On 2011-06-11, Eugen Leitl wrote:

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A requirement for a bubble would be a promise of ever-growing value, the rest is just the marketing.

No. There is also the concept of a rational bubble, where people invest into something because both them and the others settle into a rational game-theoretic balance where everybody thinks everybody else values a commodity, hence they value the commodity themselves, and thus the commodity in question continues to be valued indefinitely. A cycle involving boom and bust is just a special case of a rational bubble, and a very specific one, whereas the general case doesn't much predict any outcome. The general case also involves stable valuation of the commodity in question, when some real backing is present. Which would then usually be called a (fiat) currency, or (an unbacked) security. As soon as such a commodity establishes liquid markets wrt other commodities, it has a real chance of becoming a bona fide currency. No matter where it came from. Take for example Virginia tobacco at its time. It became a medium of exchange, and it remained so long after it had lost its use value by spoilage, in individual cases. BitCoins perhaps aren't backed up by anything, but so aren't useless cigarettes or fiat-pieces-of-paper. Nevertheless, the latter work just fine. (Modulo independent, political and macroeconomic concerns over whether they're the best possible currency.) BitCoins are of course far short of the real cryptocash that we'd want. But their worst problem isn't about bad economics, practical monetary concerns, or whathaveyou. Now it's finally about perfecting the engineering, and about how to advertise to the masses that this sort of thing now finally exists. The Silk Road articles already did half of the job, you know... -- Sampo Syreeni, aka decoy - decoy@iki.fi, http://decoy.iki.fi/front +358-50-5756111, 025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2