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bogus comments on Why you should consider buying Bitcoin right now (Jan 2015) if you have high risk tolerance - Less Wrong
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Bad timing there - BTC price has been falling further, hitting less than $180. As I write this, it's around $190 - see here for updates (referencing the BitStamp exchange).
Kindof amazing timing, haha!
The process of a new person learning about bitcoin, getting an account with an exchange, getting money there, etc probably takes a week or more, even if they started right away. I'd rather post a few days before a bottom than after it really.
That said, we were already in full on crash mode when I posted, which is exactly why I posted, because those are the best times historically to buy.
Of course, there is really no way to know where the crash will stop. Catching the exact bottom is pretty much a matter of luck.
The principle still stands, and is more true now than yesterday: Either Bitcoin is dying, or buying it now is a good idea in the long term. Either of those could be true.
Yoiks! Please tell me this history of which you speak!
The history of which I am aware summarizes its lessons about buying things that are crashing with the descriptive term "catch a falling knife." It is not a way to make money, it is a way to get hurt. THAT is the history of buying things as they crash.
The time to buy something which is crashing is AFTER it has fallen. After it has stopped falling that is. After all the speculators, those who thought it was worth something merely because other fools thought it was worth something have been bankrupted from the market, and the only remaining buyers are the people who actually want to use the thing things for whatever they are used for. It is the value of thing in use which puts a floor under the price, not the speculators.
This is the history of bubbles.
So, let's say the Bitcoin outcome is binary -- either you lose all your investment or you will get a very high return (in many multiples). Under this assumption:
What's your current estimate of the probability of Bitcoin going to zero?
Is that estimate a function of the Bitcoin price? In particular, will it change if Bitcoin goes to $100? to $20 to $1? Will it change if Bitcoin recovers to $500? to $1000?
A few years ago, I joked that my probability estimate was linear in the price of Bitcoin- and so my decision of whether or not to buy was independent of the price.
I believe that the moving average of number of transactions is a better indicator of the health of bitcoin than the price. If transactions are declining, then bitcoin is declining in use. If they are increasing, then adoption is growing, even if the price drops.
The price reflects the average market participant's opinion about whether bitcoin will succeed or fail. Right now a lot more people believe it is going to fail, who used to believe it would succeed. To some extent this could be a self fulfilling prophecy, but I think that the fact that transactions have been steadily growing over the past year indicates that bitcoin is still doing fine.
Bitcoin has dropped over 90% and been proclaimed dead before and recovered. This does not mean that it is guaranteed to do so again, but it does mean it is possible it will do so again. Heck, the price could go to around $50-75 or so, and then recover and go to $10000 two years later! That would merely be a repeat of its history. If I had to give a 90% confidence interval of what the bitcoin price would be in a year, and I said "between $10 and $10000" I think I would still be overconfident, and that range would be too small. Bigger moves than that have already happened in its history. Literally anything could happen here.
I have to note you didn't answer any of the questions in the grandparent comment :-)
The transactions can take place over a large order of magnitude. Bitcoin can experience healthy growth in transaction volume, and still shrink by many orders of magnitude in its tradability against the dollar or the euro or gold or whatever.