To me that means that it's time to start selling. There is no fundamental reason why Bitcoin is rising so fast, it seems like speculation to me. I'm not one of the Bitcoin haters either, I've been heavily involved the last 6 months, I just don't see any major reason for this spike other than the usual speculative arguments.
If Bitcoin shouldn't be spent then what use are they?
I always find this argument silly, as I see intrinsic value in finance as a logical fallacy, but I'll entertain the idea anyway. From Wikipedia:
>In commodity money, intrinsic value can be partially or entirely due to the desirable features of the object as a medium of exchange and a store of value. Examples of such features include divisibility; easily and securely storable and transportable; scarcity; and difficulty to counterfeit.
I see Bitcoin as three things: a commodity, a 'trust-less' payment network and a distributed ledger. Now, those are all value-worthy features in my book, especially the latter two.
If you live in a bankless country without a stable currency, Bitcoin is a very powerful tool that has 'intrinsic' value in its capacity to serve your financial needs where other instruments have failed or are entirely absent. Same goes for folk stuck in countries with severe capital controls or vicious austerity measures.
If gold has "intrinsic value", so does Bitcoin. In fact, Bitcoin has more value from that perspective; since when you could you divide gold infinitely? It's also counterfeitable; Bitcoin, not so much. That's what all these clowns like Joe Weisenthal don't seem to understand because they are so caught up in their own ideas of sound money that they can't see the value that Bitcoin brings to the table. Their loss.
> There is no fundamental reason why Bitcoin is rising so fast
Sure there is. The goal of BitCoin is to be as popular as USD and EUR. There are maximum of 21,000,000 bitcoin. Imagine owning 1/21,000,000th of all the USD!
A genuine 'why?' I'm reasonably naive on these issues, but there's no fractional reserve banking of Bitcoin yet, is there? M2 and M3 include savings, all of which couldn't be converted directly into underlying currency, whereas every Bitcoin is clearly traceable and exists as a unit of currency. Disclaimer: I am no economist or financier.
I find this limit a really interesting part of the bitcoin experiment.
What sets the limit though? Is it technically possible for the developers to revise this limit at a later date, thus causing a drop in value for existing holders?
This limit is set by miners and the reference client (and the various clients that copy the reference client's limit).
I'm not sure of the exact minimums necessary to change the limit, but roughly speaking if you could convince more than half of active bitcoin users and enough miners to control more than half of the network hash rate, you could change the limit.
However even this wouldn't necessarily change the limit in the way you expect. It would create a hard fork where you would have two versions of bitcoin. All coins made before the fork would exist in both versions, but coins made after would only exist in their respective version. So you'd have A-bitcoins with a limit of say, 1 billion, and B-bitcoins with the old limit of 21 million. Whether anyone would still use B-bitcoins depends on how many clients/miners decide to stay on the B-bitcoin branch.
The limit was set as part of the bitcoin protocol. You can change it by basically making a replacement to bitcoin. It won't exactly be easy to convince people to use your new replacement (because massive social change is hard).
There are many bitcoin fans who think the hard limit is a very good thing.
> One way to start selling a bit is to actually spend them.
That is what I was getting at, in order for Bitcoin to have a reason to exist people must spend them on goods and services. Bitcoin most likely would not exist for long if it became purely a store of wealth. Not that that will happens but many people are treating that way.
If bitcoin becomes a universal "store of wealth" it automatically becomes the only currency: most marketable, most liquid, cheapest to transport and store currency. See my big comment on how this happens elsewhere in the comments in this post.
Gold is not currency because it's too damn expensive to store and move.
Capital gains tax evasion - maybe, I'm not a lawyer and I'm not advocating it. But it's clearly a motivation for some people to spend bitcoins directly without going through an exchange.
