Old coins on the move. Why is it troubling? Of course they rather sell high than low.

I would rather do this way (as a guide to newbies):

1. Buy with a small amount as soon as possible (upon first hearing about this, it is unlikely that anyone will invest more than 10% of net worth, more likely 1%).

2. Every time you gain confidence in Bitcoin, buy more. Do not consciously DCA, because your inability to appreciate Bitcoin fully in your first day automatically serves as DCA

3. When the combined effect of your purchases and bitcoin's value appreciation results in you having more than half of your net worth in Bitcoin, select a "percentage of other assets" you want to have as a hedge in your portfolio. The "rake" % is always half of "other assets" %, if the rake is taken after each doubling in price.

If you are already in, you can start following the plan from (2.) or (3.).


A further word about the optimal rake%:

I suggest you use 10-20% rake. This lets you keep 35% (in case of 10% rake) or 11% (in case of 20% rake) of your bitcoins when their value goes to $1,000/mBTC.

- If you use only 5%, it takes quite long before you cash out any meaningful amount, which is risky. Also your portfolio tends towards 90% bitcoins/10% everythingelsecombined, which makes most of us too emotional.

- If you use 0%, you go crazy. Many can live with this as long as bitcoins are a small % of their portfolio, but start making mistakes (such as selling 90% of the holdings, at the instant they appreciate so that he can buy a new house) when the percentage grows bigger. Better be disciplined, set a schedule to sell, and follow it. (You may skip the first several doublings if your capital is small and you want to quickly grow it.)

- If you use 30%, you only retain 3% of your bitcoins, which I think is suboptimal. If you are so concerned about getting your fiat value back, I suggest you let it go up to the second double, and then repatriate the original investment.

Better get used to the idea that it is very improbable that you will have the same number of bitcoins when their purchasing power is 1000x higher than now. In astute cases, I think you have shed 2/3 of them, whereas most have only 1-10% of the amount that they now have.

The same happened when Bitcoin was $0.5 until now. If someone has 35% of the bitcoins he had that time, he is very smart (and very rich).

You told some time back that you would not sell your experience to me at any cheap price. What part of your experience is only valuable in the context of Internet? What would you say is the value of Internet to you, or to an average person?

As for me, I am able to live without a good health. I would pay much to gain one, though.

But I don't own a house, have a car, or TV, or coffee maker, even though I could buy those things. They are negative value to me.

Without Internet, the world would go back to information repression. Dark ages. Let's say I value the freedom of Internet to $1 million. In actuality I value it much more, because instead of going to work, I spend my days solidifying the Internet by posting valuable free information there. I would make much more money than $1 million by going to work and scheming something that profits me in the expense of others.

I think Bitcoin brings even more important things to the game than Internet. It is the coercion-free money (transfer protocol) of the Internet, and capable of bringing such abundance and freedom that the oppressive structures of the world would just lose their grip. Vote, or exit. Bitcoin enables exit in actuality for large groups of brilliant people, whereas PM's only enabled exit for very few (like you and me), and those could not leverage their exit any way. Internet enabled exit for VC investors (pun), but their money sits in the controlled financial instruments. Bitcoin is the most important exit, considering everything that has been available so far.

So what is my net worth calculation? Health. Knowledge. Most of the other things are worth zero (and for this reason I don't have them). Oh yes, and some financial wealth, most of it in bitcoins.
 
Is it so difficult to think that the Internet is worth a double-digit percentage of the world? The world is valued at $400T, which does not include Internet. I cannot easily dream how Bitcoin protocol in practicality changes the world (any more than I was able to grasp how many industries were revolutionized by Internet before it started to happen), but I can say that $6T, gold's market cap, is only realistic in the case that Bitcoin does not turn out to be more than digital gold.

If it really takes off, it makes most of the valued structures in the world obsolete (the same way as I sold the cars and did not buy a TV even for free). The real limit (in mathematical sense, limit is the absolute upper bound) for Bitcoin's value is more than 50% of the world.

In Old Testament times, the property rights of land could not be enforced, or were not applicable in cases that land was only used for herding. The technology was uniform and there was no capital stock (material or immaterial). The wealth of people consisted of cattle, salt, cloths and garments, and gold and silver. The gold and silver accounted for more than half of all the wealth (including land!).

Perhaps we are entering in an age where most of people's wealth is again in most hidable, most protable, most usable form, as the industrial age and its huge capital requirements give way to Internet based businesses with immaterial capital, capital which can be created directly from knowledge, by mixing in only a trivial amount of money, which is ubiquituous anyway.

Soon everybody is so rich that money will only be used to buy groceries. The more interesting things of this life will not be (able to be) bought with money, any more than they are now. The difference is that nobody will be out of groceries

Quoting in context:



Yes, I admit that Bitcoin will never go to 2XX anymore. Henry Brade (Technomage) was right, I was wrong. We had a FB debate last week.

I still think that $2200 by Christmas and crash afterwards is a possible and probable scenario. My analysis says that each crash low is 2x the pre-bubble ATH. So the essential content of that post still holds, and I am not about to deny that one.

I give better odds that we see my sale price of $672 that that we don't see it.

I want a castle. For christmas present.

My point exactly. As China is no more buying our coins, who is left to raise the price?

The sad truth is that there is no "buying like crazy" going on. If it continues to fall, a rout is much more probable than a buying frenzy.

China is falling, with lots of coins listed for sale and no corresponding buyers.

sounds fine for me. Just stick to the plan so before long you will also have regained your initial investment.

(Or lost it all, but that is the risk we'll have to take.)

In the long run, there will only be about 1,000,000 people with a whole bitcoin. If you manage to keep 1/10 of your stash permanently, you are among this group. Not bad really.

Big holders have no use for euphoria atm, small users don't have BTC2,500. End of story.

But the tactic is in the book

Last 24h price: down -3.8%.

It will break up any moment, where "any" is defined that 5x the money is needed compared to any previous breakout in Bitcoinhistory.

Still waiting

That proves that in essence, Bitcoin is not a technology. Its market cap was <$100,000 when Gox was opened and the "technology-phase" ended. All the subsequent gains have been possible because of the collective action of all the market participants.

Bitstamp has treated me well, and the service level in BTC China is even better, if possible. Same day response in the midst of the most active trading day this week.

Liquidity results in stable prices.

Stop loss is a tool for suckers. This plan assumes that you invest what you can afford to lose. One of the most important features is that you never sell when prices are trending down. That will soon reverse the trend and keep your coin stash intact.

If you are the type that thinks in dollars and wants to cash out the original investment, I suggest the following:
at $2, do no sell
at $4, sell the original amount (which is 25% of your bitcoins now) Now you are clear.
afterwards, sell according to your rake.

If this is too risky for you, you are investing too much. Think again with a smaller initial sum.

Many forum frequents actually have too much % of portfolio in bitcoin now, after the recent runup. If you are 10% rake type of guy, it means you should have $20,000 worth other financial wealth per every BTC100. If your rake is 20%, you should have $50k per every BTC100. If not, then sell! Congratulations! You have already completed the initial doublings of your plan

This requires proof. I downloaded the longest timeseries of Bitcoin trading activity available (Mt.Gox USD), and set the following:

A person wants to invest $1,000 in Bitcoin, and has the following options:

- Invest it all now, at an average price this week.
- Invest it in 4 equal lots in 4 subsequent weeks, starting this week.
- Invest it similarly over 8 weeks
- Over 12 weeks.
- Over 26 weeks (6 months)
- Over 52 weeks (12 months).

Then I calculated, how many bitcoins can be gained/lost by spreading the purchases. Result:

On average, by buying all instantly, the following advantage over other options was gained:

4 weeks = +8%
8 weeks = +20%
12 weeks = +33%
26 weeks = +79%
52 weeks = +161%.

In some cases DCA does come out ahead. In the 10% cases that most favored DCA, their advantage was (negative sign=DCA advantage):

4 weeks = -13%
8 weeks = -22%
12 weeks = -31%
26 weeks = -30%
52 weeks = -46%.

On the other hand the 10% most favorable cases for instant buying yield the following:

4 weeks = +33%
8 weeks = +77%
12 weeks = +101%
26 weeks = +214%
52 weeks = +416%.

By dollar cost averaging, the most would have been gained by having a 52-week plan instead of an instant lock-in in the week of 6.6.2011. (-77% less coins for instant).

By buying instantly, the largest advantage over DCA would have been by buying in the week of 27.9.2010 instead of during the following year (+629% more coins).

Haha, fail. Gandhi would never pay attention to ramblers.

China is still 6.5% higher than west. At that rate there is some but not much flow. I expect it to close totally this week, which means that China demand no more supports western orderbooks. Then we'll see how much new western money can influence the price.

We need 5 times more sustained fiat inflow, to go on from here, compared to 2 months ago. The exponential trend shows that, on average, the money inflow grows only 50% in that period of time.

It crossed Y1,000 in Oct 19, and (almost) hit Y7,000 in Nov 19.

+600% in one month, followed by a -50% initial reaction and now struggling to consolidate high in 5,000s.


Now this reeks of desperation. I feel ( )that in the end the bears are right after all. They can sit on both the fiat gains and the bitcoin gains, whereas the bulls will rush to the exits when we go south because their portfolio is all-in and it is consuming them.

It takes roughly the same amount of new money entering in, to raise the price from $200 to $800 than it takes from $800 to $1400. In the October runup, we had undervalued starting point, stellar news and China mania. For December, we have "to the moon" from people who have no fiat in their bank account that could possibly lift it to(wards) the moon, short-term overvaluation, and an overhang of pending sales from rational investors who diversify as price rises.

You dream of exponential new money flowing in. Yeah, long term you are right. Just hold onto your coins while we dig deeper  

Don't you think they read my writings..?