The proof is straightforward.
Take the rate of growth over the last three months. Use your eyeball to extrapolate forward six months.
$6,800 pops out as the answer. Q.E.D.
I sense your skepticism.
Let's be more conservative and use a more cautious view of the rate of growth over the last six months, to extrapolate forward six months.
The new conclusion might be that Bitcoin is going to drop to $1,800 by the start of 2018. A big loss if you bought in anywhere above $2,800. But more than a double if you bought in early 2017 at $800 or below.
And the final conclusion that you should walk away from this short read with is:
Extrapolation is very dangerous.
Extrapolation has less value in predicting the future Bitcoin price than gazing into a crystal ball.
But your neural circuits have been trained over 1000's of generations to look for simple patterns. You are here today, because somewhere in your background one of your very distant ancestors was good enough at detecting simple patterns to avoid being eaten.
That makes it almost impossible for you to look at the recent six month chart of Bitcoin and avoid jumping to the simplest possible conclusion. "..... this trend has to keep going."
Bad news. The simple pattern analysis machinery that is hard-wired into your circuitry could be leading you astray.
So what will the price of Bitcoin be in January 2018?
I know I don't know.
You're on your own on this one.
I think that if we hold onto bitcoin for a while maybe even 5 years, then even with the drops, the price will increase and it will be worth so much more.
That is definitely a possible outcome. I agree that is more likely than either of us being eaten by a large carnivore
Good post... Your point about the use of linear interpolation in finance is something that I had a "mini rant" about in an earlier post.
Your conclusion is very good haha
Anyone with a doctorate is typically willing to rant for hours about the evils of extrapolation
STEEM On !!
Dave
I've only been on Steemit for 11 hours and I have ranted about this twice already haha.
Ill be commenting and hopefully posting in the crypto section most of the time so feel free to follow me :)
Upvoted and followed. I agree, it's not easy to discern the future -- my estimation, though, is on the high side. :)
Higher feels right.
STEEM On !!
Dave
Dave I just read a very good post by @sean-king that discusses the intrinsic value of bitcoin. Just as extrapolation is dangerous, the valuation models he explains don't necessarily predict the market value of bitcoin but they do show how the intrinsic value of the network should be growing. Check it out if you are interested.
https://steemit.com/bitcoin/@sean-king/my-bitcoin-valuation-methodology-valuing-bitcoin-as-a-network
Thank you for this pointer. A very valuable reference.
Bitcoin network had more computing power in 2013 than the best 500 supercomputers in the world. And the miners have been growing since then.
Adds to confidence that bitcoin isn't going to be a giant scam and crash to zero.
STEEM On !!
Dave
This post received a 1.5% upvote from @randowhale thanks to @davebrewer! For more information, click here!
Stellar is offering free lumen tokens to bitcoin holders. They're just distributing it to addresses based on the blockchain, it is part of their business plan. Do not miss it ! I mean, whether you like Stellar or not, it is free money !
Thanks for the tip
STEEM On !!
Dave