I am a big fan of Bitcoin and I’ve been using it since 2012. I was mining for almost 2 years until my electricity was costing me more than the coins I was producing. I’ve worked in few projects that were accepting Bitcoin as payment, processing the transactions and more. During the life of Bitcoin we have seen few bubbles, meaning the price going up parabolic, a lot faster than the previous periods and eventually crashing back. Every time, the price after the crash was higher than the price the rally was starting. I believe we are now in another bubble, prices doubled in about a month and we see big gains daily. This is unsustainable and eventually all markets with these characteristics are correcting themselves. The only questions no one can answer is how high it will go before the crash and when it will happen. In the long term I believe Bitcoin will worth more than what it is now but be careful when buying Bitcoins now. Why buy now when you can buy in few days or weeks with a discount. There is no doubt that Bitcoin has now far more users and investors and that is why the price is so high (over $2200) but that doesn’t mean it can continue playing the greater fool game forever.
I would like to tell you the story from my point of view and then decide if buying Bitcoin now it is a good idea. First of all, for Bitcoin to be able to handle the number of transactions other payment systems do needs to change and this is known since the creation of Bitcoin. From time to time some spam the Bitcoin network with transactions and this leads to two things, first to delay the verification of the transactions and second to increase the transaction fees in order for the transactions to be verified faster. The last spam (days ago) was the worst so far and it created the largest backlog of transactions. I had a transaction that took a week to be confirmed. There are some proposals on how Bitcoin can change and handle larger amount of transactions, the most common are SegWit by Bitcoin core and Bitcoin Unlimited mostly backed by miners. SegWit (Segregated Witness) is a soft fork which means it can handle “old style” transactions along with the new ones and Bitcoin continues normally. Bitcoin Unlimited is had fork which means that it is incompatible and will cause problems in the Bitcoin network. If that happens which is what Bitcoin miners want is to have two Bitcoin blockchains and by extension two coins. Exchange sites decided to keep the Bitcoin core as BTC (or XBT) and the new coin (if created) as BTU (or XBU).
The price of one bitcoin (1135) is very close to the price of one ounce of gold (1165). If Bitcoin continue this trend it will soon reach parity with gold and even surpass it. The price of Bitcoin continue its uptrend while the value of gold decreased in the last months. This shows that the dynamics are changing and people prefer the digital gold instead of the traditional one. While writing the post the price went from 1120 to 1135, I will try to post it before change again and make me re-edit!
This post is not related to the Bitcoin as technology nor the future of its price but the data of Bitcoin. There are several wallets to keep your Bitcoins but the ones that offer the best security is the ones that don’t trust 3rd parties, including the original Bitcoin client. Since they don’t trust any 3rd party they need to download the entire blockchain, every block, every transaction ever made and verify it. That amount of data has reached 100GB so you need a hard drive which can fit that size and have room for future blocks also. The early blocks were empty with few or no transactions but new blocks are full or almost full so expect the size to grow faster from now on. In addition, more users are joining the Bitcoin train, more companies are accepting the crypto-currency and is expected to have even more transactions.
Many believe that Bitcoin price will hit a new high at 2016. My opinion is that this will happen at 2017 but this remains to be seen. The following reasons are what many, including me, believe that will push the Bitcoin price up.
Bitcoin price rally is due to the weakening Chinese Yuan. They turn into Bitcoin since it is more stable and because of that demand, Bitcoin price is moving upwards. The demand is estimated to continue and the price to be soon above $500. This happens also with other countries and currencies but it didn’t have this effect in Bitcoin price. As said before, the price will be affected also by the halving that will happen in less than 2 months. The price is estimated to reach $800 by the end of the year.
Japan officially accepted Bitcoin, and other digital currencies, as money. In particular, Japan recognizes them as having function similar to money. The specific legislation was at works for weeks and it is finally accepted. In addition, payments can be made directly to Bitcoin without the need of converting them to fiat currency. Banks will start investing in Bitcoin as assets for asset management and future gains.
Dell, one of the biggest companies in the PC market is now accepting Bitcoin, the most known crypto-currency in the world. This made possible after partnership with Coinbase. Any purchase from Dell’s website can use also Bitcoin as payment option. Dell wanted to give this flexibility to their customers. My guess is that in few years Bitcoin will be the first payment option in all online stores. After some drops to the price of Bitcoin which is predictable because more and more companies accept Bitcoin but they convert it immediately to dollars which drives the price down
I delayed a month to post this. Microsoft started accepting Bitcoin payments to allow their customers to buy games, software and videos with the crypto-currency. After partnership with BitPay now Microsoft customers can add money to their Microsoft account . After that they can buy any digital goods Microsoft offers. That gives Microsoft customers another way to purchase what they want and Bitcoin owners another option to where to spend their coins.
There are many gambling sites and some of them are accepting Bitcoins. Some other sites were created based on the Bitcoin protocol and they generate their random numbers based on that. Users tend to trust more a website that shows exactly how they generate their results instead of just have faith from a black-box gambling site. One of those websites is SatoshiHunt which has look of a retro slot machine and everything is open to its players. Satoshi Hunt is based completely on the Bitcoin protocol and you can win up to 100x your bet. Players are anonymous, you don’t create account and you don’t provide personal details like name or email. Playing is simple, you send a bet which should be between minimum and maximum allowed bet and seconds later the slot machine is spinning and you see your result. After you win you will get the amount won back in few minutes depending on the Bitcoin network.