Let's enumerate the grand possibilities filtered by an increasing bitcoin value versus dollars (without predicting small-time-scale changes):
- Bitcoins will grow to a peak and then decrease to a much smaller value
- Bitcoins will continue to increase and then plateau to their real market value (which later on, in hindsight, everyone will claim has always been very rational.) This will make them take a share in between the available global currencies, and then everyone will continue life normally.
- Bitcoins will be continue to increase in value such that no one can ignore them anymore. This will effectively destroy the old notion of currency and push economy into a totally new realm.
I really hope it's at least the second option. I am not sure I want the last option to be true, since I haven't invested in Bitcoins enough yet.
On the speculative side:
The way I see it is, Bitcoin is currently feeding on an open field of existing wealth. It hasn't even started to be used as a currency of exchange, as many have said. When that starts happening on a wider scale, there's really nothing that will stop Bitcoin from eating the whole market of currencies, and becoming the defacto coin of exchange (except the ridiculous large spans of time that are required for verification).
- Govt's try to crack down on BTC. The usual asperger reaction "haha, it's mathematically unbreakable" is followed by a tug-of-war and probably ends with taxes levied on exchanges and merchants.
- BTC become a speculator's haven like penny stocks, the endless boom/bust cycles driving out merchants (except for drugs) and consumers
- The protocol weaknesses overwhelm BTC (e.g. it takes hours for any transaction to clear) - scaling P2P is goddamn hard.
- Bitcoins will continue to increase and then plateau to their real market value (which later on, in hindsight, everyone will claim has always been very rational.) This will make them take a share in between the available global currencies, and then everyone will continue life normally.
- Bitcoins will be continue to increase in value such that no one can ignore them anymore. This will effectively destroy the old notion of currency and push economy into a totally new realm.
I really hope it's at least the second option. I am not sure I want the last option to be true, since I haven't invested in Bitcoins enough yet.
On the speculative side: The way I see it is, Bitcoin is currently feeding on an open field of existing wealth. It hasn't even started to be used as a currency of exchange, as many have said. When that starts happening on a wider scale, there's really nothing that will stop Bitcoin from eating the whole market of currencies, and becoming the defacto coin of exchange (except the ridiculous large spans of time that are required for verification).