Guide: How to Short BitcoinsEN
Mod note, this was written at 12:30am, see the current usd:bitcoin rate here here
Well, let's start this off by saying that today alone, the value of 1 BitCoin to USD has jumped $44.1 hitting a whopping $234.9 coin value and by the time I finished writing this, it went up another $3 — but of course this is due to the massive media hype and a rush to scoop these pacman pellets up at any cost hoping BitCoin value will continue to climb.
But, for all the pessimists forecasting the doom of our cryptocurrency friend, you can put money where your mouth is and bank on the falling of the BitCoin with New York startup "Coinsetter" which provides a Forex platform to bet with/against BitCoin (specifically geared to make leveraged trades on margin and short the market) but the kicker is that actually the company was started by a former Investment Banker named Jaron Lukasiewicz. But of course Coinsetter isn't the first in the space, it will be competing with a Hong Kong company named Bitfinex as well as another called ICBIT.
With marginintroduced, obviously there's some money to be made, but I don't think now is essentially the time to even think about shorting BitCoins until the hype starts dying down and you can ride the freefall down to a plateau as soon as we can see some realistic market checks, rather than loop going on where each guy is paying more than the next to cash into the climb.
I believe the best way to emphasize the hype though is to embed the "Hype Cycle" from peinvestor2012 on the "Bitcoin - Believe the Hype" post and compare it to a chart of BitCoin price:
Speaking of reddit, this post displays the Bitcoin hype perfectly.
Bitcoin overlayed against a hype cycle
Now, BitCoin Prices:
Hey! Doesn't that curve look familiar?
It's obvious BitCoin will be around for a few years, but it may be more obvious that with alternative cryptocurrencies reaching mainstream (such as LiteCoin and NameCoin) we may see fragmentation of the core BitCoin market because currently all that's driving the BitCoin price is the popularity of the network which drives this ever increasing value.
Although, you must remember the BitCoin relies on "miners" to extract and pull BitCoins from the system requiring an exponential rate of computing power and expensive computing rigs, eventually forcing most of the mass "miner" market who can't spend $30,000 on a dedicated BitCoin rig to switch over to these alternative cryptocurrencies with a lower computing difficulty rate allowing them to again mine in large amounts for less money that will accumulate into solid sums, thus causing them to tell their friends, who tell their friends, which causes a buzz, which drives up the price, which drives up the mining, which raises the difficulty, and which finally leads to a crash when the computing power required becomes intangible again.
(ex. mining BitCoin solo for 48 hours straight will currently only garner you around $2 - $4, which isn't worth the electricity bill you'll receive for that kind of drain.)
Any kid willing to write out a mimic BitCoin system will be able to "create" a currency and this will continue until we're saturated with cryptocurrencies and everyone realizes the aimlessness of shady cryptocurrencies.
Do I think we will adopt a "virtual currency", yes, I do. But, do I think BitCoin, or even his copycat successors for that matter is our guy? No. Personally, I believe that eventually, yes, we will develop a cryptocurrency, but most likely it will be born from a corporate effort in the F500, from the Government, or the UN who want a united form of currency for the developing world.