Technical limitations will hold off any world-changing events
A user is spreading his or her belief that OPEC or some country with a failing monetary system is going to adopt bitoins as its main transactional currency. I want to reiterate that this possibility will *never happen* with bitcoins in their current state. Anyone who would consider to use the technology as the primary currency for a market needs to know that all of the transactions in that good can be processed. Bitcoin's 1MB limit does not allow enough volume for these groups to change their systems. Anyone who is in charge of evaluating alternative currencies for such organizations would recognize that problem.
This is one of the reasons that issues like the development "freeze" and the 1MB transaction limit could be having a direct effect on the current price. There could be a group of people, like a huge cartel or a small government, who are more than willing to take the next step but cannot because of technical limitations.
Companies accepting bitcoins are much different than nations or cartels using bitcoins. If the network becomes overloaded, a company simply doesn't receive any more transactions, and people will start paying by old-fashioned means. If a country were to adopt bitcoins and the network becomes overloaded, there is no such way out.
I think there is a some understanding that is lacking about how we would expect the technical limitations of the network to manifest themselves. I personally think that what we are seeing now is a more likely outcome of these limitations than the network reaching the limit and transactions backing up. We would expect to see a situation where the limit is in sight (but not a danger yet) and people who want to take it to the next level choose not to do so because of their fear of overloading the system.
People disappear in periods of low volatility
Ever noticed how people tend to disappear during periods when the price is steady, and then flood reddit when there is high volatility? The period we are in now is rapidly approaching the most stable period in the history of bitcoin. Soon, we'll start to see those newspaper articles again claiming that bitcoin has finally plateaued at its stable value. Yet, the number of comments in /r/bitcoin, daily discussion threads, and here hasn't been this low since the last cycle.
For all that people talk about low volatility being critical to bitcoin adoption, people don't seem to be very excited about bitcoins when their price is stable. This seems to lend credibility to the idea that the price dictates adoption, rather than adoption dictating the price.
How would bitcoins die?
To examine what will cause bitcoins to succeed, it is necessary to consider how they could die. Try to come up with a scenario that causes bitcoin to decline in value and become worthless, so that cryptocurrencies don't succeed. The technology is so much better than the existing system in many ways that creating this imaginary scenario is difficult.
Some people fear that a 51% attack will kill bitcoin. While it sounds worrisome in principle, the act of a 51% attack indicates that there is sufficient interest in the technology that it has value and that people are using it. A 51% attack would result in a crash, followed by an improvement that is made to the protocol to prevent a future attack. Since a 51% attack can't actually spend money, a change in hashing algorithm or some other countermeasure could be implemented and switched over without theft in the meantime.
Others believe that governments will ban the technology. The odds of that occurring seem almost zero now. There will be at least one jurisdiction that allows bitcoin to exist, and people will flock there to create technologies. Those technologies will then be offered over the Internet and none of the other governments will be able to prevent their usage. The world won't just regress to an earlier technology and "skip" cryptocurrencies.
Some people consider bitcoins difficult to use, but the definition of "difficult" depends on how motivated a person is to learn the technology. People go to extraordinary lengths to do things they want to do, and make up false excuses for things they don't want to do. It is far more difficult and dangerous to buy illegal drugs and consume them, but some people take the risks of arrest and overdose and do it anyway. They don't complain that the government has made it too difficult to buy the drugs.
The only way that bitcoins don't become the world currency is if people don't find them useful. In any case where bitcoins are useful to people, the huge distributed network of users come together and fix the problem. Death due to a 51% attack, for example, indicates that bitcoins were not useful enough to people to save them; otherwise, they would declare war and seize the attacker's equipment by force.
If you're asking me what makes something "useful," I can't answer that question. I've tried four businesses and all have failed simply because nobody used the product. Getting a technical product working and bug-free is easy; determining what people will want to use is far more difficult. If it were easy to determine what people liked, then anyone could create a viral video and have it spread across the Internet in hours. The key takeaway is that, in the long-term, 10-year investors are listing the wrong risks. The sole major risk is that there is some reason that people won't want to use bitcoins. That reason may not even be identified yet. In the event that bitcoins are not found to be useful to people, we will likely never know why they didn't succeed because it is impossible to figure out what people are thinking.
As a caveat to this section, it's worth mentioning that people who decide not to adopt bitcoins because they worry about the types of problems I mentioned are a group of people who consider bitcoins to be not useful because of the possibility of these outcomes. That's a bigger risk than the problems themselves.
Interesting argument between /u/greenearplugs and /u/Emocmo
There was an epic argument between greenearplugs and Emocmo about the results of technical analysis and proving that you are right when posting on reddit. The quote of the day is from Emocmo:
The "measuring" argument is a good one. There are many people on reddit who assume that everyone is out to gain karma or reputation points. When someone like Emocmo, /u/moral_agent, or me comes along who posts what he believes without caring whether it is the "popular" thing to say, people start to question what the "motive" is. In /r/bitcoin, someone went so far as to claim that if a blogger has no ads on his site, then he has a negative motive that he is hiding from everyone.Every so often there comes along some person who thinks that I have to show you how I am personally profiting or not based on my own analysis. I don't really understand the "dick measuring" mentality that goes along with that. Post your own analysis.
Assuming good faith is critical to Internet discourse. It annoys me that people are trying to make people appear evil despite there being no evidence of that. There are people who don't care about karma or popularity and simply say what they think is right.
Other
- There is an interesting article at http://techcrunch.com/2014/07/14/love-v ... ps=gravity today that examines the effect of technology on love and sex. A few months ago, I responded to a comment in /r/bitcoinmarkets about so-called "involuntarily celebate" men. The poster was railing against men who have such profound psychological issues that they can never be realistically expected to hold a relationship. I replied that the correct response to the problem was not to demean such people, but to investigate technological solutions. The article today points to some evidence that dating sites and apps like Tinder are seeing a marked increase in "aggressiveness" (their words) by women as the needs of men are being met by things like porn, realistic sex toys, robots, and so on. Women, who previously received hundreds of messages from men, now find that they have significantly less choice. Years ago, a man who was introverted or who did not have sex was derided as a "40-year-old virgin." Now, it seems as if such stereotypes are fading as the number of never married people skyrockets.
- Some day, obviously, it can be expected that virtual reality will satisfy the needs of both genders. For the next 20 years, however, I wonder if this trend means that we will see a profound shift in power in the areas of sex, dating, and marriage. Perhaps we will see communities like /r/seduction decline in popularity, as some men decide that technological means of satisfying their desires are good enough or even better than real life? Sites like fastseduction.com are already past their heyday that occurred around 2005 with the publication of several influential books, and it will be interesting to see if sites focusing on how women can get men back into the "real world" start to develop.
- Tomorrow is a Toastmasters Thursday, and my brother is on travel installing the pool's production hardware that I may need to help with, so maybe someone will step up and post thoughts if I can't.
- Days until July 24: 8