*snort* Funny. But... not entirely true: he must have believed he at least could make the trade I described when he got that bitcoin. So at some point in time, he believed it held some value.

Every time a transaction corresponds to bitcoin coming *into* the exchange, or *leaving* the exchange, sure.

But a huge part of the everyday trading, I'm sure, consists of BTC and USD just trading back and forth. And for those trades, to my knowledge, the exchanges don't creat new transactions -- they just move around the traded bitcoins between their customers in their internal balance sheets, but the actual btc are held in a combination of a 'hot' wallet and 'cold' wallet of the exchange. Others can correct me if I'm wrong about that.


Yes. I wanted to give a range that I feel comfortable is really inclusive of the actual number, so I picked a rather low and a rather high number.

Still, I'm not completely sure if 1 million is really so completely off target. Sourceforge registered ~3.5 M client downloads since the beginning of time.

Sure, quite a few of them are duplicate downloads, and not everyone who downloaded the client actually owns bitcoin. Then again, that inflation of the target would be countered by those who hold btc but use an alternative client, or those who own btc without ever having downloaded a client.

If I had to pick a single number, I would probably say around 500k people hold bitcoin worth more than 1 USD.

I don't think the entire issue of speculation vs. commercial transactions vs. gold-like store of value is quite as black and white as many here seem to paint it.

One, those who, like a mantra, keep repeating: there's no real transaction volume, therefore the price is unsustainable, are ignoring the store of value function as motivation for current price levels. This has been pointed out above of course.

Two, on the other hand, those who fail to see any problem with the lackluster commercial adoption, seem to be ignorant of the fundamental trust problem bitcoin faces, and likely, will continue to face in the near future. Everyone on this forum will gladly trade 1 btc for the current market price, but with near certainty a majority of the world's population sees the value of a bitcoin substantially below that value, if not at zero.

Three, this is were two points above should be combined: commercial transactions are not per se necessary for bitcoin to hold value, but each commercial transaction represents at least two people that agree that bitcoin actually *does* hold the value that mtgox says it does. Which ultimately is necessary for bitcoin to fully unfold its 'store of value' function.

I would add that in comparison to MS, PP is maybe slightly more proactive/less conservative, and would be more likely to jump on the bitcoin train earlier than other competitors would but in essence your comparison is spot on.

It's way too early for a company like PP to, openly!, make such a commitment. They would have very little to gain, and very much to lose. And they still have plenty of time to include bitcoin if they ever want to, when btc transaction volume becomes significant outside the holy trinity of [speculation+silk road+satoshidice].

Very interesting question. Could be useful to try to find an answer, even given the inherent uncertainty in our estimations. Thanks OP.


Does this number include *all* addresses ever created and used for transactions? I guess it does... any address holding any btc must have been used in a transaction, and those must show up at some point, when the transaction is confirmed, right?


Good point. But I find the > 1 btc cutoff a bit too drastic. 0.1 btc is still a lot more than "3-4 satoshi", so I would add at least the next lower group, 0.1-1. So we get around 250k addresses.

* * *

Here's a more general consideration though: there are ways to hold btc and *not* be associated with your own address. Take for example all the speculators/investors on mtgox, bitstamp that never moved their btc around. Their coins are stored for them by the exchange. They are certainly people that own btc, but they're missing from our estimation.

completely based on intuition and half-arsed guessing, I would put the total number of owners between 50,000 and maybe a million. (that's a pretty big range, I know.)

I find it hard to believe it could be much less than 50k, given the total amount of money that entered the exchanges at the height of the bubble, and the total number of (non-bot) trades on a given day. Also, given the media attention, subscribers to r/bitcoin and this forum, I simply don't think it's possibly there are only 10,000 or so owners worldwide.

On the other hand, I don't believe it can be much more than about a million, because of the limitation of how to get btc in the first place -- total number of owners = total number of miners + total number of people that are registered on the big exchanges. I'm discarding all less significant ways to get coins that way, of course.

Any comments on my estimation?

To abuse your own sig:

There's a tendency for every discussion about evidence of btc commerce to turn into a metaphysical investigation of what exactly constitutes "evidence" and "commerce".

Blitz originally asked about "meaningful transaction volume". Fair enough, the Munich situation is hardly evidence for this.  But phelix' point was: "If you have a computer at the counter accepting Bitcoin comes at such a small effort it will always pay off." That's not challenged by the claim that it's only 1 guy paying in btc.

ooooh, looking good... To da MOON!

Maybe. ("Swindon, I'm nearly at the moon. Have you got more ladder?")

I don't think we talk about the same thing. I'm not talking about the fundamental situation, the general buying/selling situation on either of the exchanges.

I'm talking about short-term *tradeable* (by my metric) dips or upswings. Like those that happen all the time. Like the on that just happened two days ago, where (theoretically) you could have sold at 110 and bought back at 101 (on mtg).

Anyway, like I said, not fully crystallized yet in my opinion, but I'm holding my finger on the trigger, so to speak.

We're about to enter a (short-term, at least, but tradeable IMO) trend reversal, downwards, judging by what I look at. Still avoidable though if price picks up, to 104, 105 maybe.

Interestingly, mtg and bit are decoupled to a degree right now, with bit looking slightly more positive. The two exchanges are still strongly linked of course, but I noticed that there's at least some instances in the past 2 months were bit actually lead mtg. Not the norm though, usually still the other way round.

Two things: (1) I missed the part where Goomboo switched from 1h to 1d. Big difference already Glad Goomboo cleared that up for me. (2) If you read my post, you will notice I wasn't strictly speaking about total profitability alone, but *total number of trades* and *share* of profitable trades. The latter two are important mainly for psychological reasons, for me. Thats the point I was trying to make.

First time I'm posting in this thread, but I've been checking it for a while. I appreciate what you do here a lot -- first, rigorously introducing the EMA20+10 average crossover method, which is a staple technique, secondly, maybe even more important to me, stressing how much testing, questioning your own methods, and discipline in executing your method matters. Thanks for all of this.

Hope you don't mind that the following will be somewhat critical of the method you mention throughout this thread, the EMA20+10 crossover method. Here's the short version of my problem with it: it gives too many false positives. And, applied to a useful time interval (1h), it is awkward to use manually.

Here's the longer version  ... just happened again these days. Using 1h as the time interval, the EMA method interpreted the recent dip as a trend to trade on. Selling crossover was at pretty much exactly 106, buying back at 106. Including slippage and fees, that's a (small) loss, almost certainly. This happens quite a lot with this method, in my opinion.

Here's the second complaint: using the method on 1h time interval,  because of the high sensitivity of the method, you either have to constantly watch the price or be able to trade, or you only check it, say, once a day, but then you're lagging behind.

In conclusion, I started my btc trading journey learning about the EMA20+10 crossover method, but I've given up on it pretty soon afterwards. Maybe it's just my personal preference, but while I still work with moving averages, I prefer slower moving, less sensitive parameters. They net less of a profit than the EMA20+10 method at it's best (i.e. I sell and buy a bit too late, compared to the faster EMA), but my share of profitable trades is higher, I believe, and my total number of trades is lower, which stresses me out less.

So did you ever regress over the data starting from a different assumption, say, assuming two (or three) independent (exponential) functions generated the data, and search for the optimal splitting point of the data, then compare the total error. (I'm lazy, I know. Why ask others to do the work that you could do yourself. My apologies.)

actually, that's exactly my point. That's the often heard objection "price growth can't be exponential, because such growth becomes unsustainable quickly". Which is absolutely true. But only if the rate of growth is constant.

Say we have a function characterized by:

"Beginning with a monthly growth rate of 20%, this value continuously decreases s.t. it is halved every 12 months"

(which would be a sigmoid function of some sort, I guess)

Simple linear regression performed on data plotted on a log chart, i.e. what solex did, is not able to model such a function. to my knowledge at least, someone please correct me if I'm wrong.

I'm not saying that this is the most likely candidate for the btc price function, but it's an example of what is outside the realm of linear regression.

Yes and no. Actually, a single exponential growth function could be used to paint a pretty little picture of btc/USD development until now. Or Apple's stock. Or bacterial growth. However, that doesn't mean that in each of those cases only one function actually is behind that data -- in fact, it is extremely unlikely, given my argument (identical parameters, or perfect predictability of them) above.

In the end it's all about precision. If you want to predict whether, all things going mostly alright, btc/USD will be up a lot from where we are now within 3 years, then yes, the single function model is most likely good enough. If we want to decide whether we're in a weekly slump of a mid-term trend reversal of a mid-to-long-term bear market, then maybe the same simplification is a bit too much.

I'm using different methods and indicators, and I don't place much emphasis on support levels, but my overall interpretation is probably quite similar: since early July we are in phase that could potentially reverse the overall downtrend since the April peak.

I'm a bit more cautious than you, perhaps. We've had such potential reversals before, and they didn't last in the end, but for now, I would see the price staying above 100, or even slightly below, as a relatively strong signal that the early July trend persists, that could take us out of the larger downtrend.

If you allow, one more comment, the same one I made to [statistical modeling guy whose name I still can't remember but who has a carricature of Darwin as an avatar]: I don't object at all to regression analysis, and even extrapolating from it, but I am a bit suspicious of the underlying assumption of this particular analysis...

(aside: got into a huge discussion with the guy about whether it's an "assumption" or not. dude don't know his axioms.)

... the assumption that there is *one* underlying function generating the data. I find it hard to believe that traders' sentiment, btc fundamentals, number of market participants, bitcoin protocol related hard facts, etc. would all be identical, or in theory at least perfectly predictable, over the years, which in principle would have to be the case for the same growth function to generate the data in 2011 and in 2013.

I know, it's all simplifying assumptions. I'm not really objecting to using your method to predict the price. My own methods are in fact less sophisticated. I just like to soapbox a bit about my pet belief that a number of functions (perhaps only slightly) greater than 1 governs the btc price.

"the bear market" is such a sweeping statement, it is almost useless. almost.

ever since the bubble popped, the downward momentum was substantially greater than the upward momentum, if looked at from a sufficiently removed perspective. But I will also say that this pretty much changed since early to mid-July, when the current trend that brought us to 110 began. Again, from a sufficiently removed perspective, it looks different to me than the previous post-bubble periods.

So maybe it's a bear market after all. But one that we could break out of around this time. Or not. we'll see, I guess.

I'll say that much: if we fall below 100 in the next couple of days and stay there, somewhere a bit closer to 90 than 100, I agree with you. The bear is still going strong. If we stabilize around where we are now, I'd say it's pretty much an open question again.

@prof7bit

I guess you're asking Traktion, since he suggested the pattern, but even though I didn't agree with him, your "find in less than 2 minutes" criterion is a bit unfair. Depending on how well trained you are, it could take you 30 seconds or 20 minutes to find a pattern, irrespective of whether it is really there or not.

When Traktion first posted, he also had a 15 min view. I'm not experienced in determining candlestick patterns, but I *could* see how (on the 15 min view) a left shoulder and a head had materialized, and a right shoulder was possibly forming.

I mainly disagreed because of the volume acting atypical.

I see. Another TA denier :P

Didn't you just post some while ago that the whole mtgox situation is blown out of proportion, and that you had no trouble getting your (rather large) withdrawals through in a reasonable amount of time? Maybe I'm confusing things.

EDIT: apologie to lucif if this is turning into too much off-topicness for this (excellent, btw) thread.