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Why Bitcoin will jump to $100-$200 over the next 6-12 months.

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.

Introducing ASIC:
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.

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You seemed to have....

completely missed the "wider sense/narrow sense" distinction clearly and intentionally laid out in the Mises wiki definition.

You are just in denial...

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~wobbles but doesn't fall down~

Just like a liberal

Interpreting definitions the way deem fit..

What an absolute intellectual Fraud.

Please go hang out with the liberal crowd, clutch on to your paper fiat dollars, and get in the line waiting to blow your King Ben Bernanke.

Please...

list the data you use to characterize my political leanings. Use links from my Daily Paul commentary.

It seems you have merely pulled the ad hominem "liberal" out of your butt as some kind of attack on me. :)

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~wobbles but doesn't fall down~

You miss the analogy...

You interpreting definitions as you desire. A liberal tactic. You support the dollar over a viable alternative. Just like a liberal. You use intellectual dishonesty, ignorance, and propaganda as justification for your arguments. Just like a liberal.

It's not an ad hominem, it's an analogy that fits..

The explaination newbies need

If you are lost when it comes to what BitCoin is, but want to know, this is the post for you. Some of what I'm going to say is oversimplified, to get your beak wet. Once you grasp the concept, go ahead and dig deeper if you're interested.

First off, technical info, then I'll break it down. Anyone can correct me if I'm wrong(I'm sure you guys will :) )

BitCoin first and foremost is a distributed computing project. Secondly, the way it rewards people for their computer power is in the form of the electronic currency(BitCoin). It's basically "folding" but instead of solving problems that break down proteins or look for things in space, you are using your computer power to solve incredibly huge mathematical equations of actual value.

Think of when your computer gets some kind of malware. It's a virus of sorts that sits on your computer. But how do people benefit from making malware? Well, a number of different ways, more annoyingly(and what bitcoin does not do) it runs ads, creates false traffic, collects user data, ect. The incentive is there, because your computing power is valuable. The reason why this is important, is because any capitalistic economist should ask themselves, why make malware in the first place? Well,

    a lot of people pondered this question

, including those that developed BitCoin and MIT hobbyists. You can just create a shared incentive and actually use the computational power for something of real and honest value, by creating both an OPEN SOURCE system, and use the basis of voluntarism to earn an encrypted digital revenue. Stealing data and cpu power with malware is so application limited. If you simply respect privacy, it is a FAR better approach.

While it bares no tangible value, like that of silver or gold, BitCoin presents a solution for a problem that would be far too inefficient to add the extra transfer from a commodity to itself. So where is the value? The problems that are solved create the value itself. Kind of like an innovation that creates wealth and resources externally to bitcoin mining (intelligent application). So it is a medium of exchange, much like any currency, only recognized for its value between two parties.

As long as mathematical problems of value exist that need to be solved, there will be "mining" opportunities. Thus, by fixing the supply to a finite amount, the value for solving each problem is going to vary based on the market. Analyzing and solving problem 1 was subject to the resources at hand, thus, with the smaller amount of computational power in place to solve the problem, the more bitcoins were awarded. The more computational power, the fewer bitcoins are awarded. This is no longer the ground floor, but BitCoin is still very very far from the ceiling, so you can get in on it, while it is still early.

Now comes the second part. How does the currency provide longevity? With more retailers accepting BitCoin, and more users trading(there are a heck of a lot now), then those who hold the bitcoins on both sides(consumer/merchant) will have an incentive to use and spend the BitCoin. Will BitCoin last forever? In theory, yes and no. Competing currencies exist, although the big reason for BitCoin to be a solid choice, is because it is constantly improved and updated, and it is the most widely recognized currency. Yes, surprise, this is the free market(at least in one sense) so there is risk. But any potential shortcomings would have to rely on humans/computers solving every valuable math problem. A feat that is impossible.

How do we know what problems actually hold value, and which do not? Hah, the beauty of computing. One of the problems is figuring out the answer to that very problem. It is forever evolutionary.

If I'm way off, please correct me. Add to what I said, ect. But the important thing is, the liberty lovers who have idle computing power should be mining. BitCoin is not going away anytime soon. BitCoin is not a fiat digital currency. The currency you get from playing MMOs like World of Warcraft, that would be a fiat digital currency.

Now it's clear as Mud...

I am totally confused. The post starts out explaining that bitcoins are created by this process called "mining" and then it goes on to talking about buying them. Which is it for someone who knows NOTHING about bitcoin. Makes no sense so far.
JG

The things that will destroy us are: politics without principle;
pleasure without conscience; wealth without work; knowledge without character; business without morality; science without humanity; and
worship without sacrifice: Mahatma Mohandas K. Gan

Bitcoin mimics physical gold

so, can you buy gold? yes
can you mine gold? yes

However you choose to acquire bitcoin is up to you.

I guess the Bitcoin folks come out at night..

I basically said the same, That I expect bitcoins to go to $100 because the demand for it's utility as a currency. All I got were ignorant haters that added no substance to the convo. It really grinds my gears how people say they're for liberty, say they want to end the fed, but still rather use dollars than bitcoins.. Listen Bitcoin haters, unless you have completely abandoned the dollar system, then you are part of the problem. Bitcoins is far more superior than dollars and actually transfers power to the people from the central bankers.

Bitcoin freaks...

talk down to buyers of gold, silver and other real commodities (real wealth). Go figure.

You said:

"Bitcoins is far more superior than dollars."

Really??? On what empirical foundations do you base such a statement?

Markets require price stability of a currency in order for borrowing and lending to occur. If the price of a currency is going up then lenders don't want to lend and if the price is dropping then borrowers don't want to borrow.

Bitcoins have shown nothing but HYPER-REACTIONARY responses to any change in activity level. Where is the bitcoin-based finance market? Where has it EVER existed?

Bitcoin is NOT a currency. It is a speculative craze-based investment that has been front-loaded towards early miners. A hybrid ponzi/pyramid scheme. Period.

The best analogous description of bitcoin is "amway cult"...

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~wobbles but doesn't fall down~

on what ground?

It's not centrally controlled
It put power in the hands of the people and takes it out of the hands of central bankers
Governments have not been able to regulate it
You dont pay taxes on purchases
Low to no transaction cost
Constantly audited
It mimics a gold standard
It's value appreciates instead of depreciates
It cant be manipulated by inflation

I could continue but I think that's enough to shut you up.

Obviously Bitcoins is a currency. Your just being intellectually dishonest. People use it everyday to transact. No one is talking down gold and Silver, I own plenty of it. I would advise that everyone buy physical gold and silver. What I'm doing is talking down the dollar. The Green pieces of paper you worship.

I get it, your Ben Bernankes bit(ch) and you have been assigned to talk down Bitcoins.

You said:

"It's not centrally controlled"

Excuse me? It is controlled by an central algorithm that contains arbitrary constraints chosen by one person (santoshi).

You said:

"It put power in the hands of the people and takes it out of the hands of central bankers"

Haha. When did this occur and how? Are you referring the "The People" (the masses)? Very few people use bitcoin.

There is no finance going on with bitcoin (a functioning system of lending/borrowing) because the price is not stable. Historically bitcoin has shown to be VERY reactionary. Bitcoin is NOT a currency.

You said:

"You dont pay taxes on purchases"

There is no tax generally on internet purchases.

You said:

"It mimics a gold standard"

Toy versions mimic things. Hot Wheels mimic cars. Monopoly money mimics real currencies. "Mimic" most often means "toy".

"It cant be manipulated by inflation"

Temporal analysis of the bitcoin blockchain reveals that a majority of bitcoins are just sitting in a very few accounts. Upwards of 70%. This is a hyperinflationary time-bomb waiting to go off.

http://arstechnica.com/tech-policy/2012/10/78-percent-of-bit...

http://www.loper-os.org/?p=1009

You said:

"It's value appreciates instead of depreciates"

Can you demonstrate this with historical bitcoin charts? My charts show bitcoin values have a history of dramatic rises in value with subsequent crashes and rings (like a bell). The same pattern as bubbles and pump-and-dumps.

You said:

"I get it, your Ben Bernankes bit(ch)"

Nice stab-in-the-dark attempt at ad homimen. I follow the Austrian school of economics and am for a free market of competing currencies. You seem to be saying that someone who qualitatively has issues with bitcoin MUST be a keynesian. While that may be convenient for your argument it is not logical. I am an extreme economic non-interventionist who believes the Govt has no business whatsoever defining or creating money. Only the market can do that.

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~wobbles but doesn't fall down~

Try to exercise

a little tolerance towards those you disagree with. Your passion seems to dominate you. I happened to convert a bunch of my US Dollars into bitcoin last September, when I finally saw the light, and I feel greatly rewarded and secure. My value has already tripled. Your attack of bitcoin seems rather irrational from my perspective.

Pardon me?

I was replying to PeacefulAnarchism who was the one attacking the character of people who dislike bitcoin as "ignorant haters" and such.

Notice that the bulk of my reply refers to non-personal points of discussion about bitcoins themselves.

You said:

"Your passion seems to dominate you."

You are confusing non-personal debate points with "passion". I am quite calm and chilled this morning. :)

You said:

"I happened to convert a bunch of my US Dollars into bitcoin last September, when I finally saw the light, and I feel greatly rewarded and secure. My value has already tripled."

The multiple of profit has no bearing on the moral or structural integrity of the system you are making money off of. Child sex ring operators and bandits make lots of profit.

You said:

"Your attack of bitcoin seems rather irrational from my perspective."

Can you reference specific text from my comments that you think is irrational and why?

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~wobbles but doesn't fall down~

briefly,

I find your loose comparison between bitcoin and child sex ring operators to be irrational. There isn't any moral comparison. You use derogatory language, "bitcoin freaks," in another comment which led me to presume it is misguided passion fueling your argument rather than rational thought.

The main point I would like to communicate to you is to try exercising greater tolerance toward others who don't share identical viewpoints as your own. Diversity is beneficial. Bitcoin is an experiment and only time will sort out that which is unsustainable.

Nowhere...

did I compare bitcoin to child sex ring operators. And you know this.

A claim was made along the lines of:

"I made a nice profit off of bitcoins therefore bitcoins are good."

Making a profit off of something does not indicate the structural or moral soundness of the system generating the profit. Again, you know this.

You said:

"The main point I would like to communicate to you is to try exercising greater tolerance toward others who don't share identical viewpoints as your own."

No, your main point is that people who have technical problems with bitcoin should just shut up or you will make ad hominem character smears against them.

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~wobbles but doesn't fall down~

You crack me up, weebles.

Keep practicing those skills. You're going to have to try to one-up yourself someday. Just take care not to take things too personal, we're all in this together.

Picked up 182 BC

About a month ago and have doubled my money so far. Bitcoin Meet ups are popping up in Massachusetts and New Hampshire. Local shops are starting to take BC. In Cambridge Massachusetts thanks to the local MIT club. I see them really taking off and I will buy as many as I can get my hands on. As they are very hard to aquire. Also looking into being a miner with some MIT professors.
Go to www.localbitcoins.com

this post SUCKS!

this post ROCKS! good info man. i was just learning about bitcoin too... maybe its time to get into the bitcoin bandwagon.

Yep

Yep, once it goes mainstream it will be insane.

pretty nuts

How the most adamant people against bitcoins are supposed libertarians. Trying to show them how Bitcoins actually promotes liberty by taking power away from those who undermine it is like trying to explain to a neo-conservative evangelical Christian how war is bad and works against what their religion stands for....which is peace. They just refuse to see it.