How will it stabilize?
Its quite simple. The price is moved by market orders. If a panic sell event is induced by the "evil forces [TM]" then there is a certain amount of volume created by the panic sellers, only that volume is available to move the market, the panic sellers just don't have any more coins to sell than that. If I am the only shark in the pool surrounded by panic sellers I can estimate where to put my buy limits to get maximumm profit from that events, the lower it would drop, the more profit I can make but it is limited by how much is dumped, i can only make so much money from that one event and not more. If there are other sharks beside me then I have to share my profit with them, they will try to front-run my orders and get their share of profit and I will make less because only a finite amount of coins is dumped and we all try to buy some of them. There will be more buy orers competing with each other, absorbing the falling coins, slowing down the move, catching it earlier. The more buy limits there are competing with each other for dumped coins from the panic sellers the less it will drop. The more people start using the same strategy of catching the falling coin a little bit earlier than all the rest of the sharks the fewer it will be able to drop before it is completely absorbed and the more limit orders exist in the book to profit from huge price moves the more expensive it will become to induce such price moves. I understand the argument, but it is still guesswork at best. You presume you are the shark. It's very similar to people that believe they have a system for the casino. What happens when your strategy of absorbing the falling prices doesn't stop the drop? Will you become a panic seller? Will other sharks try to trick you into that? Maybe you overestimated the top and underestimated the bottom. Fortunately, their is a bottom stop gap with the difficulty factor and its affect on mining cost. But that only limits new coins generated. Besides, I'm not really talking about exchange price here. I'm talking about the running average used by commerce. I don't trust centralized exchanges to report these API prices, nor do I trust their exchange practices. Meh, I guess most people will always believe in invisible hands without a spec of evidence. |
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There is no plan to create any stabilizing factor
The market is the stabilizing factor. You don't need to plan it, it will just happen. After realizing that there is a huge profit opportunity I have written a bot that will exploit it and extract volatility from the market and convert it into profit for me. Others will do the same. Since there is only a finite amount of volatility the more people are extracting and converting it the fewer volatility will remain. How will it stabilize? Where is your evidence about limited volatility, do you mean less than 100%? I understand that you try to guess at the price changes to make money, but so does everyone else. Can you point to a mathematical theory that supports the idea that speculation stabilizes price? |
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I recently read this very insightful article on money vs. bubbles: http://unqualified-reservations.blogspot.ca/2013/04/bitcoin-is-money-bitcoin-is-bubble.htmlThe [Bubble Theory of Money] asserts that money and a bubble are the same thing. Both are anomalously overvalued assets. Both obtain their anomalous value from the fact that many people have bought the asset, without any intention to use it, but only to exchange it for some other asset at a later date. The two can be distinguished only in hindsight. If it popped, it was a bubble. If not, money - so far. I've been talking about this since I called it Pricecoin. Back then I was thinking it would need to be a separate crypto, but now I see it could be a layer like Bitcoin Payment Messages. It's very simple. Include the exchange rate used in every transaction (in local currency) and also sample rates reported by the exchanges. Use this data at the mining supernodes to compile a running average price in terms of several major currencies. That result can be encoded into the current block and read off the blockchain. This would act like pegging the price to a basket of currencies. |
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People tend to believe something that is in writing. If the most current average price of Bitcoin is encoded in the block in a way that is generally regarded as fair, then people would use that price. If exchanges want to trade at a different price, that's fine and will be reflected in the next block. That's the difference between spot price and rolling average which would make Bitcoin more stable on both ends. It is less likely that it will trade with huge price swings if speculators know there is another price mechanism in play besides exchange rates.
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Bitcoin is not a currency it’s a steak. My corner grocer had T-bones on sale last week for $5.99 a pound, this week they’re $10.99 and next week they might be $6.99. You are never going to know the exact price of btc or steak until you check the price today. Welcome to the world of commodity trading; glad you could join us.
I guess that's why we don't barter much anymore. Bitcoin would be more useful as a currency than a commodity. I'm just trying to offer a way to make it so. |
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To peg a currency exchange rate, you must be able to buy when there are lots of seller, means you need to have a huge amount of USD reserve. And you should be able to sell when there are lots of buyer, means you need to have a huge amount of local currency when needed
China have a USD reserve of more than one trillion, and they can produce RMB as wish, that's the basic requirement to keep a currency peg
That would be a sovereign fiat currency peg. Bitcoin is a decentralized currency that replaces the sovereign with math. A decentralized peg can also replace the sovereign with math. |
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Bitcoin will always trade at plus or minus 50% or more and will never stabilize.
Relative to what? Who says bitcoin must forever be priced in USD? Relative to what people generally value. If everything fluctuated in price like Bitcoin we wouldn't have menus, we would just throw handfuls of money in the air and see how much lands on the counter.  |
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It's basic statistics. Use groups of exchanges and groups of transactions. It's simply a math based fiat pegged to the currencies it is traded in.
That could give you a number to which you think it would be good if the price of one bitcoin would be close to. But how do you plan on making the actual price closer to this number? You can't really control the price unless you control the amount, either by creating bitcoins or the other currencies at will, or owning a huge bunch of them. You would not use that price for trading, it would be a useful average price for business using a decentralized algo rather than a separate service. The price could be encoded into the most recent block. Mainly this would have a strong psychological effect on price stability. |
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I've been talking with a friend of mine for over two years about investing in Bitcoin. He is not at all interested. He calls it bubblecoin and has a point. Bitcoin will always trade at plus or minus 50% or more and will never stabilize. There is no plan to create any stabilizing factor. Simply expanding the user base will not stop people from pumping and dumping and causing panics. If this were true, then small countries would generally have unstable currencies and large countries would have stable currencies.
Price is psychological and there are no psychological tools to create faith in the price stability, nor is there even any discussion about it. Psychology, sociology, and economics uses statistics to create useful tools. Bitcoin uses "invisible hands" of the free market. Analysts use statistics to look at the market, but their results are not peer reviewed, nor even publicly available. Market analysts are the soothsayers of economics. We need a useful predictive tool for Bitcoin price that is useful for business.
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Bitcoin price is already set by a Japanese corporation.
It's at the mercy of them, it's not set by them. Bitcoin price should be set by a mathematical algorithm as a layer on the protocol.
 It's basic statistics. Use groups of exchanges and groups of transactions. It's simply a math based fiat pegged to the currencies it is traded in.  |
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Bitcoin price is already set by a Japanese corporation. Look what good that does. Bitcoin price should be set by a mathematical algorithm as a layer on the protocol. In math we trust.
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"beliving"? Heck, why not besinging and bedancing too?  That would be a Belieber. |
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MLM parties are not big money makers. They are social events. Sell a little over spot. Sell materials for and teach how to secure your wallets. Make up for small margins with volume. Talk about what you've learned. Have fun.
It's not true MLM unless higher ups are receiving commissions on the sales of people down-line. I'm not trying to discourage the idea of Bitcoin parties, just be careful about promoting the concept as MLM if it's not because MLM has a pretty shitty reputation in general and you don't want to attach that baggage to yourself without reason. Unless you were selling physical Bitcoins, there really isn't a way to use the MLM model exactly. I guess I like the idea of parties because people get excited and may want to buy things with bitcoins. |
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Dollar Cost Averaging usually works for me. If you want to try to time valleys, then great, but don't count on always being right. I never put all my money in at one time.
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I've thought about starting a wiki of how to run MLM style Bitcoin parties at home. If you have all the educational materials you need, it would be easy to sell them. There are already cash for gold parties like this.
What is being sold that would be an incentive to offer a party? There's no residual income. MLM parties are not big money makers. They are social events. Sell a little over spot. Sell materials for and teach how to secure your wallets. Make up for small margins with volume. Talk about what you've learned. Have fun. |
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My plan is to make $250k a year, save $100k a year, and retire by the time I'm 40.
I can live easily off $50-100k annually in retirement because I'll already own my home and vehicles outright and have no debt.
Where is bitcoin in this picture?
BTC = $0.00
XRP = $0.50
DXY = 85
If dollars hyperinflate, then $100k may not buy much. |
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That was photoshopped for an article for illustrative purposes. It was not intended to represent an actual Bitcoin atm.
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I've thought about starting a wiki of how to run MLM style Bitcoin parties at home. If you have all the educational materials you need, it would be easy to sell them. There are already cash for gold parties like this.
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