The only reason why a price "correction" may happen is if those who own bitcoins - and large quantities at that - decide to dump them on the market at a price that is well below the current exchange rate.<p>But you have to ask yourself under what circumstances could that happen. Bitcoin cannot be "shorted" which is the main reason for that happening in the real world.<p>What if many people were to need to sell their bitcoins for example if a bank in a major country decided to call in all its loans. Again as we have seen with the Cyprus Crisis you'd be better off <i>keeping</i> your bitcoin rather than selling it.<p>It's hard to see how a crash could occur without there being a major external factor influencing the decision to sell large quantities of bitcoin.<p>Even if a government was to declare it illegal, there would be nothing they could do to enforce it. Wallets are private and encrypted, and the blockchain means that no government could grab your coin.<p>I think it's more than proved it's worth, I think the price can only go up because normal currency is so open to abuse by governments - see Cyprus again.<p>Lastly,one other factor that could affect the price, is damage to the internet in some form - restricting access or the ability to buy or sell.
I don't believe so. There will be some downs for sure. The main difference with Bitcoin is that every coin is accountable. You know if you possess it or not. Compare that to Tulipmania for instance where one of the reasons for the crash was that people would buy tulips from others that didn't exist.<p>It's the same as a run on the banks. It happens when the bank has lent out too much money - money that it doesn't have. When people try to withdraw their actual money they put in, it leads to the bank going belly up because they actually created money out of thin air.<p>I think this is a big difference with Bitcoin and a reason why it will survive the inevitable ups and downs and stick around for the long term.
It won't matter if it does unless you're speculating. (Or holding onto a non-trivial number of bitcoin for whatever reason.) Bitcoin has proved it's point, that a decentralized currency is possible, and that it can be done practically and used for real transactions.<p>As a proof of concept, bitcoin is a huge win for anarchists and libertarians everywhere. So in that sense, I don't think that it's original author really cares.<p>I think that if it does "crash" the crash will be caused by regulatory pressure, or it will live to see the end of bitcoins being issued in whole.<p>EDIT: In the short term, I would not be surprised if the currencies value takes a sharp drop.
I don't have much bitcoin experience. The accelerating exchange rate seems to indicate there will be a major crash. At the same time the increase could be a result of bitcoin going "viral", but I don't think the amount of coverage of bitcoin justifies the massive prices.