Where were you betting?

I'll take freebitco.in's multiply 2x as an example, since you don't really lose money there. It's only fictional money.

You can win lots at first, but on average for every amount you bet, you will lose 5% on average. This is because there is a 500 house edge on the whole 10000 range which you can spin. It's 5% of your total bet.

Not everyone would have been lucky enough to earn $900 and then lose it. You are very lucky indeed. Most people would just lose more and more as they bet more.

I hope you are playing with provably fair games. Either way, provably fair is fair in that it is transparent but it's not "fair as in 50/50 chance" of winning. This is just an example, the odds will usually be provided when you log onto the gambling website.

It should be 4% actually, but I decreased it. It actually forms part of an argument involving the zerohedge article http://www.zerohedge.com/news/2013-11-22/bitcoin-or-bank-heres-how-they-stack.

The problem with an analysis like this is that a bank wire costs a different amount in each area. An international bank wire in Australia only costs $22, Western Union is like $5. There are also many other wallets like perfect money and so on that the Indians in my workplace use to send money back to India.

In fact you must add an exchange rate fee of approximately 2% to the exchange fees (mtgox and so on). A quick example is the difference of 0.94 on MtGox when the true exchange rate is 0.917. These values may change but the fees are a consistent 2% extra. (I'll do the analysis again on another exchange if you can find one that will payout in various fiat currencies, rather than USD. You have to realise that if you withdraw in USD, when you deposit the cheque in a bank in another country, you still pay something around $20 for international cheque clearance.)

Thus bitcoin's true cost of transaction 1%+1%+2% = $40 (4%) transaction fee versus SWIFT ($22). I don't know why american's are price gouged... But international transaction fees should be much lower and the banks can reduce them if they see bitcoin is taking over...

Until these fees by exchanges decrease we shouldn't expect any further uptake by people seeking to minimise international transaction fees.

--------------

Mind you, speculators can still push the price beyond anything we can see. That's the only thing going for bitcoin at the moment. Using Secondmarket's analysis, I found a price target of $100 because it only captures 10% of Western Union's market due to the block size issue. It's going to be a wonder if Secondmarket's Bitcoin Investment Trust will start dumping next month in accordance to lifting of sale restrictions (Someone mentioned this will be an issue but I'm not sure.). That's fundamental analysis. However, using technical analysis that involves a straight line, MACD, candles and more, so the price could be much higher. But then again technical analysis can also go in a straight line downwards...

http://www.fool.com/investing/general/2013/11/17/bitcoin-bubble-or-value.aspx

Source: SecondMarket. <<<< Bitcoin Investment Trust

Remember, at the moment the maximum number of transactions daily is around 90,000 due to mining pools only choosing to mine 250kb blocks. Due to the mining process, it's actually unwise to increase the block amount as it could mean less rewards if someone solves a smaller block earlier. That's what the developers are saying. That the problem lies with the miners and so even if the developer removes the 1mb cap, it does nothing.

Western Union  2.5 million transactions a day
Paypal 4 million transactions per day.

Notice how the Paypal number is twice the Western Union one (more transactions = higher value). But the real fundamental price is only $100 if a maximum of 360,000 transactions can take place on the bitcoin network. It's actually $25 if you look at a realistic transaction limit (caused by mining pools).

It would be fantastic for everyone if the price stablised at $100, the developers would be millionaires. Most people that are true bitcoin enthusiasts that are not it not for the money would be happy. No offence, I'd rather have high uptake of Bitcoin at a lower stable price and for it not to fail rather than have my name "Satoshi Nakamoto" or "Gavin Andresen" and so on connected with the ponzi elements. Even Einstein quoted that he did not like that his name as tarnished by involvement with Nuclear Weapons.

But returning to technical analysis, it can go higher... So in the meantime, as an speculative vehicle, BTC all the way (in comparison to cash).

The real comparison is between EFTPOS "debit cards" 20 cents transaction fee versus Bitcoin "3% transaction fee". An average transaction is usually above $10, so bitcoin loses already.

I doubt bitcoin will work competitively unless we starve the miners and exchanges...

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Paypal 30 cents fee on international transfers.

Ebay fees don't count. If ebay started to accept bitcoins, expect their share of bitcoin fees to rise.

We should be looking at websites that use paypal for e-commerce.

Either way we need to see miners earn less fees and exchanges earn less fees. Furthermore, the ponzi element of bitcoin needs to be removed otherwise it will lose the mainstream audience.

Currency in circulation
+
Reverse repurchase agreements
Treasury cash holdings
Deposits with F.R. Banks, other than reserve balances
Other liabilities and capital
=
Total factors, other than reserve balances,
absorbing reserve funds

Total factors supplying reserve funds
-
Total factors, other than reserve balances,
absorbing reserve funds
=
Reserve balances with Federal Reserve Banks

There is a small ident in the table where it provides a breakdown.

------

As with the Fed injecting temporary levels of money. They can, it's legal. There is nothing wrong with it, in fact it is designed to create opportunities for investors. Everyone knows what the Fed is doing, so there is no concern and you can make money too. Furthermore, a currency war has allowed it to become cheaper to manufacture in the United States rather than China..

http://www.smh.com.au/business/comment-and-analysis/the-hk-aussies-outsourcing-to-the-usa-20131121-2xwvo.html

Looks like the United States will be able to repay their debt afterall and taper. Basically, that's evidence that it's working.

EDIT: Changed the word unlimited to temporary. That's the main reason why theories about QE going on forever are false. They won't do it, the elites in America want to be able to spend their money too. Why devalue it to zero?

Reserve Bank credit
+
Foreign currency denominated assets
Gold stock
Special drawing rights certificate account
Treasury currency outstanding
=
Total factors supplying reserve funds

It's the lowest next to Canada. Lol.

Either way, it will only be private citizens that borrowed too much that will get hurt. All of us with excess cash will make money. That's why cash is so important! When everyone defaults, they have to sell. Why are you bashing the opportunity to make money. It's like you guys hate making money. But you like making money with bitcoin, that's delusional.

How is the Fed's balance sheet relevant to this anyway?

The one who took the thread off track with your socialist comment. Take a look at the post above, it relates to QE and the Fed.

We answered your question already. It doesn't need to make a profit. Central Banks are not there to make a profit but to maintain financial stability... You have to understand how OMO (Open Market Operations) work. It's basic economics. It's a controlled currency war. That's why america isn't suffering hyperinflation. That's why it works. It's financial trickery. But you can make money from it!!! That's all that should matter for an informed investor.

Peter Schiff screams about the Central banks but because of the Central banks, he has made a fortune as a result of central bank policies. DAMN RIGHT!

OMO Basics - To put money into the market, the Fed basically buys govt bonds and puts extra money into the market. If it wants to go the other way, it sells government bonds and other collateral (see long list of collateral on the Fed website).

---------------

It seems like the real problem is that you haven't added.

Foreign currency denominated assets
Gold stock
Special drawing rights certificate account
Treasury currency outstanding

The whole ledger is there. What are you complaining about? It balances, it's simple accounting...

Reserve Bank Credit includes everything that is collateral!

What are you talking about? We have no socialism down under.

In fact america is a communist society. Trying to make obamacare work, free stuff everywhere, food stamps for free, free free. Coupons, free. I mean we don't have any of this stuff down here. No funny coupons to get free stuff from the supermarkets...

We have one of the lowest debt levels in the OECD. Our interest rates are going up.

Either way it's relevant because if every other central bank starts raising interest rates. The U.S. Fed will have to do the same otherwise they will look like the odd one out. Get ready to make some money gaming your central bank. Stop complaining and go make some money.

Seriously, if we had negative interest rates, most people would just withdraw their money and put it under the mattress. That way you don't have to pay the bank to keep your money.

That's why it is not going to happen. Everyone knows how to game the Fed. That's why we should be thanking the Fed for giving us the opportunities to make money.

Everyone who has an interest in bitcoin has to thank the Fed for the price appreciation we have seen so far.

Bow down to your masters.

I'm in Australia, we don't have your nonsense conspiracy theorists, thank you. Learn the economics behind it and try to apply it to another civilised western country. You will find that putting America by itself and the other western countries in another basket is just nonsense.

I don't know who your Krugman guy is but she sounds like a great person.

Tapering is happening soon, so if you don't want to game the Fed. That's your problem. Everyone knows this is transparent information. Everyone started to buy assets when QE started. So what will people do when QE stops? They will want to hold cash. We don't have QE in Australia, we just have rates going up and down, but it's the same thing. QE is just basically OMO without the interest rate mechanism.

You guys blame the Fed but if you had the money to protect it, why didn't you just move it all into Gold? It's all transparent. The Fed's balance sheet looks normal. It's because you don't believe the conspiracy theories.

One of the reasons why there are still reserves is that the Fed is trying to recapitalise the banks so that they don't fail. There will be enough money even after people unwind their risky positions (due to fractional reserve banking some of the money will disappear, but afterwards due to these reserves, that no longer becomes a problem).

Another reason is that it's actually more closer to a currency war. The idea is to fool the forex markets just like Easy Abe did. None of that extra liquidity will actually reach the market to cause inflation. The banks won't lend it out due to their prudent stance. Do you guys know how difficult it is to borrow at 0.25% or some other low interest rate value?

This is also why everyone saying that there will be hyperinflation is fooling themselves. The money isn't being injected into the system like the conspiracy theorists believe. That's why the reserves are so big. My personal opinion is that this is a phony currency war. That's why no money is being lent out.

QE infinity has no effect, it's a delusion to get ordinary consumers spending and the plebs pumping up asset bubbles. When they take it away, bubbles shouldn't pop like they do, but the ordinary citizen doesn't understand it and will sell anyway. The same amount of liquidity usually remains in the market, with a few exceptions.

There are plenty of other reasons in the FOMC minutes if you go read them and other commentary.

Carry trade money doesn't end up at the Fed... If the U.S. brokers sell USD and carry in EUR for example. It's the europeans that would have the money now. Where is the evidence that they are redepositing this into the Fed reserves?

Hell, those articles are foolish. Why would someone just lend rather than sitting on funds if the risk of getting nothing back is too high? The fact is they don't want the banks to lend... It's a currency war and the carry trade is part of the devaluation of the dollar to increase U.S. exports and to bring back manufacturing to america.

Not going to happen. If you want more lending, expect more inflation, it's as easy as that. Relaxing the lending standards would be the key rather than doing QE. That's why it's nonsense.

Likewise when interest rates rise, the opposite happens. You do realise it's not going to stay low forever.

Japan tapered. Then they got deflation, but merely holding their japanese fiat led to a 1% real return each year. Go do some research rather than spread your FUD. Until recently when Japan decided to play games again, but they will still return to 1% real returns in the near future once the temporary effects wear off.

Low interest rates aren't your enemy. Japan had low interest rates and they received 1% real return a year because goods are getting cheaper each year. How do you fight against that? Your argument is not sound. It's interest rate compared to inflation that you should be analysing. Otherwise you fail at simple economics.

Typical scare tactics about debt being passed from generation to generation. That's only relevant if you have borrowed too much. Otherwise if you go to work, hold onto your money in low-risk fixed interest products, it becomes worth at least an extra 1% each year.

It's no conspiracy, that's why free markets don't work. That's why we have government regulation in the real world. The trades aren't fraudulent in an illegal sense because there is no regulation, but as you have stated, they are manipulative...

The point of trading on an exchange is to let the big sharks eat the small fish. The small fish don't care as long as they can transact. Then we should would ask why do some people make a big deal about central banks when it only affects the big sharks, the big players have the most to lose... An ordinary citizen with a small savings account is barely affected by central bank policies. They just cry out the loudest but they aren't the ones most affected by it.

I call BS due to the fact in most countries you get a real return of around 1% a year in fiat by keeping your money in the bank. Even more if reasonably invested.

Furthermore, for people stating that there is an unlimited supply of dollars, that's BS too. Central banks can forcibly take Money out of the system when inflation happens by increasing the cash rate, selling back government bonds, leading to a reduced money supply. This all happens transparently. BS on the closed doors. Good luck holding inflationary bitcoins when the united states starts tapering. Bitcoins are to be continuously produced for over 100 years still to come , meanwhile dollars are going to be constantly destroyed in the near term due to the taper. Then money supply will converge to mean values dictated by average interest rates. Those averages are much higher than rates today. Thus cash will become more valuable in the long term compared to now, provided it is hedged for inflation either through term deposits or inflation linked bonds.

  Who puts all their money into one asset class?  

I am a big believer in the permanent portfolio method.

You can live without debt and be diversified. That way you won't sell when the stockmarket crashes and you can gain the benefits that have been proven over time. You are buying a share of a business. There are dividends and distributions of real earnings.

There are no economic benefits that can be gained with bitcoin. You are better off investing in a bitcoin gambling firm or an exchange. Otherwise you aren't creating any revenue stream but relying on the fundamentals which could disappear overnight. High Risk doesn't necessarily mean High Return. In fact the most risky assets are the ones that have gone bankrupt such as Enron and they have zero yield.

You want a stable revenue stream. This can even be as easy as collecting a welfare check. You don't see people just holding gold and not collecting welfare do you? Who would give away something they qualify for. That would be ridiculously insane!

Furthermore, if everyone is selling, why don't you sell and get back in at a later date? Even if that is only $100 lower?

The problem is only a few people will trade directly at that amount.

However, due to the need to match orders on a book, a latent sell order at the market price will drive prices down. The problem with latent orders, much like iceberg orders is that you don't know how big it is until it hits the market.

Even if there was a wall of sell order at $1,000, then people that want to get out will start to sell at a lower price. The sell order may then retreat and become a market order which would bring the price down onto unknowing buyers who have setup specific entry targets.

However, usually the price changes will be smooth as the bots pass the hot potato around and drive the price down smoothly. So most of us will be able to get out of the market faster than the bots.

If you sell, then there is a buyer, but what that buyer does next will determine the price.

Funds are going back to cash and prices are being bid down. Remember the money supply is going to be reduced soon. Cash will soon be more valuable. USD is rising against many currencies.

Why? Tapering.

There will be less dollars around and interest rates will rise.

This will drive all asset prices down, and may be the trigger for bursting the bubble. Bond yields are already rising in anticipation. Gold is  falling, stocks are falling. This is only the start, come December when it actually tapers, we will have bigger rush for the doors.

Remember the housing crisis was coming around, everyone could see the starting signs, but then Lehman collapsed and it triggered something big. What was the best thing to hold then? Cash. All other asset classes will be hurt.

We don't know what black swan will arise over the horizon, but it has happened many times in the past and will happen again in the due course of nature.

Because of tapering, we will be cheering on the central banks for making cash more valuable, rather than criticising them.

We will have Max Keiser kissing the boots of Central Banksters for making cash more valuable. 

Yep, it's a bit late to get rich. To make 10x your money. The price has to rise to $7,000. That isn't going to happen for a long time.

There are a lot of cheaper payment methods than bitcoin, after you take into account transaction fees and slippage.

This will be a major stress test on the bitcoin network.

Good luck on the event.

Maybe we should get everyone that isn't buying anything on that day to send bitcoins to another one of their wallets.

We need to boost the number of transactions per day to make it look like bitcoin is popular.

Then and only then will they take bitcoin enthusiasts seriously.

Wrong, tapering is happening soon. The USD is rising in value against major currencies. Stock prices are falling. Gold prices are falling. Bond Yields are rising.

This will lead to less US dollars in the market place, which will lead to higher interest rates. The money supply of US dollars will decrease. So whilst bitcoins are continuously being mined, the number of dollars will be reduced through tapering and then normal open market operations.

QE isn't a one way street. Be informed and not misled.

You can do more research on how Japan tapered in the 1990s.

Here are some words of wisdom from zerohedge:

"More transactions please. More uptake please."

You do realise what that phrase would imply? The blocks would become full very fast. People should stop spending bitcoins at the moment or we will hit the critical 90,000 transactions per day mark again.

https://blockchain.info/charts/n-transactions

Soon $1 of bitcoin will be dust that is nontransferable within reasonable time limits as the transaction cost will exceed the trade-able value.

Just curious, how do we know if we have the bonus activated or not?

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