05.11
Unknown
Wow, what a week. Reddit took the leap and is now accepting Bitcoin payments, the market took a 20% dip and bounced back like it never happened, and the general buzz around Bitcoin is nothing like the community has ever seen before.
Looking at Bitcoin mining, the first ASICs from Avalon and ASICMiner are now online, and at some point next week Butterfly Labs will most likely be shipping their long-awaited product to the lucky miners who threw down their money last summer.
The Bitcoin market cap is just moments away from hitting $300,000,000, and the chart is starting to make the June 2011 bubble look like a speed bump:
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| Bitcoin Market Cap (Chart courtesy of blockchain.info) |
Looking at Bitcoin mining, the first ASICs from Avalon and ASICMiner are now online, and at some point next week Butterfly Labs will most likely be shipping their long-awaited product to the lucky miners who threw down their money last summer.
The number of Bitcoin projects on the go is impossible to measure, as most developers are rather secretive, but I can quote one anonymous source as saying, "if I told you how many major projects I was aware of, your mind would explode." I'm not sure if that means four to six, or ten to twenty, but there are definitely a lot of enthusiastic developers mashing away at keyboards as we speak.
So, with that in mind, let's take a look at the future, shall we?
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| The Next Six Months (Original chart courtesy of bitcoinx.com) |
What I've done here is added six months onto this chart (click for full-size), showing where I believe the exchange rate and mining difficulty will take us over the next half-year. Predicting mining difficulty at this scale was rather easy; it's going to go up, and quickly. A difficulty of seven million will easily be achieved by the first couple weeks of March, as thousands of chips are sent out by Butterfly Labs and the second batches from the other manufacturers begin coming online.
Predicting exchange rate is a different monster altogether. With the Reddit adoption, in essence an acknowledgement from a large corporation that accepting Bitcoins is risk-free, the way has been paved for other major businesses to sit down with the likes of BitPay, Coinbase, WalletBit, and OKPAY, and add Bitcoin to their list of acceptable forms of payment.
It used to be that accepting Bitcoin literally meant having a Bitcoin wallet and receiving Bitcoins. Now it's obvious, almost mainstream obvious, that you can pay a third party a nominal fee to convert those Bitcoins to fiat currency and, literally overnight, expand your customer base to the global market.
Now we're at a $300,000,000 market cap. As we approach a billion dollars and beyond, Bitcoin will become even more liquid, allowing the payment processors to lower their fees and increase the pressure on thre three archaic stalwarts: PayPal, Visa, and MasterCard.
So where do we go from here? How much is global, fraud-free, peer-to-peer, open-source digital cash worth to the global economy? 300 million dollars? A billion dollars? Ten billion? At ten billion dollars, a Bitcoin is worth $476 at full dilution (21 million coins). There are several niche publicly traded technology companies with market caps in the ten billion dollar range, but we're talking about a technology, Bitcoin, that could literally revolutionize global banking. What are the odds of Bitcoin being worth 15% of ten billion within six months? I would say that outcome is quite likely, and that's all my chart is showing.
The current "spike" to $28 is the equivalent to the spike to $10 that occurred before the June 2011 bubble. Assuming this is a similar "calm before the storm" situation, I predict we'll see mid-fifties by mid to late March, followed by a consolidation in the $40 range, and then an aggressive steady climb toward $100 by the end of 2013.
Again, I can't predict the future; nobody can, but at this point I can't see why such a useful technology that has already survived three years of endless attacks unscathed, will not receive massive adoption in the very near future, at first by business, and then subsequently by consumer. Most importantly, Bitcoin is a concept that is starting to go viral, and when things go viral on the Internet, they move quickly.
Predicting exchange rate is a different monster altogether. With the Reddit adoption, in essence an acknowledgement from a large corporation that accepting Bitcoins is risk-free, the way has been paved for other major businesses to sit down with the likes of BitPay, Coinbase, WalletBit, and OKPAY, and add Bitcoin to their list of acceptable forms of payment.
It used to be that accepting Bitcoin literally meant having a Bitcoin wallet and receiving Bitcoins. Now it's obvious, almost mainstream obvious, that you can pay a third party a nominal fee to convert those Bitcoins to fiat currency and, literally overnight, expand your customer base to the global market.
Now we're at a $300,000,000 market cap. As we approach a billion dollars and beyond, Bitcoin will become even more liquid, allowing the payment processors to lower their fees and increase the pressure on thre three archaic stalwarts: PayPal, Visa, and MasterCard.
So where do we go from here? How much is global, fraud-free, peer-to-peer, open-source digital cash worth to the global economy? 300 million dollars? A billion dollars? Ten billion? At ten billion dollars, a Bitcoin is worth $476 at full dilution (21 million coins). There are several niche publicly traded technology companies with market caps in the ten billion dollar range, but we're talking about a technology, Bitcoin, that could literally revolutionize global banking. What are the odds of Bitcoin being worth 15% of ten billion within six months? I would say that outcome is quite likely, and that's all my chart is showing.
The current "spike" to $28 is the equivalent to the spike to $10 that occurred before the June 2011 bubble. Assuming this is a similar "calm before the storm" situation, I predict we'll see mid-fifties by mid to late March, followed by a consolidation in the $40 range, and then an aggressive steady climb toward $100 by the end of 2013.
Again, I can't predict the future; nobody can, but at this point I can't see why such a useful technology that has already survived three years of endless attacks unscathed, will not receive massive adoption in the very near future, at first by business, and then subsequently by consumer. Most importantly, Bitcoin is a concept that is starting to go viral, and when things go viral on the Internet, they move quickly.
