My prediction is that there is a 70% chance bitcoin will crash and become worth $500 or less over the next couple of years, with a 30% chance it will trade at the current price or more. I could even see a small chance that it goes $100,000 in the next couple of years.
The bear case, which is my primary scenario is driven by the following factors:
Replacement: Facebook was the ninth or tenth social network to hit scale, after MySpace, Friendster and dozens of other smaller projects. Google was the tenth search/directory site (depending which definition you're using), preceded by Lycos, Yahoo, GNN, Excite and Alta Vista. It follows that bitcoin will be replicated by better technology, and if that happens people will move their money too quickly to that platform -- just like you moved from MySpace and Lycos in a heartbeat when you experienced Facebook and Google.
Regulation: Money is power, and I don’t see governments giving up their power. They are fine with watching this experiment play out, but they will ban unregistered cryptocurrencies before giving up their power, and anyone who says “but it can’t be stopped!” is super naive. Sure, BitTorrent or VPNs haven’t been stopped in places they are illegal, but you don’t see folks using it in the face of harsh penalties. China puts people in jail for VPNs.
Energy: It’s only a matter of time before folks get really tired of bitcoin burning through energy at this pace. Sure, bitcoin might evolve to burn less, but it’s still a risk.
Hacking: it’s amazing that bitcoin hasn’t been taken down by hackers, but that doesn’t mean it won’t be. I’m really impressed by its resiliency, but it’s still dangerous.