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Most people are familiar with exponential laws like Moore's Law and the more general Kurzweil's Law of Accelerating Returns. The history in the above graph to date looks very linear and law like. We see this pattern continuing for the foreseeable future with Bitcoins or whatever is the leading crypto currency. Our working hypothesis is that this law will continue at around 100% growth in value per year, with the potential of occasionally surpassing the 300% / year growth rate we saw between 2011 and 2013.
Since there is no central authority mitigating currency valuation fluctuations (i.e. as when the federal reserve increases or decreases interest rates) the volatility of crypto currencies will continue. Similarly, since there is no central authority, or any method for which more than 21 million Bitcoin mining limit could be increased, this all but guarantees a growth rate that will always be far more significant than any temporary volatility. The implication being there will be an inverted roller coaster in valuation, with successive spikes continually increasing in value at a geometric rate. Any time there are shocks to a primary crypto currency, such as a defect found, or governments attempting to shut them down, or valuations simply getting ahead of themselves, this will cause quick ‘flash crashes’. But all of these will just be buying opportunities, and even if the currently leading crypto currency is completely shut down, some other currency will take it’s place, or surpass it. The market capitalization of whatever is the leading crypto currency will quickly return to the above projected total market capitalization growth rate levels.
All risks to fiat currencies and economies will accelerate the adoption of Bitcoins. These risks include world indebtedness see wikipedia: http://en.wikipedia.org/wiki/Government_debt . Governments trying to steel currencies, like they did in Cypress. And of course, the inflation of currencies, as a kind of tax on the people holding them to fund governments, is yet another risk/problem. Bitcoin enables people to escape all of these risks, and indeed profit from them, as the more they occur, and the more serious they are, the more rapidly people will adopt Bitcoin.
As Bitcoins become more established, they will gain a reputation as a great place to move money, any time any economy or currency turns south. At the first sign of a recession, people will want to sell everything from all fiat currencies, to stocks, to real estate, and so on, all capital rapidly moving into Bitcoins, causing the value of Bitcoin to explode. People won't want to spend any Bitcoins to buy anything because of the extreme profit potential they will be missing out on, during such recessions. Only when the economic cycle turns, the price of Bitcoins finally spikes as the economy starts to turn around, will people start to spend them to buy things they need again. And these accelerated cycles will continue the inverted roller coaster, where each spike will be 10 times the value of the previous spike every two years or so.
There were huge interest expending all kinds of resources, governmental and not, attempting to shut down peer to peer file sharing of movies, music, and such. But the more effort thrown against this, the more it backfired. In fact the government shutting down Napster, is what spawned the creation of peer to peer sharing technologies like bit torrent, on which Bitcoin is based, to say nothing of all the Napster copy cat system that sprung up to fill the vacuum.
Argentina is making a huge effort to outlaw Bitcoin as is described in this Why bitcoins are more expensive in Argentina than the US Coindesk article. But all this resulting price deferential is doing is making it EXTREMELY profitable for people to find some way around whatever system they attempt to set up to stop it. To say nothing of the fact that Argentina is outlawing one of the greatest entrepreneurial and social revolutions in history, pushing them back towards a pre emerging economy state like North Korea.
The above chart shows that Bitcoin valuations have already increased in an order of magnitude (10 times increase) 6 times. The first 5 each took less than 6 months. The last one took less than 2 years. We predict this will continue as described by the canonized law of the crypto coin, with the following noted milestones.
This topic is part of the Crypto Currency Survey Project.
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Total Support for This Camp (including sub-camps): 4.75
Topic Name: Bitcoin Value in One Year
Name Space: /crypto_currency/
Camp Name: Law of the Crypto Coin
Title: Canonized Law of the Crypto Coin
Related Nick Name:
Parent Camp: Agreement