Why Bitcoin will jump to $100-$200 over the next 6-12 months.Submitted by teknetz on Sat, 03/02/2013 - 00:47
For those of you that don't know, bitcoin is a decentralized crypto currency that is not regulated by governments or banks.
Bitcoins are created by a process called mining, which is nothing more than figuring out the answer to a mathematical puzzle. This is done by testing many possible answers as fast as possible, until finally finding the combination that works. When the correct answer is found, bitcoins are rewarded to the node who solved the puzzle.
Up until just recently, the fastest way to mine bitcoins were with GPU's from powerful graphics cards, which mined at a rates of 80-200 M/hs(million hashes per second). Many bitcoin miners would set up "rigs" of these machines full of these graphics cards to get the highest rates possible.
And for the most part, this was good, as it gave people with not so great hardware a chance to get in the game and try mining some bitcoins, without the fear of any one person or group possessing all the hashing power.
ASIC stands for Application Specific Integrated Circuit; in other words, it is a computer chip that is designed to do a very specific task, very well. There are currently a small group of manufactures getting ready to release asic chips designed specifically for bitcoin mining that is going to blow the current mining technology out of the water. Some of these units are processing upwards of 80 G/Hs(GigaHashes (i.e. 1000 M/hs = 1 G/hs), which means that the rate bitcoins are going to be generated is going to quadruple over the next 12 months.
And because of the way bitcoin was designed, there will only ever be a total of 21 Million bitcoins in existance. This was hard-coded into the design to prevent inflation, and devaluation. Once the last coins are mined, the value of them is going to skyrocket.
Also, lets take a look at what bitcoin has done lately:
If you had invested just $100 6 months ago, the average price of bitcoins were $10.30, which would have bought you 9.708737864 bitcoins.
Come to today, the closing price on mtgox.com was $33.81. Those bitcoins today would be worth $328.25. That a return of over 200% in just 6 months.
Combine this with the fact that bitcoins are becoming more popular. MtGox, the worlds largest bitcoin exchange has just announced its partnering with CoinLab here in the US to service the increase demand from US based customers. Also, just by looking at the average volume over the last 6 months should tell you something; In Oct-2012, there were an average of 34,676 transactions per day. Today, in March of 2013, there are approximately 66,255 transactions per day.(data by blockchain.info) so popularity is steadily increasing.
So as you can see, impending scarcity, greater acceptance and usage, combined with a devaluing dollar, is creating a perfect storm for bitcoin to surge unlike anything ever seen before in the next 6-12 months. If you have a few hundred in federal reserve notes you can afford to invest, I highly suggest you buy a few bitcoins and hold on to them for the ride.