I remember in 2000 a Sonera (mobile operator) user was worth $20k.

No more

This is rational, if we are not in a bubble, which is your point. But when the masses move in earnest, the bubble can much more overvalued.

As I stated upthread, it seemed a bit early for the stage where the masses rush in and also the institutional investors are coming in now, so the price had to come down first.

The China news pump and dump was manipulated that is clear.

P.S. So you tell me how much a CPU-only altcoin is worth if it can bring in 10 to 100 million users in a year? Let's not be too boastful shall we, because that comes right before the fall.

Edit: The potential and name recognition is already huge:

http://venturebeat.com/2013/12/19/this-is-what-people-in-9-emerging-markets-think-about-bitcoin-survey/

I have been fervently upgrading my methodology regarding this exponential trendline issue. Currently the model which I personally use contains the following data:

- Before Mt.Gox, fixed 0.005
- After Mt.Gox until 31.12.2012, Mt.Gox daily volume weighted average
- 1.1.2013 and later, VWA of Mt.Gox, Bitstamp and BTC China daily VWA's.

The trendline is recalculated monthly back in time (to reflect the trendline available in any point of time in history) and will be recalculated biweekly in the future. The model did not seem to be least squares but rather simple fit (equal area above and below trendline). The slope of the trend is established very well during the last year - the recalculations of 2013 have seen the slope fluctuating in the band of only 2.9%, and the price has moved from below to above, to below, to above, and again down towards the trendline. Others use Mt.Gox data and ignore the history before 17.7.2010. This results in a trend which is 15% less steep in logarithmic scale, and shows the current price ($600) as even more overvalued than my model.

This model has given insight on the buyback level after the crash has played itself out. As such, it would be foolhardy to assume that the current crash would play itself out exactly as the April one did. But the trendline analysis seems to confirm the essential similarities to such a degree that we can make an informed guess on how low to go and when. It seems inevitable that we will touch the trendline soon on a daily basis (in the recent dip it was only crossed in BTC China and Bitstamp, and not on a daily VWA). After touching it, we will go below it. Last summer we spent 158 days at an average of -0.222 log units (-40%) below the trendline. This period started 55 days after the top.

Today the trendline is at $446 and growth is $3.15 daily. There are many ways to try to estimate how quickly we will go to -40% below trendline. One (obviously arbitrary) method is to take the final capitulation of the last bubble, and compare its duration from the top and price level relative to trendline. That would suggest a $339 capitulation in 26.2.2014.

The last bubble saw 3 distinct buying opportunities, 2 of which happened relatively quickly after the top as dips/flashcrashes, and the 3rd one was the final capitulation much after that lasted for days. Now we have only seen one flashcrash that has taken us to long-term buy levels, so at least one more is expected. The reason for the expectation is not that there is some cosmic magic that the two bubbles should play out similarly (afaik there is not) but that the trendline, which has taken into account the exchange rate over the course of Bitcoin's history (and thus is the sum of every factor ever that has, could have or will have affected the price) suggests we are overvalued, and the downtrend will quite likely end only when this overvaluation is purged. This is deeply rooted in experience from other markets over centuries. Don't jump under the train that's falling from the sky.

If this thread is to help us in speculation, the advice it would give is as follows:
- Do not buy back yet in $500, for that would be catching the falling knife. Even if it bounces back from above $500, it will come down again. Last summer the final one was weeks after the interest had started to wane. When my usual critics don't care to argue any more but have thrown in the towel and don't care anymore, then we will have cheap coins. It is more likely than not that $3XX will come.

I totally agree with that statement. I think it's still MASSIVELY undervalued today however. Best risk-adjusted return on the planet for investing in today.

Yes, if it doesn't I must be complete and totally wrong. I can't see how crypto can NOT play a major role in the coming decades at least.

But then again, it's very unlikely for another crypto to overtake Bitcoin as Bitcoin can incorporate almost any new thing altcoins come up with. Unless something truly revolutionary (such as Bitcoin itself) comes along. But Bitcoin took 3000 years of civilization (and 86 years since the transistor and 41 years since the Arpanet) to be invented. So I'm guessing that's not very likely, and if it is, not many assets are going to be safe from it anyway as nothing is truly safe from Bitcoin today (maybe non-financial stocks are kind of isolated).

And what would be a "fair value" (as analyst tend to call it) for 1 Bitcoin? $100k? $300K?

BOA says $1300, but that looks as a number pulled from their asses.

The problem with your estimate is, is that you forget Bitcoin isn't the best coin.

The other altcoins like Feathercoin and Peercoin use less energy/need less miners/have 30times faster transaction times/have more coins/better in every category. Might take another year or two, but the coins with the most benefits will be the higher echelon coins, specifically not Bitcoin(unless someone completely changes everything about it to make it better in every way shape and form).

Bitcoin is only extremely more popular for it's capitalization on early mover and early promoter in the beginning. Other coins will easily be worth more.

Hey RP, may be a little off topic, but can you point me to a thread that explains this more thoroughly? I think I understand why the miners need to be there - what about the energy?

That's untrue. Bitcoin would work even if no energy was consumed by mining. Look up Proof of Stake, for example.

Thanks for responses guys. I'm pretty sure this belongs elsewhere.

I am quite familiar with white paper and how/why bitcoin uses POW. I am trying to get to my own understanding of whether so much energy is required for the POW in the long-term. It may in fact be essential, as RP suggested. However, as we go forward the energy expenditures become absolutely massive, and something about that seems "wrong" and "unnecessary" to me. Maybe it is what a global universal ledger/blockchain requires and it will displace many other wasteful energy expenditures, but I think there must be a better way. I understand POS is another way to go, with its own challenges/limitations. Anyway I need to dive deeper.

I'll bring these questions to another thread.