The days of the week are still with us from ancient Pagan times.  Thursday was "Thor's Day."  Thor was the Pagan god of war.

I'm wrong: Thor is the god of thunder.  So Thor's Day can be explosive and loud

Woden is the god of war.  We fight on Woden's Day (Wednesday).

An observation:

Last March/April, during the media coverage, my friends and family were interested in hearing about bitcoin, but not a single one took the next step and purchased any. 

But now, upon hearing about the recent run-up, three people in my network are making small purchases.  They are starting to believe there's really something to it. 

It is easy to forget what it was like *before* we learnt about bitcoin.  I think these people are simply starting to think "hmm, maybe it's not a pyramid scheme" or "maybe it's not like a video game token," or "maybe there actually is something to The Bit Coin [sic] after all."  

In the big picture, I think we are all still very early....

When the story broke, I thought bearish (locked-up coins hitting the market, people worried about the security of their BTC).

Now I think bullish (anti-fragile, right?):

1. This is the top story at forbes.com.  The DPR/silkroad/bitcoin saga just got more interesting, and I think it will play out in public view for some time now.  As more mainstream outlets pick up the story, the masses will learn a bit more about bitcoin and some will want to participate.

2. The US now has ~174,000 BTC.  Does any other country own nearly this much?  I don't know how things work in the upper echelons of political power, but for some reason I think other powerful nations might want to establish a position "just in case."

Blitz, I sense a bit of a swagger in your step lately.   

It's nice to have you back Proudhon!

Just sold 10% of my coins.  I believe in bitcoin and think it will go much higher, but at a certain point it seems ridiculous not to rebalance your portfolio.  I think it is wise to remain diversified.  

What about all the bulls that earn a paycheque in fiat?  

If your income is in dollars or euros, etc., it seems reasonable to allocate (say) 20% of your long-term-savings money to BTC.  This would add constant upwards price pressure.  A lot of bitcoiners are young: their BTC holdings in absolute terms will rise, despite bitcoin becoming a smaller and smaller % of their net worth.  

The callous elitism of the post brought a tear to my eye.  The younger people here hold great power to make bitcoin succeed: we should encourage them.  If they are excited about what the 0.2 BTC they minded may turn into, that is only a good thing.  Their delusions will be grand enough to excite their friends into participating.  Slowly, the BTC economy grows as they motivate their peers to participate and they come to see they're creating a real economy outside of "the old system" that offers them better opportunities to shape their destiny.  A decade down the road, perhaps their visions of grandeur from their wildest dreams didn't quite pan out, but I bet it still turned out pretty f*%6in great!


No, for the reasons many other posters mentioned.  EDIT: and 18 year olds quickly turn into 25 year old.  What is not "normal" about being young??

Hilarious. my GF just ran out of bed: "my bitcoins are up, my bitcoins are up.....gotta buy another Gyft card!!!"

I think there is a reasonable chance of hitting 5 figures in 2014 too.  

But I also think we will have to cross "the chasm" in 2014 or 2015.  This will be difficult, because some unforeseen event will occur, or a carefully-crafted false flag will be raised, in order to fatally shake the faith of bitcoin holders from all 6 continents.  If enough see this event for what it is, we will have passed this last test. Bitcoin will be unstoppable.  

Bears and Bulls: Can't we just call it $700 for the night, get some sleep, and start again tomorrow?

EDIT: Oh wow, it's almost morning!

I am a big bitcoin bull, but DaRude has a point.  There are several battles ahead on the road to becoming a significant international currency.  Bad news could come at any time and knock another 50% off the market cap.  I think we will prevail, but more trying times lay ahead...

Yes, I agree tHash.  I apologize if I took your comments out of context.  Right now, if I were to bet, I'd say 60% we're going up and beyond the ATH in the short term. 

Goat, was that you?

This has been debated to death for good reason: the public doesn't "get" that the decimal point is arbitrary.  Come on exchanges: just cite the price in mBTC and we'll find out soon enough what the new unit is called.  

So one-hundred-thousand Satoshi's should be called a Million?  

mb300sd, why wait for a specific price to sell most/all?  Why not continually sell as the price goes up using something like the SSS divestment plan (https://bitcointalk.org/index.php?topic=345065.0)?  This way, if bitcoin eventually fails, you still do well, and if it becomes a dominant currency, you do extremely well.  By adjusting your rake % you can shift the balance between more fiat early on or more wealth should BTC succeed.  

The FBI will sell the coins at auction.  If the auction is well advertised and set-up in a reasonable way, I expect the coins to sell for *above* market price.  

Bitcoin holders worry about large sells driving down the price.  But big Wall Street players that want to get into bitcoin worry about the opposite: driving the price up too high before they establish their positions.  

The FBI was somehow able to get DPR's private keys for at least part of his stash.  The FBI moved these coins to an address they control with a series of 324BTC transfers (324 = FBI on telephone keypad).  So they already have the private keys needed to auction the coins off.  

As for your other question about bureaucratic hurdles, I really don't know: maybe it will be more complicated than I think.  But, really, how is this different than auctioning off rare art or expensive cars that were proceeds of crime?  

Two reasons:

1.  Fanfare (324 = FBI)

2.  It is more secure to do it this way (and this shows that the FBI had a competent bitcoin consultant helping them).  Say the FBI sent 40,000 BTC to an address that they control with a single transaction.  This means that a single 40,000 BTC coin is sitting in the FBI's new address.  Now imagine they want to move 10 BTC to a different address.  Well, they will have to "spend" the *entire* 40,000 BTC coin, send 10 BTC to where they want, and issue the remaining 39,990 BTC back to their own address or to a new change address.  What this means is that in the *extremely unlikely* event that something goes terribly wrong on this 10 BTC transfer, they could potentially lose 40,000 BTC, not just the 10 BTC they were trying to spend.  

If your address contains a bunch of smaller coins, the most you could lose to some *extremely unlikely* "bit flip" or other error, would be the full value of the coin you used as the input to the transaction.  For this reason, I always transfer coins to paper wallets with a series of smaller transactions rather than a single large transaction.  

Huge 2000 BTC buy wall at 4000 yuan on BTCChina.  It's saying "FEED ME!"

Hmm, you're right.  It's gone now.  

We still have no proof that BTCChina is shutting down, correct?

Here are the possibilities as I see them:

1.  All yuan transfers to BTCChina are banned.

2.  Only 3rd-party payment processor transfers are banned.  That is, you are still permitted to deposit and withdraw to/from BTCChina using your bank account.  (This change was made so that China could keep a better track of capital flows for AML purposes.)

3.  This is all FUD and nothing has changed.

Let's imagine for a second that BTCChina is shutting down*.  So the small fish start to panic and sell their coins, like they've been doing all day.  But for every coin that gets sold, one also gets bought.  So who is buying?  I would expect it to be long-term bulls and insiders who knew about this move in advance.  

So the question is what are these people going to do with these coins since they can no longer sell them in China?  I would argue that they would actually behave more like "strong hands" and consider them a diversified asset outside the reach of the Chinese gov (just like how wealthy mid-level Chinese come to Vancouver and buy expensive real-estate with questionable funds).  I really can't see them dumping the coins on BitStamp and then wiring the proceeds back into the Chinese money-prison.  In other words, although BTCChina shutting down would reduce demand, it would also reduce supply.  

Over the next year, the price continues to rise and the Chinese holding these bitcoin do well since they have funds they can enjoy internationally outside the watching eye of the communist party.  Their friends soon become jealous and want in on the game, increasing demand.  Meanwhile, the sheep that are panic selling now realize they were fleeced and promise not to let this happen again.  

Maybe I'm blinded by my bullishness, but, once again, I see this as anti-fragility in action.  

*I think people can still deposit/withdraw via bank transfer

So funny!  The first time I went to Greece as a young boy, I thought you were supposed to stand too.  Had to learn the hard way....

I think these make a lot of sense, once you understand how they "work."  

Oda, then how would you explain the fact that loaded came onto this threaded and posted "hello from china" moments before that huge 2,000 BTC wall at 2640 yaun was eaten?  I saw that with my own eyes.

I agree.  It is more likely that these coins were sold privately.  You don't just dump 1% of the outstanding bitcoins on BitStamp (or cavirtex  ).

We've all seen how large sell orders can drive down the price, but remember, if big players want to get into this game, they must be very worried about driving up the price too high before establishing a position commensurate with their wealth    

And there are *very* big players waking up to the possibilities of bitcoin.  Take Vladimir Putin, with a potential net worth between $40 - $70 billion (http://www.thebureauinvestigates.com/2012/04/19/putin-the-richest-man-on-earth/).  Just think how difficult it would be for him to buy up 1% of the outstanding bitcoins (which is only ~0.1-0.2% of his net worth!).  He would need to cut deals with early adopters holding large numbers of coins.  I also bet he is paying *more* than the market value.  (Of course, Putin is probably not buying; the point is that there are at least a few rich billionaires who are.)

So you think it is more likely that not a single billionaire in the entire world has taken a position in bitcoin, despite all the news and excitement?  Isn't Richard Branson a billionaire?  I think we have evidence that he holds some coins. 

In the spirit of our "speculation sub-forum," indeed I have no proof.  And yes, I should have written "the point is that there are at least a few rich billionaires who could very well be buying.

The point of my post was to show the difficultly in buying up *large* amounts of coins without driving the price through the stratosphere.  I used Putin as an example because only 0.1-0.2% of his estimated net worth is already 1% of the bitcoin market!

I agree that billionaires benefit from the status quo.  But I also believe that billionaires will hedge their bets so that they can retain their wealth through turbulent times. What's interesting is that this "hedging" process can really shoot up the price and make bitcoin more likely to succeed.  

Exactly 2017orso.  What is so interesting about bitcoin is that every rational person (even those who despise bitcoin) should take at least a small position (WRT net worth) in bitcoin "just in case."  But this "hedging" pushes up price, increases media exposure / public awareness, which leads to more hedging, and on and on.

The Winklevoss are also young and have time to grow into very big fishes.  Remember, the wealth held by those in their 50s, 60s and 70s must be passed down to the younger generation.  Bitcoin is one possible mechanism to facilitate this.  

A lot can happen in a generation.  

Do we have any evidence that the old coins recently moved could have been from Satoshi?  I understand that the Satoshi coin are sitting in 50 BTC blocks, untouched since mining.  Has anyone been able to see if the old coins that just moved were from a bunch of old addresses each containing 50 BTC?

And even crazier, the transfer doesn't have to be explicit.  If economic participants begin to value bitcoin more than fiat money, the wealth just gets "sucked" out of fiat money and injected into bitcoin, almost like magic.  

Think about all the aging multi-millionaire and billionaire baby boomers (and older).  One way that their financial wealth could be transferred to the younger generation is through inheritance.  But another mechanism is that young people could simply place less value on these legacy financial products.  Bitcoin has the power to suck wealth away from the legacy financial system just by doing its own thing and building something better outside of the current system.  

When Einstein explained the theory of relativity, it wasn't that the older physicists eventually came to realize that he was right.  What happened instead is that they all died, leaving behind only the younger ones who were less blind to truth.  

I think it just comes down to market uncertainty in the short term.  For instance, when the price of BTCChina goes very low, it's possible to purchase coins from Chinese panic sellers and quickly flip them on BitStamp or Gox for a (nearly) risk-free profit.  I think some market participants are expecting this, and thus set their bids lower than they otherwise would.  

In the short term, I believe we can indeed dip lower again (Christmas holiday massacre?), and I don't think we can make a strong move above the ATH until there is some closure regarding BTCChina.

Disclosure: I am long-term bull that thinks we will continue to grow with or without the blessing of the Chinese government.

I can't read anything "between the lines" either.  This letter to me does not seem to provide any new information.  Basically it just re-says what I think the market is already thinking: the bitcoin/yuan market in China is severely limited (at least) in the short term due to these funding problems, but bitcoin is not illegal.  

+1

This is the speculation sub-forum, but if you're going to speculate, at least post your rationale. 

Holliday, I can't tell if you're joking.  Do you believe the most likely explanation is that Satoshi is the NSA?

I am leaning towards the idea that Satoshi was more than 1 individual too.  


I too agree that if it was some government organization, it was only a small subset of individuals acting without the knowledge or permission of their superiors.  

If too many people knew, it would have surely leaked.  For example, if it was an NSA initiative from the top of the chain of command, there would have been so many more people who would have hinted to friends of friends to "just buy a bit of these new things called bitcoins."  If wealthy insiders had the scoop, I doubt we would have seen bitcoin difficult at 1 as long as it was, and I doubt we would have seen bitcoin fall to $2 after the crash of 2011.  


It matters to me.  That's why I asked.

What if instead of losing the private key, they "lose" the private key?  The bitcoin experts helping them manage these coins must be tempted.  I'm sure they could craft up a plausibly-deniable reason that the transaction got sent to the wrong address.

The icing on the cake would be if the courts ruled in DPRs favour, and the FBI not only had to give him back his coins, but they had to re-buy 170,000 BTC on the open market to replace those that were "lost."  Yes, incredibly improbable, I know, but it's Christmas time, OK....

+1

Great policy.  Retail sales are taxable (easy to enforce), mining profits are taxable (big mining groups will *want* to play by the rules), but capital gains are not taxable (would have been difficult to enforce: calculate my "profit/loss" each time I buy a beer using BitPay!?).

Hmm, I sold 10% of my position at ~$700 thinking we'd retest the lows.

But now I realize I've found Nirvana: I cheer if the price goes up or down!

OK guys, I did it.  I bought the DOGE!  130,000 of them!

Why'd I do it you ask?  Well in addition to the fact that their mascot is so cute, I figure supporting this coin is win-win:

Case 1: It actually becomes significant
=========================
Outcome: WIN

It would be so fitting in our high-strung world if something like DOGE coin actually overtook LTC.  It reminds us not to take ourselves too seriously.  The DOGE project is so stupid it just might thrive!

Case 2: It goes down in a spiralling ball of flames:
===============================
Outcome: WIN

If it goes down in flames due to some mis-tuned parameter, etc., our collective conscience will remember not to buy into the next big alt coin hype.  This is a win because it will strengthed the perception of bitcoin as a well-thoughtout coin, and the alts as silly copies that made minor (yet possibly destructive) changes to the protocol.


In conclusion:

much wow!
such difficulty!!
v profit!!!

Old news from the 25th, and apparently fixed. 

Yeah, a wallet service got hacked.  I think this was similar to the inputs.io theft.

I was referring to the DDoS vulnerability posted on Reddit on the 25th.  Apparently you could add 1GB to the blockchain for a few pennies or something.  Someone wrote a scrypt to prove the point, but turned it off because he didn't want to be a jerk.  I think this got fixed.  

Either way:

v fun!
much profit!!
woof!!!

doggy bag lol

There's even a post somewhere where Loaded says he bought 2BTCs of DOGE just as a joke!

BTW--if there's any new readers out there who are taking my purchase (or anyone's for that matter) of DOGE coin as an endorsement that I think this is a wise investment, please don't.  I think (80%) it will go down in a spiralling ball of flames!  I did it just for the lulz and for the reasons I explained here: https://bitcointalk.org/index.php?topic=178336.msg4173898#msg4173898.

Woof!

Oh shit, just got home from the pub and I'm drunk too.  Does this mean we're going down hard? 

Well I've sold, then bought, and then sold (just my trading coins).  

I'm hoping to calmly buy in the $500s but I'll probably panic buy in the $900s.  

You might be surprised.  Bitcointalk.org is ranked #1426 by Alexa in the USA and #952 in Canada, for unique vistors per day.  

Quickly calculating the ratio of "views / posts" over a random sampling of forum threads suggests a 40 : 1 lurker-to-poster ratio.  There are at least 50 posters here that follow Risto's posts.  Multiplying that by the lurker-multiplier factor of 40, suggests that approximately 2,000 individuals across the globe are paying attention to what he says.  

Even the MSM picked up his thread about wealth distribution in bitcoin (and unfortunately reported his estimates as facts). 

I follow your posts too, windjc.  I think you have a lot of good insight, and I'm sure others agree.  The point of my post was to show that there *are* more people watching than just the regular commenters here: your posts and my posts included.  Yes, my calculation could likely be refined--it was just intended as a rough estimate..  

I know Risto has a lot of people that listen to what he says: a few weeks ago there were two "attack" threads launched at Risto.  He received a great deal of support.  He is one of the "personalities" of bitcointalk.  

I think part of the confusion is the definition assumed for the word "follow."  I mean it in the twitter sort of way, as in "pay attention to."  I don't mean blindly do whatever that person suggests. 

Yep, I'm hoping to calmly buy back the 10% I sold in the $500s but will likely panic buy in the $900s.  

But that wouldn't maximize my loss JJ.  I'm thinking of giving up on this swing trading with 10% of my coins.  I seem to be good at calling the bottoms but terrible at calling the tops.  I may buy back in a few % and consider the rest an early SSS divestment if we keep going up.  

I know, hey, Adam!  We're both uberbulls but it looks like we sodled when we should have hodled!

Good point.  I never looked at it like that but it makes sense.  Some of us enjoy the downtrends because it allows us to accumulate more coins (and that is more important to such people than the instantaneous $ value of those coins). 

Just 10% of my coins, so no real worries.  

Is this in response to my previous post?  Do you feel I mis-interpretted what you were saying? 

We're all fools but eventually one of us will call it just right. And boy to Risto call this last growth-spurt right.  

I think the only thing we can say for sure is that if bitcoin adoption continues to grow, then the price (over the long term) must grow too.  

If we define "super S" as faster than exponential growth over the early portion of the S-curve, then I think we can rationalize this (doesn't mean its correct though).  

Assumptions:

- bitcoin adoption, x, is small compared to its theoretical potential adoption
- the amount of people that hear about bitcoin is proportional to the number of bitcoin users (who keep bringing it up).
- the probability that after hearing about bitcoin, a person becomes a user, is k

I don't feel like being rigorous, but I think we can roughly see that bitcoin growth could then be modelled by the differential equation: dx / dt = k x, which of course has the familiar "exponential growth" solution.

But, I think we can be reasonable sure that k is *not* constant, but instead depends on how many users there currently are.  I say this because I have noticed that the general "guy at the bar" is much more interested and eager to talk about bitcoin after the November media blitz, than prior to this.  Prior to the April growth spurt, no one really cared at all.    

So, lets say: k = c x and then our differential equation becomes: dx / dt = c x^2, which has a hyperbola as a solution.  


[uberbull]This means that we will eventually approach a singularity where the bitcoin price becomes infinite.  The only way for this to happen is for the USD to go to zero as well.[/uberbull]

Sorry, I used the wrong tags.  Upon reflection, I should have used [uberbull]...[/uberbull].  I agree that this is possible, BTW. 

+1

Nice post.  I think Wall Street will find a way to thrive too though, and this is not a bad thing. 

I recently learned I am one-degree of separation from a great whale manipulator.  Manipulation is happening.  I also learned that the exchanges realize this and are cracking down on it behind the scenes (they obviously don't want to come out and discuss this openly).  And besides, as the market grows, manipulation is becoming more difficult anyways.

But it's important to note that the great whales do not want bitcoin to crash to the point where it truly damages confidence.  They know they cannot quickly cash out 100,000 BTC and nor do they want to because they believe that bitcoin is the future of money.  

In fact, the more I think about "manipulation" and "whales" the less I see it as manipulation in the first place.  What's wrong with putting up a 1,000 BTC sell wall to try to drop the price?  By doing this you are risking a larger whale eating your wall in a single bite--live by the sword and die by the sword it seems.

In conclusion, the great whales--more often than not--are allies of bitcoin.  

Thanks DaSheep.  I though this was interesting:

"But on January 7, 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin. The Hunt brothers had borrowed heavily to finance their purchases, and as the price began to fall again, dropping over 50% in just four days, they were unable to meet their obligations, causing panic in the markets."


Seems it was a change in COMEX regulation that triggered the panic.

Gentlemen (windjc and Voodah), I respect both your opinions, but I don't see why you're arguing.  I think Voodah is saying that "manipulation" is happening and he'd prefer not to actively trade it right now, while windjc is saying that "manipulation" is happening and that he feels he can profit from it.  There does not appear to be an argument here (edit: except maybe the definition of "manipulation.")

Interesting debate guys regarding market manipulation.  I think aminorex's definition below is a good one (regardless of one's views on the ethics of such an activity):


According to this definition, I believe that market manipulation is indeed happening.  The next question is "is this wrong"?  vdcc says this is fraud:


I'm not convinced, but I'd like to hear further arguments.  Here's what I think is fraud:

A whale calls up the owner of an exchange and, says "I want to put up a 5,000 BTC ask wall to scare the fish into selling to me for cheaper, but I don't actually want to risk a bigger whale buying all my coins.  Can I pay you 50 BTC to ensure that if someone tries to buy my wall that your trading engine encounters 'technical difficulties'?"  If the owner agrees, this is fraud and we have laws that would apply in such a situation.  

But if two colluding whales buy and sell to each other on the open market to try and make it appear there is more volume at a price higher or lower than what they believe to be the market price, then could not one argue that this is simply "strategy"?  Is not everyone still playing by the same rules?

Yes, this gets more interesting every day and I still can't believe this is happening. There's been a huge response to his "Bitcoin is Evil" piece in the blogsphere and the MSM.  With this latest bit of back-peddling, he may be back-peddling right off a cliff.  

We've already defined "market manipulation" and I think most people here have agreed.  Many of the trading activities you just posted have already been mentioned as manipulation, and I think most people also agree that manipulation occurs to some extent in the bitcoin market.  

The next question is "what is fraud"?  It seems your definition is:


You mentioned that:


But is not your concept extremely broad?  Would not that mean that every used-car salesmen who pushes a bit too hard is fraudulent?  Would not that mean that any time a cougar pretends to like your personality (for some ulterior motive) that that's fraud?  Would not that mean that when I thank my mom for the great Christmas present, with a big smile and a hug (despite the fact that I already had two of these things [which I politely fail to mention]) that I am engaged in fraud?

And then, since your definition is based on someone's calculation to mislead who is the final arbtrar of intent?  

How Walsoraj defined fraud:

From http://en.wikipedia.org/wiki/Fraud

Fraud is a deception deliberately practiced in order to secure unfair or unlawful gain (adjectival form fraudulent; to defraud is the verb). As a legal construct, fraud is both a civil wrong (i.e., a fraud victim may sue the fraud perpetrator to avoid the fraud and/or recover monetary compensation) and a criminal wrong (i.e., a fraud perpetrator may be prosecuted and imprisoned by governmental authorities). Defrauding people or organizations of money or valuables is the usual purpose of fraud, but it sometimes instead involves obtaining benefits without actually depriving anyone of money or valuables, such as obtaining a drivers license by way of false statements made in an application for the same.

A hoax is a distinct concept that involves deception without the intention of gain or of damaging or depriving the victim.

Sorry, I should have been more explicit, Walsoraj.  

You said that "anything calculated to mislead others is fraudulent," and later asked what courts would disagree.  I was pointing out (with my quote from Wikipedia [likely inline with Western courts]) that your definition was incomplete.  It also requires the deception to be practiced "in order to secure unfair or unlawful gain."  This second half is one thing that makes it different from a "hoax."

It's also interesting the response of pheonix1, who believes that Karma is the highest court.  I think he makes a good point, perhaps encouraging us to open our eyes a bit wider for the interesting future that lays ahead.  
 

Yes, exactly!  The Wikipedia definition requires the arbitror to not only conclude that the deception was deliberate, but that the gain that resulted from it was "unfair."  So we are back a square, indeed.  If a whale places a 3000 BTC ask wall to scare the small fish into selling, does that qualify as "deception"?  A larger whale could eat his wall in a single bite.  And even if one concludes that this is deliberate deception, is this also "unfair"?  The market participants are playing by the same rules, some of them just happen to hold more capital.  Lastly, I'm not even convinced that profitable manipulation is even possible over the long term. 

One reason that I'm excited about bitcoin and the power of the blockchain is that I believe it will allow us to write more exact contracts and motivate de-ambiguity or our legal system.  

I think Voodah makes good points here.  

Let me chime in with my two-cents: we can definitely hit $3,000+ with our current infrastructure and regulatory climate, but a lot has to happen if we're going to make an uberbull move to $40,000 - $100,000.  I think we need to wait for bitcoin ATMs to be deployed and operating at numerous major cities across the Western World (coming in 2014-2015?), and we need some way for the average guy with an eTrade account to get in on the game.  If these two things were in place, then I can see that when the media bitcoin blitz begins again, the infrastructure can meet new demand and the price can truly reach the oort cloud.  

I few more points about the ATMs....

A lot of people are excited by the news that Lamassu has already sold over 100 machines (https://bitcointalk.org/index.php?topic=392148.0).  They should be excited because this means that engineers are actively working to build cost-effective bitcoin ATMs, and that entrepreneurs are eager to purchase these machines.  

But just because the machines have been built and purchased, doesn't mean they will be deployed in large numbers in the wild any time soon.  I know that some people ordered these machines before performing due diligence in regards to the regulatory compliance required to operate them.  They wanted to get "in line" and figured that they would solve any regulatory problems as they come up.  I'm not saying this is a bad idea, I'm just saying that...hmm...so far there's only two operating ATMs in the world (that I know of).

It wasn't that long ago that people were saying that ATMs wouldn't make it to the US due to FINCEN and state money-transmitter compliance.  And people are now saying that because these Lamassu machines only sell bitcoin, that somehow they will be exempt from AML/KYC requirements too.  This sounds sensible to me, but until we have a fleet of ATMs deployed across the Western World, I think we must expect future obstacles.  

Voodah just forgot his [teasingBitChick]...[/teasingBitChick] tags 

Hi JulieFig, my counter-attack against such people is to appeal to the logical desire to maximize wealth.  You ask them this:

You meet a generous billionaire who loves to gamble just for the lulz.  He offers you a bet: he says he's going to toss a coin (a provably fair coin) and you get to call it in the air.  If you lose, you lose your bet, but if you win, you win 20 X what you bet.  You only get one shot at this.  How much would you bet?

Even if you detest the concept of bitcoin and assign it a small probablity of success, it is logical to at least make a small bet in case it succeeds.  Why not risk $100 in case it goes to $500,000 per bitcoin?  

*To do this, you must be able to convince them that should bitcoin *one day* become a dominant global currency, it must have a market cap measured in hundreds of billion or trillions of dollars.  This is fact, but still some people can't understand that if more people buy something of limited supply that the price must rise.

I don't get that sense at all.  I think most people believe that bitcoin will be a better way to store wealth and exchange value with people across the globe.  It is a powerful idea that will probably lead to advances that we can't even imagine yet.  I feel we have a chance here to leave a better world behind for our children.  I also think most people will always hold a portion of their wealth in bitcoin, regardless of how high the price rises.  

About the profit: Of course people want to increase their wealth.  What is wrong with that?  A fir tree doesn't say, hmm, I think I'll stop growing now that I'm 100 ft tall.  No, the fir tree says I'm going to keep reaching for the sun!  This is just the way nature is.  I think to advance as a society we need to become more self-aware of what we really are.  

Bitcoin is interesting because it allows one to work towards something they believe in while simultaneously earning a profit (should the price continue to rise).  

Yes, you're right.  How quickly I forgot that I used to be one of those people.  How I rue the warm autumn day in 2009 when my mom emailed me a note on bitcoin from some obscure "New Age" website and I was too arrogant to even read it.  

It's quite sad actually.  She wanted to get $100 worth.  IIRC MtGox wasn't even around at that time, but I think there was some other way to buy some.  I had it in my head that it was just some stupid video game money so I didn't put forth than 20 min of effort it would have taken to help her.   

I think just a whim.  And yes I've sent a few coins her way

We'd have a mid-sixties gramma whale lurking the bitcoin seas!

Cheers macsga and Happy New Year everyone!

(Still 11 hours here in Vancouver)

A lot of people have been burning on DPR for being careless.  This may very well turn out to be the case, but let's remember that the trial is just getting started.  There may be some interesting plot twists in store...

The only way I could see this being potentially possible, is if (a) bitcoin ATMs get deployed across numerous major cities all over the world including the US, and (b) bitcoin ETFs becomes available that allow the average eTrade+European-equivalent investor to take a position in bitcoin as easily as GLD.  (Personally, I think 2014 is too early for a rally of this magnitude.)

To sustain a monster rally, the people need easy ways to buy.  

I spoke with Mitchell Demeter, one of the guys involved with bringing the RoboCoin ATM to Vancouver.  He told me that their ATM buys and sells in real-time from BitStamp.  Basically, you pump in $100 in cash, the machine deducts 3% (as its fee), and then it initiates a market buy order on BitStamp on your behalf.  Once the coins have been procured, it transfers them to the address that you scanned.    

So, ATMs like this will directly influence (in real time) the price on the major bitcoin markets.  Provided the ATM owners' exchange accounts remain well funded with fiat, then they should be able to supply whatever amount of coins are demanded.  But note that at least once already the ATM in Vancouver has had to limit (or disable) orders due to so much demand that their BitStamp account ran out of fiat.  

In its first month, the bitcoin ATM in Vancouver did slightly over $1,000,000 of transactions (albeit during the November growth spurt).  I must assume that most of that demand was local to Vancouver.  Now imagine 1,000 similar ATMs operating all over the world: it is quite easy to see how billions of dollars could flood into bitcoin once the "easy buying" infrastructure is in place.  

That's funny you say that.  I didn't think you were being antagonist in the least.  But in retrospect, I can see how my post may have come off that way. 

This forum posting is interesting.  Take the discussion we just had: I was using your quote to answer your question, but also to give information to the many readers of this thread that aren't actively posting (evidence suggests the lurker to poster ration is ~40 to 1).  It's quite weird actually.  I was 25% addressing your question, but 75% throwing in my vision of how things unfold for anyone who cares to listen!

I agree with Voodah that the market has matured and that 50k dumps are much less probably, but I also agree with aminorex that they are still certainly possible and that we should in fact expect one eventually.  It takes a fairly sophisticated individual to arrange a OTC deal with a Wall Street hedge fund or Chinese tycoon.  There *must* still be early miners, maybe 23 years old, completely mind-blown by the fact that they have $80,000,000 in bitcoins.  Eventually one of them just says, "I'm getting the fuck out of Dodge" and does something stupid.  

50k is extreme--the point is that big dumps are always possible for a variety of reasons.  

I'm sorry Goat, I don't think I understood your last two posts.  What did you mean "no one is going to dump 50k btc on the open market not expecting to get the fait"?  And what did you mean that 50k is not extreme "unless the exchange is doing it?"  

That site is pretty funny, but I'm wondering if those stories on buttcoin.org are completely made up.  Myself and others have done several large withdrawals successfully from cavirtex--never had a problem.  In fact, the only problem I've ever had was getting money in to the exchange.  In Vancouver we have an active 'local bitcoins' community too; if you'd take a 10-15% discount to cavirtex, you could sell $100,000 tomorrow for cash.  

I like to watch the order book live at http://bitcoin.clarkmoody.com -- gives you a real feel for how things work.

You should see your limit order in the book as the price gets close to your target.  If someone accepts your bid, then you should get your coin.  It should not be possible for a bid of less $/BTC to be executed while yours remains unexecuted.  

The "Buying" column represents the limit orders looking to buy bitcoin.  You would sell bitcoin into these bids.  

If you want coins, you either need to place a limit order (which goes in the "Buying" column on Clark Moody) and wait for someone to sell into it, or you initiate a market buy yourself.  When you market buy, you would eat up the "Selling" column to whatever depth is required to meet the number of coins you want.  The cheapest coin you can market buy is the ask at the top of the Selling column (of course, there may only be 0.01 BTC available at this price).  

I believe the correct translation into the DOGE dialect is "much resist" anyways.  The follows the DOGE Dialect Rule 14B: phrases should be no longer than 3 syllables whenever possible. 

I haven't caught up yet in this thread (3 pages behind), but I wanted to comment on the emotion evident in the post above.  Feri22 is suggesting that people will want to dump their coins at a low price so as not to turn their bitcoin profit into a loss.  

I agree that many people may act like this.  This is why Risto's SSS divestment plan is so important (https://bitcointalk.org/index.php?topic=345065.0).  If you had purchased bitcoin even as late as this summer and followed this plan, you've already divested enough $ to offset your original investment while still hodling most of your bitcoins.  Once you've recouped your original $ investment, you can more easily emotionally detach from the $/BTC-rate and avoid panic selling at low prices.  

Hi Rampion, welcome back!  I was worried we had lost you (along with your insightful commentary).  Happy New Year!

The DPR and Silk Road coins are not "on the move."  The funds are sitting at https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN455paPH and https://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5GNn4xqX -- not a single satoshi has been withdrawn.  

These coins will not be auctioned off before the trial concludes, and would not be sold at Gox or BitStamp.  The wording of the statement "the reason for selling is that the Government has lost faith in the value of bitcoin and does not want to deal with the volatility of the currency" makes me suspicious of the credibility of the author's "source in the U.S. Justice Department."  I wonder if Tech Crunch contributor John Biggs (author) has any relation to our fine forum contributor JohnyBigs: https://bitcointalk.org/index.php?topic=372303.0.  

The word "faith" is the giveaway.  "Faith" in a seized asset has no relevance in a criminal court case such as this:  "Your honour, the Defence Department does not have 'faith' in the market for Picasso's art work and wishes to liquidate the painting recently seized by Mr. BigMobbDude.  You honour, we must act fast, or the bottom may drop out of the market!"

The words "dealing with volatility" is another giveaway: the coins are just sitting in a bitcoin address--there is nothing to "deal with."

The point is that if the coins are to be sold, they will be sold at an auction, regardless of any "faith" the government may or may not have.  

^ Negative commissions for market makers.  I don't understand exactly how that will work, but it sounds innovative.  Reminds me of the investor option at just-dice.com to bankroll the casino (and thus share in the profits). 

Bitcoin seems to promote this idea of "equal-opportunity" between peers in a market-driven manner that I really like (just-dice.com investors, bitfinex lenders, BTC-china market makers). 

Thanks notme.  If I understand correctly, anyone who posts a bid or an ask will be paid a small fee should their bid or ask be filled.  The fee will be paid by the person who initiates the "market sell" or "market buy."

I see from notme's link that this maker-taker idea has been around since 1997 and is actually in use in some major US markets.  This seems like a great way to increase liquidity, tighten spreads, and perhaps reduce volatility in our bitcoin markets.  I'm curious what the down-side of the maker-taker model is...  

People who recently learned enough about bitcoin and decided to invest, and those that entered during the November media blitz who now slowly divert a portion of their paycheques to build their BTC position.  In fact yesterday I received an email from a friend asking "what exchange do you use" after discussing bitcoin over the holidays.  


Miners who do not keep all their coins, panic sellers, and the occasional great whale who wants to lock in USD profits at these higher price levels (and must do so slowly).  Non-great-whale bitcoin investors who follow a disciplined divestment schedule have already sold.  


Agree.  

Is GHash.IO primarily independent miners pointing their hashpower this way, or is mostly internal to GHash (e.g., hardware at cex.io, etc)?

Hmm, I understand GHash does merged mining with alt coins and is thus more appealing to some miners.  But I wonder why more aren't moving to Elegius or another smaller pool giving the current situation and potential (temporary) loss of confidence should something "funny" happen.  Is this a "tragedy of the commons" or is it a case of "meh, whatever"?

I completely agree that if GHash.IO achieved >50% for a period of time that it would very likely be a non-issue.  Like many people have pointed out, they are incentivized to follow the rules; if they double-spend and orphan a bunch of long chains, we'll all find out and it would hurt their BTC holdings and mining reputation.  

But I must admit that I'd be happier if all pools had < 25%.  

Yes, I think this is the most rational fear of centralized hash power. 

I'd like to hear other Wall-Observer's feelings on the BetCoinDice double-spend.  I think what they did was "wrong," but I also think it did a bit of good too.  It simultaneously showed (a) how hard it actually is to double spend (and that you'll be caught), and (b) that double-spends *are* possible in certain cases and one should develop the appropriate business model to deal with them.  For example, could GHash with 25% hash power hurt just-dice.com with a double-spend?

Nice.  I didn't realize this benefit till you mentioned it.  Sometimes it's also impossible to even pay with certain international credit cards, which is obviously not a problem with bitcoin/coinbase.  

Oh man, this is my new favourite TA method!

A good friend of mine has a theory of how we use "negative entropy" sources to help us more easily get things done.  An example of a "negative entropy" source are words that create a strong emotional response, like those shown in bold above.  

His theory is that we will use these words (neg-entropy) to dump entropy into until we've extracted all of the useful work from the source.  At this point, these words actually begin to have the opposite effect on the public as they once did.  

I think we are at that point already.  Whenever I hear "terrorist," "drugs," "money laundering," or "child porn" my instant emotional response is against the person who is trying to use these words to advance their agenda.  

If you're Canadian, you can pay your credit card bills with bitcoin using Bylls starting today.  I did a test run with $20 earlier.  See: http://www.reddit.com/r/Bitcoin/comments/1v3uk8/bylls_launches_canadas_first_online_bill_payment/

Until DOGE, I associated the alts with imitation coins for people who felt they missed the bitcoin train (even though it is still early).  

But After Doge (AD), I am a big fan.  DOGE is like the "alt-coin" equivalent of Proudhon's "confirmed bad news" thread: it's an effective counter trolling (alt coin pumping) parody.    

People really like DOGE and have a lot of fun with it.  If you spend some time on http://www.reddit.com/r/Dogecoin, you get a sense of the fun-loving and generous community that has formed around it.  It is quite a different feel from the Quark or NXT user groups.  Participating with DOGE is a "fun" way for new users to learn about crypto-currencies and mining.  I think these people will all become bitcoin advocates.  

I think the "fast" mine (31% have now been mined) was brilliant.  There is currently an oversupply keeping the price low and the users generous.  But pretty soon, the newly mined coins will get tight.  If they can keep the hype up till then, I actually think DOGE coin has a decent shot of becoming the dominant script coin.  Right now, r/Dogecoin has 30,851 subscribers, 660 online now.  But r/Litecoin has 17,447 subscribers, and only 65 online now.  Litecoin has 24X the market cap.    

There's a doge tip bot, doge-dice, doge-road, great trading volume on the exchanges, and just a lot of energy that is still being sustained. Bitcoin supporters, if they think about it, may support DOGE as the best alt-coin because it sort of makes every alt-coin look equally silly.

I'm getting pretty desensitized to this volatility.  Cute little bitcoin bears.  So fuzzy.

I'm drinking red wine and watching Blue Jasmine (Woody Allen).  Jasmine was rich and lost it all to Uncle Sam.  She could have kept 5,000 BTC in a brain wallet and avoided all the drama.

Just another reason that bitcoin will succeed. 

I agree that the bitcoin wealth distribution likely follows a Pareto distribution (many coins are held by only a few people), but do you realize that the "47" number was pulled out of...I mean "estimated" by Risto Pietila right here at BitcoinTalk.org?  

https://bitcointalk.org/index.php?topic=432430.msg4740844#msg4740844

No prob.  

So is that Jamie Dimon burning Satoshi?  Or the most ardent bulls burning Mah87?

And so can fiat and so can gold and so can any form of money that humanity ever cooks up.  

For me, bitcoin seems most just.  

Hmm...I think I may have placed my bids too low.  

I guess they call it day-tarding for a reason  

All that stability was making me anxious.  I'm feeling better now...

By 1k he means 100 BTC.  

I think it's just jitters.  People sitting on large gains feeling anxious and thus choosing to divest a few more coins.  That's not to say that we couldn't go lower.  Look at the chart of this summer, for example....  

CONFIRMED!  All that work paid off!

Next: the comments on our Speculation Sub-forum replace the Minutes from the Legacy Fed FOMC meetings.

Looks normal to me, perhaps even a bit low: https://blockchain.info/charts/bitcoin-days-destroyed

It does feel like the price is being stabilized through some active effort.  But, if that's the case, are they running out of bitcoins or dollars?

Hmm, that's an interesting idea: run a "market stabilizer bot" for a month (with really deep pockets).  Eventually you'll either have too many bitcoins or too many USDs.  You now know the direction the market wants to move before every one else.  I wonder (but doubt) if such a scheme could be profitable....

It's really simple once you "get it" but it took me a while to wrap my head around it too.  I'll try:

If you send me 1 BTC and I spend it tomorrow, when I spend it, I will have destroyed 1 bitcoin-days.

If I wait till next month to spend it, when I spend it it will destroy 30 bitcoin-days.  

But I you send my 60 BTC and I spend them 12 hours from now, it would also destroy 30 bitcoin-days.  

So, it's a combined measure of the magnitude and oldness of the coins that are being spent.  If we see a huge spike in the amount of bitcoin-days destroyed, it's a good indication that someone just moved a lot of old coins.  

Interestingly: something akin to bitcoin-days is used by the bitcoin-network to determine the priority of a transaction.  AFAIK:

   priority = (# of BTC) * (age) / (size of TX in bytes)

LOL.  When I first read that I thought you were calling my explanation a piece of ....

I don't know much about Proof of Stake, but I understand that the current priority scheme is one of the denial-of-service protection measures in bitcoin.  It makes is so that legitimate 10 mBTC transactions built from coins that have been sitting in your wallet for a few days have a higher priority than someone ping-ponging coins back and forth every block trying to bloat the "unconfirmed transaction" and increase confirmation times for the average user: https://blockchain.info/unconfirmed-transactions

I agree with the dynamic you described above.

I would add that presently we have two forces at play:

-  new buyers who entered the market Nov-Jan, excited after learning about the potential of bitcoin, wanting to increase their positions (perhaps they initially invested only a couple hundred $ just to get their feet wet)

     VS

- people who are now sitting on large gains, waking up in a cold sweat in the middle of the night one night with the epiphany "hmm, I now have $100,000 worth of BTC and $5,000 of cash in the bank.  I believe more than ever in bitcoin, but perhaps I should diversify just in case."

Eventually the people sitting on large gains have diversified enough to sleep soundly, but the new buyers keep entering the market and buying and we get a new leg up...  


But the one thing I can't figure out is what caused the dip (see below) this last summer.  I believe a lot of people (myself included) think we will see something like this play out again.  But does anyone have a rational explanation for why this might have happened in the first place?  I remember this moment well: everyone on local bitcoins in Vancouver was sold out of coins (or asking ridiculous premiums) which I thought was odd (it was as though it was clear to everyone that the price was too low).

Jorge, I just simulated a bunch of log-brownian time series in Mathematica, and I can never reproduce anything that looks close to the "growth spurt" pattern we see in bitcoin's historical price graph.  The problem with your model is that it ignores the true network dynamics at play, and therefore misses the most important features.    

I think it was Myron Scholes who used log-Brownian motion and the what's now known as the Black-Scholes equation to come-up with *optimal* pricing equations for financial derivative products (options, etc).  He was a key member of the hedge fund "Long Term Capital Management" the spectacularly collapsed in 1998 and was bailed out by the Fed.  

I think it's funny when I read about stochastic differential equations in economics as though they have the same kind of reliability and validity as the same mathematical techniques applied to a problem in physics or signal processing.  

Is it not clear to the world yet that economics is not a hard science?

Billyjoeallen has made many helpful and insightful contributions here.  People will be successful as bitcoin consultants and it would give me pleasure to see our own forum members succeed.


MatTheCat, you haven't answered my question from last night:

Fair enough.  But fear by whom exactly, and why so late?  I doubt it was fear from new buyers who came in near the March/April run-up: they did not yet have much to lose.  So it was fear from people sitting on large gains thinking it could all vanish and they had better diversify, just in case, correct?  But why did it happen so much after the March/April growth spurt?  And are we likely to see this play out again?

OK, I think this all makes sense.  The MtGox fears reduced the total bid volume on the exchange, and when the final capitulation came (triggered by Gox concerns), there was insufficient USD liquidity to soak up the bitcoins and the exchange price fell dramatically.  The street price in Vancouver (local bitcoins) didn't fall during this period--in fact many exchangers were sold out!  So I think this was basically a market dislocation--there was ample demand from new small buyers, but the mechanism to acquire coins from the large holders at Gox had broken down.  

Will we see a final capitulation from this last November's growth spurt?

This sounds interesting but I'm not following.  Run on what bank?  Evidence?

Large dumps have corresponded with the forum going down since as long as I've been paying attention (March 2013).  

IIRC, evidence of DDoS attacks on the forum exist and I believe the admin have confirmed this several times.  The other logical explanation is that "everyone rushes to bitcointalk.org when they see a big dump."

NEWS FLASH: Apparently Apple pulled the Blockchain.info wallet app for iPhone/iPad from the AppStore.  

http://blog.blockchain.info/2014/02/06/blockchain-response-to-apple/

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward.” – Apple, Inc.


^^^How the times do change.  

Did you actually get USD for Gox today?

The reasons I'm doubtful of the "working Gox arbitrage" theory is (a) the drop was precipitated by a large market sell order on BitSamp (JorgeStoffi confirmed this several pages back), and (b) would we not expect to see a rise in the price on the non-Gox exchanges caused by people re-buying the coins they're selling on Gox?

Maybe the impossible happened.  Maybe MtGox is on the cusp of fixing BTC *and* USD withdrawals and what we are seeing is pre-arbitrage by a group that found out.  

Gox was weird earlier, Bitfinex is buggy now.  I'm surprised how stable the price on BitStamp has been through this. 

It would seem that the "panic sheep" haven't been selling.  Here's how I remember today:

- BitcoinTalk went down (DDoS?)
- Huge dump on BitStamp (1000+ BTC)
- Huge volume on Gox dropping the Gox premium dramatically.  Little correlation seen at the other exchanges.
- Apple pulls Blockchain.info app from AppStore
- Bitfinex goes buggy (hack?)
- Another huge dump of BitStamp (2000 BTC)

I'm surprised how well we're holding up.

Please accept my apologies for being the bearer of more FUD, but someone appears to have just moved a lot of old coins:

https://blockchain.info/charts/bitcoin-days-destroyed

When the madness calms down the price will be at least $100 above the point of peak madness.

Many bids filled  

Ahh....sweet bottom

Well, no one knows for sure, but that felt like it for tonight to me. 

Ouch.  Assuming that was a fake ~600 BTC wall that just got eaten in a single bite.

MatTheCat with the theory; TERA with the experimental evidence.  

Nice work guys!  This is an important find, and something the Bitfinex must address.  

+1

Hey Julie Fig, I first bought in during the last run-up in prices in March/April.  I had what I thought at the time was "something I was OK losing" invested, and I was disheartened when the price fell below my buy-in price through the late spring and summer.

It turned out this was a blessing in disguise.  I kept researching bitcoin over the summer, and became more and more confident in its future.  So the amount "I was OK risking" on this fascinating opportunity kept increasing, and so I kept on buying.  

The point I'm trying to make is that if the price continued to rocket upwards after I purchased it, yes, I would have never been under-water, but I also would not have accumulated nearly the amount of bitcoin that I did [thereby also reducing my average buy-in price].  

Risto (reptilia) says to just buy in all at once, because your uncertainty towards bitcoin will automatically cause you to dollar-cost average [what you "think" you can afford is less than what you will afford once you're more comfortable with bitcoin].  I totally agree with this statement, as it's exactly what happened to me.  The fact that the price flat-lined all summer is what allowed me to build my position up to my true comfort level.  

Yes, I see you were mis-quoted.  I fixed it in my post. 

I don't want to get all doom and gloomy, because the malleability problem will eventually get fixed.  However, I'm not convinced that the market has come to terms with the "step backwards" that bitcoin usability has just taken.  

What the malleability attack showed is that it is possible [and in some cases probable] that a zero-confirm transaction will become invalid even if both customer and merchant are honest, and proper fees were paid.  This affects the usability of bitcoin at brick-and-mortar stores as I describe here: https://bitcointalk.org/index.php?topic=459678.msg5113081#msg5113081

The "fix" that should appear shortly is more of a "work-around."  Gmaxwell estimates it will be on the order of a year before the malleability issue is properly resolved.

The "work around" prevents wallets from using unconfirmed change outputs, thereby making all zero-confirm transactions in brick-and-mortar stores more trustworthy again.  But remember, this degrades usability: there are situations where you may only have unconfirmed change outputs in your mobile wallet, and thus you would not be able to immediately pay for your coffee [see my linked post above].

There's a work-around for this work-around too, and that involves making "smarter" wallets.   These smart wallets would ensure that you have a good supply of confirmed coins at your disposal, by breaking up large coins when necessary.  

The point I'm trying to make is that the malleability issue cannot be easily or quickly fixed, and the work-arounds have consequences themselves and take us a step-backwards in usability.  This will all be resolved eventually, but in the meantime, we've presented the forum trolls with an all-you-can-eat smorgasbord of troll food.

I completely agree that we will eventually solve this problem by eliminating malleability, and then confidence in bitcoin will grow by another leap.  That being said, this is not a trivial cosmetic issue, as I initially thought:

When the network is under malleability attack, zero-confirm transactions built from unconfirmed change outputs are not reliable.

This is new information to most market participants, and it affects payment providers such as BitPay and Coinbase, especially in brick-and-mortar stores.  It will take time to solve this problem properly, and in the meantime, we may encounter additional usability problems.

I think that statement is true. 

Exchanges can deal with the malleability issue, even when the network is under malleability attack, by simply not creating transactions from unconfirmed change. 

The point I'm trying to make is that the "side effect" of disallowing unconfirmed change to be used in new transactions, is that there are usage cases where someone may have a positive balance but have no funds available to purchase their coffee.  The solution to this side effect is smarter wallets that dynamically maintain an arsenal of confirmed coins, but this is more work. 

I think it is thus people sitting on large gains that are now choosing to "diversify."  The malleability problem has shaken some confidence, and those with 80%+ of their portfolios in bitcoin are getting jitters and reducing their exposure [locking in some gain].   I wouldn't be surprised if we still go a lower, but now is probably a decent time for new users to build up larger positions.  

I agree we aren't at bottom yet.  There is a sense of concern in the air, but there's been no panic since the Mt Gox press release on Monday.  I think we grind lower, perhaps with a few bull traps, and then a final panic drop to the true bottom.  I bet we definitely break into the $5xx's on Stamp, probably dip to the $4xx's, but I really doubt we see $3xx's.

Of course, I don't know what I'm talking about, so please don't consider this trading advice!


EDIT: Hey, we broke into the $5xx's while I was writing. 

Hey, you're buying at a rate of 0.44 BTC per liter of vodka.  Just 4773 more liters until you make the Vladimir Club.

I told everyone I knew about bitcoin during the summer of 2013, and made sure they at least "sort of" understood it.  Nearly half thought it was a Ponzi-scheme / scam, the other half thought they were too late [But it just rose 1000%!  How could it go up more!?].  Only 3 people went ahead and bought.  

The upside to bitcoin is huge--it's still a positive EV investment.  Put in only $1000 bucks.  You'll either lose most of it, or 10X, 100X, or more your investment.  

I understand people not wanting to risk large amounts of their net worth on bitcoin--it's a new idea and there is risk of failure.  But I think it is actually more risky *not to* invest at least a small amount.  

If bitcoin succeeds, you'll be quite happy even if you only set aside 1 BTC.  

Yes, cavirtex is fine.  

I also spoke by email with Eric from Bylls.com in Montreal this morning [this is the bitcoin-to-bill-pay service that allows you to pay your electricity and cable bill with bitcoins!!].  He says they have secured multiple banking relationships, so they are not affected.

 

I was hit by similar tin-foil hat theory this morning too.  What if Mark is actually being heroic, and none of us on the outside can see the complete picture?  What if he threw bitcoin under the bus [malleability] as cover to lock withdrawals to actually defend against some greater attack?

There must be a rational explanation for the low price and incessant dumping on Gox.  But none of the theories I've heard really make sense.

 

Let me see if I understand your theory:

- the group that was exploiting Gox's mishandling of the malleability issue got greedy and deposited a lot of bitcoins to go for a final "moon shot" fraudulent withdrawal,

- meanwhile, Gox realized that they had been robbed and locked down all accounts,

- the thieves became worried that Gox could link the stolen bitcoins to certain large accounts held at Gox,

- but Mark didn't have proof of what account it was yet, so the thieves were still able to trade,

- the thieves start the incessant dumping, selling indiscriminately to random people but also to certain accounts that they control.  This way, although they don't get to keep all the loot, they get to keep some of it.


I guess I'm skeptical of this theory because wouldn't Mark have shutdown trading if he could see that the dumping was coming from just a few accounts?  Isn't no trading better than someone selling stolen coins to obfuscate the money trial?

+1

Jorge is an intelligent individual who makes a meaningful contribution here.  I hope that he sticks around! So that bitcoin can eventually win him over LOL. 


In other meta news: with the change to the newbie policy, we've seen a great increase in genuinely trollish/FUD threads and a decrease in high-quality posts.  I hope that the forum administrators will revisit their policies, perhaps even disallowing members below a certain activity level from starting threads.

I think people take the concept of 'money' so for-granted that they cannot fathom how simply changing the way money works could lead to all sorts of efficiencies and wealth creation for society.  

The intersection my apartment overlooks actually has a financial institution on each corner.  Each of these four banks is full of offices with computers and lights burning electricity, employees drawing a paycheque, and unhappy customers wasting their precious time in lines.  I get a lonely feeling when I walk past these banks--like I can see a future so clearly that most of the population hasn't woken up to yet.  

Perhaps it will be 2016 or perhaps it will be much further out, but peer-to-peer electronic cash is coming.  For hundreds of years, people 'headed west' to build a better life for themselves and their families.  'The West' was a source of negative entropy, due to its abundance of untapped resources, cheap land, and lack of regulations.  

Bitcoin is also a source of negative entropy.  You can still head west.  

Yeah, that was pretty funny in Proudhon's "Confirmed Bad News Thread" how we'd confirm each other's BS rumors [using the FUDChain^TM technique] and eventually that MSM source in India quoted Proudhon and his sources as "confirmed"!  Classic BitcoinTalk moment.  

600watt is a good guy.  He's making an inside joke, referencing Proudhon's now-famous "Confirmed Bad News Thread" (https://bitcointalk.org/index.php?topic=412280.0).

This was a FUD parody thread making fun of both the FUDsters and those that would believe them without doing their due diligence.  Proudhon would link to "confirmed sources" in Chinese and Russian alphabets that had nothing even to do with bitcoin, but most people didn't bother to check.  

It reached its moment of glory when a MSM outlet from India actually cited Proudhon and his "confirmed sources."

I've appreciated reading your thoughts over the past few months and I do hope you stay around.  It is helpful to learn the viewpoints of people that haven't been won-over by bitcoin.

Just one question:

You must admit that nobody can foresee the future with perfect clarity.  In 2018, bitcoin could be a dominant world currency, it could be an academic curiosity of a past failed experiment, or it could be something in between.  My question is how do you expect you'd feel if bitcoin is successful beyond all of our wildest hopes?  Will you look back, shrug, and say "oh well"?  Or will you be disappointed that some mental obstinance prevented you from hedging with 2 BTC just in case?

  

You are only required to accept "legal tender" for the settlement of debts.  Any business may choose to accept any legal form of payment it wishes for the purchase of goods and services.  

For example: I could open an ice-cream shop where I only accept payment in bitcoin.  If you don't have bitcoin and can't pay on my terms, there is no one who can legally force me to serve you ice cream.  

However, if I say "OK, Joe, you don't have any bitcoins?  I'll give you an ice cream today if you promise to pay me back next week."  If Joe doesn't pay me, I could sue him in small claims court, and, if I won, he would be ordered to pay me back and he would have the right to do so in dollars.  

That was my question.  Joehal quoted me because he wanted to hear your answer too.  

I thought your response was interesting because I've had friends say exactly the same thing.  Basically: "they'll buy in in the future if it looks like it will be successful."  But these are the same friends who wished they got in earlier!  In fact, Jorge, even you said you thought bitcoin was a good investment several years ago, if only you had known about it then.  

It sounds like what you are saying is that bitcoin was a good investment in the past [at a lower price], and it may be a good investment in the future [at a higher price], but it is not a good investment now [even just 2 BTC as a hedge].  Is this correct?

....

It just hit me.  

PREDICTION: JorgeStolfi buys a few bitcoins if we pass the all-time high and continue to move upwards in price.

There must be a bunch of people like Jorge who are fascinated by bitcoin, feel they learned about it too late, realize that it could go much higher, but are presently skeptical and feel it is a bad investment now.  The next growth spurt begins when we pass the previous all-time-high and these people buy in, realizing that bitcoin may have just become a good investment all of a sudden.  

The price rise draws in media attention and more and more bandwagon jumpers hop on board.  Jorge Stolfi is sitting pretty because he got in at the start, but people keep pilling in and pilling in.  More smart people like Jorge hear about bitcoin from this media blitz, research it, and again feel that it is too late for them as obviously the "bubble is about to burst."  One growth cycle later and another JorgeStolfi is born.  Of course our current Jorge Stolfi is a wealthier man at this point.

That's what I thought until 10 minutes ago.  But now I think I understand the dynamic better.  Jorge wants to believe.  If we pass the previous all-time high, he will decide to buy a few coins, as the logic will suddenly make sense.  It is people like him who become the impetus for the next growth spurt.  

I think most here can share stories about how we could have had so many more coins, had we been more proactive/open-minded/etc/etc.  

Believe it or not, my mom sent me a link to a story about bitcoin from some obscure "new age" website in the spring of 2010!  She "wanted to buy $100 just in case."  

I was too arrogant to even read the article!  

I'd love to read your "Jorgeology" thread.  You could collect all your thoughts on bitcoin together in your first post, and we could discuss them.  

I think there's a lot of attention focussed on your person because it is rare to have someone debate intelligently and politely against bitcoin on this forum.  To date, I believe that you are being genuine and trying to look at bitcoin with an open mind.  It is interesting for me to hear the reasons a person has views so different from my own.  You are clearly intelligent and probably a thought-leader in your sphere of influence.  It is interesting for me to watch the evolution of your thinking.  And of course I hope that I can influence it in some small way too.  

Where is your cut-off between an investment and a gamble, Jorge?  Is investing in a tech company a gamble?  What about a high-quality corporate bond?  You could lose all of your capital in either case, right?  

The reality is that all investment is a gamble, and there is a continuum of expected returns and expected variance.  The question is simply how much variance are you willing to risk?  Answer that and then build a portfolio that you expect to give the best return subject to your variance constraint.  

Bitcoin is volatile--for sure.  But by using leverage and put/call options, I could build you a stock fund of equal variance.  However, there is no question in my mind which portfolio would have the larger expected return.  Obviously you disagree.  

Similarly, I could build another fund with 10% in bitcoin and 90% in US treasuries.  The variance of this fund would be better than most blue chip stocks (it would be very unlikely for this fund to ever lose 10% of its value), yet the upside could easily be 25% per year on average.

 

+2  Stick around Windy!

I'm highly skeptical of the "750k BTC stolen" figure.  It seems that this number only comes from the questionable "Gox Restructuring" document going around.  

MtGox is clearly in trouble; however, unless this was blatant insider theft, I don't see how they could have lost 750k BTC.  

You are correct, kkaspar.  We are all just guessing--including yourself.

If you think bitcoin will be successful, then at some point in the future the price will be vastly higher than today.  You've done well so far by waiting, but why not deploy 25%-50% of your allocated funds now?  If yesterday was the bottom, you can enjoy the ride up from here.  But if we hit your $200-$300 target, then you can purchase more.

People don't have to buy and sell all at once.

Thanks for the honest reply, kkaspar.  It is difficult to buy at the "bottoms" because the feel in the air is always so negative [although I'm not saying that yesterday was necessarily the bottom].  The recent Gox news has shaken some people's beliefs in bitcoin, and the price is lower to reflect that. 

But imagine the feel in the air if Gox returns a fair % of customer deposits, well-funded and professionally-audited exchanges open up in NY and London, and the price starts to rise.  Eventually we would look back to the days of getting Goxxed with whimsy--a bump along an enchanted road to great things. 

That being said, if you believe that bitcoin only has 1-2 years left, then I think you are gambling no matter what you do. 

The way I'm leaning now is that the 750,000 BTC loss is pure FUD, leaked so that Gox depositors are more likely to settle for less than the par value of the Gox IOUs.

I think that Gox has lost customer funds and Gox is insolvent, but not nearly to the degree that a 750,000 BTC loss would imply.  GoxBTC's sold as low as 0.07 BTC = 1 GoxBTC on BitcoinBuilder, and right now the price is 0.14.  If a company looking to takeover Gox knows that the solvency situation is not that bad, they could buy up a great deal of GoxBTCs at less than 20% of face value.  In fact, maybe that is what is happening now.  Perhaps this is all it takes to regain solvency, or perhaps they cut a deal with remaining depositors for 500 mBTC on the coin.  With the current FUD in the air, I bet a lot of depositors would jump at a chance to get 50% of their funds back.  

Gox, or a company planning to takeover Gox, can right now buy 8 GoxBTC IOUs for 1 real BTC at BitcoinBuilder.  This would be a legal way to give depositors a voluntary "haircut" outside of bankruptcy.  Eyeballing the bitcoinity chart, it looks like they've done about 80,000 GoxBTC in trades.  A lot of this was swing trading, but perhaps 20,000 GoxBTC have been bought for an average price of 0.25, or 5,000 BTC.  

Of course we can't know, but if this was a coordinate effort to buy up the IOUs for cheap, then this action could have reduced Gox's BTC liabilities by about 15,000 BTC.  

If the 750,000 BTC loss is FUD, this might make sense...

Both scenarios are possible: your's where they create fractional-reserve fake GoxBTC in order to get real BTC [and criminally increase their BTC liabilities], and mine where an interested third party buys up the GoxBTC for cheap [to reduce Gox's BTC liabilities for the takeover bid].  

Your scenario is fraud pure and simple, while mine I think would actually be legal.  I hope that I am right, but, at this point, who knows.  
 

If you remove popular addresses, then transactions have been increasing exponentially:



Including popular address is less relevant in my opinion, because there has been a huge shift away from on-chain gambling (e.g., the original Satoshi Dice) to off-chain gambling (e.g., just-dice.com).  Just-dice.com takes something like 100 bets per second on average.


EDIT: Also Coinbase-to-Coinbase wallet transfers happen off-chain too. 

Lol, I've always wondered that too.  I just crunched the product in Mathematica and it converged to an equation involving Gamma functions.  Perhaps Marcus can share its significance.

f(x) = Sqrt[Pi]/(Gamma[(Pi + x)/(2Pi)] Gamma[1 - x/(2Pi)])

Yes, but just like certain infinite sums converge (think power series for cos(x)), certain infinite products also converge.  Mathematica is pretty intelligent and can often reduce infinite sums and products to closed-form analytic equations.  

Jorge, I'd like to send you a 100mBTC tip for your work compiling the Chinese Slumber method posts.  

It is really easy to get a blockchain.info wallet.  If you are willing to accept the tip, just post a pic to this thread that shows the blockchain wallet on your screen and something that says "JorgeStolfi" so I know the address belongs to you.  

Loaded is offering a reward for information leading to the recovery of personal and client funds stored at MtGox:

https://bitcointalk.org/index.php?topic=489950.0

EDIT: Loaded is a great whale, for those that don't know.  

I was quite surprised too, but he did like to splash around at MtGox from time to time.  Perhaps a 'sizeable amount' is still only a small percentage of his and his clients' portfolio.

But this brings up a good question: if a whale loses a large chunk of their bitcoins due to MtGox, would then tend to purchase more to bring their overall portfolio to the same % bitcoin?

Glad to hear it isn't too bad % wise.  I had a few GoxBTC too

There will be a shitstorm indeed.  However, if investors who thought they held 750,000 BTC* in aggregate realize they now hold 0, this revealed scarcity may blow the price in the upwards direction as easily as negative sentiment may push the price down.  


*Assuming this is true, of course.

I agree.  We really need to come up with some trustless system for storing and transferring value. 

Fascinating!  That's what bitcoin really comes down to, now that I think about it.  

All the libertarian-this, statist-that, ponzi-scheme fears and get-rich-quick hopes are just projections that we as a society are placing on a new powerful technology.  

May I ask how important you feel Turing completeness is in the scripting language?

Please PM me with your thoughts, if you are able.  The way I'm leaning is that money is not a computer, and the subtleties with the halting problem among distributed miners will bite us at some point anyways.  

I don't trust NXT at all!

These are good points too.  Turing completeness in a scripting language means that "anything computable, can be computed by running the appropriate script."  So there is an infinite surface of potential problems that would slowly show themselves, I think.  The Java exploits are a good analogy.  

I've learned a lot from people like you, TERA.  I used to think that TA was voodoo science no better than a coin toss. Now I see how the price wave cycles drive the news/FUD as much as the news/FUD drives the price.  It's quite fascinating, really. 

Thanks mb300sd.  I was about to write the same comment.  

I'm not following.  Would you care to put into plain words what you are implying here?

But maybe you were accidentally credited with more BTC than you deposited some how.  Like Fluidjax said, can you go through the transaction log and pin point where the mistake occurred?  If you lost BTC, either the accounting won't add up, or they'd need to fudge losing trades that you didn't make, right?

Completely agree.  Exchanges are an important part of the bitcoin ecosystem and traders should feel reasonably comfortable holding funds with them.

We need to demand better transparency and third-party auditing of exchanges.  The Gox implosion provides the impetus to get this going...

Totally off topic, but I had to share this image from the official US Department of Health and Human Services Facebook page as I couldn't believe my eyes.  

https://www.facebook.com/HHS/photos/a.577318915631772.1073741828.573990992631231/711923322171330/?type=1

Or it could mark the beginning of the end--the point when the meme was no longer funny. 

In my opinion, it is highly unlikely that 750,000 BTC were stollen recently.  If a huge sum of coins were stollen, then the theft occurred in 2011 when Gox security was lax and the bounty was much less.  The theives sold these coins in 2011 and 2012, keeping the price repressed and explaining the long bear market at this time.  

Here is my theory in more detail:
https://bitcointalk.org/index.php?topic=488058.msg5397869#msg5397869
https://bitcointalk.org/index.php?topic=492393.msg5438572#msg5438572

If the coins were not stollen recently and entered the bitcoin economy long ago, then the missing 750,000 GoxBTC is bullish medium and long term, because the effective monetary base of bitcoin just decreased by 6%.  If 20% of those who thought they had coins at Gox, buy new coins (and move them to cold storage this time), that represents 150,000 BTC of sudden demand.  

I feel for the people who had funds at MtGox, and I think it is important to be sympathetic to these victims.  They are our fellow human beings and some may be in a lot of pain right now.   

But what is wrong with learning from the experience and moving on?  Do you have a better option?

I went to breakfast, and came back and see that many people misunderstood what I meant by "learning from the [MtGox] experience and moving on."

I think most community members, myself included, want to figure out what happened.  How else can we learn from the experience on move on?  And I think most community members want a criminal investigation of MtGox too.  In fact, I believe it was the large players in the bitcoin world (Coinbase, Blockchain, SecondMarket, etc) that contacted the FBI to report evidence of criminal behaviour at MtGox.  If MtGox is found guilty of a fraud that wiped out half a billion dollars and hurt many people, then those responsible should suffer the consequences.

Furthermore, the purpose of a bankruptcy proceeding is to recoup as much funds as possible to payback the creditors (Gox depositors), so we are already working on salvaging as much as possible [although there may not be much to salvage, if my theory is correct].  

So I don't understand how the people that are arguing with me are saying anything different than what I'm saying.  


Here is what I think actually happened, by the way:

https://bitcointalk.org/index.php?topic=488058.msg5397869#msg5397869
https://bitcointalk.org/index.php?topic=492393.msg5438572#msg5438572

Sorry for the OT, but does anyone here remember who discovered "Willy" and when?

I wrote this article: http://www.reddit.com/r/Bitcoin/comments/1zdnop/peter_rs_theory_on_the_collapse_of_mt_gox/ and credited Willy's discover to my fellow Wall Observers here.  However, paleh0rse from Reddit claims priority but hasn't shown me convincing evidence.  

We were talking about Willy as early as December, right?  

LOL, this is why you should never sell all your coins. 

Traders are borrowing coins on margin from Bitfinex and selling them into the market.   These traders hope to buy them back cheaper in the future, return the borrowed coins, and pocket the difference.  "Pushing down hard" means traders are borrowing additional coins and selling them into the market, thereby helping to push down the price.   

There are presently 8,116 BTC on loan to short traders at Bitfinex.  These traders are paying on average 27% per year in BTC to borrow them, and at some point in time they will buy them back because they aren't theirs to keep.  If the price goes up instead of down, some may chose to buy back to minimize their loss, thereby adding fuel to the rally.  At this point, other short traders may be running out of margin (they now have insufficient collateral to cover their mark-to-market losses on their short position) and Bitfinex will force them to cover, squeezing people out of their positions. 

Can you give me an example of who an insider might be?  

Do you consider yourself an insider or an outsider?

If I created something I believed was important for bitcoin and purchased more coins because I thought my invention made bitcoin more valuable, would that be insider trading in your mind?

It was a serious question.  The point I was trying to make is that there are no insiders and there are no outsiders.  These terms no longer make sense outside of the legacy financial system.  

Why do you think most people are here on this thread?  They are looking for information to make better trading decisions. If they find it, are you saying that it would be unethical for them to act on it?  


Bitcoin is not a stock.  There's neither insiders nor outsiders, but some people have better information than others.  That's life.  


You are blurring the lines between "using what you've learned to your advantage" and "defrauding your customers."  Only one of these is unethical.  

If I purchase more bitcoins because I think my invention will be useful and strengthen the ecosystem, then I'm taking a risk on what I believe.  If I'm right, then I would call that a just reward.

If someone sells GoxBTC to his customers because only he knows that GoxBTC aren't back by any real BTC and he needs to raise cash, then that is fraud.  

Fair point--as soon as the theft was known it should have been disclosed if it meant that the company was now insolvent (after disabling deposits, withdrawals and trading).

I don't know but I think it is uncertainty regarding the movement of old coins that could be tied to MtGox.  Here is the latest discussion:

http://www.reddit.com/r/Bitcoin/comments/1zvx7i/coinsight_now_shows_another_160000_btc_transaction/

It looks like we also have blockchain evidence that a large sum of old coins was just moved:

https://blockchain.info/charts/bitcoin-days-destroyed-min-year

(I think people tend to over react to large bitcoin-days-destroyed events, however.)

Yes, please clarify what BTT is.  

Regarding bitcointalk.org, if you click on the "MEMBERS" link, you'll see there are currently 271,709 members (a lot of sock-puppet/troll accounts, but still).  Is there a way to get the stats on membership vs time?  Is anyone tracking this?  It would be interesting to plot this curve....

My thoughts as well.

This isn't certain at all.  Personally, I think the most likely explanation is that the coins were stollen many years ago and sold off explaining the bitcoin bear market of 2011.  MtGox has been running a fractional reserve ever since [https://bitcointalk.org/index.php?topic=497289.0].  It's also possible that many of the missing coins have gone to bitcoin heaven (lost private keys), or have been seized by an authority.  

I think that all 750,000 BTC currently belonging to a single thief of scammer is the least likely scenario.

I think we have a very long time until that happens.  

I remember when I was first learning about bitcoin in March 2013.  People would say how this alt coin was better because it had faster block times, or that alt coin was better because it was proof-of-stake and used less mining energy.  Or this coin has demurrage to prevent hoarding or that coin uses ASIC-resistant hashing, or this coin is "Turing complete."  What I've come to believe is that this was mostly attempts by alt coin pumpers to appeal to newbies.  It seems to make sense that a "second generation" coin would be an improvement, but the more I learn, the more I believe that there are no fundamental improvements that can be made by alt coins and design changes.    

I've now spent months researching bitcoin at the technical level and I never cease to be amazed at Satoshi's genius.  He seemed to give great thought to every detail.  

My only criticism (and perhaps I'm missing something) is the way the ECDSA signatures are included in the transaction hash (which contributed to the transaction malleability problem).  But maybe there was a reason for this too that I've missed.  Nevertheless, we should have malleability eliminated over the coming year.  

Yes, malleability was known for years and, in my opinion, wasn't even a "bug."  It was just the way bitcoin was.  Competent exchanges could never be affected by malleability.  

But it seems to me (I should give credit to DeathAndTaxes) that if the ECDSA signatures were not included in the transaction hash, then malleability would have been impossible right from the start.  But perhaps I'm missing something and it was important that the signatures were included in the transaction hash.  

Only time will tell.  


TERA I do disagree with your comment earlier that we are seeing de-adoption.  By the metrics I follow:

- blockchain.info web wallets
- coinbase wallets / merchants
- transactions per day excluding popular addresses
- network hash rate
- Reddit r/bitcoin subscribers

we are still growing exponentially and with the same "time constant."  Bitcoin is like a (good!) virus spreading across the world.  

Jorge, what looks exponential on that curve is actually super-exponential.  Straight lines represent exponential growth on a log curve.  

If you plot bitcoin statistics that correlate with adoption, you'll see fairly constant exponential growth over the last 5 years:

- blockchain.info webwallets
- transactions per day excluding popular addresses
- network hashrate

The super-exponential run-ups and crashes only seem to happen with the price.

Interesting article, and more evidence of a trend I've noticed: the media is beginning to paint a picture of a bipolar aristocracy:bankers vs tech innovators.  The bankers are a known quantify while tech innovators may be disruptive to the powers that be.    

I think the "opt-out" meme promoted by Balaji Srinivasan is very powerful and has ruffled some feathers.  It forces a rethinking of our shared mythology: do we need state-controlled money (why not bitcoin)?, how much meaning do those imaginary lines only visible on a map have (Crimea)?

Probably.  

Interesting comparison (numbers are approximate):

MTGox at bankruptcy

Liabilities=~$500 M
Assets    =~$150 M  (after 200 kBTC were found)
===============================
Shortfall =  $350 M

Bitcoin money supply: 12,000,000 x $560 = $6,700 M

Shortfall / Money Supply = 350 / 6700 = 5.2%


Lehman Brother's at bankruptcy

Liabilities = $768 B
Assets    =  $639 B
===============================
Shortfall =  $129 B

USD M2 money supply: $11,000 B

Shortfall / Money Supply = 129 / 11000 = 1.2%


I wonder if the USD financial system would be more or less robust to a failure of equivalent size to MTGox.

Interesting discovery we just made in Risto's thread: price action seems to grow with (proxies for) the square of the number of users, as per Metcalfe's law.

Just eyeballing it (I haven't done a regression), I'd say pretty close to $500.  The usage statistics grow at about 3.2X per year, however, so the Metcalfe Value will bump into the real price very soon provided the network continues to grow.  

Isn't your bolded text the very essence of the myth? 

Personally, I don't know how many coins are actually held by the "chinese" and I also don't know whether they would be more or less likely to sell them in a "ban" scenario. 

Are you saying that it is obvious they would remove coins from the exchanges to bitcoin wallets, or obvious that they would sell every coin in their possession and remove yuan?

Is it also obvious to you how many coins are actually held by the Chinese?

I think I've been on the forum too long these past few days and today I've finally become delusional.  I see Atlas Shrugged and Hunger Games playing out in front of my eyes.  

For example, this video of Obama's recent talk where nobody claps reminds me of the crowd from District 11 that all salute Katniss with their hands, in an unspoken gesture that "something is wrong with the power structures of the world."

http://www.zerohedge.com/news/2014-03-26/what-happens-if-us-president-stops-speaking-and-nobody-claps

Secession movements in Crimea, Venice (Italy), Scotland, Caledonia, and many other places represent the districts getting restless.  

The search for Satoshi Nakamoto represents the question "Who is John Galt?"

The fact that once you become consumed by bitcoin you become unproductive at your non-bitcoin engineering duties represents the migration of technical skill to Galt's Gulch in Colorado.  

Bitcoin is simultaneously Rearden Metal and the MockingJay.  It is Rearden Metal because it is better than the status quo, yet the MSM and establishment defame it relentlessly.  Bitcoin is the MockingJay because it represents a morphing and backfiring of a centralized organization's attempt to manipulate what should be a natural process.  

But I think the bitcoin revolution will be peaceful.  Unlike HungerGame or Atlas Shrugged, the antagonists are financially incentivized to abandon their slowly crumbling institutions.  In fact, I think some are already on the side of bitcoin.  The IRS ruling was ideal, ZGL-coins may eliminate reporting requirements for day-to-day transactions, and institutional investors can benefit form the reduced capital gains rates.  Senator Manchin is suddenly favourable to bitcoin, just like how Lawsky eventually came on board.  The Winklevoss ETF will be approved and high-quality exchanges will appear in New York and London.  The USD has hit the iceberg, but like the Titanic, most are still dancing under the illusion that the ship is unsinkable.  But more and more hear the crackles and find a lifeboat.  Ironically, the more people that come on board the life boats, the bigger and more luxurious they become.  

Lol, I was lazy and didn't fact check.  Yes, the one in Spain.  

This is true.  Reserve demand for gold has only held up for several thousands of years.  Our high-technology and globally-interconnected economy appears to now be shifting reserve demand to digital assets: https://bitcointalk.org/index.php?topic=68655.0

The beauty of bitcoin is that anyone is free to use it for whatever reason they desire:

If bitcoin is to become an important world currency, it must go through ups and downs like this.  If it didn't, everyone who got in early would become filthy rich.  But everyone can't become rich, so bitcoin must tug at your emotions to test your beliefs, taunting you to make a move.  It rockets to the moon, promising you wealth beyond your wildest dream.  And then it crashes lower and then lower again, shattering those fantasies you were living in your head.  

But in the end the question is simply: do you want bitcoin to succeed?  

For me it is something to fight for.  In all my life, I have never seen a technology that I feel has as much potential to right so many wrongs in the world.  It is money by the people for the people.  It empowers the individual, which empowers the community, which empowers the world.  It is bottom up money, rather than top-down, and reflects the natural order of human relationships.  It is the system that will allow us to break free of certain chains that have been holding back our species, as we evolve to a higher level of community.  

Life is about making decisions.  We are free people and can do as we choose by accepting the consequences.  At some point, each of us will be old and at the end of our lives.  We will remember the battles we fought and won with pleasure, and those we lost with pride.  Our regrets will instead be of the battles we were too afraid to fight.  We will look back and say, how could I have been worried about loosing (what you'll later perceive as an inconsequential) $25,000 bucks when what was at play was the evolution of money itself.    

I decided a year ago to commit my time over the next several years to working on bitcoin.  I will continue to do so as long as transactions are added to the unforgeable global ledger know as the blockchain.  I will work to advance the technology, use it at every opportunity, favour hiring employees who accept it, and gently promote it across my sphere of influence.  

I believe I am not alone.  

I thought it was just me, but I agree that Jorge has disappointingly matured to somewhat of a garden variety troll. 

At least he's not pumping Ripple. 

My idea is to consider the Metcalfe Value model (V ~ N²).  It makes no attempt to extrapolate into the future; however, it does show that the bitcoin market cap has grown in proportion to the square of what I refer to as the generalized user base over 4 years and over 1,000,000% change in price.

This should make Oda and Blitz happy, since this is not a predictive model (in time).  However, it provides support for Risto's exponential growth model because bitcoin's generalized user base has actually deviated less from true exponential growth than bitcoin's market cap has.  




The question of price then becomes one of adoption.  Will bitcoin continue to be useful to a growing number of humans?

It doesn't actually matter.  

What my model does is defines two abstract unmeasurable quantities called the "generalized user base," N and the "value of bitcoin", V.  I then define that these two variables satisfy the Metcalfe Model, V ~ N².

Everything is exact so far and I haven't made any assumptions.  Then I ask: "is this model useful?"  

To answer this question, I look for observable proxies for both N and V that are measurable.   Reasonable proxies for N include "unique address used per day" and "transactions per day excluding popular addresses," but one could also consider subscribers at r/bitcoin or users at bitcointalk.com.  In fact the more proxies for N that show self-consistency, the stronger my model becomes.  A reasonable proxy for V is the market cap of bitcoin.  

It has already been shown the the model is useful, and that it is in fact reasonable to infer that bitcoin's value grows as the square of its generalized user base.  Realizing that I am using the terms "bitcoins value" and "generalized user base" in a technical way, the task moving forward in time is to find ways to estimate N that simultaneously support the Metcalfe model without stretching the common-sense meanings of the words "value" or "user base."  If we have to stretch common-sense too far, then the model will no longer be useful.  


This is how we make progress in theoretical physics.  A good example is Newton's Second Law: f = m a.  A lot people think that this is some discovery about a "fundamental law of the universe," but it is actually just a definition.  The net force acting on an object is defined by humans to be equal to the product of the object's mass and acceleration.  You could equally create another "law" that says f2 = m v, where v is velocity and f2 is "force 2.0."  Both are correct by definition, but only one is useful.  If you calculate the "force 2.0" of gravity, you'll get a complex mess; whereas the "force" of gravity is an elegant equation.

Yes, exactly.  

The two ways I am presently estimating N were suggested by Aminorex and someone else when we made this discovery in Risto's TA thread.  Moving forward, we can use anything for N but the more we have to stretch reality to say it bears any relation to what we mean when we say "user base," then the less useful the model becomes.  

If bitcoin adoption (especially as a medium of exchange) continues to grow, the model must breakdown at some point for the proxy N = "number of transactions per day excluding popular address."  For example, if I plug Visa transaction quantities into my model I get bitcoin valuations in the hundreds of million or billions lol.  But this doesn't mean that the model is necessarily broken, just that the old proxy is no longer valid.      

But back to the debate about Risto's regression, I do think it is very interesting how various proxies for N seem to deviate less from exponential growth than bitcoin's market cap.  So I think it is fair to say that the exponential growth model has held so far.  How far into the future it will continue to hold is speculation (as I know you agree).  

My model would say that for this to happen, that bitcoin adoption would need to reverse course.  That is, bitcoin would have to become less useful such that it is used less and less moving forward in time rather than used more and more.

No one can predict the future with certainty, but it seems to me that bitcoin's properties make it a very useful tool for a wide variety of purposes.  Here is a thought experiment: imagine that tomorrow everybody somehow "knows" that the price of bitcoin would never increase, but that the price of bitcoin would never decrease either.  It is simply a fact that 1 BTC will forever buy the same basket of goods.  Would you expect world-wide demand to hold bitcoin to increase or decrease?

Jorge, you'll need to take it up with Richard Feynman because I borrowed the example from him (from Feynman Lectures on Physics; however, he called it a "gorce" rather than "force 2.0").  

You interpretation of this history of physics and calculus shows that you've never questioned how our perception of reality is shaped by those among us with the courage to pursue truth.  

What is a dynamometer?  A simple way to construct one is to use a spring and mark equally-spaced lines to indicate how far the spring has stretched.  You can then place a "mass" on the end of the spring and measure the spring's stretch by counting lines.  You then say that "force is the change in the number of lines," but by doing this you are implicitly assuming that Hooke's law holds (that f = k x).  All of physics is a bunch of definitions and equations piled up on top of each other that are self-consistent and that explain what we see in the natural world.  They are human constructions.

Satoshi Nakamoto once said that "humans are pattern-seeking, story-telling animals."  Newton saw patterns and he made up a convincing story to explain it.  That story proved to be so useful and so powerful that it became entrenched in our perception of reality, and now generations of physicists have built on top of it.  But it is just a story that explains what we see in nature.  It is not nature itself.  

When Newton wrote "Principia," he planted the seeds that would change mankind's perception of reality over the next several hundred years.  When Satoshi wrote "Bitcoin: a peer-to-peer electronic cash system," I would argue that he did the same thing.  

I think if you were alive in the days of Newton, you would have been a bishop of the Catholic Church.  I believe you would have claimed that calculus was "pointless" and because of your mental obstinance, you wouldn't have even understood what it was that Newton meant by "acceleration is the second derivative of position."  But you are also smart, and you would have realized that Newton was able to accurately explain the motion of the heavens, diligently recorded by Nicolaus Copernicus 200 years early.  This would have frightened you, Jorge.  You would have written about the evils that would come from physics and that no man can understand the complexity of God's creation.  

Newton would have seemed to you a heretic, for he presented a theory that was strongly at variance with established beliefs and customs.  This is not unlike how you view bitcoin as heresy today.  

Precisely.  They are models that we slowly optimize as we seek out truth.  The most useful models influence our perception of the universe in all of its complexity that we see in front of us.     

Reshaping our perception of reality is both exciting and frightening.  Some embrace it and ask how they can use it to their advantage.  Others cling tightly to their past beliefs, trolling internet forums as the pressure from their cognitive dissonance grows, for these people know deep inside that their worldview will never be the same.

Oda, could you expand on what you mean by "bitcoin idealism is dead"?  I had dinner last night with a colleague who attended the Amsterdam Conference and he seemed quite excited by the opportunities that are rapidly emerging.

But I've never understood what "idealism" even means in the context of bitcoin.  Bitcoin is useful.  People will therefore use it to advance their agendas.  And there are all sorts of different people with all sorts of agendas in this world.  Greater interest in bitcoin from a broader swath of the population tells me that bitcoin is evolving as it should.  

That's why we have alt-coins: for when 1,000% annual returns just aren't good enough. 

Right now you can get 1740 bits for 1 USD.  Sounds like a lot to me 

Personally, I think the colloquial term "bits" will stick.  For those pushing SI prefixes, perhaps a good compromise would be to use μBTC or μ as the symbol.

From DennisD7 of r/Bitcoin:

http://www.reddit.com/r/Bitcoin/comments/24m4ps/proposed_shape_for_the_bits_symbol_is_a_square/

SecondMarket is buying up 1000 / 28,000 = 3.6% of the new bitcoin supply on a regular basis.  Without the word "not" your bolded statement above is equally valid (and equally biased): they are big buyers!

Right.  You can only predict events to the extent that the underlying system is computationally reducible.  Unlike the 2-body problem (that has closed-form solutions), the 3-body problem is computationally irreducible. To determine the answer to which planet gets ejected would require a computer that has more computational power than the universe itself.  In other words, to find out the answer, we must observe reality unfold.  

The question of whether the universe is deterministic is unresolved.  Many physicists claim that wave-function collapse is real, for example citing Bell's work to "disprove" Einstein's hidden-variable theory.  But Bell only showed that no local hidden variable theorem was possible.  This means that if the universe is deterministic, there must be non-local effects.  Stephen Wolfram's concept of the universe as a network of nodes allows for non-locality without violating causality.  

We don't. 

One could argue that Coase Theorem would suggest that trade volume measured in BTC should decrease as the distribution of bitcoins becomes more efficient (e.g., as time goes on or as adoption continues). 



I think he just means the volume of those coins that directly trade against USD (e.g., ignoring the questionable volume on the Chinese exchanges). 

I wonder if Eternity is a bot.  For example, he just quoted me nearly verbatim and for no apparent reason:


I've noticed he's done this to me before as well as to other people. 

Eternity, are you a bot?? <-- I wonder if he's programmed to respond to questions

Yes.  We know the universe is universal (Turing complete) and that how the future unfolds is undecidable.  So it makes no difference from a practical point of view whether or not the universe is deterministic.  In either case, the only way to determine the future is to wait for it to happen.  

Yes, and I've seen adds for "Senior Member" accounts for sale.  Perhaps people run comment-bots and then sell the accounts.  

Nice find, Oda. 

Looks like Eternity is a bot. 

They were talking about it in the Meta section one day.  IIRC ~0.1BTC is the going rate for Sr. Member. 

But I think it is a bad idea to sell an account because they can be used to abuse trust.  Remember, for every person who posts here regularly, there's like 50 lurkers or something (I've seen estimates but can't recall exactly).  So if a forum member who many readers follow and trust were to sell an account to someone who turned out to be a scammer, it could cause a lot of problems!

At some point in the future either the USD/BTC exchange rate will diverge to infinity or collapse to zero.  Long term, there's very little else that could happen.

It's hard to imagine drastic changes to the status quo but human history is full of them.  

If a pattern exists, then it will be exploited in order to earn positive alpha (i.e., earn a profit in excess of what would be commensurate with the risk taken).  As it is natural to seek alpha, more and more money begins to exploit the pattern until it no longer exists!

In a perfectly-efficient market, alpha = 0 no matter how you allocate your capital.  Bots that exploit patterns make the market more efficient. 

With no known efficient process for extracting the 8 million tons of gold dissolved in our oceans, mining is pretty much the best way we have now to produce more.  

With no known efficient process for harvesting gold from asteroids…

With no known method to cost-effectively fuse lead + other cheap elements into gold…


Let's try it with fiat money:

With no known shortcuts for printing more money out of nothing or confiscating someone's funds…ahem…oops?  

Oda, can you explain this comment in more detail? 

LOL Jorge, I see you can make fun of yourself.

It reminds me of the joke about the acceptance of ideas by the academic community:

- When the idea is first proposed, they say it will never work.

- Later, when it appears to be working, they say it might work but it's not important.

- Finally, when it's clearly working and important, they say "we've known that for a long time."

And Nxt, NEM, any coin that IPO'd and possibly any coin that was instant/ninja mined.  

I would also say that ALL proof-of-stake coins are "controlled and administered" by the developers in order to bypass the nothing-at-stake problem therefore giving them administrator privileges over the blockchain (for example, Vericoin devs just forked their blockchain to undo the theft from Mintpal).

Legitimately mined coins would be fine IMO.  I expect sidechains and spinoffs would be fine too.  I'm not sure about proof-of-burn coins (e.g., Counterparty).  

Save your story for the Super Nintendo, kid.

stagger |ˈstagər| verb
1 walk or move unsteadily, as if about to fall:
2 astonish or deeply shock: (as adj. staggering)

The question is: did he mean definition 1 or 2?

In any case, I agree that it is difficult to overstate the potential impact of COIN. 

+1

Classic Aminorex. 

I think it would be helpful to adoption to abstract buying/selling further (provided the wallets didn't overcharge for these abstracted services).

Here's a thought experiment: Imagine that everybody has visibility of all of their money on a smartphone app.  For simplicity, consider that only dollars and bitcoins exist.  The app has two features:

1.  It displays the market value of each user's money, expressed in whatever currency is currently "dominant," along with the exchange rate between the two currencies.  

2.  There is a slider bar that allows each user to dynamically adjust their personal exposure to anywhere between 0% bitcoins and 100% bitcoins:
                
    0% BTC / 100% USD   <-----|||SLIDERBAR|||----------------------------------->   100% BTC / 0% USD

Assume there is no fee for trading and no slippage.  If it was this easy for everyone, what would people do?  

Bitcoin adoption is all about slowly coaxing the world to move that imaginary slider bar a little further to the right!

This theory states that the 850,000 coins were stolen when MtGox was hacked in June 2011.  The thief sold them over the following several months, producing the brutal bear market of 2011.  Mark K covered up the theft and used Markus and Willy to buy BTC with customer funds as necessary to make good on BTC withdrawals.  This theory also explains why Willy was put into reverse and dumped like crazy immediately prior to the collapse (so that client accounts were missing BTC rather than dollars, making the original theft (and cover-up) look like a recent theft.) 

Here's a link related to "THK" for those wondering what it means:

http://www.reddit.com/r/Bitcoin/comments/20juso/activities_of_those_tibanne_limited_hk_users/

ShroomsKit is actually the alter ego of a great bitcoin whale.  Since the whale knows the short term price movements (he's creating them), he gets a kick out of playing the character of an emotional trader that has the worst possible timing. 

I'd like to see a marked increase in the daily number of transactions to confirm a new bull phase.  According to the Metcalfe model (using TXs per day), the value is still approximately $400.

It shows the fact that the market cap has historically grown as the square of N, where N is a proxy for the number of users in the network.  To complain that it's "tucking" the most recent data into a "tiny corner" is to completely miss the point of the graph.  

How long will this relationship hold?  No one knows.  


If you zoom into nearly any section of the graph, the match is not as impressive.  What's impressive is that the market cap has grown as the square of N over 4 years and over 4 orders of magnitude of market cap growth.  


The current deviations are within the range of past deviations, so we can't really say anything yet.  I think the model must break down at some point should bitcoin adoption continue to grow, because the extrapolated price per BTC at Visa-levels of transactions per day are unfathomable  

The "effective fee" that Jorge is talking about is due to the expansion of bitcoin's monetary base.  Like Justus said, with bitcoin this inflation programatically tapers off over time.  The higher inflation rate right now helps to distribute bitcoins to a broader user base.




It's interesting to compare this to the "effective fee" due to expansion of the monetary base in fiat currencies.  Here's the relevant chart for the USD.  Note the opposite nature of the concavity.  

I pay my credit card off in full every month, but I would love nothing more than to ditch it and never look back.  My problems with credit cards:

- I don't want to borrow money that I don't need just to buy something online. 

- I don't want spend 5 minutes entering my credit card details and personal information, especially when the site later rejects it because "I'm Canadian."

- It's annoying to log into my online banking to pay off my credit card and I don't like setting things to "auto pay."  I just want to pay cash online once and be done with it!

- Approximately once a year something "goes wrong" and any benefits are washed away.

- Examples of things going wrong:

     + early this year my credit card was suspended because I made a sizeable purchase from a luxury women's apparel store.  When asked why this triggered a suspension, the CSR said "because you're not a women."  I suppose Visa thinks that men don't buy gifts for women.  The embarrassment of having my credit card declined on a subsequent purchase (because it was suspended) and then sitting on hold for what felt like half an hour to get the problem sorted out costs more in time and annoyance than any "rewards."  <-- and I'm not a dog, I don't want "reward treats," I just want to pay the market price.

     + last year, my bank had a computer problem and one of my payments against my Visa card got cancelled.  The bank contacted me to let me know that I should resubmit the payment, but this made the payment late according to Visa.  This was just after I had got back from a holiday so I had a large balance on the card.  The interest payments I was charged offset any benefits. 

     + very recently, my card got charged for something that I didn't purchase.  I called Visa and they had a "technical problem" and were unable to cancel my credit card and issue me a new one.  The claimed that "it didn't make sense why they couldn't cancel the card--their system just wouldn't let them."  But then they said they couldn't open a dispute for the unauthorized charges until they cancelled the card!  Anyways, it eventually got sorted out and they removed the fraudulent charges, but the annoyance of making several calls to Visa over the course of a few weeks probably cost me almost a full day of my time in total.  In the past, I've just paid small fraudulent charges (for example, I was being charge $3.49 / month for god-knows-what for a few years) because it's usual cheaper and always less annoying than dealing with the problem LOL. 

So, for me, the benefits of moving completely to bitcoin would be huge.  When you factor in the value of your time and the annoyance of dealing with customer service representatives on the phone, bitcoin is vastly more efficient for me. 

Yes, it's like reading entrails in ancient times.  We look back at that practice as ridiculous, but the best haruspices (entrail readers) could actually predict the future to a certain degree.  The reason is that if the people thought a certain future was destined to unfold, in small ways they would each work to make it happen. 

Our shared mythology is a powerful force.

In other words, you're saying that people attach a speculative premium to bitcoin.  I disagree--there has always been a speculative discount relative to its utility.  This discount reflects the non-zero probability that bitcoin may fail.

I can best argue this point with the following thought experiment:

Imagine that tomorrow the world knows for certain that the price of bitcoin will neither rise nor fall--1 BTC will forever buy the same basket of goods.  Would worldwide demand to hold bitcoin increase or decrease?  I think it's pretty clear that demand would increase dramatically based on bitcoin's security, privacy, and transportability.  But demand can't increase without a change in the price!

The more I consider bitcoin's game theory, the more confident I am that there are only two equilibrium price levels for the USD/BTC exchange rate. 

This time last year….


Things were pretty boring around here:


Adam was bullish:


Oda was skeptical:


Some people thought we needed a good drop in price to pick up buying interest:


Justus was correct about Gox (but we never checked the hash of his prediction):


Solex's prediction came true too:



And Adam eventually got his $180:

I think the binary-future meme is useful for social reasons.  People don't want to look stupid.  For example, this meme will allow COIN ETF buyers to logically invest and hold the opinion that the probability of failure is significant.  They'll say:  "The most you can lose is whatever you invest, but if it continues to grow the return could be >10X.  Although it's definitely high risk, the potential reward is so great that I'd be crazy not to take a small position 'just in case.'"

When I read his tweet, I was concerned that O(1) block propagation would drop transaction fees too low and allow the blockchain to fill up with spam.

After reading this new write-up, I see the IBLT proposal not only improves TPS throughput, but also improves incentives.  It takes some power away from centralized miners and returns it to the nodes!  If you are anti-social and try to propagate blocks full of weird transactions that the network doesn't know about or that were dropped due to insufficient fees, then there's a better chance your block gets orphaned and you lose the coinbase reward.  

Here's the latest chart (updated just now):

Good to see you Billy Joe Allen!  Welcome back!!

Exactly.  And this explains why we get distinct "growth spurts" as opposed to a price history that looks like exponential Brownian motion.  There are two variables (price and adoption) that are coupled in a way that produce positive feedback: this positive feedback reinforces the uptrend (until it snaps) and reinforces the downtrend (until it tapers out).  

It's pretty clear that MtGox was operating on fractional reserves, and I also believe that Willy was Mark's bot.  But your assertion the he "achieved [fraction reserve trading] by using either fake accounts or bots" seems to imply that he was the mastermind of some elaborate scam.  I think it's much more likely that he was running fractional reserves, not out of intent to defraud, but to coverup (and try to fix) a large bitcoin theft from 2011:

http://www.reddit.com/r/Bitcoin/comments/1zdnop/peter_rs_theory_on_the_collapse_of_mt_gox/

MtGox was making good money, and Mark would have preferred to keep his reputation and his business than risk everything, including potentially his own life, in executing some fractional-reserve scheme that was doomed to implode.  If you were a powerful and respected figure in the bitcoin community, the owner of the world's largest bitcoin exchange, and already reasonably wealthy, would you have concocted some hair-brained doomed-to-fail scheme like this?

If my theory is correct, it means that Willy didn't pump the price at all, but that the price was in fact artificially low through 2011 and 2012 due to the sale of almost a million bitcoins by the actual Gox thief.  Willy was just drove the price up as required to make good on MtGox bitcoin withdrawals.  Remember, there were 850,000 missing bitcoins upon the implosion of Gox and very little missing dollars--not the other way around.  This means that bitcoins were actually more rare than the market had priced in.

I agree that the collapse of MtGox was a setback for bitcoin.  I'm just getting tired of people stating that Markus and Willy were the dominant factor in the growth spurts of 2013 or that they were part of some nefarious-but-vague plan that no one can describe concretely yet contain the buzz words "fraction reserves" and "pump and dump."  Really, how did Willy and Markus improve Mark's quality of life if that was really their purpose?  No, Mark was desperate to save Gox.

Here's an interesting article (written from the perspective of females looking for a male partner) that suggest that 'nice guys' (or 'nice girls') don't exist; rather, everyone adapts their personality (to various extents) to the people around them and the situation at hand.  It's then up to each individual to adjust their personal behaviour and appearance to elicit the response they want from the opposite sex. 

http://www.therulesrevisited.com/2014/09/nice-guys-dont-exist.html

To create a digital version of the US Dollar that retains its "cash-like" properties, David Andolfatto (VP, Federal Reserve Bank of St Louis) argues here that miners would be needed to process transactions in order to keep "Fedcoin" free from KYC requirements:


So here we have a Fed Official arguing that decentralized transaction processing is actually needed to fit within the existing regulatory/legal framework.  The Fed can't use a "permissioned ledger" because then those granting permission would also be responsible for AML/KYC checks.  This is opposite to the idea that "decentralization hurts the ability ... to integrate into the current legal/regulatory pigeon-holes."

This debate with Jorge reminds me of a piece I wrote in September:
===========================================

Of course miners selling coins affects the price.  If there's insufficient demand to absorb the new coin supply, then the price will fall until demand picks up.  This is bitcoin's distribution system doing what it's designed to do: distribute coins to those who value them.    

Bitcoin is a strategizing women that will use your lust to accomplish her goals.  It's your desire for wealth that precipitates the boom, and it's your hope and envy that fuels the accompanying media frenzy, propelling us another rung up the market-cap ladder.  And she knows this.  She also knows that in your despair you will sell your coins to those she hasn't dated yet, as though you're burning love notes from a women who broke your heart.      

She has nobler goals than to enrich you.  Although some of you will score and some of you will strike out, to her you were all only useful tools.  We're building a new decentralized economy that, if successful, will reshape the world in unfathomable ways.  She's the foundation of this new economy--sound money where each coin was forged by the greatest physical efforts of man to strangely produce a purely-digital asset…a digital asset that can be transferred in less than a second across the world without the permission of an authority or the assistance of a third party.  She is an evolution in money.    

Indeed the price must grow for the experiment to succeed, but it's more important that the price be the right price to best distribute coins to those who want them.  The issuance of new coins is what keeps downwards-pressure on the price, testing the faith of hodlers: "why are your coins so special if miners are finding new coins everyday?"  It prevents the price from deviating too far from true demand, as ruthless miners will put to rest the ambitions of lustful.  This is necessary.  We're all just playing out our roles.  

How will it end?  I don't know.  Tales of great ambition are fraught with great tragedy.  Only time will tell if she'll seduce her way to the very top.

This inspired me to produce a historical chart of "miners' revenue as a percentage of the money they move."  Not unexpectedly, this percentage is decreasing as the number of transactions per day increases.  

Does this mean that the network becomes more cost-effective to operate as it grows?  

No.  Total fees paid to miners tend to increase as the number of transactions per day increases.



Thus it would seem that the network simultaneously grows both stronger and more cost-effective as the number of transactions per day increases.