I suppose that a financial treaty between a sufficient number of developed countries could establish a mining pool cartel. The cartel would consist of a majority of the current mining pool incumbents. Cryptographic virtual medallions would be one-time generated and sold to the cartel. Each such virtual medallion would give the bearer the legal right to consume a certain amount of electric power for the purpose of mining bitcoin. The virtual medallions would be treated as property and could be sold. Furthermore, they could be somehow combined and divided by some mathematical mechanism.

The treaty would specify the total amount of power that could be spent worldwide for Bitcoin mining. The free market would allow the exchange of virtual medallions from one mining pool to another. I think that this could be done without forking the blockchain, provided that another shared database contains the cryptographic proof that a coinbase block was signed by a certain virtual medallion.

There are likely loose ends and various faults with this scheme, but the main idea is similar to how New York City controls the number and profitability of its taxi cabs. Because a small number of mining pools effectively control bitcoin, I believe they could reject as invalid any new blocks created outside of this medallion process.

Those big farms are likely running at a loss right now, considering the need to continually upgrade their hashing power. Cheap power cost does not solve this major problem of Bitcoin ASIC mining.

But even if miners are better off in the long run simply buying and holding bitcoin, they are still better off mining compared to conventional business investment because the next bubble will vastly increase the value of any coins they have not yet exchanged, thus ensuring that if they can hold on, they will prosper. I understand for example that the operator of the US Washington State bitcoin ASIC farm has a personal holding of over 1000 BTC.

Sure technical analysis could be performed on a linear chart, but then all the trend lines added the chart by the analyst would have to be exponential and no tool I know can do that.

I suggest that linear charts are best used for brief time frames, e.g. days, in which the exponential curves are flatter, and might effectively be ignored.

Now I am seeing what the rest of you are . . .

I am watching both Huobi and Bitstamp on Bitcoin Wisdom. The Chinese are driving prices lower and Bitstamp is following. It has been reported that certain exchanges have indeed been notified by their respective banks that accounts used to receive customer deposits must be closed.

On Bitstamp, the price is currently $431.76 which is a lower low than a few days ago. Big red candle on the 6 hour chart. I am on my way to the local Robocoin ATM to put a few more fiat bills into it.

Thanks to you all, I have a better understanding of the theoretical relationship between bitcoin transaction quantity and price. Consequently, I have started watching even more closely the Blockchain.info chart that best illustrates the recent data.

Note that reported transaction quantity has been declining starting in March. I wonder which data series will reverse trend upwards first - transaction quantity or price?

I have thought about the proportion of transacting bitcoins vs the held-in-storage bitcoins. Coinbase reported that approximately 80% of their customers were buy-and-hold. The proportion I think is important when trying to figure out a maximum value of bitcoin. But your graph neatly sidesteps the issue because the shape of the function is independent of any consistent adjustment of the bitcoin quantity available for transactions. Right?

I currently lease my GPU rigs to scrypt miners, but have been considering Scrypt-N because of the competing ASIC rigs expected this year.

Its interesting that in recent days, scrypt-N coins have been dominating the Coinwarz profitability chart, when I enter Scrypt-N hashing rate that corresponds to what has been reported for my type of GPU cards.

I recall the term time sharing being widely used especially in the 1960's and early 1970's.

One of the ways I spend bitcoin is to buy gift cards from Gyft or Giftcard Zen. Unfortunately the coins get converted into fiat right away and my subsequent use of the gift card at, for example, Amazon does not add to the Bitcoin economy. I expect that as the Bitcoin economy grows, business to business bitcoin transactions will also grow enough to keep the flow going once a merchant receives my coin.

I have not used them much because my trading is very coarse grained. Back in April 2013, which was my best trade, I set a spread of sell orders as the prices appeared to double in the week leading up the peak. This was at Mt. Gox. Most of the sell orders got filled, I did not know where the first pullback would exactly be - who could - but I spread my buy-back orders around $120 which was a 50% retracement from $240 which was the last time I could reliably place an order on Gox that near the peak.

Bitcoin Wisdom has a lovely Fibonacci line drawing feature that I may further explore. And I have come to depend on BitDreams' charts posted occasionally in this thread.

Guilty as charged. The logistic model is hand fit according to my guess as to a maximum price value of one million USD, and my placement of the two previous bubbles into the future is biased by the supposition that the next bubble will be very similar to the previous two bubbles.

I have an undergraduate degree in applied mathematics, which gives me a certain comfort with numbers. I last traded bitcoin back in the summer of 2013, mistiming the exact bottom and paying for it when I bought back in. My timing of the two previous bubble peaks has been satisfactory however, and I am considering a trade off the next bubble peak, or at a minimum a postponement of mining equipment purchases and other major bitcoin spending until the peak - which I will recognize by the simple method of counting the days for each doubling from the low. When the price looks to double in less than a week - I sell.

Of course my posts are biased because I am a bitcoin holder and want others to participate in the economy and thus lift prices. Satoshi factored in the enthusiasm of early adopters as he designed the virtuous circle that has brought us this far.

Your model continues to boggle my mind.

I try to perform at least one Bitcoin transaction daily. Either by spending some, buying some, transferring some, or most often by receipt of mining earnings.

Suppose that I am responsible for permanently increasing the daily quantity of transactions by one. Today's adjusted number of transactions reported by Blockchain.info is 58,006, and your model projects a market cap of $1.50 * 58,006 * 58,006 = $5,047,044,054.00. My contribution makes the adjusted number of transactions 58,007, and the corresponding market cap is 5,047,218,073.50. The difference between the two market caps is $174,019.50. As the total number of Bitcoins at the time of writing is 12,591,775, my one incremental daily transaction lifts the corresponding price per bitcoin by 0.013 USD.

Right?

Summer 2014 Bitcoin Bubble - First Projection

I hand fit this simple projection by copying the April 2013 bubble and the November 2013 bubble into the future, aligning both along the logistic model trendline. The vertical line separates the current Bitstamp price series from the future hypothesis. This first iteration of the 2014 Bitcoin bubble projection supposes that the peak occurs in July - August and that the ensuing collapse is underway in September. I project the peak at 6000 USD and the subsequent consolidation price at approximately 3000 USD through year end 2014.

As the collapse of the current bubble resolves, perhaps further iterations of this projection can be more accurately placed. The crucial assumption of this projection is that the next bubble will be very similar to the previous two.

Thanks, I leave this great performance chart open on one of my monitors.

https://docs.google.com/spreadsheets/d/1VOAhFX1XRizdaTp71qnYI5pRh9VIZEQ51LHuGUmxri0/pubhtml

Invalid column index 11. Should be an integer in the range [0-10].

?

What I would like from a site like Fiatleak is the net amount of fiat entering an exchange. But as this data is not available, the site uses trades - which is distorted by zero-fee trading common on Chinese exchanges.

Zero fee trading is great, but not used everywhere.

I watch Huobi, which is one of the Chinese exchanges that is a leader in no-fee trading. I find the volume numbers on Huobi plausible. I am not a trader now, but I believe no-fee trading greatly facilitates the high volume.

I have thought about that also. But as soon as discounts are provided to business-to-business purchases made via Bitcoin, then merchants will recycle coins they received from their own customers into purchases in order to obtain the discounts.

For example, I can buy Walmart gift cards from Gyft and receive a small discount using reward points. For a company that routinely buys gasoline or other supplies from Walmart, that discount is significant.

This is indeed important.

I worked for a very large regional Electric utility in Florida, USA, programming and managing a portion of the customer billing function. Customers wanted to pay by a variety of convenient methods, yet because the utility operated as a regulated monopoly, it could not pass on to ratepayers as a whole, the merchant fees charged by credit card companies - thus credit card payments were not an option unless the ratepayer paid all the fees, which were percentage-wise onerous.

With a simple Bitcoin address, there is no fee to the receiver of the payment transaction - as the sender pays the fee, which is tiny percentage-wise. Integration with a Bitcoin payment service such as BitPay or CoinBase would cost more. But I suppose that if the utility kept the coin, it could be easily handed out to deserving and willing employees as bonus without exchanging for fiat.

Moreover, public utilities accepting Bitcoin will encourage governments to accept Bitcoin for fees and taxes, for the same reasons regarding credit card merchant fees, and the absence of charge backs.

Once governments routinely accept Bitcoin, banking as we know it slips further down the slope to obsolescence.