I got a chuckle out of that one too, lucky survivors often have a story about why they were "chosen" to survive 

We do disagree. I was deep in the banking business during the period from 1999 to 2009, I got to watch the whole thing unfold like a bad accident in slow motion. It was the madness of crowds feeding itself into a frenzy and can't be laid on just governments, just the Fed, just banks, just borrowers, just politicians, just real estate developers, just house flippers or just any one or two other of the usual whipping boys. It was one of the most interesting pieces of behavioral economics I've ever seen but making sense of it is not something that has taken place yet, for one thing there's way too much denial around the subject still and too many blind men feeling up the elephant and calling out the all the textures they know favorites first.

I do tend to say that at the simplest level, when the criterion for writing a loan or not ceased to be the borrower's ability to repay and instead was the ability of the lender to lay off risk ( so it seemed ) via securitizations, swaps, etc, that's when the train started leaving the tracks.

You said "Gambling is fine if losers lose and winners win. When losers win, shit gets all fucked up." Losing and winning are definitional, how can a loser be a winner? Did I miss something?

Your estimate of the BWP doesn't sound terribly off but I have no clue as to what would be on. If you are correct, there's plenty of headroom for more gambling based on comparative ratios, you want to write some Bitcoinica default swaps with me? Tell ya what, you BDS me and I'll BDS2 you, then you can BDS3 me back, then....

So bitcoin isn't differentiated from fiat currencies in this regard? There's a lot of whining going around about how gambling wrecked the world economy in recent years, e.g. credit default swaps, the total magnitude of which dwarfed *everything* ever before seen. Why would we not expect a similar outcome in the bitcoin microcosm?

Maybe it's time to start writing Bitcoinica default swaps looking forward to the day when no one can get their money out of BC because everyone is trying to do so at the same time? Naw, that's too simple, we would need to write swaps on the swaps, just like the CDS2, CDS3, and so on that were written on mortgage-based CDS. Naw, that didn't work out, but that's ok, someone could make some money at it for doing very little at least until the roof falls in.

What do think the total BWP ( Bitcoin World Product ) is? That is to say, goods and services exchanged for bitcoins?

Other.

There is very little "bitcoin economy" other than its application to transgressive activities like the drug trade, money laundering, and maybe a little tax evasion. You really need to go out of your way to use it for "normal" purposes and it just limits your choices in the marketplace for normal goods, why bother?

OTOH, it's a pretty good online gambling game. The game aspect can cause $2 million in coins to move in a day's time. Take out the drug trade or not, there's no way anything near that much in coins is moving in goods and services on a daily basis.

The notion of a bitcoin economy is rather quaint sharing the room with a 500 pound gorilla riding an elephant, that is, gambling.

Yes, thin ground, excellent! 

This was just a warm up round, I expect to see far worse train wrecks still lying ahead. By way of comparison, since the 9/11 attacks people barely even remember the World Trade Center bombing of 1993. We have yet to see the bitcoin 9/11.

I think talking about greed at all is an attempt to impose some sort of moral or ethical context where one simply doesn't apply because it simply isn't relevant. From a pragmatic point of view, the only mistakes our "greedy" subject made were tipping his hand and perhaps being a bit of a pig in the sense of the old saying, "Bulls win, bears win, and hogs get slaughtered".

Oh, and he relied on Bitcoinica to actually work the way it was presented to work. Whoopsie  

There it is, we have a winner, the #1 bitcoin gambling site on the internet 

 In the poll thread about Bitcoinica changing their margin limits, someone suggested that even higher margin should be offered along with a lowered account limit, IIRC the post suggested 100:1 with a 10 BTC limit, in order to bring in the gamblers. This seemed a valid suggestion to me but apparently isn't how Zhoutong envisions the site's character.

FWIW, IMO Bitcoinica still has a serious negative impact on the market by offering more margin than they can fund at times, as someone else can still take everyone to the cleaners with a small force of bots/meat puppets, but that's a discussion for another thread.

Urban Dictionary, second definition:
http://www.urbandictionary.com/define.php?term=starfished

Yeah, worse yet in this case it's a paying deal, just like getting Zhoutongued all over 

I've had a few tiny buy limit orders at various prices in for over 24 hours now just to monitor things, one of them would have been triggered at least a couple of times were it not for the cold clammy grip of the Sphincter Of Reachable Reserves Impediment, also known as SORRI 

I watch very little television at all, and most of what I watch is non fiction. Fiction I've found entertaining enough to not turn off include "The Sopranos" ( it's just like being with my family again ), "Mad Men", "Six Feet Under", and probably a few others that don't come to mind at the moment. I am fond of some content on Comedy Central, enough that it is a regular stop. The rise of TV via the internet has really helped me focus on not being spoon-fed puerile crap, I got rid of my $150/month "1000 channels and there's still nothing on" cable a couple of years ago and never looked back.

I can't agree more, the show is a real celebration of the principle that to ignore the good and cultivate the mediocre is an American cultural imperative, almost enough to make "reality TV" programming seem to have redeeming qualities. It's another dumbed-down rendition of a formulaic legal procedural "drama", I couldn't bear to watch it without a bit of fast forwarding. The episode's dénouement was breathtakingly dumb, as if the writers finally came to  point where they said "Ok, there's 47 minutes worth of filler between the commercials, let's pull the plug on this flatliner and go drink to forget what we have become." 

It depends on who you mean when you say "caused the spikes". If I bought at 3.50 in December, ran a promotion over a few weeks to draw in new money, then sell to the new money at prices up to 7, I'm good and the "new money" is now part of the zero-sum game. I think in the sense you mean that those "new money" buyers caused the spikes and when they sold to you they took a loss.

There was a lot of bullish talk going around, for example IIRC hyping of "The Good Wife" episode started in this forum in December. The pitch was that this would bring in "new new money", persons who hadn't bought bitcoins previously, and the pitch ( one would hope ) caused persons already predisposed to buy coins to buy more with their dirty, dirty fiat currency that no one would ever want 

BTW, I'm not claiming I had any part in this, I just know the drill and saw a play going down I've seen before.

The other piece of the big swing appears to have been forced liquidations on Bitcoinica. One could make a case that the dreaded asterisks became bullseyes for sellers using relatively little capital. The details don't really matter, the important property of the set up are conditions where a little capital can trigger a big price change as Zhoutong describes.

Not to be Mr. Obvious regarding Mr. Bitcoin, but the video is on the CBS site, accessible from at least the U.S. and probably elsewhere as well.

http://www.cbs.com/shows/the_good_wife/video/

I found the CBS link via Hulu. It also is being offered by at least one major cable TV provider in the U.S. as part of their free videos-on-demand.

LOL! Now THAT'S the kind of hot bull-on-bull comforting we would like to see more of 

Bitcoin is like a penny stock? Oh, say it isn't so! 

All kidding aside, it's good to see at least a couple people involved with bitcoin know the difference. Also, the point about the magnitude of the volatility should not be overlooked. I've seen quite a few comments dismissing the volatility of bitcoin on the basis that other assets exhibit volatility. You don't see this kind of volatility in much other than distressed currencies like the Zimbabwi dollar or out and out money raising scam vehicles like penny stocks. That is to say, right now bitcoin trades like a piece of crap that almost no one should take seriously.

I'm not trying to start another argument on this subject with anyone, as it simply is what it is. Zhoutong's example of how little money it takes to move the price of bitcoin should be self-explanatory.

During the 1990s I made the acquaintance of some professional penny scammers and had a hypothetical discussion about what it might take to do it. The suggestion was to look for vehicles that could be manipulated with an investment of around $500K more or less. So, by that yardstick being able to create a 50% price swing for $200K current is actually a real bargain, such a deal 

Yeah, the next thing you know someone will expect you to be accountable to others, the idea! 

Yeah, that's it, draw a bullseye for us 

I'll have the Satan sandwich with extra spawn, hold the pickle please  

I believe the comma is *not* being used as a decimal point in this context. I could be mistaken. It's a good thing the word "billion" doesn't appear here, otherwise we might have to ask if 10^9 or 10^12 is meant 

I like the proposal as on its face it addresses the limited reserves issue which seems key to me.

However, the use of multiple accounts for coordinated trades would only require a bit of bot work for those so inclined to implement it. There's someone both prepared to do so and chomping at the bit to try it, any other assumption would likely be wrong in a day or two anyway. It could be done with computer-directed meat-based mouse actuators sort of like one of those CAPTCHA-breaking type operations, but going the bot route would be easier to manage and cheaper for what would likely be a "what works today" effort, particularly if it eventually kills the host organism  

The leverage Bitcoinica can handle is its problem to decide. Perhaps you need to cap everyone at 2.5:1 or 5:1 until you can grow the reserves more. I imagine that how that affects your profitability would also be part of striking a balance.

EDIT:
I am "neutral". If Bitcoinica continues to bite off more than it can chew, I would expect it to fail.

All the asterisks recently made me think Bitcoinica might be getting slammed back and forth a bit on limited reserves, perhaps pressuring its ability to hedge as well. Reducing the leverage available would lessen that effect, wouldn't it?

Also, just to hear it from you, was there a connectivity issue involved at some point in the last day or two? If so did that ever result in liquidations or not?

Perhaps your could start a thread with a sticky that addresses all these questions that seem to be around? I imagine you are getting a lot of this right now.