Another thing to do is key-signing (http://en.wikipedia.org/wiki/Key_signing_party). 

Use your GPG keys to register on #bitcoin-otc, rate each other and help build the bitcoin Web of Trust.

Does that mean you're bullish on PMs and commodities, S3052?

I would bet against you on AAPL because though most consumers are weak, luxury brands should fare better due to the growing inequality.

Haha, funny you should mention Asheville NC "mayabong".  You should flier BTC for MJ (or maybe MJ for BTC).  Just saying.. never been there myself but I know some folks who have emigrated.

Good work, hitting the streets to promote BTC never occurred to me.  Since we need volatility... anyone in NYC wanna flier up and down Wall Street? 

Price bottomed at $11 on July 5, and bounced to $16.5 on July 6.  The rally hasn't come, but we've seen several patterns of bullish consolidation (sideways movement under low volume) and pushes towards trend reversal.


Thanks Enky.  I'll send you back 0.5 BTC when we bounce from $9 to $18

Great work in your blog.  The question is indeed when will the trend reverse?  We're definitely in a short term bear channel right now (or the bargain basement, as I like to call it).  By your longer-term analysis, we would expect to see a break out of the trend later this month (around the 20th of July as you predicted back on the 5th), with a bounce from $9-$10 or higher (or at the least, bullish consolidation followed by a rally).

So on the ratio chart, we stay around 1:1 and and see a double dip (first dip was the 5th to $11, second dip still to come), similar to the prior double dip after coming back from $1.10 in late February (first dip in early March and second dip in early April).


Currently, I'll note a couple of externalities which are probably having an impact and preventing things from going smoothly.  First is the SEPA problems with MtGox's French bank.  Things are fine in the US with dwolla working smoothly, but MagicalTux has stated that more funds come from Europe than the US.  And secondly, there is the constant DDoS attacks on the biggest pools, Deepbit, BTCguild, and slush, which have been interfering with difficulty growth.  Then of course there was the MtGox breach (from which they made a spectacular recovery within the week).

These technical difficulties may affect the timeline, so that we see the reversal come later than predicted, after they are sorted out.

Yes, there could be price candlesticks on this chart.  Right now the price used is the weighted average (weight = volume), so the crash from $30 plots to about $18 because the majority of the volume during the crash traded around $18.

I have a vision of a real-time javascript chart with mouseover tooltips of the ratio line showing the actual price and difficulty at each point (and candlesticks would be cool too), but I don't have the time.

My first purchase was in March and I started out conservative, quick to sell hoping to buy more cheaper.  It worked a couple of times, but because there wasn't much downside volatility back then, I usually lost potential gains and was forced to buy back higher.  Since I was also quick to buy, the losses didn't seem much but they started adding up.  And as the real gains multiplied, so did the potential gains (which started feeling more like losses).

By the time it broke $10, I had learned a lesson trading bitcoin: "don't sell", and felt a little wiser during the quick rise to $30.  Needless to say, when it crashed to $10 and I still hadn't moved, I was even wiser (or at least more experienced).  Kudos to anyone able to make that perfect trade, and triple their holdings.


Moral of my story: two lessons learned.  #1) you can lose a lot of potential gains selling repeatedly at mis-predicted tops during a furious bull run.  #2) you can lose a lot of potential gains by not selling at an actual top. A lot.

The perfect trade (eg. sell all at $30 and go all in at $10.50) is obvious in retrospect but just too difficult to predict.  Trying to time the perfect trade is not worth the risk (upside against the downside) because markets are unpredictable, so selling portions reduces that risk.  But try not to sell mid-run, because it goes up fast and furious.


My speculation going forward:  Another bull run will come.  I will not sell at $30 because that is the old high, and when old highs are broken it can go parabolic to a new high.  I'll hold on as tight as I can during the run, and start selling portions at potential tops on the way to $100, but probably not more than half by the time it goes to $100.  Hard to say where a parabola will stop, but they do come down.  I'll pay close attention to the price over difficulty ratio (see charts in my sig) when attempting to predict tops.

I would expect another bull run to start by August (3-month cycle) or a little later, certainly before the end of the year.  It will go above $30 and could approach $100.  How quickly it rises and how hard or from where it falls (a dip or a crash) will depend on if difficulty growth keeps pace (price over difficulty ratio).  I would be both surprised and not surprised if it passes $100, say to $300 before year's end or in 1Q 2012.  I'll look at the difficulty to predict a bottom.

$10 may be tested again before $20 but I expect it to hold and bounce as before.  I would dump below $9 (new historic low in the ratio).  A rise above $20 sets the stage for the the next rally (over $30).

It prints newlines on every hash rate update when run in lxterminal (linuxcoin).  

Anyone experience the same?  Know why?

EDIT: was told this is because of the width of the terminal window.  There is some extra whitespace after the hash rate text which wraps around to form blank lines if the the terminal window isn't wide enough.

I look at the cost of getting bitcoins by buying relative to mining (see charts in my sig).

There is a specific use, and bitcoin itself is the killer app: the storage and transfer of unseizable funds.  That someone was Satoshi, and his trick for making the funds non-seizable is decentralization.

The network difficulty has been going up, from under 1,000 to 1,500,000, because of demand.  And price has been going up, from under $0.10, because of demand for this killer app: bitcoin in and of itself. 

Bitcoin for buying stuff or using in games (like gambling) is more of a byproduct.

Bitcoin can store and transfer non-seizable funds.  The killer app we were waiting for is already here.

There is a dramatic increase in said economy, reflected by the increase in mining and the increase in exchange volume.

Using the price and difficulty correlation, I speculate we're at the bottom of the deflated bubble now between $10 and $15 (historic low in price over difficulty ratio - see charts in my sig).

Rally or bubble reinflation starts again when price breaks through resistance at $18-$20 a second time, which will attract more mining and speculating.  Price increase will outpace the difficulty (difficulty is a lagging indicator), then price corrects but to a higher bottom, supported by the higher difficulty. 

Lather, rinse, and repeat.

How are you measuring the size of the "actual" economy? 

I think the two important indicators are network difficulty and exchange volume / price, both of which have been growing like wildfire.  "Someone" cashed out over a million bucks today, permitting others to cash in.  It was a down day, but held up quite nicely given the ceaseless cries of doom and gloom.  That it held above $10 is more evidence of the correlation between price and difficulty (charts in my sig), and that network difficulty is a reliable measure of the size of the economy.  I'll have more confidence of this measure if the correlation continues.

If you know how to reliably measure the "real world value" of assets, maybe you should tell Wall Street.  Speculative expectation has been setting the price of things like houses, oil, bread, gold, and stocks ever since civilization moved to from a barter economy to a monetary economy.  Why should the price of bitcoin be any different?

I'm with S3052, support at $10+ or free fall after that.  You'll get $8.25 either this month or next century.

I predict there's enough rational actors to support $10 (whose reason is based on mining difficulty).  I can only hope the rational actors have enough USD.  If so, today's prices will be a retrospective bargain (see charts in my sig).

If its an irrational or overwhelmingly spooked market, it will sink below $10.  In that case adios..  you can have mine for $8.25.

If it recovers by August, it'll be smooth sailing barring another black swan (e.g. a second "goxing").  

I think bitcoin is rational, and will be out of the woods soon.  Bears beware.

As the last chart shows, the price over difficulty ratio is approaching the historic low below 1:1.

Here's what I said shortly after the crash from $30 to $10:


Difficulty has held steadfast, and is now on target for ~1.5 million for the next readjustment.  Price broke the strong support at $15, and is now between $13-$14.  That puts the ratio below 1:1, approaching the historic low reached in April when difficulty was at ~100,000 and price was around $0.75, and had briefly dipped to $0.59, setting an absolute bottom of the ratio to around 0.6.

If bitcoin history repeats itself, we could see a brief price dip to $10.00 while the difficulty estimate is ~1.5 million, which would place the ratio at 10/15 = 0.67.  Then price recovers from the ~$10 low, rising slowly at first and then more quickly, spurring a rally and difficulty increases afterwards.

Otherwise, price could break through $10 and "free fall" (quoting S3052), setting record lows for the ratio.  In that case, all bets are off.

I remain bullish on bitcoin and my bet is still on.  Difficulty is still holding steadfast.  I predict the price has either already bottomed or it will bottom before $10, then recover until faith is restored and another rally ignites.

ASICs/FPGAs are at least an order of magnitude more power efficient (at least 10x more power efficient) than current AMDs.  And AMDs are more power efficient with each generation. 

When the older inefficient chips are replaced by new ones, that will result in more hash power and less power consumption.

The savior came and his name is Satoshi.  The popular use is as an unseizable store of arbitrary value.

I, for one, agree here.


The hash rate will increase, but total power consumption may not.  Chips will get more power efficient, in an exponential manner of Moore's Law.  So no, mining power consumption could stay roughly the same.  But the money spent on chips, and the hash rate, will increase dramatically.

Yet another spin on the "mining will be unprofitable because difficulty will skyrocket and the price is staying at $xx", except this time its not ASICs/FPGAs, subsidized gamers, or other invested miners that are the threat, but botnets.

Botnet operators have many different choices of monetizing the machines they control, from click fraud to credit card fraud to DDoS attacks and spam.  Sometimes they just sell the botnet outright.  You might be able find where they sell them and look at  prices.  If a very large botnet is not hard to achieve then they shouldn't be very expensive (in truth it isn't easy to infect many machines, so large ones are expensive). 

Profits from credit card and banking fraud set the base cost of a botnet.  Do you think monetizing by mining (which will mainly be CPU power not GPU) will be more profitable than credit card and banking fraud?  If anything, botnet operators will probably be looking to capture bank logins to buy bitcoins.

Miners who sell their coins high and buy back in cheap will be the ones making the most profit.  Miners who sell their coins continuously at the going rate will be the ones who regret it.

Yea.  Decentralization does it.  Its not just a buzzword, it means no central authority can seize an account.

E-gold failed because the Feds took it down.  Bitcoin can succeed because the feds can't take it down (or will at least have a much harder time).

Paypal fails for some because paypal freezes their accounts.  Bitcoin can succeed for them because noone can freeze bitcoin accounts.

The crypto pad will have to remain in memory so the bitcoin client can use it to decrypt the wallet.  Again, the trojan can get the wallet from memory after decryption by the bitcoin client or it can get the crypto pad from memory and use it decrypt the wallet itself.

Similar strategies to defeat other two-factor authentication methods.  If there's a malicious piece of software on the OS, you've already lost the war. 

Spend the energy keeping trojans from getting in your base in the first place.

Anyone who's had their paypal account frozen (rightly or wrongly) understands the value of decentralization.