, because BTC is only going to grow in popularity and capability, not diminish. Therefore the question is how long you're comfortable with waiting. EDIT3: Hm, I've hit a nerve. I wasn't trying to tell anyone what to do... but it probably sounded that way. Sorry. I was just doing a quick writeup of my own personal thoughts regarding Bitcoin's near future outlook. I'm nobody special, so please don't take financial advice from me.

knowitall 13y ago

kolev 13y ago

I think the news about China is pretty bad as it cut off one of the arms of Bitcoin - being used as currency. With very limited use in e-commerce so far, I think it will stay as a speculation tool for a while. I personally think it will drop below $1,000 as it ran out of steam trying to break $1,200 several times without much success. The drop in transaction volume after it passed $1,000 speaks for itself, too. Also, a lot of speculators are now looking into altcoins, which hurts Bitcoin, too.

nazgulnarsil 13y ago
bitcoin can't really stagnate, inflation is still over 10%. $4.3+ million USD equivalent demand must enter the system each day to maintain a steady price. Maybe after 2016 when inflation hits 4%. Right now it's either up or down.
- kolev 13y ago
  Well, it can't completely - even if it drops back to $500, it still will be better than USD or CNY. I just don't think there's much interest at the moment for price above $1,000 and Merrill Lynch/BofA pretty muched capped the price temporarily at $1,300. There's another dump happening right now - the temporary increase was nothing, but the typical "dead cat bounce" we've seen before. Too much bad news isn't always good news!

SwellJoe 13y ago

I find the coverage by Wall Street (well, one analyst on Wall Street) funny, actually. While I agree with the method by which he's assessing the current value, I think it's also amusingly conservative, which isn't surprising. There's a long history of old business leaders viewing the technology that destroys them through the lens they view all of their traditional competitors, and vastly underestimating what it's impact will be. Innovator's Dilemma is one way of looking at it, but in this case I think that's woefully inadequate of an explanation (i.e. comparing a new tech company against an old tech company). Here's the thing about Bitcoin, and the reason I've become really excited about it: If it succeeds, it means an end to banking and money as we know it. You can't compare that to Western Union, or PayPal, or Visa, or MasterCard, or even gold, or silver. It'd be like comparing the Internet to Time Warner Cable or Clear Channel or book publishers or books, in general. It doesn't make sense. They're wholly different levels of abstraction. If Bitcoin really succeeds, it is nearly impossible to predict its value, because it will change the entire financial world (and it will look like it happens overnight, even though it'll be 10-20 years before we see all of its effects). So, if this analyst is predicting what will happen to Bitcoin in January, he's probably right. If he's predicting what will happen a year, five years, and ten years down the road, he's gonna be in for a big surprise.

foobarqux 13y ago
How can you agree with method and find it "amusingly conservative"?
- SwellJoe 13y ago
  It's probably my own conservativism speaking. The way I justified spending a bit of money on Bitcoin when all of this hype started up a few weeks ago was to imagine Bitcoin taking over Western Union's role in the market (which is a no-brainer...it's already happening, and is very, very, very likely to be the first casualty of Bitcoin...Western Union has no reason to exist in a world with widespread Bitcoin adoption and availability). That one little aspect of the financial industry alone justifies a several hundred dollar Bitcoin valuation (I was doing this math when it was trading at $200, so that looked like a no-brainer investment to me). Then, when you start looking further up the chain...PayPal, Visa and MasterCard, gold and silver for value store, and you try to figure out how PayPal could beat Bitcoin in a free market. I can't see any way for PayPal to win. There's nothing PayPal does better than Bitcoin. Literally nothing, and Bitcoin does it for less. So, if we assume Bitcoin subsumes Western Union and PayPal, it's actually looking undervalued by a lot. If we follow that line on out, it begins to look more and more undervalued. So, I like the method, but disagree with stopping at silver and money transfers. Those are the low-hanging fruit. Those are the things that will first feel the wrath of their customers for being more expensive and less convenient and more intrusive than Bitcoin. But, those aren't the only things that will be disrupted by Bitcoin. It just takes a little imagination to see that the market cap for Bitcoin is potentially the same as the market cap for every currency in the world. It's damned near impossible to predict how this is gonna play out, but if it succeeds, Bitcoin is gonna be huge.

pera 13y ago

> Digital currency gets investment bank coverage, and the assessment is largely bullish. So now Ars Technica is giving financial advices? ok...

msgilligan 13y ago

Greenspan calls Bitcoin a "bubble". He ought to know, he's inflated a few… (p.s. This should be read with your best John Cleese accent)