Well first of all, it doesn't always predict the price to rise. It predicts for the price to fall as well, though it would make sense if it predicted for the price to rise more than fall since that is what it has done more of throughout history.

Second, yeah the 20 day graph isn't very reliable. That's why I have the note there, and I also specify this in the about page. The 20 day chart only exists because it is interesting to see and a lot of people asked for it.

There is no confidence interval for where the price will fall in relation to the average error. The average error means that on average, predictions are off by that amount. If you have the neural network make predictions at every point in bitstamp's history and average how far off it was, you will get those numbers that I have put above the graphs. It probably comes more down to something like 90% of the time the price is in that interval, and 10% of the time it is a relatively significant amount off.

This tool isn't something you want to use exclusively and just blindly follow. However, I do think it is useful if you combine it with looking at the news and using your own judgement.

Well this is not looking particularly promising at the moment lol

Bitcoin may not be the best, and it's only advantage may be that it was first, but in reality that is a HUGE, HUUUUGGEEE advantage. Probably the biggest advantage you can have. To be more clear, it's actually not the fact that it came first that gives it an advantage, but rather the fact that it currently is the most popular by far (because it gained popularity before others did). This is why Facebook is so much more popular than Google+. It is why YouTube is more popular than Vimeo. The thing that becomes more popular first tends to stay the most popular by far. These trends can even be (and often are) mathematically modeled using graphs of social networks.

Consider a graph with nodes and edges, where each node represents a cryptocurrency user and each edge represents a transaction between two users. Connected nodes want to be using the same cryptocurrency, otherwise they can't trade with each other. Each node has a rule that it will adopt the cryptocurrency that is used by more than a certain percent (let's say 50%) of its connected nodes. You can see how if the majority of the nodes use bitcoin, the phenomenon will spread and almost everybody will use it. In order to change that and have everybody use, say Litecoin, you need to have enough people adopt Litecoin such that the majority of every node's neighboring nodes adopted litecoin. It is difficult to explain this without drawing it, but hopefully you get my main point: inertia is powerful, and bitcoin still has a TON of it.

Haha yeah you really seem insistent on that upgrade lol. I do plan on doing that in addition to some other ways of possibly restructuring the way predictions are made in an attempt to increase accuracy. Right now I just got back to school from spring break though and I have a ton of work -_- haven't been able to do a lot with the predictions yet. I'll probably get started on this stuff around Wednesday next week... I should have much more free time by then.

Yeah I know, I'm curious to see if it shoots back up again. I think that it will, but it's hard to be sure. Like I wrote on the about page, it can have trouble when real-life events significantly affect bitcoin prices (like the China news in this case). So we'll see how well it does.

My neural network prediction project (http://www.btcpredictions.com/) is predicting a pretty decent sized climb over the next 24 hours, and I'm inclined to believe that it will be correct about this.

Thanks! The source code is proprietary for now, but you can access the prediction data at the following URLs:

24 hour: www.btcpredictions.com/STData.txt
5 day: www.btcpredictions.com/LTData.txt
20 day: www.btcpredictions.com/SLTData.txt

The first line of each of these files is a question mark followed by the unix time stamp of when the prediction was made. The second line is an exclamation point followed by the average error for the neural network that made those predictions. Every other line is the letter k followed by a price.

You are welcome to use any/all of this data but if you display it publicly please cite the source

Actually almost all of the downward movement since the peak around late november/early december has been a result of news. When there is no bad news the price almost always tends to go upward. I would say that we are in a prolonged upward trend that is being frequently disrupted by harmful news like the China ban.

It probably will go up again soon. This seems like it is definitely a result of the China news though.

http://www.bloomberg.com/news/2014-03-27/pboc-orders-banks-to-shut-bitcoin-exchange-accounts-caixin-says.html

I've been working on software that uses neural networks to predict bitcoin prices. It has been making reasonably accurate predictions. You can see them on this website:

http://www.btcpredictions.com

The 24 hour and 5 day predictions are often pretty good, and the 20 day prediction is a bit less accurate but still interesting to see. The predictions are certainly far from perfect but I think they still provide valuable information. By considering this forecast in addition to recent news stories (and your own, presumably intelligent, judgement), I think there is some solid potential to make money trading.

hmm maybe... it looks like the price is dipping down a bit. I think that the IRS taxing bitcoin is beneficial in the long run though. Bitcoin has to be taxed somehow for it to be viable as a currency, plus taxing it is a form of recognition and this gives it some more legitimacy.

I think if I had to put all my money in one of them for 10 years it would be gold. There is basically zero risk putting it into gold since gold has intrinsic value and always will. Bitcoin has no intrinsic value and could become worth gazillions in 10 years or it could be worth 0 (I'm willing to bet it will be one of those two). I am not adventurous enough to take that risk lol...

I think being 100% paid in bitcoin is a really bad idea at the moment... we're really not there yet. I love bitcoin and I'm a huge supporter but that would just be way too risky. Bitcoin is still far too volatile to merit investing everything into it. Plus you can't spend them on all the things you need yet, so you'll have to convert a significant amount back to USD (or whatever currency your country uses) anyway. I would consider being partially paid in bitcoin but I would do no more than like 20% to be honest.

If a company "goes bust" it still had intrinsic value before which is what caused it to go up in value in the first place. People invested in the company because they thought it would be successful and provide some valuable product/service to the world, and therefore rise in value. They are investing in ownership of the provider of this product/service. When you invest in bitcoin, you're investing in something that does not have intrinsic value and only holds value because people TRUST that it does. Once again, this is different from investing in a company because people make these investments because the actual product or service the company provides is intrinsically valuable.

The only intrinsic value of a tulip is that it's pretty (at least as far as I know). And to say something has intrinsic value because it is useful as a currency really does not make sense. Anything can be used as a currency - honestly gold probably holds the most intrinsic value of anything in that regard.

I mean, bitcoin objectively has zero intrinsic value =/ neither does a dollar bill really. Just so we're on the same page as far as what intrinsic value means, the intrinsic value of a dollar bill doesn't go much beyond its use to snort cocaine or write on. Compare a hundred dollar bill to a hammer - the hammer honestly has much more intrinsic value despite the fact that it is not worth $100. Intrinsic value means the value of the thing in itself, and not the value that you can obtain from it by trading. If someone had all the bitcoins in the world but nobody was willing to accept any of them or give any money for any of them, they would be worthless because they have no intrinsic value.

And it is true that the value of bitcoin comes from trust only... it is not backed by the government and it has no intrinsic value - we trust each other to attribute value to it. I personally don't see this as a problem, but it's still true. It's value as a currency is easily replicable, as we can see with all of the alternative cryptocurrencies.


I don't understand what point you are trying to make. If the company goes bust then you lose money, but it's still different from the tulip craze because the company has (or had) intrinsic value. It didn't become valuable because people trusted that it would, as was the case with tulips and as is the case with bitcoin. It became valuable (presumably) because it produced a desirable product.

But it's not just that it's rising quickly - it's also that it doesn't have intrinsic value, like tulips. A share of a company that rises quickly in value has intrinsic value in that it means you own a portion of the company. Bitcoin's value comes only from the trust that we share - the trust that if someone gives you bitcoins for a real product, you can spend them elsewhere to get other real products.

I completely agree. I would use these predictions as a guideline but I definitely wouldn't follow them strictly 100% of the time. You definitely have to read up on the latest news and factor that into your decision as well. I believe that combining the neural network predictions with your own (presumably reasonable and somewhat intelligent) judgement could earn you a lot of money.

That's not really the same logic. Facebook and Twitter are companies not currencies. Also they both have intrinsic value, which is probably the biggest difference.

I think the idea of the comparison is that it is behaving the way tulips did when they were skyrocketing in value, and therefore it isn't illogical to predict that they might crash like tulips did. I don't think this will be the case but I can see how people would make the comparison. It doesn't have to have already crashed for the analogy to work.

This is a pretty awesome idea! I think the ponzi scheme myth is a good one. I feel like when people say bitcoin is a ponzi scheme it just shows that they really don't know what bitcoin is and they also don't know what a ponzi scheme is lol... and too many people hold this irrational belief.