BitCoin and Cryptocurrencies - Will they fail? My 3 Predictions!

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Black.Star said:
So much wrong information about how Cryptography works in this thread...
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Probably, but it doesn't make my opinion or my prediction wrong.

Some people are talking like BitCoin is Magic.

It is just another vehicle being manipulated by speculators.
 
One of the primary problem I see in BitCoins is its ability to be "created" by individuals, with enough computing power and skill.
Money can't be "created". A creation of money, by printing out money, is as always an option, but an option that will lead to total economic collapse, just look at what happens in Zimbabwe. While the government "can" make money, it's illegal for citizen to "create" money.

In BitCoins, every body can "create" money. As the number of people "creating" BitCoin grow, the value of BitCoin will surely drop, killing it.

The second is the total lack of rules concerning the BitCoin, mainly concerning international foreign exchange.
How does BitCoin fare against US$? We can assume that BitCoin will then be regarded as international currency, which people may buy or sell. But who will actually buy BitCoins, if they can pay in a normal currency? The foreign exchange market flows according to the myriad of international transactions from around the world. People in US will sell US$ to buy EUR to pay some goods they imported in Europe. People in China will sell their Yuan to buy SGD$ to pay some Singaporean firm. Who will buy BitCoins? There will be no demand for the currency.

Sure, upon launched people may buy the BitCoins. But as Bit Coin price is high as now, and predicted to go down (as there are no demand or low demand) no investors will purchase BitCoin currency.

Thirdly, no system is safe. It's easier to hack a system than to secure a system. Governments, big companies can easily mine more BitCoins than you, due to their superior skill and superior computing power.

Fourth, there are no guarantee for BitCoin. Your USD$ is guaranteed by the US government, that the value printed on it is valued the same around the world. Though the era of gold-backed currency is already way over, the currency, or the value of currency, is still guaranteed by the government and the international rules. At present no such rules exist for BitCoin. Even when saving your money at bank, the bank is guaranteeing the value of your saving. Who will guarantee your BitCoin value, if, say, the server crashes one day? Banks may fail though, but usually banks have a minimum payment to you.
 
GreyKnight said:
One of the primary problem I see in BitCoins is its ability to be "created" by individuals, with enough computing power and skill.
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With your permission I will dive into physics. Nothing can be created out of thin air. Bitcoin "creation" is an exchange of energy into another form of energy. Same happens with gold, at some point of time energy is converted into matter (which is nothing but another type of energy).

Creation of the 1st Bitcoin required a relatively small amount of energy, but the more you create, the more energy you need. At some point our ability to produce the required energy becomes limited - this is where Bitcoin starts to gain its value. It can no longer be created, only exchanged. Then we invent new technologies, and the price drops a little. However, soon enough our new technologies are no longer enough to produce the required energy, and the circle continues.

On the contrary, printing dollars becomes only cheaper as the years go by. E.q. you need to invest less energy. This is a major flaw comparing to Bitcoin.
 
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GreyKnight said:
In BitCoins, every body can "create" money. As the number of people "creating" BitCoin grow, the value of BitCoin will surely drop, killing it.

Thirdly, no system is safe. It's easier to hack a system than to secure a system. Governments, big companies can easily mine more BitCoins than you, due to their superior skill and superior computing power.

Who will guarantee your BitCoin value, if, say, the server crashes one day?
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lol you have no idea what you're talking about, just admit it :P

This is how it works, the people who own Bitcoin will promote it. The people who will will talk down about it because they missed their chance to buy low. But, its always going to go higher in price in the future, and the people that criticized it or talked down about it are going to feel stupid that they didn't hop on the train earlier. At that time, the price is gonna be much higher.

ATM's, new exchanges, emerging startups, new protocols, and projects involving bitcoin will continue to grow as they are. The beauty of it is everyone can always invest, even if the price is $10000/coin, if they have $100, they can get 0.01btc. And that .01 will always be $100 regardless of how much Bitcoin they got. The number of 1.0 denominations on the market in the future will be lowered.
 
jazzc said:
They will try. The promise of the system is that a) they can't currently do and b) it will keep evolving - either it 's call bitcoin or not. What bitcoin did is prove the crypto-currency concept and got it mainstream.
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It is FAR from mainstream. It is just reaching the awareness of the General Public now and the majority still don't actually understand OR comprehend it. How many miners are there? How many investors? How many BitCoin are currently out there?
The answers may surprise you. The market is tiny and the US government is now the largest single shareholder of BitCoin.


jazzc said:
BitCoin price will fluctuate for long and that 's obvious and healthy since it 's in its infancy. Crypto-currencies will never be worthless now unless the crypto part somehow goes away.
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Cyrptocurrencies are a fantastic idea but if the currency cannot be traded or converted into cash then it will become worthless.


jazzc said:
That 's exactly the point. No printing money - no debt on your kids.
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If BitCoin fails then SOME people will be left with huge debt.



jazzc said:
If that 's what you see BitCoin used for, it 's obvious why you got to the wrong conclusions.
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BiCoin was designed to be an online digital currency, it wasn't designed to be an investment vehicle.
Speculators are now running the show. Many people are right now working on manipulating the market.
Smarter people than I and dare I say you, are working on trying to control the market.



jazzc said:
You better take a crypto 101 class.
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Right after my Economics 101 class.



jazzc said:
I can take the risk of having it cracked in 10 thousand years.
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It wouldn't take 10000 years. Look up Moore's law, the computational power of a Computer purchased 10 years from now might do it.



jazzc said:
That crypto class will help you immensely.
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Yes, maybe I do need a refresher but many encryption methods have been and continue to be broken. It is admirable that you have faith in cryptography but naive to consider any current encryption method in use unbreakable. There are unbreakable methods but these schemes are more difficult to implement than the best theoretically breakable but computationally secure mechanisms.

I had written a better response but my computer crashed (too much mining).

As I stated previously, this thread is only my opinion and predictions. It's purpose was for debate. I think it is working.

Here are some more articles:

http://falkvinge.net/2013/09/13/bit...to-be-caused-by-usually-illegal-price-fixing/
http://arstechnica.com/information-...of-bitcoin-rally-other-greedy-selfish-miners/
http://techcrunch.com/2013/04/05/why-do-vcs-care-about-bitcoin/
http://www.forbes.com/sites/jonmatonis/2012/07/31/top-10-bitcoin-statistics/
http://money.cnn.com/2013/11/04/technology/bitcoin-flaw/
 
Patel said:
ATM's, new exchanges, emerging startups, new protocols, and projects involving bitcoin will continue to grow as they are.
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For somebody on a marketing forum your seem to have been swayed by some pretty blatant marketing gimmicks.

The market is too small for widespread ATM's and the investment won't pay off except for the marketing they have received.
Which is the ONLY reason they did it.

Yes all those things will grow but that isn't an argument that BitCoin will survive.

With any new technology or system you will have your early adopters, then slowly others will jump on the bandwagon.

The BitCoin crash will be even harder than the dot-com bubble.
 
W130SN said:
Actually, I think people refusing to (or being blocked from) trading BitCoins for USD will kill BitCoin.
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I believe its going to be the other way around. People will start to exchange Bitcoins to other currencies. For example, if you need USD badly pick that route Bitcoin->EUR->USD. Or, remembering that China is there, the most likely route is going to be Bitcoin->RMB->USD.

Chinese will make sure that route functions smoothly, because on the long run it will position them in right in the center of the global trade, and allow to manipulate the US market.
 
lancis said:
I believe its going to be the other way around. People will start to exchange Bitcoins to other currencies. For example, if you need USD badly pick that route Bitcoin->EUR->USD. Or, remembering that China is there, the most likely route is going to be Bitcoin->RMB->USD.

Chinese will make sure that route functions smoothly, because on the long run it will position them in right in the center of the global trade, and allow to manipulate the US market.
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The thing is, I don't think the market is sustainable.
The people NOW investing in BitCoin are NOT interested in BitCoin, they are only interested in its current $ value.
 
W130SN said:
The thing is, I don't think the market is sustainable.
The people NOW investing in BitCoin are NOT interested in BitCoin, they are only interested in its current $ value.
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I also thought this way, until faced the regulations of modern banking system. Bitcoin is perfect for merchants, thats why many jump on the bandwagon. The setup time & cost is negligible, fees are extremely low. True, there are many speculators on the market atm, but the situation is changing rapidly.
 
lancis said:
I also thought this way, until faced the regulations of modern banking system. Bitcoin is perfect for merchants, thats why many jump on the bandwagon. The setup time & cost is negligible, fees are extremely low. True, there are many speculators on the market atm, but the situation is changing rapidly.
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This is exactly the reason that BitCoin was designed for and works perfectly for.
But because of the speculators and investors the market is too volatile for widespread take up.

Don't you feel that BitCoin is actually moving too fast, the value is rising too high, too quickly.
It is not a natural level/steady rise.
 
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condadon said:
...there will be a huge retreat from the current value, this is nothing unusual for tradable things(commodities,currencies,ect.)...
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That is exactly what BitCoin is at the moment, a commodity that is being traded against the $.
What is it's intrinsic value?
People don't refer to how many BitCoin they have they quote their holding in dollars.
 
W130SN said:
For somebody on a marketing forum your seem to have been swayed by some pretty blatant marketing gimmicks.

The market is too small for widespread ATM's and the investment won't pay off except for the marketing they have received.
Which is the ONLY reason they did it.

Yes all those things will grow but that isn't an argument that BitCoin will survive.

With any new technology or system you will have your early adopters, then slowly others will jump on the bandwagon.

The BitCoin crash will be even harder than the dot-com bubble.
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Please explain how I am swayed by marketing gimmicks. I am pretty sure I used the words "continue to grow"

I also said the market is at a small cap. Thinking that all the infrastructure behind Bitcoin will continue to grow, but Bitcoin will not survive is non sensible.. That's like saying the internet will come out with many new sites but the internet will not survive. Even if Bitcoin crashes harder than the dotcom bubble, I am willing to take the risk and help support Bitcoin. When the Bitcoin crash similar to the dotcom crash happens, I'll experience it. But the dotcom bubble grew to new highs after it crashed.
 
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condadon said:
Yes, which basically is one of my biggest concerns. There is no anchor on how to set a fair value on BitCoins imo whether it is traded against currencies or metals or whatever. How are you able to give it an exact value then? The volatility in currencies is based on the econmic outlook/expectation of the respective country for a certain timeframe.

Where can you set it in BC? This is more or less the a copy of the .com bubble in this regard
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For that question these pages should give you a simplified idea, how it is worked out.

https://en.bitcoin.it/wiki/FAQ#Economy
http://bitcoin.org/en/faq#economy
http://bitcoin.stackexchange.com/qu...ins-come-from-and-what-gives-them-their-value
http://bitcoin.stackexchange.com/questions/9458/what-determines-a-bitcoins-value
http://bitcoin.org/en/faq#what-determines-bitcoins-price
http://en.wikipedia.org/wiki/Bitcoin#Economics


Read this, it shows how things could be manipulated:

http://www.businessinsider.com/this-is-why-bitcoin-is-broken-2013-11
 
Patel said:
Please explain how I am swayed by marketing gimmicks. I am pretty sure I used the words "continue to grow"

I also said the market is at a small cap. Thinking that all the infrastructure behind Bitcoin will continue to grow, but Bitcoin will not survive is non sensible.. That's like saying the internet will come out with many new sites but the internet will not survive. Even if Bitcoin crashes harder than the dotcom bubble, I am willing to take the risk and help support Bitcoin. When the Bitcoin crash similar to the dotcom crash happens, I'll experience it. But the dotcom bubble grew to new highs after it crashed.
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Don't get me wrong, I am not against BitCoin.
I have supported it it since the idea was released in 2008.
It is a fantastic idea BUT it is my opinion that it will fail.


A Crypto-Currency will be successful at some point BUT not until the issues I have raised have been addressed.

When it fails of course crypto -currencies will bounce back eventually but it will take time.

It took at least 3 years for investment levels to rise after the DotCom bubble and then only the bravest VC's were putting their money in.

It will take longer for the public to regain confidence in something that they do not understand.
 
Patel said:
I'd also like to mention that half of the Bitcoin articles are written by people that don't know jack about Bitcoin. BusinessInsider saying Bitcoin is broken, selfish mining kills Bitcoin, blah blah. Bitcoin is still working right now so how can it be broken? All these articles are just FUD. It isn't hard to determine how Bitcoin's value is calculated. Scarce good, high demand, low supply. You can probably figure out the rest. Also, scarce good, low demand, low supply, and you can also figure out the price. The more articles being published about Bitcoin do nothing more than create more awareness behind it. They say any publicity is good publicity, in Bitcoins case that is completely true. Look at the prices when Bitcoin gets no media coverage, vs the prices when Bitcoin is all over the media. There is your volatility. Matter of $100 increase in a month due to exponential advertising by the media.
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This is EXACTLY, PRECISELY my point. BitCoin SHOULD NOT BE AFFECTED BY MEDIA COVERAGE BUT IT IS.
Therefore can be manipulated easily.

Have a look at the charts. Do they look natural to you?

http://bitcoincharts.com/charts/mtgoxUSD#tgCzm1g10zm2g25zv

gxzSP8a


https://gold.net/chart/currency/BTCUSD/
http://bitcoinity.org/markets
https://blockchain.info/charts
https://coinbase.com/charts
http://bitcoin.clarkmoody.com/


This one is just for a laugh: http://thenextweb.com/shareables/2013/04/10/the-only-two-bitcoin-charts-that-you-need/
 
W130SN said:
Don't you feel that BitCoin is actually moving too fast, the value is rising too high, too quickly.
It is not a natural level/steady rise.
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Its hard to say whether the value reflects its actual cost at the moment. There are two factors that constitute its intrinsic value:

1. Mining electricity costs. This is the same as with gold. Gold cannot worth less than the mining costs. Otherwise the mining will stop, leading to deficit of gold on the market, which in turn will set the prices higher. The electricity costs are high at the moment, and some people moving to Indonesia in order to mine, as electricity costs there are much lower.

2. Bitcoins per capita. Say there are total of 1000 bitcoins, and only 2 people use it. It makes 500 bitcoins per capita on average. Suddenly Bitcoin gets a media exposure and 998 new users buy 1 bitcoin each. Now there is 1 bitcoin per capita on average. The prices go up, because having only 1 bitcoin in a pocket makes it seem as a much more valuable/rare asset.

IMHO the prices are higher than they are supposed to be, but its really hard to say whether it is really or only slightly overpriced.
 
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