gamerandy

There are several potential tipping points, but my favorite one is a large corporation accepting Bitcoin.

Amazon has an incredibly small operating margin, less than 1% - They have more than that in transaction costs, so if they were to accept Bitcoins for product and offer Bitcoins as payment to their affiliates it would cause a rush of other companies to jump onboard for the same reasons.

Once that happens with one large company, it sets a precedent. Doing something new is scary, and when the regulatory environment is uncertain like it is with Bitcoin the choice to accept could potentially cost you a lot of money later if it's retroactively made not OK and the value of the currency plummets.

But once a company like Amazon or Google jumps in, they have enough political swing and momentum that attacking Bitcoin becomes attacking them, and they'll fight that tooth and nail if it's saving them money.

Another example of a tipping point would be a country, ANY country, adopting it as their formal currency OR issuing a new currency with Bitcoins as the transparent backing of it. With bitcoin you can have a functional gold standard, because the gold doesn't need to be hidden from sight.

It is the hiding that makes gold standards dangerous - The people who issue currency with the gold as backing have no reason to issue the correct amount when only they know how much is out there, and how much gold they have.

There are already really small niche sites you can trade Bitcoin at leverage with, but it's just a bad idea. With a "normal" commodity market, like say chickens, if you think chickens are undervalued and want to profit from them you can buy forward production of say, a million chickens.

Then when the option comes due, if you're on the profitable side of the trade you can essentially sell it for cash and the chickens never need to be delivered. In that way, it almost doesn't matter if the chickens ever existed to begin with because you never intended to take posession.

With Bitcoin, it's different - Converting a bitcoin options contract into US dollars, yen, whatever actually is more expensive and time consuming than just "accepting delivery" of the bitcoins themselves. You can still sell them for whatever currency you want, but it is at the time of your choosing rather than at the point of settlement.

What that means is that if you sell an option and the Bitcoins don't really exist, you could be screwed. You either default or buy them at market price which can be very painful given how volatile the pricing is right now. It is a bad idea to play with leverage in Bitcoin because if you lose, you potentially lose very big. Additionally, it's bad to buy an option because you introduce the possibility of the counterparty (supply) not being able to deliver, whereas if you just bought Bitcoins you have the Bitcoins.

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The recent bubble (in my opinion) was caused by media attention -> new users enter the market -> price goes up because demand outweighs supply -> media pays more attention because the price is going up -> more people get in not wanting to miss the opportunity -> price goes up -> etc

This can only go on for so long - The currency is deflationary, but there is a problem with exchanges where when volume is very high they start to lag because they cannot keep up with orders. Being unable to access your money in a fast moving market has the tendency to cause people to panic, and especially new users often rush for the exits when they think the price spike is over.

These things are going to happen, no way around it - But they're healthy, and if you look at the low points over time you'll notice that even there they are trending up because the supply/demand fundamentals basically require it.

What standard is your currency backed by?

It depends what you mean by "last nail in the coffin"

If you mean it actually is removed from the internet, that would require the removal of the internet. In the same way you can't stop bittorrent traffic, neither can you really stop cryptocurrency traffic - They're both P2P so barring going to peoples houses and uninstalling the software, or blowing up the internet it's pretty hard to do.

If you mean "It won't ever reach mainstream adoption" - That could happen because it is made illegal, or has harsh regulatory requirements put on it that make people feel like they can't safely transact with it at their business because using it puts their business at risk.

In the same way the automobile changed the horse-and-buggy system as they knew it. If you play out the logic, one functionally obsoletes the other. I was talking with a financial reporter the other day who has been coming around to bitcoin, and he said to me "You know, if they were building the banking system from scratch today I think this is pretty close to what it would look like"

Andreas answered a question below about bitcoin and self driving cars, fixing spam on the internet by using Bitcoin addresses with tiny amounts of BTC in them to prove you're a real person and not a single-use bot, there are so many crazy and impossible things that become actually probable when you're talking in the context of a world built on decentralized, rules-based, cryptographically secured, instantly transmittable, person to person internet cash.

I have never been so hopeful for our future as I am now that I've thrown my days into bitcoin. Bitcoin 2013 was a fine conference and a wonderful experiance, so many very smart people have quit their jobs or left their studies to do the same thing I have.

We know we're building the future, and it's a better one than we have today.