Many people believe bitcoin's value will go up when the block reward halves. I think the better question should be, why should it go up just because the reward has halved? We saw last year that when difficulty was too high (ie. reward too low) that many miners stopped mining and difficulty readjusted itself. The higher difficulty did nothing to sustain the price, and likewise I postulate that a lower reward (the same as a higher difficulty) doesn't automatically translate to more USD$ per bitcoin.
Bitcoin is just as useful at $1/btc as it is at $10 or $100. It does the same job.
Speculators and investors believe that the value of the coins will go up when the reward is halved due to basic supply and demand. If we assume that demand continues to increase as the Bitcoin economy grows (more merchants, more users), however the rate of increased supply is decreased by 50%, the delta between supply and demand will widen. When demand outpaces supply, value goes up. The difficulty to mine blocks is irrelevant as it is self-regulating and will always average out to one new block roughly every 10 minutes, which keeps the rate of supply steady. What will be changing is the AMOUNT of supply provided at that consistent rate. |
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The number of subscribers should have very little indication on whether the service is of high quality or not.
S3052’s service is great. He (other than when the price went to 1.99) has kept a very level head, providing good analysis on the Bitcoin charts, and markets. I really like the fact that when the Bitcoin market is boring he doesn’t jump at shadows.
I agree: S3052 is very professional in delivery and his product is one of high quality. He definitely does a good job IMO of staying objective, even when the market IS boring. But, boring market = little profits; little profits --> no extra funds to subscribe It's nobody's fault and everybody's fault  Everyone with more than 5,000BTCs should join my new service. For a monthly fee I'll spare you from the boring details of technical analysis and simply tell you to buy or sell. Naturally, I'll do my fiduciary duty and publicly troll in the opposite direction. Also, I only accept payment in USD through Dwolla. |
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Can you try to explain this measurement to me as a laymen ?
its intriguing me..
100% is 100% of the price exactly one year ago. Everything in green represents times when the price was some amount greater than it was exactly one year past. The price is now lower today than it was exactly one year ago, and what this chart will come to show in the coming months is more and more red because in 2011 around this time and onward from here the price shot up and stayed above $10 for a few months. It's very doubtful the price will recover to those levels this year and so we probably won't see this chart back in the green again until November, when the price a year past was in the $2s. |
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Damn it, this sideways movement is driving me crazy. Even bitcoinica fail cannot change this...  This is quite normal... the moment most people give up, the moment the train starts leaving the station. Protip: He just told his subscribers to sell. |
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Don't subscribe anymore. I do sometimes still use S3052s public updates as contrarian indicators.
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Hardware by far! It would pay itself off after 5-7 months (that's including the electric bill) By my Calculations, even at a measly 5% difficulty increase per re-target, the hardware wouldn't have paid off even after a year. And that's assuming you could get $5000 worth of Mini-rig Value hashing power delivered today. From my calcs, you'd only have 821 BTC after a year, whereas you could buy 1000 BTC now and save yourself the electricity/heat/hassle of dealing with the hardware. Will post excel img in a sec Bingo. |
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This is going to be even more fun to watch as the price falls.
it'll be fun to watch as we enter the bubble territory, but the huge downward spike it'll form shouldn't be a bearish indicator, as you seem to be suggesting. in fact, the crossover we see here is simply due to the current stability of the price versus the entirely unhealthy double ramp that started around this time last year. this chart is interesting, but not very speculative. I'm not suggesting that the huge downward spike should be a bearish indicator, there are plenty actual bearish indicators to pick from. |
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are they trying to hide it by making it whole bunch of small transfers?
You got it. this sucks! months of mining and the first time I try bitcoinica my btc get stolen. stupid hackers!! Has it been confirmed that people won't be getting coins back? I thought Z said they'd cover the losses. |
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 Chart by Dree12, Mt. Gox USD Open data from Bitcoin Charts
Magenta: mean value (linear); Y-axis (100%): no change from 365 days ago
Bright yellow: 2012-01-01; Desaturated yellow: beginning of a month
Green/Red: increase/decrease
Bright green/red: record increase/decreaseThis is going to be even more fun to watch as the price falls. |
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With $5000 I'd go short on bitcoinica right now. Oh, wait...
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I want to understand instead the likelihood and impact on Bitcoin of getting a large number of gamers to turn on their GPUs and start mining. What if CoinLab's efforts lead to hundreds of thousands of additional people opting to cash small amounts of BTC out of their system?
Likelihood = Low. Impact = Look at most of 2011. You're welcome. |
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I'm tell you guys, this stuff is going to be the end of bitcoin.
Just as viruses were the end of the internet! I don't know. How many internets were stolen or freely mined and sold at whatever price the perpetrator could fetch at the time? |
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The biggest threat to BTC as I see it is non-GPU miners.
For me, the main attraction of BTC was that I could mine it myself. I could literally "generate" money with my own computer.
And so could anyone else with a half decent computer. Thus it was easy for people to obtain bitcoins, and then spend them.
Once the FPGAs take over, squeezing out the GPU miners, the only effective way to obtain BTCs will be by buying them with cash, which is hard to convince people to do.
EDIT: What I'm getting at is that a huge attraction of bitcoin is the ability for just about anyone who want's to to mine it. Once you have to start paying cash to obtain them, they lose a lot of their convenience.
Um, it's enormously inconvenient and pretty costly compared to buying them outright to acquire any significant amount of bitcoins (more than, say, 10) by mining them these days. You're right that FPGAs are a threat to bitcoin, but not in the way you think. As FPGAs and botnet miners take over the network the price is going to plummet. Why? Because FPGA and botnet miners have much lower operating costs and can tolerate selling for lower prices and they'll essentially compete with each other to sell their bitcoins, creating a race to the bottom. You might be tempted to get all giddy at the prospect of buying "cheap" coins, but the falling price will generate more bad press for bitcoin, thus pushing further away the sorts of people this project needs - regular people. As people will be less inclined to participate in bitcoin, because they see a history of falling prices since it's received most of its public attention, demand will continue to wane even as supply continues to increase; and, as I've said, most of that new supply will be going into the hands of FPGA and botnet miners who can afford to race each other off a cliff. The best thing for bitcion is for these "regular people" to be able to mine bitcoins themselves. The introduction of FPGAs takes the mining power away from "regular people" and puts into into the hands of the few that operate FPGA farms. As for the falling price due to lower power consumed/coin mined, I hope the block split this December alleviates some of that. The time for regular people to mine for themselves is long, long past; and as I just described the block reward halving in December isn't going to rescue bitcoin, if anything it's going to make the problem worse by pushing out all but those with the lowest operating costs - i.e. FPGA/ASIC and botnet miners. If the price keeps falling after that, then the only ones who'll be able to keep the network afloat will be kids using their parents' "free" electricity and botnet miners. |
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The biggest threat to BTC as I see it is non-GPU miners.
For me, the main attraction of BTC was that I could mine it myself. I could literally "generate" money with my own computer.
And so could anyone else with a half decent computer. Thus it was easy for people to obtain bitcoins, and then spend them.
Once the FPGAs take over, squeezing out the GPU miners, the only effective way to obtain BTCs will be by buying them with cash, which is hard to convince people to do.
EDIT: What I'm getting at is that a huge attraction of bitcoin is the ability for just about anyone who want's to to mine it. Once you have to start paying cash to obtain them, they lose a lot of their convenience.
Um, it's enormously inconvenient and pretty costly compared to buying them outright to acquire any significant amount of bitcoins (more than, say, 10) by mining them these days. You're right that FPGAs are a threat to bitcoin, but not in the way you think. As FPGAs and botnet miners take over the network the price is going to plummet. Why? Because FPGA and botnet miners have much lower operating costs and can tolerate selling for lower prices and they'll essentially compete with each other to sell their bitcoins, creating a race to the bottom. You might be tempted to get all giddy at the prospect of buying "cheap" coins, but the falling price will generate more bad press for bitcoin, thus pushing further away the sorts of people this project needs - regular people. As people will be less inclined to participate in bitcoin, because they see a history of falling prices since it's received most of its public attention, demand will continue to wane even as supply continues to increase; and, as I've said, most of that new supply will be going into the hands of FPGA and botnet miners who can afford to race each other off a cliff. Interesting point of view. You don't think that serious investors would buy anyway and that everything would equalize? I mean, the reward halving in December coupled with falling prices would mean that it wouldn't take a whole lot of cash to buy the equivalent of an entire day/week of block rewards. To me, it seems that in most plausible scenarios where a Bitcoin price drop seems likely there exists plausible counter-scenarios to create balance within the economy. No, I don't think that serious investors would buy anyway. Buy anyway? Why would they buy if the the price momentum is downward? The reward halving, IMO, further compounds the problem I've described. Unless the price doubles when the reward halves, lots of miners are going to take a serious hit to their profit margin. This will be especially true for GPU miners, whose operating costs are higher. Botnet and FPGA/ASIC miners will, of course, take the same hit, but as their operating costs are lower, they'll be apt to stay in the game longer; but as I've already described will end up competing with each other to sell their coins to cover their operating costs and attempt to profit. This will drive the price down. That the price will continue down will in all likelihood scare off the newcomers the project needs. The project is significantly more robust and the infrastructure significantly more secure, yet demand hasn't increased over last year. The best explanation for why demand has been so weak is because of all the shit that happened last year, and that apparently continues to happen, and because the price has been in decline for so long. |
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Um, it's enormously inconvenient and pretty costly compared to buying them outright to acquire any significant amount of bitcoins (more than, say, 10) by mining them these days. You're right that FPGAs are a threat to bitcoin, but not in the way you think. As FPGAs and botnet miners take over the network the price is going to plummet. Why? Because FPGA and botnet miners have much lower operating costs and can tolerate selling for lower prices and they'll essentially compete with each other to sell their bitcoins, creating a race to the bottom.
The rise in difficulty from the increased hashing power will reduce the number of bitcoins per gigahash, keeping the price stable. Well, over the past year bitcoin difficulty has risen from increased hasing power and that has reduced the number of bitcoins per gigahash... |
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The biggest threat to BTC as I see it is non-GPU miners.
For me, the main attraction of BTC was that I could mine it myself. I could literally "generate" money with my own computer.
And so could anyone else with a half decent computer. Thus it was easy for people to obtain bitcoins, and then spend them.
Once the FPGAs take over, squeezing out the GPU miners, the only effective way to obtain BTCs will be by buying them with cash, which is hard to convince people to do.
EDIT: What I'm getting at is that a huge attraction of bitcoin is the ability for just about anyone who want's to to mine it. Once you have to start paying cash to obtain them, they lose a lot of their convenience.
Um, it's enormously inconvenient and pretty costly compared to buying them outright to acquire any significant amount of bitcoins (more than, say, 10) by mining them these days. You're right that FPGAs are a threat to bitcoin, but not in the way you think. As FPGAs and botnet miners take over the network the price is going to plummet. Why? Because FPGA and botnet miners have much lower operating costs and can tolerate selling for lower prices and they'll essentially compete with each other to sell their bitcoins, creating a race to the bottom. You might be tempted to get all giddy at the prospect of buying "cheap" coins, but the falling price will generate more bad press for bitcoin, thus pushing further away the sorts of people this project needs - regular people. As people will be less inclined to participate in bitcoin, because they see a history of falling prices since it's received most of its public attention, demand will continue to wane even as supply continues to increase; and, as I've said, most of that new supply will be going into the hands of FPGA and botnet miners who can afford to race each other off a cliff. |
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I'm tell you guys, this stuff is going to be the end of bitcoin.
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This is the bitcoin I've missed for the past couple months.
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