Bitcoin falls below $300, lowest in 11 months

Personally, I think there's still more (potentially much more) downside in the short-term, but it's hard to catch a falling knife. As an investment vehicle, it's highly speculative and there's still a many existential threats that could cause Bitcoin value could completely collapse (something is fundamentally broken with the protocol that can't be rolled back/forked/or patched, instability/attacks on the mining network that make mining untenable, aggressive governmental illegalization/prosecution of crypto-currencies).

However, I'm pretty bullish about Bitcoin mid-term, and here's why:

* The blockchain is pretty revolutionary technology that allows transactions between untrusted decentralized parties. There's almost no end of interesting decentralized architecture/applications that can be built on it. Blockchains are secured by computation - the Bitcoin network is by far (magnitudes) the most secure network and security (mining difficulty/hashrate) continues to grow[1]. While there are some interesting altcoins being developed (Ethereum is probably the most promising), it seems like Bitcoin will be the best blockchain to use if you have something you want to build anytime soon. There's a lot of interesting developments (side chains, tree chains, etc that will let devs use the network more easily)

* Even comparing to a year ago, the amount of infrastructure: exchanges, wallets, storage, payment processors, ATMs, being built has been staggering. I think w/ the way Coinbase, BitPay, and Circle are working we're just getting to a point where a regular consumer might even consider using the Bitcoin (think the net in '94/'95). There's still a lot of basic infrastructural improvements that need to happen.

* Along with that, I think that cdixon's post on "native Bitcoin apps"[2] is right on. International microfinance (as an extension/evolution of international remittance) and decentralized marketplaces can be do things that have traditionally been too hard/expensive to be worthwhile (again, the parallels to the story of the Internet). These are billion dollar opportunities.

* To some degree, this shuffle of weak hands/speculators/early adopters cashing out is probably a better thing in the long term. You're seeing some big players doing some major market manipulation (this drop was primarily driven by a 30K BTC sell wall) - still, overall volatility continues to decline[3] and Bitcoin's suitability as a transactional instrument is improving. Personally, I consider the early-adopter/"dark matter" coins as one of the most problematic aspects (and existential threats) to Bitcoin. Last year, Risto Pietilä ran some analysis on the leaked Gox data and extrapolated estimates that basically 1-10K people own 50% of all Bitcoins. The day that Satoshi's coins start moving and the sky doesn't fall I'll feel better, but there are enough of these dark matter coins that Bitcoin may never get out from under the threat of extreme manipulation. Once crypto-currency infrastructure gets hammered out, I think there will probably be a mass migration to something that doesn't end up making a handful of crazy people trillionaires, but maybe people won't care (or prices become irrelevant as BTC is used primarily as a payment rail/tx processor; the floor will be based on money velocity and mining cost). I continue to be surprised as I've started following Bitcoin more closely.

So, you probably don't want to put your life savings in, but it's probably worth investing some time at least to pay attention to what's popping out of the crypto-currency world.

[1] https://blockchain.info/charts/hash-rate

[2] http://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-a...

[3] http://btcvol.info/

[4] https://bitcointalk.org/index.php?topic=316297.0

Indeed - the stories are straight out of a Ben Mezrich book about silicon valley.

We've got a crashed Mercedes, a breakup, a bank account illegally held in bitcoin, skateboarding in the hallways, DJ parties in the office, prostitutes galore, and a 22 year old founder.

...and that's just the first four comments.

I fear that just as bitcoin arrived suddenly it will go just as quickly. It's based on fundamentals that is not well understood, at least by people who buy it (because its gonna go up!).

Bitcoin is more than a currency, so reducing opinions about it solely to "speculating on currency" is disingenuous.

Bitcoin is a technology. I've made my career by picking winning open source technologies and betting my career on them. If you think some people who spend their lives predicting day-to-day price movements are better at making technology predictions than I am, I question your assumption. There's a reason I don't speculate in international currency, but that I am willing to express my fiscal-opinion on bitcoin.

I also question your assumption that these groups are anywhere near representing the primary driving forces in the thinly traded bitcoin market at this point.

There is no such thing as a nerds-only price for any investment in so much as you believe a given market is efficient. Fundamentally, what I would argue about investing in bitcoin is that small differences in the estimate of the success scenario produce wide differences in fair value estimates of this asset (because the outcomes possibilities are asymmetrical), so if you have a strong opinion on the different weighting of the possibilities it is no more unreasonable than buying an individual stock, and in fact may be the more rational choice.

There are only three scenarios that would alter the USD reserve status: 1) gradual erosion over decades, via the rise of the yuan for example; 2) if the QE / stimulus era explodes and the globe sinks into an even more protracted recession (ie if the Keynesians were wrong), in which case the US government will print incredible sums; 3) if the US initiates a war against the major European powers or China, that could open a fault-line in the global economy (this is another hyper unlikely scenario)