Sure, you should not invest.

I say that because investing has different skill levels and different risk/reward profiles. The lowest level is perhaps savings accounts and CDs and at the most extreme end are derivative financial instruments. Long before you get to currency speculation you go through equity value investing, bond investing, and equity option investing. After going through those things you get to commodities, precious metals (a form of commodity) and then currencies.

So to ask the question "should I invest in this right now?" doesn't make a lot of sense to an investor who is always looking at what they have invested, the risks of those investments, and the forces that move things. If you are wondering what the outlook is for price expansion of bitcoin relative to the Yen or Yuan, or what geo-political events are most likely to move the value of bitcoin and in which way, then you are looking at the investment in context and really the only answer is one with your other context which isn't part of your question. If you portfolio was a million dollars and you wanted to put $10K into bitcoin as a 'kicker' (something that would potentially kick up a big return but if you lost it in its entirety it would only represent 1% of the return. That's an interesting question. It has far more downside than upside at this point.

A voice of reason in a world gone mad! He would have to clarify the amount of risk he wants to take and how much time he wants to spend on it. A friend has very successfully invested in bitcoin (1000%+ return), but I am very sure he has the price up on his smartphone 24/7 and can sell very quickly.

I don't know how much downside it has, as a long term gamble, because there's an upper limit on the amount of currency. If it does take off with the general public, the longer you can hold the more it will be worth.

"Hard limit of about 21 million Bitcoins" say you bought 1 million bitcoin at $1 and bitcoin becomes a replacement for paypal?

Well the downside is that that loses all value. That can occur for a number of reasons but the two most widely speculated on are a global response (something like the G8 deciding that they won't allow trading it) or a technical defect (which invalidates some part of either the transaction train or the currency itself).

But that said, its also very volatile as a currency and that makes for a lot of speculation and rapid market changes. Not for the faint of heart and certainly not a place for any money you might actually need a year from now.

I think that's a good question in general, and to answer you sincerely someone cannot tell you that. It's anyone's gamble.

Look at Apple: http://goo.gl/6hZfI

People felt like they "missed the boat" in 2005, 2006, 2007, 2008, 2009, 2010, 2011, and 2012. Seriously.

And none of them had any concrete way of knowing that it would continuously impress year over year.

...Or that it would go from 700 to 450 in the last six months.

the word you meant to use is speculate, not invest.

and no, you shouldn't. there is a set of people who hold piles of bitcoins obtained when mining activity was minuscule or because they run pools, exchanges or such. The bitcoin spot price is almost entirely determined by how much this group is selling, and the general amount of demand from speculators.

While they've learned a lot about effective market control since the last time they got it up to 30 and then crashed it to 5 in an almost instant panic caused by one big seller and everyone else's fear of being left behind, it's still a fragile process.

In the end, even though BTC stands a fair chance of continuing to rise from here, you stand a strong chance of not timing the peak and holding into a big crash. Timing a speculative market you know little about, has no fundamental value floor and that's primarily driven by a small number of players is probably not the best way to try to make money.

Surely the BTC price couldn't have anything to do with factors external to the market participants themselves ... ?

Whenever the BTC price moves up or down, do you honestly believe "It's those blasted early adopters, at it again I tell you"

You also appear to assume, incorrectly, that early adopters are just itching to exchange out into fiat currencies, as if their eyes are glued to their computer monitors, just waiting for their lucky day to "cash out BIG" ... into fiat currency. Hmmmm

This goes without saying. As with PM investors, many Bitcoin holders see real issues with fiat currency, specifically that banks are a terrible place to put your life savings.

>Whenever the BTC price moves up or down, do you honestly believe "It's those blasted early adopters, at it again I tell you"

Because of bitcoin's ludicrous generation curve the early adopters own what, 3/4 of all the bitcoins, guaranteed to be at least half of all those there will ever be? So yeah, price movements are likely to be their influence because they're the biggest owners.

>You also appear to assume, incorrectly, that early adopters are just itching to exchange out into fiat currencies, as if their eyes are glued to their computer monitors, just waiting for their lucky day to "cash out BIG" ... into fiat currency. Hmmmm

It only takes a few. They're sitting on these bitcoins that have shown themselves to be highly volatile, and at the moment their value is increasing by the day. Sooner or later many of these people are going to be in a position where they could get several hundred thousand dollars by selling up, if they're not there already. Is a crash certain? No, but it's wise to plan for that contingency.

It's a double edged sword. The unique point of difference benefits of BTC itself remain unchanged regardless of current market price, and furthermore, should early adopters dump all old coins onto the markets all at once, the lower price would only make it more affordable for newcomers to buy at discounted rates.

Recall that early adopters of questionable loyalty to BTC already had a chance, or two or three, to cash out at very favorable rates. Many did. The result is Bitcoins continue to drift into stronger and more loyal hands. Meaning, as time passes it grows less and less likely for there to be ANY event capable of destroying confidence in the markets. If you get into BTC at this point, you should know fully well what the risks are.

As a general rule, if you don't know the answer to this question, you shouldn't invest. Unless you can come up with a solid reason for why a particular asset should provide a long-term return (net income, interest, or the correction of a current undervaluation) the best you can really do is speculate, and you mostly likely don't have a large enough asset base to make speculating worthwhile (since you should only use a small fraction of your investment holdings.) If you take a whole bunch of your net worth and put it in, then you're just gambling, not investing, the same as if you went into the FX or commodities market and bought a bunch of paper hoping it will rise.

No.

I mean people can tell you their opinions, but the reality is that nobody knows - as in all other investments...

Now that I think of it, at least with BitCoin there can be no insider trading, because there is no company that owns BitCoin. (There could still be information not available to all, for example somebody could have cracked the protocoll and short BTC knowing that it would be dead once he releases the information).

The problem with giving blanket investment advice is that different investors have different methodologies and timetables. For example, some people buy and sell stocks every few minutes, while some hold stocks for years. They also use different methods to predict future value, like algorithms. If you were to trust someone to tell you when to buy, you'd also need him to tell you when to sell.