Too many bears.  I jest, but there are a good number of people who will say it with a straight face.

IMO: The fundamental need for coins very low and will not increase until it's in much more widespread use.  Until then, high prices are based on speculative buying, and speculative bubbles pop.  So here we are.

You need to find a problem that is: 1) very hard to solve (about 20,000 GPU-hours per solution); 2) trivial to verify it was done correctly (less than 1 GPU-second per check); 3) politically neutral (we have to agree on the problem being solved, and some people will object to using their GPUs to solve some problems).

Brute forcing SHA256 to sign a block is very hard, but once it's done it's trivial to verify the solution, so it's perfect.  You could make a hard F@H problem that takes 20,000 GPU-hours to solve, but then it would take 20,000 GPU-hours to verify that the solution was done correctly, so it doesn't work.

It is generally believed, but I'm not sure if it's proven, that it is impossible to have a problem that satisfies both 1 and 2 while performing useful work.  No one has proposed one yet.  F@H fails on #2.  If you can find a useful problem that satisfies both conditions, please let us know!  I'm sure it would be readily adopted.

We have to find a useful but universally benign problem.  F@H would be fine, but "renting out" will be strongly objectionable.  We need to find a single problem that the network can standardize on for a long time.  This part is easier than finding a problem that satisfies both 1 and 2.

Also, you're playing with fire using the word "backing" here.  It has a specific meaning: If you no longer want your coins, you can trade them in to get something back.  Doing useful work to generate coins does not come with a guarantee that you can get that amount of work back when you turn your coins in.

I have nothing intelligent to add, so I'll just say:



I like where this currency is going.

If you're speculating on long term success, buy and hold.  I wish Bitcoin wasn't a speculative asset, but it is what it is, so I'm not going to rag on you for that.

Market makers and arbitrageurs can milk the volatility wherever it goes, and they're a positive influence on the whole.

I'm just mocking the ones who're capitulating all the way down and panic-buying at every twitch back up.  They don't know what their strategy is and acting on emotion.  They're textbook speculative noobs, making things suck for both themselves and the rest of us.

We still have a whole lot of True Believers who aren't sure when the bad times are over and they really don't want to miss their opportunity to get in on the Biggest Thing Ever.  They'd be long now if they hadn't already lost 80% and just couldn't afford to lose any more while this thing was going down, but Despair will be over SOON!  I mean, it's been bottomed for weeks, right?  So one of these waves is going to launch it!  And they're not going to be left out.

At least that's how it goes in the stock market.  And Vegas.

The last few days have been courtesy of one or two individuals.  The market is going where they're pushing it.  You can't really model market behavior until they decide they're done.

You can: try to predict what their next moves will be; or try to predict what will happen after they quit screwing around; but you can't really say what will happen "in the next day or two" based on the charts.

Cheaper than PayPal or credit cards (even with trading fees)
Much cheaper than other irrevocable payments (wire transfers)
Easier for international buyers
Works for things that PayPal doesn't allow like virtual goods, porn, or Wikileaks
Privacy / anonymity
Microtransactions

I'd love to use it for a value store as well, but that will wait.

+1, I agree completely.

I was alluding to this when I said "broken economics", but I didn't want to derail the thread with my usual pitch.  Suffice to say, there are several people working on interesting ways to improve it, most likely in another cryptocurrency since the changes would be too controversial for Bitcoin.

If it's a 16 character password and you can guarantee that they're all right except one, it can be easily brute-forced.  The more characters that are wrong the harder it gets.

I don't know if anyone has written a script to do this yet.

aaaaand... it's gone.

To the OP:  Sure, a single person propping up the price means the end of the bear market...  Until that person decides they're done.  Then the market goes back to being a market.  The only way it lasts is if he convinces enough people that the bad times are over.

IMO he'll have to spend a lot more to overcome the overall downtrend which is, again IMO, due to bearish fundamentals.

Sure it would.  In a thin market, someone with 0.1% of all BTC could crash it from $30 to $3 just as easily as from $3 to $0.30.

I want to see 5% market depths.  Then we can talk about needing more price...  But we won't need to, because the price will rise naturally.

... This is kind of inspiring me to create another price model based on market depth.

That, not the price, is the problem IMO.  Too many people desperately clinging to their brick in the pyramid and hoping to get rich; not enough people creating commerce.  The price declining toward fundamentals is slowly correcting that problem.  We don't need "most" (or even double digit percentages) of the coins to be on the market, but the current miniscule fraction is unreasonably low.

I'll just leave it at that since my thoughts on Bitcoin's broken economics are (and belong) in other threads.


My business can't happen in BTC until there's liquidity for transactions of tens of thousands of USD, or better, enough value stability that I can just hold the BTC.

... But again, I need market depth.  High prices alone don't provide depth unless they're backed by commerce.

You kind of implied it when you said "A higher price would mean generally lower volatility" in a thread about getting the price back up.  Sorry for the rant if that's not what you meant. 


Nor am I advocating an artificially suppressed price.  I just want it to fall naturally until commerce raises it again.


True, but the Bitcoin economy can be one or two orders of magnitude larger than it is now (along with 1-2 orders of market depth, and 1-2 orders of stability) without raising the price.

Again what you're saying isn't wrong.  It's just that you're implying that you want the price higher when really you want a large economy (which happens to cause a high price).

Last time before I drop it:  A large volume of goods trading integrates Bitcoin into a larger economy.  This causes: 1) correlations; 2) stability.  It does not cause correlations which in turn cause stability.  The correlations are just the consequence of being part of a larger economy.



I agree with everything you say here.  I disagree that propping the price up helps liquidity.  Unless it's backed by large amounts of commerce (and therefore trade volume), it's just a high price in a thin market, and therefore subject to high volatility...  Even worse than a low price, since a propped up price drops whenever the fleeting interests of the price-proppers changes.

The high price is an effect, not a cause.  You have to create the root cause: commerce, which creates volume, which creates depth, which creates stability.  Note that "price" isn't in that chain: it's a sibling of volume, an effect of commerce; artificially recreating a correlated sibling effect (high price) does not magically recreate their common cause.

It's like saying that land with lots of wildflowers makes a good place to grow crops.  Sure, they correlate - because they have good soil, rain, and sunlight.  But planting flowers everywhere doesn't make the land good for farming.

A 51% attack doesn't let you steal wallets.  It only lets the attacker double spend their own coins.  Even then it's impractical to do in most cases.


Normally I agree with you.  In this case we have an individual who's placing some very large bids that go against obvious profit interest.  Short-term these moves are losing money in a big way.  He's either: 1) trying to help Bitcoin by propping up the price at his own expense; 2) trying to manipulate market sentiment for a risky long-term play; 3) a fool being parted from his money.

1 and 2 ARE manipulation.  3 is just business as usual except that we normally don't see a single person with that much money to burn.  Fools usually come in flocks.


I like the blue leather.  Black has been done to death.

Commodities and stocks correlate to each other when they have broad use and relevancy to each other.  Gold, oil and USD have some well known correlations because people are trading huge volumes of each to a practical end.

Bitcoin would correlate to oil if people started buying oil in BTC.  That (and a hundred other similar things happening; you can't have one alone) would also correlate to a great deal of stability in BTC because that would be an enormous growth of the BTC economy.

That doesn't mean the price correlation CAUSES BTC to stabilize.  You're mixing up cause and effect.

Fat pixels for people who can't figure out Ctrl-+.

What an interesting day.  I'm usually not a believer in The Manipulator.  Most of the time people say it and I look at the charts and I see some walls on either side of the spread representing some arbitrageurs or market makers leaving their hook in the water, moving in rational ways predicted by commissions and profits.  I post my charts, say "point him out", no one does other than saying "OMFG walls", I roll my eyes and move on.

Today's different.  This was really interesting behavior by a single entity, either an individual or a coordinated group.

The left side of my chart is 22:00 GMT.  Interesting moves:

0:50: Mr. X sells 50k.  Crash.
1:00: the market behaves normally.
1:50: Mr. M: I'm in.  $2.50.
2:30: M: $2.55
2:50: Mr. X sells through him.  Ouch.
3:00: The price is creeping up and M starts backing it as it goes to prevent any sells from freaking the little run.
3:15: He pulls back to $2.50.  Perhaps he's hoping 15 minutes of running it up is enough to start a rally?  If so it didn't work.  Crash to $2.50.
3:30: Mr. X sells right through his wall.  That was expensive.  M puts it right back up.
3:55: Repeat.
4:00: M pulls back to $2.40.
4:15: Down to $2.30.  I'm pretty sure he pulled the $2.40 wall before the dump hit it.  I'll have to check trade history to be sure.
4:20: He puts in a 3 bid spread.  

... And after that, the dumps stop.  The market starts to behave normally again.  He catches a couple more small sells, the market continues to drift up, and he keeps backing it.

Mr M is clearly one entity.  Mr X is uncertain.  Someone wanted to unload some coins, but it's hard to say if it's just one guy.  Some are probably panic sells.  Some are probably exploiting M's bid wall - hey, if you want out, the time to do it is when someone's putting up a huge wall that you can dump into!

This cost M a whole lot of fiat.  He gained a whole lot of BTC, and saved the price.  I hope he wants them because he won't be able to unload them for a while.

But why?  I can speculate two reasons:

#1, for Bitcoin's sake: he's willing to throw a bunch of money into stabilizing Bitcoin.  That could be MagicalTux or anyone else who has a financial interest in a strong Bitcoin economy.  It could be someone simply doing it for altruistic reasons, or because they hate PayPal.  (Revalin holds his fist in the air!)

#2, corner a market and get rich quick!  This is very hard to do right since you have to convince other people to do your work for you.  If he has a whole lot of BTC and wants to cash out he'll need to create market depth.  By propping up the market at $2.50-$3.00 he can put an end to The Great 2011 BitBear.  By finishing Despair as quickly and cleanly as possible the market will regain confidence and hopefully start rallying again.  As it does, he can gradually sell off his holdings starting around $3.50-4.00.  Depending how much he has to dump that may prevent another bubble from forming (no complaints there); despite his dumping there may be a strong stream of investors to buy his BTC since they are no longer Despairing.  If he's really good he can run it up higher before he sells...  bigger risks, bigger rewards.

If it's #2, he'll need to stir up some hype soon.  All the stability in the world doesn't do any good if no one is watching.  I still contend that the fundamentals are very poor, so the price isn't going to rise on it's own without another big influx of outside interest.

If you get more buyers the price goes up; if you get more sellers, the price goes down; if you get more buyers AND sellers, the market depth goes up regardless of the price.

I'm not sure how any of that relates to the known number of coins.  We know exactly how many shares there are of GOOG.  So what?

Higher prices don't create stability.  Market depth does.  $100k of market depth at $100 isn't any more stable than $100k of market depth at $1.

Bitcoin's instability in the early days of trading was due to price discovery in a brand new market with very shallow depths.  In the grand scheme, these are still the very early days, and we're still doing initial discovery.

It's just my opinion and hope that the market will eventually discover fundamentals.