Yeah, that book fits me and my wife like a stereotype except that we are better educated than most no-competition small business owners that the book discusses. I laughed out loud when I read the part that those sorts of people have very frugal wives - coupon clippers, buys used cars, reads every receipt, argues every bad bill, questions the husband's every purchase, etc.

At a minimum, being anonymous is good, e.g. hiding in plain sight. I am years away from the problem anyway.

Ah yes, but my wife and I share a frugal lifestyle that belies what we can already afford. A lifetime of virtuous, unrelenting frugality does not prepare one for the sort of upheaval I foresee coming for me.

Supposing that we are three years away from the half way point of adoption, then there will be over ten thousand new bitcoin millionaires and tens of bitcoin billionaires - rpietila notably among them. Part of the mind-bending part of getting bitcoin, as in understanding it, is realizing how many folks around the world will have sudden wealth, and ten times more each year until . . .

http://www.complex.com/pop-culture/2009/07/curse-of-the-lotto-how-the-millions-can-ruin-lives

The gravest danger from sudden wealth, e.g. 1000x your current net worth, is how unprepared one could be with regard to the safety of the household and loved ones. We take for granted the enormous amount of security provided by simple anonymity when living in a developed country with an average amount of cash.

Here in Austin however, we have a world famous billionaire Michael Dell. From a distance I have seen a couple of his estates which are patrolled by private, armed guards. There is no way that Mr. Dell or his family could enjoy the sights and street life like I can. So much of what I enjoy about life would be interrupted if everyone stared at me in public, or my bodyguards, or my armored car.

What of all the beggars and solicitors that would seek my attention?

I need great wealth to fund greater goals and am old enough that the majority of my happy ordinary life is behind me. If I must move away from my less-than-secure but lovely and loving neighborhood to a compound, so be it, and live with guards, so be it. But I know that my dear wife will never be as happy and will blame me for the rest of my life when she fully realizes what I have done by simply holding on to bitcoin.

. . . To The Grave

This is why this classic thread is classic. Some folks eventually read all the posts from start to end. I did.

I believe this particular meme is better posted during the mania phase of a bubble, in which prices typically double in a week.

Ha. Our log trend models predict an average price of $100k per bitcoin in about 18 months. What difference does 12 months make when it comes to ruining people's lives?

Agreed that sidechain-enabling merged mining is a key development. I anticipate that Vertcoin could have it before the slow moving and cautious Bitcoin Core developers get convinced to implement it.

Sidechains add value to the main blockchain as coins must be purchased from the main chain in order to support the economic activities that justify the side chain. Vertcoin should encourage as many sidechains as possible, as they can individually fail without directly affecting the main chain. Furthermore Vertcoin pool operators must be somehow motivated to perform merged mining of each sidechain. This would most likely be done by sufficient Vertcoin transaction fees or direct payments to pools from sidechain owners. This new income would then flow down to miners from the participating Vertcoin pools.

There is a big first mover advantage to enabling sidechains - I think.

It depends on the degree of accuracy.

In contrast to your point of view, I have intensely studied bitcoin bubbles, personally experienced watching all of them in real time, developed a trading heuristic, and located academic research to support my tactic. Only when a significant proportion of speculators adopt this tactic will bubbles cease to characterize bitcoin prices.

Bubble peaks in general and bitcoin bubble peaks in particular have the property of super-exponential price acceleration up to the peak. On a linear price chart this feature is lost in the general parabolic appearance of the price line. But on a log chart, super-exponential growth is obvious because it curves upwards.

When the bubble starts, I keep track of how long it takes for prices to double. It is astounding what a brief time that can be. In the great June 2011 bubble, prices doubled from 15 to 32 in five days. In April 2013, prices doubled from 130 to 260 in seven days. And in November 2013, prices doubled from 400 to 800 in six days.

My peak timing heuristic is this . . . When the price looks to double within the following week, then that is a good time to place a spread of sell orders centered on twice the current price. The price doubling times get shorter as the peak approaches. From the preceding low there have been typically three or more price doublings to the peak.

The academic research on bubbles notes that the super-exponential price growth is self-reinforcing yet unsustainable, and that is why my heuristic works.

If enough speculators make this sort of trade, then the bubble peak will be lower and the subsequent bottom will likewise be higher than it otherwise would be as previously sold bitcoin is bought back.

Peter_R has discovered evidence that Metcalfe's Law applies to Bitcoin - which I comment about here . . .

Metcalfe's Law Explains 10x Price Growth Vs. 3.2x Transaction Quantity Growth

In contrast to mass conventional wisdom, I believe that owning a single bitcoin will rapidly become impossible for the average person in a developed country. Prices have been increasing on average 10x per year, and according to a logistic model of bitcoin adoption that I maintain, that astounding rate of increase will continue year by year until the half way point of adoption, at which the rate of increase rapidly diminishes.

Anyone here should have some idea how far, far away we are from the half way point of adoption. Assume some portion of transacting entities, i.e. persons, businesses and governments, will ever use bitcoin - and some portion never will. How many years will it take for the former portion to have half its members adopt bitcoin?

I believe the average person in this world having a single bitcoin will be among the wealthy persons in their respective city. It is difficult to imagine such a situation given the current price of a bitcoin - yet the great temptation will be to spend it too soon, i.e. within four years of purchase.

Actually in recent days, there has been much more emphasis on charts and such than was the case before.

In my opinion,the main issue to be resolved was - is the bottom of the November 2013 bubble behind us, or is another leg downward ahead of us? The preponderance of technical evidence debated here - is that the bottom was at $339 on April 10 using prices reported by Bitstamp.

Furthermore, there are corporate entities holding lots of working capital and otherwise spare cash that will get allocated into Bitcoin - which can readily be spent or sold for fiat. Apple, while not currently friendly to bitcoin, has $150 billion in cash and short term securities, that I believe would be better allocated into bitcoin as a deflating store of value. These are the sort of late-adopting entities that will push bitcoin values into what only can be dreamed about today.

I believe that Peter R today pointed out the value of contributing to the community.

The Wisdom of Crowds.

I keep count from 2010 - therefore 5 years. Satoshi mined a million coins on several computers in 2009 while alpha testing the Bitcoin network, but I do not count that year.

+1

You know, at one time this classic thread would be bumped by old hands as a way to sarcastically deflate the manic enthusiasm during a bubble run up. But now, when we are already past the once unsurpassable milestones of $100 and $1000, and can reasonably project $10000+ in 2015, the awe and wonder expressed by the OP are taken more seriously.

And this is a good thing.

This whole thread and this graph in particular are inspired by our Finnish Friend.

Thanks for elegantly stating what my intuition over several years has suggested that I do.

The log10 trendline is rising at about $7 daily. In contrast to your view, I believe that bitcoin prices rise at that rate until resistance at $800 is reached. After bumping against that for awhile, the next bubble will get going in earnest.

From the current situation, I project the next bubble to peak in July-August at about $6000 and collapse through the end of the year at $3000. The bubble beyond that would occur in 2015 - I think.

Log10 Differences From the Logistic Model Trendline

I added a column to the calculations sheet of the Bitcoin Logistic Model. This column subtracts the Log10 model price from the Log10 actual price. By using Log10, the result allows comparison of the relative price deviation from the trend regardless of the time frame. Buy, sell and hold technical indicators could be extracted from the data for the April 2013 and November 2013 bubbles that would be very useful assuming that the next bitcoin price bubble is similar in shape to the previous two. For example, suppose a value of +0.3 indicates an opportunity to sell near the bubble high, -0.3 indicates an opportunity to sell near the bubble low, and other values indicate hold.

Buy October 26, 2012 at $10
Sell April 5, 2013 at $140
Buy October 3, 2013 at $110
Sell November 22, 2013 at $743
Buy April 1, 2014 at $478