Just a quick reply ...


Don't know the the Bitpay wallet statistics, but would be interested. Any link for it?

Anyway, in my opinion there are two general problems with your counter-arguments to the adoption evidence.

(1) Presented with several metrics that intuitively seem to be half-decent proxies for "adoption", you find fault with any of them on the basis of what I'd call minor problems. But maybe I get what bothers you...

If it makes you more inclined to see it my way, I will admit this much: I agree. We cannot be absolutely sure adoption is growing based on those statistics. They could be (partially) fake. They could over-represent non economically significant transactions.  And so on.

However, they are the best approximation we have, and by and large, they point to increasing adoption. So while I agree that there remains some epistemic uncertainty perhaps, there is little aleatoric uncertainty that adoption grows given this data.

(2) You don't really follow the Copernican principle applied to time when you only concentrate on a very narrow range in the very recent past where adoption did not soar like it did before, and conclude from it that there seems to be no further adoption - ignoring that overall the adoption metrics are significantly up compared to where they were a year ago, and vastly up from 2 years ago.


Okay. Here's another one, this time, pure merchant driven transactions:

In May 2013 Bitpay had a volume of 5 million USD per month processing transactions on behalf of their merchants. (source)

A year later, May 2014, it's 1 million USD per day. (source)

Time for the same spiel again? "Maybe it's up from May to May, but how can we be sure that from May to now adoption continued?!" Yes, we can't be sure. But given the (often incomplete, chunky) data, I consider the hypothesis "growing adoption, though maybe not growing as fast as in the very early phase" more likely than "sudden and complete saturation/end of growing adoption".

I'm not going to argue about the rest of your post. It's on a pretty shaky argumentation basis in my opinion, but more importantly: it's really rather unimportant how much exactly the individual bidders paid at the auction. It was near-ish market with high likelihood, and will only matter in the short term anyway.

I'm more interested in your claim that "We don't really know if adoption is growing". We've had a similar discussion before, iirc, but anyway, here's my argument in a nutshell:

(a) We actually can be pretty damn sure adoption is growing, unless you willfully ignore data (or start dismissing sources without any evidence to motivate that dismissal)

(b) Adoption is perhaps not growing quite as fast as some thought earlier, and the current bear market could at least be (partially) caused by that.

In support of (a), the well-known chart of no. of network transactions (excluding popular addresses). 2 years, linear scale, 7 day average. As always from blockchain.info



The data is not likely to be significantly "faked". Why? Because the faker would do a piss-poor job in that case. Took us quite a while to break the previous tx ATH from late 2013, which ties back in with claim (b) ... usage is growing, but possibly not as fast as anticipated a year and a half ago.

Here's another good one, this time not from blockchain.info. It was chodpaba who pointed out in some discussion a long time ago that effectively, trading volume is "usage" as well - the distinction between "speculative" buying and "usage" buying is (mostly) arbitrary.

Trading volume (in USD) over all USD exchanges, last 2 years:



And the same for CNY:



Yes. USD volume still below peak from late 2013. However, significantly above most of the rest of 2013. And CNY is a completely different beast anyway.

Now here's maybe one of the strongest arguments in favor of (b) - adoption / usage is growing, but slower, based on USD tx volume:
1) USD tx volume is still below the peak  which isn't such a surprise considering that it shoots up during a rally / at an ATH, but more problematic is
2) it is growing only at a rather comfortably slow pace (NB: linear chart)



USD tx volume should be a reasonably good measure of the 'medium of exchange' aspect of Bitcoin, because for most goods purchased, the unit of account in which the goods are priced is USD, so a growing USD tx volume despite falling prices is a sign there is more medium of exchange usage - but it's not exactly skyrocketing either - since the middle of this year, it's been steadily climbing up (despite falling BTC/USD), but not going through the roof exactly either.

What is there to say? 350 retest pretty much certain, 340 as well in all likelihood. Where we go from there depends on where you see the market heading mid-term, billyjoeallen et al think another dip for 2xx is the most likely outcome, I'm still leaning towards 'excruciatingly slow grind up, but no new sign. low'.

Said it before, I'll say it again: I for one welcome our literate bear trolls, like Jorge or Lambchop.

They're wrong more often than they are right, but they raise a good point once in a while (Jorge) or post something hilarious (Lambchop).

#reacharound #whysmynosebrown

Trying to channel Lambchop here, huh?

I'm not sold on the idea that  Bitcoin is dead if it falls below some price X.

Keep in mind, price decreased by factor 16 and recovered anyway, 2011 to 2013. I'm not  convinced yet we'll make a new significant low from here, but obviously I could be wrong. So let's say we'd go below 340, then 320, then back to 270, fall through and go below the previous ATH.

Going back below the previous ATH would be a first in BTC trading, that's for sure, but so what? What it would do is most likely kill all the previously held speculative notions, the idea that we're practically ensured to see an exponential price/mcap increase, or that "Bitcoin will go to 1 million USD eventually".

In that case there's a good chance a vast number of current investors would leave for good, and price would deflate to level that seems laughably low right now... but then what? Others will pick it up from there, as long as there is the confidence that Bitcoin is useful for something after all. Cue the trolls: "It's about as useful as beanie babies or tulips". I don't need to tell you that's just noise. The usefulness of Bitcoin (or crypto in general) is undisputed. What is up for debate is the scale at which it will be used (and, as a consequence, what the valuation of the network should be).

What I'm getting at is: the worst case you describe is effectively a worst case for the previous valuation model of Bitcoin, but that's not quite identical to the death of Bitcoin (or its valuation, for that matter).

Spoilsport.

Should have probably specified, by "m'ladies" I meant this:





(Nevermind boring old me on the first picture ^_^)

Yeah, that's not how it works, unless you balanced it out completely.

Care to give us a rough idea of the ratio of one to the other? That should determine sort of how much you care which way it breaks out.

I like to introduce myself as a crypthusiast in real life, followed by a quick tip to my fedora. The m'ladies dig it.

Your economic model and reasoning is based on the assumption that the current market price (or values very close to it) fully reflects each economically rational actor's valuation of one Bitcoin unit. Assume on the other hand your goal would be to acquire a substantial position of, say, 1 million BTC. Buying a significant fraction of that position on-exchange is not in your own best interest: you will get slightly closer to your desired position, but in the process, you will drive up price substantially, thus reducing your chance to get the full position you wanted. The only available long-term strategy for you will be to accumulate off-exchange, or at most accumulate on-exchange so slowly that you will only have a negligible influence on the on-exchange price.

Note: The above is not equivalent to the claim that Draper is accumulating a large position off-exchange. It is simply an argument in favor of why an on-exchange price of x does not necessarily entail that big money is not willing to pay x for one bitcoin - it is only evidence that big money is not willing to pay x for one bitcoin on a public exchange.

Sure, if by 'proof' you mean "assuming that my overly simplistic model of economic decisions is correct".

Alternatively, he might think Bitcoin is well worth above $375, but knows that he a chance to gather a much bigger position if he doesn't buy it on-exchange, because off-exchange prices seem to (largely) follow the on-exchange price as "the market price", while there is no public price finding mechanism for off-exchange transactions (excluding localbitcoin).

@Bitcoinwisdom

Two requests/questions:

(1) Could you add OkCoin Futures?

(2) I think there's a bug in the weighted price average. Look at this for example:



I think you said that average price = price on exchange weighted by volume^2, but in the example above, average price is *below* Bitstamp and Bitfinex price which together make up almost all of the total USD volume. Maybe some error in the calculation?

I recommend Mozzarella Foxfire.

It's not exactly a party if you don't share your booze. More like, alcoholism with a pretense


As if I'd share my beautiful Ardbeg or Hibiki with anyone.

I think we should all just try to get along... bulls and bears, serious posters and trolls, hodlers and daytarders, libertarians and mind-controlling space lizards, and so on

@ask Thanks for the kind remarks. Must be the new shipment of whisky I just received having a beneficial effect on my brain hehe

I'd say that at -20% of market (which was what the comment I responded to said), there's plenty of wiggle room for slippage, even for a large stash like that.

Anyway, this is hypothetical. I doubt some large enough entity with the means to arb Bitcoin on this scale will do so on-exchange. Arb profit can also be gained by securing at a price below market a lot that will be sold OTC at a contractually bound price near market.

Anyway anyway, this is hypothetical. The above only describes why I consider it unlikely the auctions would sell vastly below market. There are reasons why they might be sold (somewhat) above market as well (government "cleared" coins, no on-exchange counter party risk).

Thanks for making some sense. Just like last time: don't think anyone could conclude from the public sources for what price the lots went exactly, but anyone thinking it was hugely above or below market is/was fooling himself. That's the magic of auctions and arbitrage: somebody will bid close to market, if for no other reason to to collect a (relatively) safe profit through auction -> exchange arbitrage (if he gets them below market that is).

As opposed to high-frequency troll posters: Plenty of data points to conclude, with high confidence, just exactly how pointless the overall contribution is ^_^

Don't worry, if that happens, I will. Signal still says BTC. Not exactly surprising considering that we are hovering around the price at which it flipped green in the first place.