At this stage the value of a bitcoin is largely dependent on the existence of someone willing to pay more. Why did it drop so much yesterday in just 3 hours? Why will the others match the growth that bitcoin has? I don't have any idea.
I do.
Bitcoin is a form of cash.
If it is to, one day, take over the role currently occupied by cash i.e. getting your salary in it and then running off to the supermarket etc and spending it, then there has to be a comparable value of it.
That is because, although the bits of paper are not worth anything much intrinsically, you need to have enough of it that people can receive it, keep it in their pockets for a little while, and then spend it.
On average, the amount of time that people hold traditional cash before spending it is about one week.
Of course some people only hold it for a day. Others stuff it under their mattress for years. But you can calculate the amount of things that are bought using cash in a day and the amount of cash that is in circulation, and it turns out that the the latter is about seven times bigger than the former.
Maybe bitcoin will follow about the same ratio. Maybe. Hard to say.
There is currently about $1.5 trillion (10^12) of USD cash. I don't know how much of others such as Euro etc. Lets say $5 trillion in total.
By design, there can only ever be 21 million bitcoins. Right now there are about 16.7 million of them (80% of what there can *ever* be), worth $160 billion.
That's about 10% of the value of US$ cash in circulation. That's actually pretty staggering. A year ago it was more like 1%.
Given that there is a hard limit on the number of bitcoins that can ever be produced, the only way the total value of bitcoin can expand to accommodate growing usage is by the value of each bitcoin increasing.
IF usage increases, which it may or may not.