By way of redistributing wealth, and funding the State, I would not be surprised, and increasingly suspect that bitcoin holdings will eventually be considered property subject to tax, in the same way that land is taxed in the USA. In democracies, new sorts of taxes have been in the past introduced at very modest rates and limited to apply to a minority of taxpayers so as to be politically acceptable to the majority.

The most palatable form of a bitcoin holdings tax would be one in which the rate of taxation is substantially less than the rate of deflation. For example, if I would not leave the USA and hide my family if the tax rate was 0.1% of holdings annually, given my expectation of 1000% price growth on average annually for the next few years.

The blockchain is public and I believe facilitates the collection of taxes in jurisdictions such as the USA in which tax compliance by citizens is voluntary.

Note that I am for fair taxation, as tax jurisdictions serve the common good. I am not for the confiscation of bitcoin by governments - simply because early adopters may eventually be sudden new $ billionaires and perhaps in a few cases $ trillionaires.

Please support the two-way peg that enables sidechains.

There is a first mover advantage for you to do this - and I have also beseeched Vertcoin to do the same.

+1

And this is the simple reason for the continued skepticism voiced by traditional investors, such are seen in the forums associated with financial websites.

They have never, ever, not in 4 thousand years, seen the investment potential that is unfolding in front of us.

Yes, that is it - to the extent that technical analysis is a theory. Not a certainty of course, but often observed when the price movement has great momentum. Furthermore, it could simply move sideways to break through, but for those of us biased to expect a new bubble this summer, then a pop upwards would reinforce our confidence.

A phrase made popular by the US president John F. Kennedy applies . . .

A rising tide lifts all boats.

It is conventional wisdom in this forum that prudent bitcoin spending is for necessities. Things you must have. For example, I spend a lot at Amazon for books, nutritional supplements, household expendables and such. Until such time as Jeff Bezos "gets Bitcoin", I buy Amazon gift cards at Gyft. I am also on the lookout for discounted gift cards, purchased in bitcoin from various sellers.

I attempt to conduct at least one bitcoin transaction daily. Here in Austin that is getting easier. There are over 60 bitcoin-accepting vendors within an easy drive, listed on Coinmap.org. Many serve food and everyone must eat.

Using money to make more money?

This is a left over notion from the credit based economy in which the presence of inflation biases every aspect of our economic decision making. With fiat, one must use money because it will certainly be worth less in the future. Notably, you can lend it out and gain both principal and interest back. One could buy an income producing asset and realize a stream of income that will likely sum to more than the original cost.

In the Bitcoin Economy, these biases are the opposite of what one should do. Deflation is weird and we must wrap our minds around what it means. For starters, lending and credit do not work in the Bitcoin Economy. The rate of deflation for the near future is greater than the investment return that one could gain. This is obvious when examining the repeated failure of bitcoin-denominated securities.

Forget about the idea of you making money. In the Bitcoin economy, only mining pools make money. Rather, you earn money. Your currency increases in value simply by holding on to it.

Bitcoin is for saving and prudent spending upon necessities. This guideline applies to enterprises as well as individuals.  Let me recast a common economic activity in Bitcoin terms to illustrate the point.

Bitcoin Household Mortgages - Not.

There are no mortgages nor long term lending in the Bitcoin Economy. Not now, probably not ever. Buy now and pay later has never really been a good idea. In the economy we are working towards, a substantial asset, whether a necessity or income-producing, is purchased on installments. You get the title for your home in exchange for a good faith promise to make periodic payments for a contracted duration of time. The amount of the payments decreases with the deflation rate, or is otherwise linked with your ability to pay. If you miss your payments, the property or collateral reverts to the seller, less the adjusted equity you have paid in.

No debt, no banks, no problems.

Edging ever closer to the November 2013 bubble collapse resistance trend line. The drama continues as illustrated on the 1-hour resolution Bitstamp chart. China leads the way, with no-fee trading on Huobi yielding 8x more volume upwards . . .

The price history of bitcoin shows 10x growth per year on average, which is supported by 3.2x average growth in both bitcoin addresses and adjusted number of bitcoin transactions - according to Metcalfe's Law. My own logistic model of bitcoin prices says that this growth rate will continue on average, actually very slightly diminishing, until we reach the midpoint of adoption. We could already be past that point but the preponderance of evidence in my opinion, is that the Bitcoin Economy is far from reaching that point.

After the mid point of adoption average price growth rates will rapidly diminish, reaching the levels you mention or lower.

I had the same notion from a different viewpoint.

There is an obvious disruptive market for bitcoin transactions whose purpose is international remittances. Here in Central Texas, there are many non-bank facilities for sending payments to Mexico. I am awaiting the development of local Mexican bitcoin economies that will form a virtuous circle of adoption. Supposing that bitcoin remittance payment recipients can simply spend bitcoin locally, there is no need for an exchange on either end.

No banks, no exchanges, no problems.

On this one-hour resolution Bitstamp chart, the upper resistance line originates at the November peak and has constrained all prior moves upwards during the bubble collapse. Assuming the bottom of the collapse is behind us, drama is building as the rally of the past 24 hours again approaches the resistance trendline.

Will it bounce back down, or bust through upwards? I will be peeking at the price indicator on my bedside phone this evening in the USA. A price above $530 would be very significant from a technical point of view.

The lower, short term resistance trendline I drew was pierced to get this part of the rally moving.

I too, have given thought to the duration of bubble cycles. Rpietila explained the bitcoin adoption phenomena in a prior post, which I agree with . . .

https://bitcointalk.org/index.php?topic=400235.msg6219380#msg6219380

I would add that traders and the not-yet-adopted public know about bubbles, and have come to expect them. We wait for the collapse to complete, for prices to begin rising again and then momentum builds the bubble mania. The duration between recent bubbles I think has to do with the flow of information and the resulting change of sentiment from bearish to bullish. Some number of months is required for new speculators to observe that Bitcoin has not yet failed, that transaction growth creates organic demand for coin, and the news stories reverse sentiment.

I, for one, think that Bitcoin is the greatest financial thing to grace my life.

I only rent 72 hour terms and usually at a price that assures immediate rental. All three of my rigs have more than  1000 hours rented. After an hour un-rented, I accept the highest offer for 72 hours.

I believe GPU mining is a shared business between myself and my renters. They do all the work of finding coins to mine and taking the risk of holding or exchanging altcoins. My rigs are stable and work fine if I do not touch them. I operate headless Ubuntu Linux, with cgmon software to restart cgminer or the rig in the rare case of a sick GPU. I do not use LRP nor any other advanced feature of LeaseRig, because stability for my customer is the most important aspect of what I do.

I never hear from my customers and have in those rare cases of an outage, cheefully doubled the lost time on the lease.

I would not use a pool directly even if I could make more coins because I am paid in advance by LeaseRig in bitcoin. With a pool there is some uncertainty as to results and payment.

I am your competition - and the customers' friend.

Here is the same rally as viewed from Huobi, where zero-fee trading yields much more volume and liquidity. The smooth, monotonically ascending rally on this 3-minute chart, is evidence I think of a whale sized buy order being executed by a bot or manually in portions while waiting for asks to fill in. The large total order gets filled with less slippage given the timely arrival of new sellers.

If a single large order did propel this impulse, then prices should begin a damped oscillation centered about 484 on Bitstamp. Alternatively, momentum traders could jump on board this short term rally.

The upper resistance line goes all the way back to the November peak and that is the one with drama. The lower resistance line which has already been pierced, only goes back to April 16.

The upper resistance line goes all the way back to the November peak and that is the one with drama. The lower resistance line which has already been pierced, only goes back to April 16.

That is what I meant. My wife is so frugal that she hates to see those plastic cups thrown in the trash, which is an obvious waste because Austin does not make commercial recycling as easy as they do for households.

I could go on and on ...

There is long term drought in Central Texas, so I take a shower with a pail between my legs to catch water that she puts on our plants. She saves, washes and reuses those plastic forks and plates routinely thrown away where still works. And she does not really need to work anymore - but does not want to waste her time.

Yep, on and on. I love her.


That behavior will come in handy in a few years I think.

I believe that GPU miners will migrate to Scrypt-N when other brands of scrypt-ASICs enter market this year making scrypt-mining forever unprofitable for GPU miners. Gridseed could lower their prices but their hashrates are not fast enough to dramatically raise difficulty.

Glad to share, even if you are merely an observer. Others reading this may consider what I say from a different viewpoint than yours. You must admit that algorithmic trading which utterly dominates large markets in almost every security is codified realtime technical analysis.

The goal of my bitcoin TA is to manually and infrequently perform trades that enable me to gain more coin, not to increase my amount of fiat. A second goal is to understand the phase of the market and thus avoid making poor decisions based upon panic or mania.

My most important bitcoin TA is calling the peak of a bubble. Using only historical price action I predict that a very good time to sell will be when the price appears to be doubling in approximately a week,i.e. the culmination of a super-exponential growth phase. There is academic research on the study of various bubbles to support this tactic. The peak is a good time to sell or spend bitcoin, either to take profit or to buy back later to increase the number of held coins.

My second most important bitcoin TA determines a good place to buy, e.g. additional accumulation, or a buy-back from a previous sale, or otherwise a good time to postpone spending coin. Using data from the last two bubbles I predict a good time to buy is right now because the Log10 price deviation from the Logistic Model Log10 price trendline is -0.344, which is less than -0.3 limit that was a good point in the collapse of the June 2011 and April 2013 bubbles.

The long term price trend, as measured by my model, is currently at $1057 and rising at more than $7 daily. This is a great comfort to me knowing that there should be a strong bias to return to the trend, and that affects my short term technical analysis described next.

The most common technical pattern that I recognize in the historical price series is what I call a shock, conceptualized as a dampened oscillation. A positive or negative impulse exhausts the ask order book or bid order book respectively, to a certain depth depending upon the strength, i.e. volume of the move. The impulse is caused by what market microstructure theory dubs an informed trader, i.e. someone with a reason to trade. The other traders, dubbed uniformed traders, react to the impulse but lack the reason, and move price action back towards a central point. The oscillation is caused by market making activity in which mostly uninformed traders try to profit from each other based on differing notion of where the volume-weighed center is and whether it is likely that other informed traders will enter the market. According to the Wisdom of Crowds principle, the oscillations dampen in time. This sort of pattern is a fractal, meaning that it can occur over almost any time duration. Traditional chartists have named these patterns triangles, wedges and flags.

I do not trade bitcoin on the short or medium term. Commissions at USD exchanges tilt the odds greatly in favor of the exchange. Market makers, employing algorithmic bots do much better when trading fees are zero - hence the tremendous volume on the many fiercely competitive Chinese exchanges having no trading fees.

With only a mild degree of confidence, I predict the next bubble to peak this July-August at about $6000 and for prices to collapse in the fall to about $3000. When the next all time high occurs, I believe that I can improve this prediction with more confidence - using the date of the ATH alone as input.

Here is my prediction for the next few weeks. We are at a dramatic situation from a technical point of view. The declining resistance line touches or nearly touches  the tops of a number of price waves in the dampened oscillation resulting from shock collapse from the bubble peak in November. I will use a long duration chart with one-week candles to illustrate the point . . .



When I look at the above chart, I conceptualize the price as having bounced away from the drawn resistance line. There are of course assorted external or fundamental causes for each of the price moves, but TA abstracts all that away with the presumption that the price and volume indirectly incorporate that knowledge via the trading behavior of the participants who perceived that information and took action.

The drama is occurring because most of the technical chartists, and I too, believe that the bubble collapse bottom occurred on April 10 at $339. And therefore the drawn line of resistance must be broken through on the trajectory to the next much higher bubble peak. The price could bust through in a strong impulse, or could continue sideways in what chartists call a channel. Here is a close up of the drama, using a 12-hour candlestick resolution . . .



The upper drawn resistance line is the same as from the first chart. I have drawn a low-confidence support line to show how the price future path is constrained to bounce back and forth in a dampened oscillation centered at $424. I say low-confidence because the central tendency could very well be some other price points where trading occurred over a period long enough to convince traders that the particular price was fair considering what they knew of the situation.

It is important in my analysis to presume that the bottom is behind us. Because it matters less which particular lilne of support is drawn - any of them that I would draw force a convergence in the month of May. Which comes to my short term price predictions . . .

1. Presuming the bottom is behind us. the price will never again go below $339.79

2. By the end of May the price will be higher than the drawn resistance line, namely above $424.

3. In the month before the new bubble begins, prices will rise on average $7 per day.