Watch altcoins to find the peak
During the last bubble, litecoins were worth over 0.05 right before the bitcoin peak. In addition to the date, I believe that runs on altcoins are a sign to get out of bitcoins.
Altcoins usually start to rise once bitcoins reach the previous all-time high, as people who feel like they got in too late for bitcoins look for other investments. For some reason, when altcoins peak, it's a signal that the market is waiting for the first piece of bad news to cause the initial crash. I'll be watching the price of altcoins this cycle as an indicator of when to sell.
Solve the world's problems first
Some people disagreed with me yesterday when I stated that much of the world's wealth is concentrated in the hands of the entertainment industry. I didn't say that all of the wealth was owned by actors, but that there are many enterprises peripherally related to media and entertainment, like telecommunciations and advertising, that also drain resources from things that solve the world's problems.
My point was the following: the world has many problems. If we solved these problems and then had fun later, or had only half as much fun now as we do currently, the planet would be better off for it. If the amount of expenditure on television were halved and that money were instead devoted towards science-related fields, then there would be plenty of time to produce culture after those issues were solved. And yes, it is quite possible that it could be the next generation before the issues are resolved, but that doesn't mean that this point is invalid.
The world is geared towards and run by a very small subset of the population. The biggest discriminator that determines who gets to experience life is health. While there are some people who have never had any health issues in their lives, the majority of people in the world suffer from disease and disability. In Africa, children starve to death or die of AIDS while people watch Broadway shows across the world. Shooters kill people in movie theaters because we do not have drugs that effectively treat mental illness. Elderly people are reduced to a shell of their former selves by a number of age-related diseases.
Yet, there is a lot of money available to research these problems. I would hope that, if money ends up in engineers' hands, that engineers spend it to solve these problems first and eliminate pain and suffering, rather than spending $1m/episode to revive Firefly.
And before anyone argues that there will always be pain and suffering, that isn't a valid argument. The amount of progress to reduce suffering that can be made is still significant.
People come around
A month ago, I told everyone I knew to buy bitcoins. I told them that, in the very worst case, they could earn 20 or 30% and sell their bitcoins rather than risk them in a bubble, because it was nearly certain there would be some recovery. Few listened.
I demonstrated my mining pool to some people during the Memorial Day party as well. Again, people were impressed, but they still asked one of my employees, "so, when do you plan on moving to apply for jobs?"
It usually takes one bubble cycle for these sorts of people to come around. Two cycles ago, I told some people to buy bitcoins when they were worth $200 in April 2013. They said that bitcoins were going nowhere. In October, all of a sudden, they change their minds and think that I'm a visionary. Then they start talking about bitcoins to everyone they know.
I've noticed that the people who oppose bitcoins the most become the most vocal supporters later on.
It takes guts to deal in this kind of money
I have 10% of my wealth in bitcoins. Two weeks ago, I think I might have mentioned I had 7% of my wealth in bitcoins.
It was one thing to have $10,000 in bitcoins. That's a lot of money, but it's not going to destroy your retirement if you lose it. But as bubbles start to form, you start dealing in significant amounts of money.
If this bubble continues, people should give some thought as to how they will handle the situation when they suddenly have a lot larger percentage of their wealth in bitcoins than any sane investment advisor would recommend. Myself, I see this money as value I never had before, so my original life plan won't be changed if all of it is lost.
However, when /u/moral_agent's "sell plan" starts to become active, and I start depositing huge Coinbase sells into my accounts, my advisor is going to think I'm nuts to buy back in with that much money after the crash, and will probably try her hardest to get me not to. People might want to think about what to do in that situation, because sometimes seeing six digits in a bank account is more real than seeing two in a bitcoin wallet.
Bitcoins aren't going to reach zero anymore
If this bubble matures to its full potential, then I think the potential for bitcoins to fall to zero will be very low, if not zero. This is much different than the way that people have been accustomed to in the past. Bitcoins will be more like a large company whose stock can have downtimes, but where it's unlikely that the company will go bankrupt.
After this bubble, I would imagine that the absolute worst case is probably that bitcoins fall to somewhere where they are now, and continued to be used by the darknets and similar elements, because that usage is not going disappear.
Number of decimal places doesn't influence what people want to buy
The number of decimal places in bitcoins does not influence whether people are going to buy bitcoins or not. The whole "bits versus mBTC" debate is meaningless in terms of whether people adopt bitcoins or not.
People who see value in bitcoins will buy them regardless of whether you buy 0.01 or 100000 bits. Someone who can get money from Mexico to the United States for 10% cheaper will take the five minutes to learn how to use decimal digits.
Other
- Some people had a surprisingly positive response to when I talked about Chromeo, even though I wasn't actually making a recommendation. Those people might also be interested in Sam Sparro.
- Days until July 24: 54