My first article went through some scenarios of when Bitcoins will peak in price. I gave a very broad order-of-magnitude prediction of “not higher than US$10,000/Bitcoin”, but I’m now going to revise this to a peak price closer to present trading prices (roughly US$900/coin) than the upper threshold (US$10,000).
The reason is quite simple: Apparently some Ukranian firm has managed to obtain a majority of the computational power of the network. Blockchain dominance was one of the reasons why I thought this scheme would collapse.
A deviant entity will want to lay low in the shadows and be patient while others continue to pour money in the scheme, but the cartel’s inevitable goal is to vacuum as much capital out of the system as possible. There is no point in announcing to the world you are taking over the whole monetary system, but rather to wait in stealth and just wait for people that are generally unaware of this political dynamic to put their hard currency into it.
It is akin to playing in a marketplace with a central banker, which functionally takes the “independent” nature of Bitcoin out of the equation – if the Ukranian entity wants to pull the plug on the network by denying your transactions, they can.
Why bother when you have a real-world currency market to dabble around with? At least you can pay income taxes in the host currency, while in Bitcoins, you have nothing.
A binary phrasing of this is: Do you want your central bank to be controlled by a Ukranian corporation, or an arm of your national government?
I’ve great respect for all your decent analysis when it comes to stock and bonds. But you’ve been consistently missing the mark when it comes to bitcoins. GHASH.io is a mining pool and roughly half of the computing power there belong to other users. Their share of the network has since been reduced as miners are concerned as well. Given how much GHASH itself has invested in its equipment, I do not see them doing malicious things as they have far more to lose by destroying bitcoin.
GHASH might have apportioned hashes to various users, but ultimately the person with the keys to the admin account that controls over half the hashes produced on the bitcoin network will control bitcoin. Only this time they don’t have to fill in a Schedule 13D declaring this.
“Given how much GHASH itself has invested in its equipment, I do not see them doing malicious things as they have far more to lose by destroying bitcoin.”
Right now, I agree. Much more advantageous to lure more into the scheme. This will change in the future.
I guess from a stocks and bonds perspective, my opinion is quite clear, play with Bitcoins at one’s own peril. The same advice goes with stocks and bonds!