Bitcoin is based on Nothing, it is just a speculation "tool".
The only good thing about it is the technical/technological aspect of it.

So those who speculated low and sold high, just played the lottery, and should probably try the Swissloss

Nope- everyone was wondering and trying to work it out. Only Phil MCR- who seemed fascinated by it but said short term speculation- and Slaphead- who like m said Ponzi and I hate to say it but Shorrick was skeptical- but then he is skeptical about everything except JCBshare- which eventually made good.. But no-one but Slaphead called it .

Now I'm just waiting for the Bay Area property market to crash.

Slaphead hasn't even posted since the big jump to $1000.

In fact since he posted it went from under $200 to just under $800 now

Oh well, I'm a killjoy anyway. I annoy myself because most of my predictions come true, but I don't invest, it's like gambling to me, one of the deadly sins. I hate speculators and bubbles. The stock market was and still is controlled by cartels.

My goodness, what a flurry of schadenfreude and self-congratulations! To be serious, though, anybody calling this correction as "The Great Bitcoin Crash" is going to be a bit disappointed.

Apart from the fact that it's already regained 50% of the lost ground (currently trading at nearly $900), this drop was totally expected by anyone who's even slightly following bitcoin price trends.

Have a look at this chart which is a logarithmic plot of the bitcoin prices since it was widely and transparently traded in 2010 until now:



If you draw a straight line through that, you get the exponential trend line. (Why is the line exponential? Because bitcoin is a new technology that's growing to fill its ecological niche in the same way that the population of an introduced species grows). This line intersects the current date at about $300-$500. Anything above that is an overbought condition - hence the correction.

The graph also indicates that the current 'bubble' and 'crash' is a bit of a baby compared with past events - e.g. between April and June in 2011, the price rose by 40-fold (the current rise was only about 8-fold), crashed almost immediately to half its value then went on a 6-month bear run to just a couple of dollars. Lots of people were calling the "Death of Bitcoin" during this period.

One thing to notice, though, is that volatility has been decreasing as bitcoin has matured (although it is still very volatile). So lets look at the question: why is bitcoin so volatile? This one is simple - bitcoin is volatile because its traded markets are still in their early phase and are inefficient.

Mature markets have big and sophisticated players who ruthlessly arbitrage price differences out (using a variety of derivatives). Bitcoin markets don't really have such big players or the depth of derivatives yet. E.g. there are only a couple of (not very well trusted) exchanges where you can even short on margin. With growing maturity and more exchanges, bitcoin will become less volatile.

Where does the price go from here? In my view, it's still a bit overbought and we could see another correction. My current position is long but my bots are always searching for sell signals in order to take a short position.

Let's respond to a few of these recent posts where I detect some old myths and misconceptions rising up again:

Apart from the fact that this was terrible advice at the time that you posted (the price had already come off the low of $576 and has risen ever since), it's not true to say that either the Chinese or the French had 'shredded' bitcoin. The French news was "hey it's volatile, be careful out there!". The Chinese news was more serious in that there was an explicit ban on Chinese banks trading and Chinese companies pricing goods in bitcoin, but there was also an explicit allowance for private citizens to trade bitcoins as a 'digital commodity'. (This is where all the growth has been happening in China and in my view is a surprisingly liberal stance). The Chinese news certainly helped push the correction (no surprise to anybody monitoring news and social media feeds).

What earlier post? What prediction did you make exactly?

I haven't seen any posters in this thread telling or advising people to buy bitcoins. Can you please quote the relevant posts in case I missed them?

I never advise anyone to buy bitcoins unless I'm sure that they have the technical knowledge to secure them against loss or theft. That's far more important than concerns about volatility (a simple small-scale buy-and-hold strategy has been very successful so far in bitcoins).

I certainly increased my trading position (essentially doubled it) in this correction. I run (self-written) trading bots which sold at $1100 and bought back at $600. But even without automation, this correction was so telegraphed (the Chinese news, trade depth, trending EMAs, even a bloody classic technical analysis 'double top') that you'd have to be dead from the neck up to have missed it.

You keep saying that bitcoin is based on nothing, but it's simply not true. Even if we just look at the 'physical layer' of bitcoin and ignore the utility of the system, we can come up with a figure of about $1B for the replacement value of the specialized computers which do the mining and secure the network. This means that a company which wanted to offer exactly the same service as bitcoin (and it makes sense to actually think of bitcoin as a company), it would need a market capitalization of at least one billion dollars.

If we divide that figure by 'issued shares' (12 million BTC), this gives a per-bitcoin value of about $100. (Not actually that far off the figure given by looking at the exponential trendline).

And, of course, some serious players are looking at bitcoin valuation. The Bank of America Merrill Lynch report (https://www.documentcloud.org/docume...n-bitcoin.html) makes interesting reading. Their conclusion is a future value of $1300 based on bitcoin's utility as a means of exchange and store of value.

We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers. As a medium of exchange, Bitcoin has clear potential for growth, in our view.

I've already done the 'Ponzi' explanation, but here goes again: Bitcoin is not a Ponzi scheme. I've noticed in your previous posts that you're coming from an academic environment, so here's a quick lesson: nomenclature matters. If you don't attach the accepted meaning to terms you can't really have any kind of academic discourse.

A Ponzi scheme is a deliberate fraud where the controlling entity (often a single person) promises a return on investment that's (usually) way beyond what you can expect elsewhere. This return actually comes from new capital from fresh investors rather than whatever the promised mechanism is. The essence of Ponzi scheme is disguised cash flows. i.e. one set of cash flows (new capital) pretends to be another (investment returns).

There are no such disguised cash flows in bitcoin or even a controlling entity. Everybody knows exactly how many bitcoins there are, what their returns are and can trade them in transparent markets.

What you could say is that bitcoin is a 'bubble'. This is where the traded value of an asset outstrips its intrinsic value and goes into a feedback loop of ever-higher prices until a crash. In order to determine this, you have to have an idea of what the intrinsic value of one bitcoin is. If you read above, then I've given figures from between $100 and $1300. Do you have any other ideas on what this value could be?

Nice long clever post above- almost like a research paper.

Look at my post above- you'll see where I say it's a Ponzi scheme.

I am a Wikipedia Academic- and I should pay them my dues, I owe them.

'Speculators have been attracted to Bitcoin, fueling volatility and price swings. As of November 2013, the use of Bitcoin in the retail and commercial marketplace is relatively small compared with a relatively large use by speculators'

Bubbles

Many have mentioned speculative bubbles in connection with Bitcoin.[55][56][57] Professor John Quiggin of the University of Queensland has noted that since Bitcoin by design has no intrinsic value, it is "perhaps the finest example of a pure bubble" currently known and "represent[s] the sharpest ever refutation of the efficient-markets hypothesis", but cautions that we have no way to predict when the value of bitcoins will return to zero.[58]
Nick Colas, a market strategist for ConvergEx Group, has remarked on the effect of increasing use of Bitcoin and its restricted supply, noting, "When incremental adoption meets relatively fixed supply, it should be no surprise that prices go up. And that’s exactly what is happening to BTC prices ."[

Wikipedia
There's probably more but I'll let you read it. Anyway " thou protesteth too loud - I never said that I was accusing you of promoting the Bitcoin, but if the Bitcoin fits... Maybe you are right- I'm no financial wizard.

One thing I do know is that it is used to evade currency problems for legal reasons. If and when the legal reason to evade using a currency are removed, then there will be little use for the Bitcoin.

I have to agree with Hoppy.
And as you stated:
"Apart from the fact that this was terrible advice at the time that you posted..."

I never posted an advice.

I just say that Bitcoin is useless. The proof is that it is so volatile because it is only based on speculation.

What is a digital commodity? What does it represent? How relevant is it and to whom? Why do I need to hedge myself on another instable currency (digital or not), while the world does not lack on fragile currencies. Bitcoin is just speculation and should have been a competitor for Paypal. It tried to fast and to far to reach a currency status.

For now, the only people taking advantage of it are tricksters.

And I have to say: if a couple of wordings can shake Bitcoin, it is scary for the holders.

__________________
http://pikscrum.com/pikscrumblog/ Changed Location of blog
@PikScrum

I mean you say that. But people bought this stuff only a few years ago at $10 and now it's worth 100 times that. Tell them it's useless and they will laugh themselves all the way to the bank.

Thanks Lammhaxe, I agree that it is too volatile for me. But please I urge everyone to do their own research. I can hardly add. I may be as irresponsible myself in gloating, I have probably just been lucky in my predictions.

Probably the only things that I would invest in at present are new technologies-scientifically proven inventions that are patented, not easy to copy, profitable industry changers. However, I know of a couple.... and still won't invest in them.

Are you envious?

I didn't know what Bitcoins were so I googled and looked up wiki:
http://en.wikipedia.org/wiki/Bitcoin

This made me laugh out loud (in the office), it looks and sounds like a massive pisstake although to be fair I didnt understand a single word of it.

How do you know I don't have any?

For all the Bubble Bet- ers! I'm confused- if we hedge against the bubble will that make it real? That might be fun!http://www.forbes.com/sites/timworst...itcoin-bubble/

Dang! I'm too late! https://bitcointalk.org/index.php?topic=330230.0

I'm just kidding by the way.

I've attended very few 'business' classes or lectures in my career.

The one thing I've learned from them is to never join a bandwagon. By the time it's a bandwagon, you're too late.

I'm off to invest in some sleep.

Of course you gave advice, you said this:

Urging people to sell is most certainly giving advice in my book. Do you want to quibble about the meaning of well-known English words?

So that was your prediction? That it's a Ponzi scheme? So read again my post where I explain exactly what a Ponzi scheme is. If you still stand by your assessment, then please give your reasoning.

Whether it's Ponzi scheme or not is irrelevant. It is a bubble, it will blow up and the question is will Bitcoin Survive and to what price will it drop?

If big players (like Baidu) do not use it anymore, the currency has no value.

http://www.bbc.co.uk/news/technology-25138627

This exactly what speculation is about: reading the market properly and playing based on what the market thinks until rational takes over

I am not sad for those who made money, but for the few who made, many lost due to deception.
This is what we call Market ManipulAtion