I think it's closer to someone looking outside, noticing it's raining, turning on the TV, and seeing a report: "Acid Rain falls in <your city here>"

Sounds pretty damn scary, if you're not an expert in acid rain.

I appreciate smoothie's attempt to frame, at a high level, what the issue is, and what it is not.  

If everyone were rational-minded in their trading decisions, I believe all these events would be minimally impactful to Bitcoin's price in the short term, and favorable in the long term.  

But there is a price discovery timeframe before getting to logic.
Coincident with an already-protracted trading range waiting to decide, up or down.
Now coincident with a DDoS.

Like many of us here, I've all-but ignored DDoS attacks for awhile now.  But amidst this perfect storm...I'm more fearful it could be the final little push the market needs to make a bearish decision...right when it was otherwise so well-primed for a bullish one.

And if you're intentionally playing the FUD game, take a tip from FOX, and add a question mark to the end of whatever you write.

Bitrebel Spreading FUD to Support his Bearish Position?

+5

Market reactions based on inaccurate data only prolongs the amount of time it takes to return to stability. This helps no-one, except those intentionally misleading others to profit.  To each his own, but unregulated market or not, that's not how I prefer to make my bitcoins.

Ripple makes me uneasy for a few reasons, chiefly the volume of its currency pre-allocated to its innovators, and the risk associated with its centralization.

I took a stab at identifying a payment layer that could ease the barrier to entry for merchants to accept bitcoin.

https://bitcointalk.org/index.php?topic=204140.msg2137867#msg2137867

My take is that for Bitcoin to jump to the next level of adoption, tools such as these will need to be designed to reduce friction when trying to initially fund bitcoins, find merchants willing to pay, etc.

Something like this needs to be designed soon, IMHO, or companies will begin inventing their own virtual currencies, much as Amazon most recently announced.

A friend asked a question. The question is one of trust.

What is to keep the merchant from getting ripped off?
What is to keep the investor from getting ripped off?

The merchant has no initial outlay. So their only risk is of not being reimbursed for the sales that they make.  Reimbursement would occur nearly real-time, so they would get reassurance pretty quickly. The blockchain would provide a reliable audit. From their end, trust won't really be a factor.

The investor has everything to lose, if they cannot trust the bitcointrust company.  Since they would control the wallets, accepting payment, then sending payment along to the company, while distributing the small percentage amongst the investors.  The investors are putting their bitcoins in the hands of the company.

This is a very real limitation, though one that I think would help throttle the growth of the company (and concept) in a healthy way.  Presumably, investors in the first few companies would only be willing to stake smaller amounts. As the company's reputation grew, so too would the trust. After all, the opportunity cost of future profits would be a strong motivator to continue to operate in an honest, customer-friendly way.

I'm sure there are other holes in this idea. I'm really hoping a few people will see some merit in this idea. Then kick it's proverbial tires, and see what problems shake out.  Or maybe someone has a different perspective. I think this is the single missing piece that lets us begin rapid merchant adoption.

If this is the wrong forum, could someone kindly let me know/ask a moderator to move it?

Bitcoin merchant adoption is currently a chicken-and-egg problem.  The long term viability and usability of Bitcoin remains in question to the common public, chiefly because you can't spend it in enough places.  Merchants are reluctant to accept Bitcoin, for fear of selling goods in exchange for a currency that could go to zero.

This proposal sets out to break that logjam. I should also stress that if successful, this system will gradually move itself into obsolescence, as merchants realize they can make more profits by owning Bitcoins themselves. 

I don't have enough time or financial resources to pull together all the skilled players that would be required to turn this concept into a fully-fledged business.  Yet I believe an advance like this is what Bitcoin needs to get it over the hump.  So, I'm offering this idea in full to the Bitcoin community, no strings attached.  If someone wants to run with this, I'd be interested in helping out in an advisory/consultative capacity, but there are no obligations.  Final disclaimer: I'm just a regular dude that thinks Bitcoin will revolutionize the concept of money. I want to see it succeed, and am offering ideas to help us move to that ideal.  I have no delusions that this plan is 100% complete, nor viable.  My hope is that other smart mind will read this, and further adapt the concept so that we can get something in place, then improve from there.  Without further ado...

The Problem at Hand
-Bitcoin holders fervently wish to be able to spend their Bitcoins wherever they spend their money.
-Merchants don't see the value in investing in a technology that might not be there tomorrow.

How could we solve the problem? By providing merchants a way to accept Bitcoin as payment, without incurring an upfront buy-in cost, and while earning at least as much money per transaction as they currently do.

Let's take a look at how a consumer thinks of a transaction (numbers made up, but important for comparison):

How Consumers View a Transaction (in USD)

Consumer sees item they want  --> chooses payment method --> Merchant receives USD --> Merchant sends item

How Merchants View a Transaction (in USD)

Consumer sees item they want --> sends USD to payment processor (credit card, paypal, whatever) --> processor takes 3% USD, merchant receives 97% USD--> merchant sends item

In short, consumers don't have to care about "the cut" that happens from payment. Merchants are very aware of this cut.  The whole concept is black-boxed from the consumer - they send the money, and get their good.  Merchants know that a middleman payment processor offsets the management of fund collection, at a cost. They can count on receiving a fixed percentage of their sale price in exchange for this benefit.

Let's take that exact same model, and insert Bitcoin in the middle. Let's use the hypothetical company Chainsaw's Widgets.  We can then black-box that entire concept, leaving the merchant in the same position they are in now.  I'll talk more about the "Bitcoin Trust" as soon as I've laid this parallel, Bitcoin-based scenario out.

How Consumers View a Transaction (in Bitcoin)

Consumer sees item they want  --> chooses Bitcoin payment method --> Merchant receives Bitcoin --> Merchant sends item

How Merchants View a Transaction (in Bitcoin)

Consumer sees item they want --> sends Bitcoin to Chainsaw's Widgets Bitcoin Trust --> Bitcoin Trust sells bitcoins for USD, distributes 3% proportionally to Bitcoin holders, merchant receives 97% USD--> merchant sends item


What is the Bitcoin Trust? (First of all, probably a horrible name for this concept. Tons of better wordsmiths out there than me. If this thing gets legs, please, lets improve on this.)
The Bitcoin Trust is the missing piece, the one that let helps everyone (except existing payment companies).  Implementing this idea will require development of a few technical, infrastructural components. For the purposes of explanation, imagine they already exist. The work of any company that tries to run with this idea will lie in developing these components, with the chief emphasis being on maximally reducing friction both to the merchants and to the consumers.  Here's a theoretical walkthrough of it in action.

Chainsaw's Widgets see the rabid demand of Bitcoin holders, and wants in on the action.  They go to www.bitcointrust.com, and register a Merchant Account. They create a Merchant Wallet, and allow investors to place invest Bitcoins for their company. They initially desire $10,000 of liquidity, and are offering to pay 2.9% of gross proceeds to bitcoin investors.  I, as a long-term bullish Bitcoin investor, decide to put 10 Bitcoins into Chainsaw's Widgets.  At today's market values, that gives me 10% of the liquidity they seek out.  Let's say 9 other investors just like me come along, and each does the same.  Okay, the fund is set up, here it is in action.

Sally Sue comes to Chainsaw's Widgets. She sees they offer Bitcoin payment! (A widget that bitcointrust builds, lets you pay the wallet set up with Chainsaw's Widgets.) She chooses that option. Payment gets sent to the proper wallet, spending $250 for some fancy Glow in the Dark Chainsaw Paint.  Automatically, the funds are sold to USD on the market. The bitcoin price charged is based on the value of bitcoin at that moment. The $250 sale happens. 2.9% of that sale ($7.25) gets distributed to the funders of the account.  For Chainsaw the investor, holding 10% of the assets in that account, I earn $7.25/10 = $0.725.  The remaining $242.75 is passed along to Chainsaw's Widgets. 

The consumer got to spend their bitcoins.
The merchant got to make more money on the transaction than by using other payment systems.
The merchant never had to assume the financial risk of investing in bitcoins.
The investors (regular Bitcoin holders like you and I) have a place to put our bitcoins, and profit, without having to play the market.

What Could go Wrong?

Plenty could go wrong. I'm sure this isn't a complete list. Nor do I think the answers are perfect. But again, I am hoping to illustrate that with some thought, these problems are solvable.

I spent a week playing with this idea in my mind, aspiring to be able to explain it adequately. I hope it's clear enough that it'll make sense, because I'd really like to talk through some of the potential problems, proposed solutions...and the potential next-steps that could get stacked on top of this idea.  None of it will make any sense if this foundation isn't solid.

Assuming you're still with me (and please, shoot me refinement suggestions if there are areas I can make this more clear)...I can think of three key problems.
1) Monies held in a centralized (per-company) wallet is still a greater risk and target than a 100%, purely distributed currency.
2) Bitcoin transactions are not instantaneous, which could get thorny for merchants.
3) Development tools need to be developed to allow these new transactions to occur seamlessly. With a wealth of existing, third-party payment systems, this may require a non-scalable number of interfaces to allow a Bitcoin payment system to interact nicely with them.

1) Like any sounds Bitcoin business, employing a highly skilled Security professional is essential.

2) We solve this either through backup payment system, social trust, or time (waiting). 
a) A backup payment system: A user can specify Bitcoin, but secondarily gives a credit card.  Payment is accepted immediately. If the bitcoin transaction doesn't verify, the backup payment system is verified. Either way, the merchant receives payment when the Bitcoin transaction is verified/rejected. Either way, the consumer completes the transaction without delay.
b) Social trust - Let's say Chainsaw's Widgets allows new users to pre-spend 0 Bitcoins. However, once you've spent $1000 with the company (and no reversed transactions), you can pre-spend 1 Bitcoin.  The specifics of the social trust system can vary (feedback, funds, anything).
c) Time - a step backwards, but the user can complete the entire transaction as if it were real-time accepted. An email sent 30 minutes afterwards indicates the successful transaction (or its negation if the funds ended up being illegitimate).

3) Consumers need to be able to pick a 'Pay with Bitcoin' option. That's all they need to care about. From their perspective, they are buying a good, and choosing Bitcoins. They do not care that Chainsaw's Widgets has contracted with BitcoinTrust to be a middleman to convert payments.  Merchants need to be able to count on getting paid for their goods. This means that when the consumer is checking out, a protocol needs to be established. Very crudely, bitcoins sent in, USD sent back to merchant, and finally, merchant's good sent.

Who Would Go For This?

We're still early in the Adoption Cycle.  9 out of 10 people I talk to today are still scared away from Bitcoin from the barriers to entry for funding, and the lack of tools.  The same must hold true for merchants.  But offering a package like this gives a new option. You can dip your toe in the Bitcoin waters, rather than needing to take a giant running start and dive in headfirst.  No up-front cash risked. Market-defined profits which should exceed existing payment methods. Capitalization on a currently untapped niche - Bitcoin holders.

Thinking Big

The theoretical company www.bitcointrust.com - it's a middleman.  Their aim is to appeal to all Bitcoin holders, and all merchants.  Just like Chainsaw's Widgets signed up, the next day, maybe Bob's Buckets signs up. They ask for $100,000 in liquidity at 2% return rates, because they're finding they can't keep up with Bitcoin payments unless they increase their size.

Now Joe Investor comes over to bitcointrust. He's thinking "Man, Bitcoin is going up. I don't wanna sell. I wonder where I can invest my funds."  Ultimately, he decides to put 75% of his money into Bob's Buckets. Even though their rate of return is lower, they sell so much more, that proportionally, he calculates he'll get a greater return on his investment. So as not to tie his profits too much to a single company, he puts the remaining 25% into Chainsaw's Widgets.

Is this limited only to small businesses? Of course not.  Amazon could do this. (I commend them for trying to go to war with Bitcoin by defining their own virtual currency. But c'mon. What is going to win - a currency you can use anywhere, or a currency you can only use for a single company?  ("First they ignore you, then they laugh at you, then they fight you, then you win.")

So that's the big payoff.  PayPal could do this.  Imagine.  They get to use their complete, existing market base. Keep their brandname.  From their perspective, they're just adding a sub-option. I'm paying with Paypal, using Bitcoin.  From the consumer side, the costs are the same.  From their end, they set up a trust, allocate a percentage to the userbase, keep the remaining profits.

What's the Endgame?

Imagine this idea works, and now you've got the dream scenario we all think about. Widespread bitcoin usage and adoption.  At some point, Chainsaw's Widgets is going to say "You know what? This is great, I'm making more money than ever...but I could make more. I'm going to put some of my own profits into my trust. In short, I will start funding 50% of my own Bitcoin transactions. Now, of those 3% profits, half are coming back to me.  From there, 75%. Eventually - "That's it. I'm going to cut out BitcoinTrust entirely, and start accepting Bitcoins directly to my own wallet."

The laws of business dictate that, once successful, this (removable) middleman can, and will, be removed.  Then we've got the scenario we all hope for.  The interim phase might be many years.

I welcome all feedback. My only requests:
-Please take the time to thoughtfully construct any feedback, with the aim of keeping discussion focused on refining the idea, pointing out errors, suggesting improvements.
-If anyone is interested in trying to get an actual business group put together around this idea, please set up a separate thread and link to it.

Thanks for taking the time to read.

See, that's my concern.  That with the breakout being more explosive,I'm afraid that lower downsides are possible. 

Before resumption of uptrend, my guesses at the likelihood of touching recent low-points:

Chance of touching $100 - 80%
Chance of touching $97 -   50%
Chance of touching $79 -   33%
Chance of touching $50 -   10%
Chance of falling below $50 - 1%

Of course, this assumes no game-changing news/events affecting the market.

It'll be interesting to see how this one plays out.

I had hoped for a triangle breakout yesterday. We're now approaching convergence, so my fear is that the breakout will be more explosive than it would have been had it occurred earlier. (i.e. more support/resistance lines broken)

My personal prediction (and position) is that we're nearing the end of price discovery mode post-crash, and we're due one more correction. Its resolution will swiftly serve as the signal to the growing number of people holding money on the sidelines, and we reach new highs before the (resumed) rally concludes.

That's my guess.

This is a great distinction to make.  I have a nasty tendency to into too much detail, and sometimes I overcompensate. Taking the example I used above:


I didn't follow each fact or speculative idea to ground.  I completely agree that if in the end, the news will not somehow affect the fundamentals of the market, there will be no effect.  But if A => B =>C => D, then we can simplify to A => D. Above, I stopped at identifying potential conclusions, some of which were certain, some possible. Completely making up numbers:

-Miners in China have recently increased.
-Wallet downloads have increased.
-National awareness of the concept of Bitcoin in China, a significant percentage of the world population, has increased.

More miners:
-Added risk of a 51% takeover from an up-and-coming chinese mining guild, causing a major catastrophe: < 1% No change to positions.
-Larger number of Bitcoin-committed people in the world. Miners have a vested interest in the long term success of Bitcoin. This should add stability. Minor positive increase to valuation.

Wallet download increase:
-Significant influx of new users still in early data discovery phase in Bitcoin. Estimate an increase in adoption and usage, with a minimum of two weeks until those users begin to show up with any real numbers, full impact may be as long as a month. When this occurs, a smooth price increase linearly proportional to the percentage increase in market cap added by these users. Let's assume this initial wave could add 10% to 200% market cap. (All values, IMHO, are positive. I'm not entertaining moving funds into a leveraged positions based on the news, so I don't need to pin it down more than that, here.)

National awareness increase:
-A long term bullish indicator.  On a larger percent-of-total-population scale, we are now introducing more people to the concept of Bitcoin. For every wallet download, there are likely 10 to 50 people still in the undecided phase. Bitcoin is now in their heads, and they've not yet acted.  So in a week, or a month, this won't seem to have had any change.  But the power of a nationally-shown, favorable, 30 minute documentary on Bitcoin, in shaping citizens' view of the currency? That could be a million more users who are now between 1 month and 3 months from dipping their toes into bitcoin. When they do, demand increases, supply remains the same, price goes up.

These are all examples where the news could result in some long-term change to the ultimate value of a Bitcoin. In a perfect world, a story would break, all participating members would instantly become aware of the news, interpret the value change identically, and the price would jump directly from Point A to Point B.  But of course, that never happens.  People have different opinions on what news will mean. That give and take is reflected in the price charts, as the market searches its new equilibrium, between all the people that disagree on how much a price should move up or down.

Still more frustrating - the market doesn't say "Hold on guys, this China news just broke. No one else do or change anything until we decide what this means." So in the end, it's really tough to ask yourself: In hindsight, what impact did this news actually have in price?

If you're still with me (and this is where I wish my ability to explain were better), it is precisely this imprecision and uncertainty that creates the opportunity for profit.  There's a great saying, knowledge is power.  I disagree with that.  I prefer - exclusive knowledge is power.

How does this apply to the example above? Putting my money where my mouth is...I view the benefits from "the China news" to be favorable, but in a timeframe that is far longer term than the market seems to believe.  In short, I feel the current run-up from $79 to $124.90 was premature. Said differently, I feel the market over-reacted to this news. So, I incrementally sold my very-short-term funds in increments as the price potentially topped at $102, $104, $108, and $112. I've got a manual stop limit defined. The trade is set, and barring a change in the market fundamentals that set up the trade, I just wait to find out if I was right or wrong this time. (Again, skipping the details of the technical indicators, but they contribute here as well.)

I could be completely off the mark. I may be unaware of an underlying driver causing a run-up. I may have underweighted the impact of some other game-changer.  But these are unknown unknowns - you do the best you can, and post-mortem the decision win lose or fail afterwards.

That's me. I'm not saying the process is perfect - I'm certain it's not.  While I've been trading for 15 years or so, I'm a self-taught, weekend warrior.  I learn from my experiences, from books on the subject, and from asking questions of the professionals that DO do this for a living, managing a stock portfolio.

wamatt, it sounds like you've got a lot to add to the valuation discussion.  At this high level, I don't have a ton more to add.  I'd love to see a more exhaustive writeup on any/all thoughts you have related to this topic.

Thanks for the kind words, all.


Reaper,

I honestly don't know whether the risk increases as a function of time.  My guess would be yes. 

I tend to think of that risk as being more strongly, positively correlated to the value of Bitcoin.  If the value of Bitcoin increases tenfold, a criminal has ten times as much to gain by somehow pulling off the same theft.  In the end, it serves as a balance. Price goes up, likelihood of negatively perceived event goes up, price finds new, lower equilibrium after pricing in the new news.

While I think that's how things work, I don't really base trading decisions on it.  I think by definition, these events are reactive.  You make or lose money on these events by assessing what the market will price the news at, more accurately or more quickly than other traders.

BTC Books - 100% agree. I completely missed the point on this one.  I'm glad it didn't bite me. 

Thanks for the correction. You've helped me again improve my process.

I never ran this potential fundamental news past my Trading Buddy (https://bitcointalk.org/index.php?topic=181076.msg1890117#msg1890117).
Because, on my own, I had brushed it off as inconsequential.  A false negative!

In the future, I should probably validate those with my trading partner.  Maybe 99% of the time it will yield no change in strategy, but in cases like these, where I was forgetting a crucial detail, it could dramatically change decisions.

Thanks again!

That’s the tricky part. Bitcoin is uncharted territory, so we’re making it up as we go.
If you look at existing markets, they have precedents.  Making up some numbers, let’s say a company starts releasing Widget X. They expect it will earn an additional $1,000,000 per year.  In general, the value of that company can be assumed to have gone up 10 times that annual revenue, or $10,000,000.  Different sectors have multipliers that may be higher or lower, but news generally prices in the same way.

The important thing is to realize, in this equation, we are the tail, not the dog.  Here’s a recent example.  I saw a few mentions about the Japanese banking holiday.  The largest holiday for them of the year!!! Funds won’t be available! My knee-jerk reaction to this was, wow, this could dry up funding, cause a short term dip. Thinking more deeply…Japan is one country. And we know from other data that they do not represent a significant percent of bitcoin users.  So while this news will be significant to anyone in Japan, it is very unlikely to affect the overall market value.

Some fundamental valuations are cut and dry.  All other things being equal, if you double the amount of users/money using Bitcoin, then the value of a Bitcoin will double.  Take this, and put it up against the recent news re: China.  We have seen an increase in wallet downloads in China following the news story.  We have seen a surge in mining. These are the facts. The rest is speculation.  Absent facts, you speculate, and live with your right-ness or wrong-ness.  Will Bitcoin be used to store corrupt money of officials in China? No one knows for sure.  But we do know this: There is alleged widespread corruption at this level, and the amount of money we’re talking about is large.  I can see this news potentially helping bitcoin. Possibly on a massive scale. On the other side, I don’t see it as posing any risk to the value of bitcoin.  I’m not terribly concerned about putting a specific number on this, because my plan is the same either way:  Close any positions in the next 1-10 days, then plan on holding bitcoins until I can look at the impact with the benefit of hindsight.

As time passes, these valuations will start to have precedents, and become more predictable.  Right now, no one knows, so the market defines, then redefines these impacts.  What is true today won’t be true tomorrow.  As long as we learn from our mistakes of yesterday, our valuation tomorrow will probably be more accurate. In my mind, that’s the best you can do – create a self-correcting system of valuation, and stick to it. Incrementally improve. Profit.  It’s enough to make an underpants gnomes jealous.

On the fundamental side, my take is:

• Decrease from the Coinlab/MtGox lawsuit fiasco (short term if resolved amicably, otherwise, permanent small-to-medium downward adjustment)
• Decrease from recent regulation stories (short term, mostly fear-based, no new legitimate threats)
• Increase from China's increased awareness/adoption (short term large, long term based on total money that remains in market)
• Increase from favorable statements/awareness by Bill Gates, Eric Schmidt (small)

Technically speaking, I think we've got one more downturn, then it's time to strap in, and hold onto those Bitcoins.

I'd welcome other's opinions on overall valuation, and where they feel it stands today, as compared to recent past.

b!z - while I'd love to, I've already got my trading buddy.  I think of that commitment as a bit more binding - we do our best to reply to each other's thoughts at first possible opportunities, as the insights may affect trading decisions.

That said, I'd have no problem with you shooting me a message from time to time if you want to kick an idea around.  I find exchanging trading viewpoints beneficial in nearly all cases, independent of whether I agree with another's conclusions or not.  So often it provides a point of view I hadn't previous considered - and perhaps the same would hold true for you.

b!z, bassclef - either of you willing to be the first (non-OP) brave soul to put your name on the Trading Buddy Spreadsheet (https://docs.google.com/spreadsheet/ccc?key=0AqpoRK3q-_aKdGpTU0xIQ2Iyek01Ri02UXNmMnVhdXc#gid=0) and/or fill out a little profile/writeup below?

I 100% agree with you, Qoheleth.  I struggled with trying to keep it simple without glossing over major points.

I think of the fundamentals as being predictors of greater market adoption, usage, acceptance. These things will lead to a greater number of bitcoins being transacted each day - increased demand.  And supply, on a relative scale, remains largely unchanged.

Going in the opposite direction - you gave a great example of why you would use different considerations for different time scales.

When making decisions for my long-term funds, I would be holding the long view - what are the present risks of Bitcoin completely failing? What indicators are there that widespread adoption is imminent? What is the vector, up or down?

When making decisions for my short-term funds, I would be considering fundamentals more like you are mentioning.  What effect has Mt Gox's crashes had? How do I want to respond the next time one occurs?  What do I think will happen to prices now that Mainstream Market X has opened, and allows for shorting?  These things will affect price on a shorter timeframe, but then equalize into the price long-term.

I swear by the value of having a Trading Buddy.  Whenever I'm considering making a shift to my valuation of Bitcoin (https://bitcointalk.org/index.php?topic=181037.0), it's nice to have external validation. Did I fail to factor something in with my analysis?  Am I overemphasizing the importance of a certain factor?  Sometimes, it's just getting the confidence boost from finding they agree with your conclusions.

I thought I could start a thread whose goal is to pair people up.  I created a shared spreadsheet:

Trading Buddy Spreadsheet - https://docs.google.com/spreadsheet/ccc?key=0AqpoRK3q-_aKdGpTU0xIQ2Iyek01Ri02UXNmMnVhdXc#gid=0

The quick and easy way is to simply follow the link and claim someone.  If you're a bit more anal thorough, you could try some of the following suggestions to try for a more perfect fit.

If you'd just like to put yourself out there and wait for someone to pair with you, fill out a "Trading Buddy Profile" below.  List whatever details you think will be important to someone pairing up.  For example, if I wasn't already paired up, I might write something like:

I weight fundamentals more heavily for a long term view, but absolutely love shorter term technical plays.  I tend to have a long-term bullish outlook. Given the right circumstances, I could see Bitcoin being sub-$1 next year, well over $1000, or anywhere in between.  I expect it'll be a bumpy ride for awhile as we transition from bleeding edge to leading edge adoption.  My interests in a partner:
-Minimum five years trading experience
-Considers both technical and fundamental indicators
-Generally bullish, long-term
-Willing to unemotionally debate points, cede errors, and be willing to say when you disagree with a position I take.

Or, you can take a look at the Spreadsheet, see who is currently unclaimed, then find their entries in this topic to find your best match.

One final note: I realize a shared spreadsheet is not the ideal tool for this. If there is a clearly superior method that doesn't require significant effort, please let me know, and I'd happily update the link from the spreadsheet to a new medium.

The whole point of the Speculation forum - trying to make some sense of the market.

Why does Bitcoin have the value it currently does?
What will Bitcoin's value be tomorrow?

Something I think we all fall victim to, at least occasionally, is to miss the forest for the trees.  We assess its value based on just one or two pieces of information.  Bitcoin's value is determined by a free market. There are many moving parts, some pushing the value up, while others push the value down. Any complete valuation of Bitcoin needs to take all these factors into account.

It's all about fear and greed.  Please note - this remains a gross oversimplification.  The main focus here is to define a simple paradigm, a structured way to look at Bitcoin when trying to assess its value.  I would encourage everyone to tailor this model to themselves, most importantly because your belief in the power of certain market forces will invariably be different than my own.


Fear  - Belief that Bitcoin's future price will be lower than the current price.
Greed - Belief that Bitcoin's future price will be greater than the current price.

Let's say you have been watching market prices, and each day for the past 20 days, the price has gone up $1.  There's a good chance you are going to expect it to go up $1 tomorrow.  You're basing that belief on activities that have taken place within the market. That makes it a technical indicator.

Now let's say you just read an article in your Bitcoin news feed - "Amazon to Start Accepting Bitcoin".  If you're at all like me, you're buying up bitcoins with every spare penny you've got, the first instant you can.  You'd be basing your belief on a news event that you think will lead to greater acceptance (and therefore demand) of Bitcoin.  This would be a fundamental indicator.

Please bear with me as I make up a few terms, so that we can talk about the fear- and greed-based fundamental- and technically-based indicators.  Then we'll be able to put it all together.

Fundamental Indicators

Legitimacy (Greed) - Confidence in Bitcoin's long term future, acceptance, and adoption.
Nullification (Fear) - Fear of illegitimacy (i.e. one or more countries defining Bitcoin to be illegal)

Technical Indicators

Oversold (Greed) - Belief that the market's valuation of Bitcoin is too low, and will correct upwards.
Overbought (Fear) - Fear that the market's valuation of Bitcoin is too high, and will correct downwards.

Let's walk through an example to put this all together.

It's March 18, 2013. The article I've been waiting nearly two years for shows up - the Treasury has just announced that it will regulate Bitcoins.  The significance to me is in what they did not say. They did not say they were coming after it. Implicitly, they said they accept it. The Legitimacy indicator has just skyrocketed.  Viewing Bitcoin purely as a commodity, the likelihood of its future value going to zero has just been signicantly reduced. The valuation of Bitcoin has increased.

Time to do due diligence, and scan over each of the four kinds of indicators. Are there any other new forces that might counterbalance the news? Other news that might magnify the value gain? Going through one by one...

Legitimacy - If I remember correctly, a small handful of other positive news stories had broken around this same time.
Nullification - No new threats.
Oversold - The rally was underway, but was controlled, and already looking stronger by the day.
Overbought - No new threats. (The previous all-time high had been cleared, and the order book was solid.)

New Price = Current Price + Fear Adjustment + Greed Adjustment

Factoring in all the variables, there are new, strong upward forces, with no new downward forces.  Everything pointed to an upturn.  I went all-in, and committed to buckling in for the ride.  And whaddaya know, the surge to $266 commenced.

I love the quote, "Plans are worthless, but planning is everything."
Was my assessment correct? I'll never know. Maybe I got lucky, and the price bump was entirely due to the new mining rig surge, or Cyprus, or some other factor I'll never understand.
What matters is that you do it. Then afterwards, reflect on your decision, and learn from it.

This is a great first step towards moving out of emotional investing, and towards structured, findings-based decisions. As you do this more, you'll hone your trading instinct. Learn what you overreact to, relative to the market. Figure out where you tend to see the value ahead of the market. These findings will grow your skill (and gains) as a trader.  It's hard work...but it can sure be worth it. 

I shot you a message a few days back. If you're unfamiliar with the feature, it is available on the main tab, third from the right.

B-E
S-U-R-E
T-O
D-R-I-N-K
Y-O-U-R
O-V-A-L-T-I-N-E  ?!?!?!