No not really. I've been doing this for 14 years now.



Despite reading your paper, I cannot describe Bitcoin's situation as a "monopoly on mining". All I know is that it is a ruthless competition of high-tech capital intensive ventures, with small profit margins for most except the best, and being the best is not cemented. As is the case in PCB industry in general.


Actually it does, and also in gold era it did. The difference is the relative size of the market.  We don't normally treat fiat currencies as something that we can hold several % of the issuance. If we did, we would command the corresponding power. Just refer to the rumors about China buying or dumping its hoar of U.S. treasuries.


I read it all, I was left wondering why Quark would be an answer to any of the problems (even if we suppose that the problems were identified correctly). All I know about Quark is that it was a hidden 100% premine and the following pump when it was published, just as the supply side had been heavily curtailed, and the resulting slide into oblivion. This has happened so many times that you'll really have to enlighten me concerning what is special about Quark.

I actually believe that it would lead to more general trust on that the coin will retain its value, than the opposite of 100% premine and 0% inflation that is touted as "good and ultimate and the value will only ever go up because there will never be any more token X". Problem is the number of such tokens is growing at least linearly, and typically the developers abandon them as soon as the initial pump is over. Not formally abandon, but practically.

If a coin is used by a community, either as a store of value or transactional medium (typically and naturally both in varying proportions), it will have value based on the economic potential of the community. If the outsiders believe in the community, the coin may gain speculative value among outsiders. This has been the case with Bitcoin at times, but I would not rule it out happening with Monero soon, due to the special quality of its community. (It may have happened with some other coins some times also.)

If a coin is developed for outsiders, with the developer intent of receiving value out of it, instead of augmenting value to it, it will experience the initial pump and then die. Very bad coins may even fail the pump. (Not all pumps that look high are successful. A successful pump means that there is at least one sucker who buys into it, and that cannot be judged from the price or even the volume alone).

The more I think about it, the better I like the idea that emission curve should be linear with a constant block reward.

Technically I said "If truth is that - -", which means that on the condition that A is true, then B.

Typical tautology. I believe A to be true, but it is possible that the history will repeat and in this case XMR rise at the apex of the BTC bubble.

If truth is that Bitcoin's demise with its $8,000,000,000 market cap will boost Monero with its $6,000,000 market cap, and Bitcoin's stellar growth will lead to Monero's exchange rate going down vs. Bitcoin, then Bitcoin's welfare is not in Monero's best interests.

In practice, very few own more XMR than BTC by value. Especially the largest holders of XMR invariably own more BTC. This means that the majority of moneros are in the hands that would rather see Bitcoin flourishing (even if it means that XMR goes down), and therefore the Monero community is supporting Bitcoin.

Monero can be regarded as a hedge to Bitcoin.

XMR exchange rate has stabilized, which means that historical volatility is down, and implied volatility is also down a lot.

Options have become much cheaper as a result!


Especially I'd like to pick the following suggestions for different strategies:

I think MEW is right away lifting XMR significantly, or at least 0.006 by the end of the month
0,00086   0,00060   140930-CALL-0.0040   30.9.2014   CALL   0,00400   0,00473   528 %   240 %   
If price rises to 0.006, you are already well in the black (2.33x). If it rises to 0.008, you win 4.65x. In this case you have more than double the leverage compared to buying XMR directly (4.65x versus 2x), and it is not worthless as long as the price is higher than 0.004.

I think Bitcoin is about to explode, leaving alts in the dust
0,00033   0,00021   141031-PUT-0.0025   31.10.2014   PUT   0,00250   0,00223   1448 %   170 %   
If Bitcoin goes up 10x in 48 days (quite typical of Bitcoin..), but XMR goes up only 2x, it means that XMR/BTC goes to 0.0008 and your option strategy pays back 5.15x. You are also covered against all negative happenings in XMR, which also reduce rate.

I believe that in 3-months, XMR has a 20% possibility of a real moonshot, to about 0.050.
0,00049   0,00032   141130-CALL-0.0150   30.11.2014   CALL   0,01500   0,01540   952 %   240 %   
You get a cool 71x return for the investment if the moonshot happens. After taking the probability into account, it is still 14x. This is a good strategy if you think there is a big chance that XMR falls unless it achieves the moonshot. You only participate in the gains.

I think that XMR gains steadily and is likely anything between 0.004-0.006 in the end of November.
You should buy XMR. This way you help the distribution of the coin, support the price, retain better liquidity, and don't lose out on the time value that is inherent on options.

Since you mentioned several instances, please list the cases/coins, and link the relevant threads, please.

I dare to say that there is no inevitability, especially when the "outside" group is constructed as an open community like MEW is.

Please link where I have said my aim is to gain more BTC? If I read my mind correctly, it has not been my aim since summer-13.

Hedge is something I have talked about. USDXMR in my understanding would immediately gain a lot if something serious happened to Bitcoin, making it a perfect hedge.

I also believe Monero has the chance of taking over Bitcoin.

I keep about 20 times my average daily volume in trading a certain altcoin in a certain exchange. With this proposal, since there is only a 5% guarantee amount, I will only keep 1 times my trading volume. Also this cuts away the intraday volatility so that I won't need to use outlier bids/asks anymore, taking it possibly down to 0.2 times my average volume.

This would mean a 99% reduction on amount lost upon scam/theft/hack/seizure, and in addition the scam/theft/hack/seizure becomes much less likely because there is 99% less to steal, cutting the total risk perhaps by 99.9%. And this is even if the system administered the funds centrally like any 24/7 exchange does! Surely getting rid of the remaining 0.1% is also nice... 

I founded a new thread to present an alternative to the 24/7 exchange, especially for those who:

- are very security conscious
- have a lot of coins and need liquidity
- need currency exchange (such as merchants)
- do a localmonero-style business
- otherwise feel pro.

This thread is for developing a dealer-to-dealer (you may replace "dealer" also with "merchant" or "whale") network for altcoin currency exchange.


Desirable qualities for an exchance service (especially from a professional standpoint):

Important:
- Less initial outlay of funds is better
- The less funds the exchange holds, the better
- The more liquidity, the better
- The less effort needed to execute a large trade, the better
- No single point of failure

Nice to have:
- Ease to join
- Ease of use
- Low fees



Matching engine:

Members post their orderbook as a signed and encrypted message to the matching engine once per day at a set time. The matching engine solves the clearing price, publishes it, and posts to all the members, how much they need to send. The matching engine can act as the decentralized escrow, or directly give the address of the counterparty.


Clearing price:

Every day the engine takes together the members' orderbooks. If the bids and asks in the members' orderbooks overlapped, there forms a one price that clears all bids higher than that, and all asks lower than that. If the price is ambiguous (a range), the clearing price is the midpoint of the highest and lowest such price.

If bids and asks no not overlap, there are no trades. In this case the "clearing price" is the midpoint between highest bid and lowest ask.

There is no need to publicly disclose the orderbooks that the members posted. The clearing price can not be manipulated, because this would lead to some of the orders that should fill, not filling. So if none of the members makes an issue about a non-fill, it can be concluded that everyone has had their fills correctly, and therefore the clearing price must be published correctly also. In this sense it is like a hash.


Fees:

Depending how much organization/setup work is needed, this can work on very low fees. I had a similar system working purely on excelsheet basis in silver since 2008 and it still does in an altered form.

Because installing and learning the system takes some time, and it works best with frequent need to trade, a fixed monthly fee is perhaps in order, regardless of trade activity. This encourages professionals and large traders, whereas keeping the occasional traders away just makes it much easier to maintain and less risky for pros.

The fee could even be waived for those who provide market-making ie. frequently or constantly send large orders that are near each other in both bid and ask side. The matching engine can easily keep track of the market-making "points" on a monthly basis and credit them to the member automatically. I will post this separately because it is a detail.


Guarantees:

The shining advantage of this system is that there is no need to send a multiple of what you are intending to trade, of your money, to a centralized, insecure, often in a questionable legal basis, website, which historically has been a target and victim of scam, fraud, hack and attack by gov.

Yes, there will be a need to send a fraction of it. There is no way around that all offers must be covered, but with a little bit of forethought, the capital requirement can be decreased by a lot.

Let's assume that the matching engine is a decentralized exchange, capable of doing escrow. In this case, all BTC or ALT for the filled trades must be sent in 1 hour following the matching. After the necessary time for confirmations, it will be sent to the new owners. A member only needs to trust the engine for the trades that already happened, as much as he typically needs to trust any escrow, and only for 1 hour. This is way better than having both the ALT and BTC funds at risk day and night in shady online places.

But the engine also needs to trust you. You cannot run away with the money because nothing will be sent to you unless you send first, but you can still default sending if you feel it is expedient. (It should not be, because: you are just trading ALT/BTC at the exact price that was just determined to be the market price. So even if you made a mistake for example entering an ask instead of bid, or something as common and stupid, it can be rectified in the next matching, or in a 24/7 exchange, for typically a 1-2% loss.)

Anyway, for this case you must post a bail to the system, covering you in the event that you do not pay on time, and the counterparty's money needs to be used to source the coins from the market instead. I believe for a mature altcoin 5% should be enough in this case, which means that for a deposit of 1,000 LTC, you could send orders up to 20,000 LTC. Now that is leverage, and reduction of risk.

If the engine does not act as an escrow but rather directly provides you the address of the counterparty, then the bail must be larger to cover for the event that party A sends his goods but party B runs with the money without sending. This can be mitigated by forcing an incremental send, where an increment is maximum the size of the bail. Although the standing bail becomes larger this way, the temporary risk for a member (in the event that you have sent the whole sum to the escrow engine, and the operator runs with the money) is smaller. Which way to proceed depends on many things.

The bail posted by one member can easily serve multiple-duty: if the owner of the bail A says that member C is also guaranteed by the bail, this can be enforced every time that the bail is not directly used by A himself.

The idea is that there is no need to send escrow payments back and forth, or keep coins in limbo (and possibly at risk) to guarantee your possible future trades. One bail payment that is a fraction of your maximum daily trade size, and stays constant until you want to exit the network, is enough.

I almost got a shock thinking that was XMR chart early in the morning...

Provide the link that works with my computer, please.

A guy named Pareto found the 80-20 rule. In many kinds of distributions, 20% of instances account for 80% of mass.

The distribution I generated for test purposes was a bit too fat in the middle. 20% richest hold only 69% of the coins. In the real life 20% richest (the 1.5 billion richest people) hold pretty much all the wealth. Especially considering that some have negative wealth, it may be that the 20% holds more than 100% of the wealth.

In cryptocurrencies, I posit that the actual percentage that the richest 20% owns, is 90-95%.

In practice it's the opposite, however. The small fish (if any) jump in and out, it is not even possible for whales.

The liquidity has become really good during the last days. There was a huge pump with 700 BTC involved 2 days ago, and the price increased by 12%, now 2 days later we are hanging around 3-5% gains.

I acknowledge my stupid words. I bought in the pump over 0.004 and then sold some in the way down, making a loss. This is called bad trading, and it did not make me richer despite the boasting.

But it gave me the opportunity to distill my thoughts concerning price manipulation, which I can copy from the MEW-IW chatboard:

Now I have some word about price rigging. In the richlist it shows that 10 or more people have 1% or more of the coin. So it is quite well distributed (the foremost reason why I am interested in this coin and not anything else). Not only that - perhaps each of the large holders has at least the same value of BTC. And trading is anonymous. In this setting it is called a perfect market, and it is impossible to collude to rig the price. This is the great advantage of Monero, something that even Bitcoin does not have.

Joking about doing price manipulation is fun, but we also know that it is an empty threat really. But the trolls get food from such speaking, and therefore it would be better not to do it. The reality is that just about every other coin has the potential of price rigging, and many of them do it actively. Monero does not have this potential due to its unique distribution. Over time this fact sinks in to more and more people, causing them to also buy moneros, "the unmanipulatable coin".

Also, if someone is in the process of accumulation, he often masks his intention with having the bought coins in asks, trying to cap the price. Similarly a seller would use bid walls to try to keep price higher while he is unloading. I have tried these techniques in a liquid market (Bitstamp BTC/USD) and in a short term (a few hours) and medium trade size (100-200 BTC), they lead to an average 0.45% better execution than not employing them. That is only possible for medium+ traders who have the required funds to put up walls, and only for medium- trade sizes, because large trades affect the market nevertheless and the strategy becomes evident to an observer, if there is simultaneous buy pressure and sell walls. It may be +EV still, though, as I see it being used in Bitstamp often now.

Then there is the "legitimate" use of walls in illiquid markets. Offering a trade at a favorable price near market (lower or even higher) for a large counterparty. Buying at market would lead to slippage.

The depth that is reasonably far from the market to not be fulfilled except in extreme cases is safe to discard from analysis. Every trader would buy XMR at 300 or sell it at 500, it does not matter how many stated intentions there are listed, if you want to know where the price is heading.

Only price and volume are true. And they are verifiably true only regarding your own trades.

Buying low and selling high is still the recipe to profits.

No, this is very normal. If price goes down, there is more interest to buy. Monero holders seem to assume the coin has some intrinsic value. This is of course very good for the coming monero economy.

We should not fight the market. If it wants to go down, there is no one single holder that can prevent it. The MEW group could try to prop up the price but what's the meaning? The group is there to build the economy around monero and not manipulate the price (I don't condemn Warz' heroic effort to defend 400 but fact is it failed - but he got lots of coin at a long term cheap price) I won't take part in concerted price manipulation.

The path of higher lows continues. It's up to the market how low we go. (If we don't go any lower after battling here for a time, and then go up, it is also a bullish sign.) A long-term negative sign would be to break 290 and I don't think that's in the cards..