Isn't this just the Federal auction coins from the Silkroad seizure getting plowed back into the market? 

A whole lot, but...  It is very easy to imagine a steady state in which rational investors keep a lot less than a tenth of a percent of their holdings in Bitcoin.  If your economy is not managed by fools, you don't really need much of a hedge against currency crisis and capital controls.  If OTOH, you live in Cyprus or Argentina ....

I think the last few months has seen a number of transitions in the market for Bitcoin. 

First, and most importantly; the speculators are starting to drift away.  With the price stable or gently declining for a few months, the kind of mindset that wants to make 20% a month minimum just doesn't see the excitement any more, so greed is weakening.  And because greed grows weaker, fear grows stronger.  Fear begins to overcome greed as the herd instinct kicks in.  The speculator is depending on other speculators staying in the market.  The realization that speculators are exiting the market, combined with the underlying suspicion that the market may in fact be primarily sustained by speculators, means that a mass exodus could cause a collapse, and the speculator does not want to wait.  To be the last one to get off the sinking boat usually means getting off underwater.

Second, the infrastructure needed to actually use Bitcoin as a normal investment or for buying things is more and more present.  More and more merchants and retailers are working out deals with payment processors to deal with Bitcoin payments.  More and more startups and technologies exist to try to make Bitcoin easier to manage and deal with.  And more and more mutual funds, hedge funds, market trackers, etc, exist to help people manage Bitcoin as part of an investment portfolio.  Regulation about it is still murky, but less so as time passes.  It is definitely better integrated into the financial infrastructure of the world than it has been before.

Third, whales are moving.  Very slowly and very carefully, some people with deep pockets are buying all the mining output and the stocks sold by speculators drifting away.   But they're not bidding up the price in order to do it, they're just backstopping the larger price declines.  They're starting to accumulate some large amounts but don't seem to be in any particular competition with each other, nor in any rush. And whoever they are they're being very quiet.

Fourth, despite the increased payment processing infrastructure, I'm just not seeing the uptake of Bitcoin as a payment system.  So far these systems don't offer retailers who immediately trade back to USD or some other government-issued currency much real advantage in costs, and I haven't heard of anyone offering a price break to customers for using Bitcoin.  The approximate volume of trades on the blockchain remains steady, instead of increasing the way one would expect if newegg, overstock, et al were getting a lot of Bitcoin business.  Bitcoin solves the value-transfer problem better than other approaches, but it does not appear that this particular problem is seen as a pain point by the consumers who'd have to abandon their accustomed channels for value transfer in order to drive its use. 

So on the one hand I'm seeing a collapse of the speculation market, but on the other that collapse is being backstopped or slowed by new purchases which are being made by people who are being very quiet and patient.  On the other hand I'm seeing a lot of payment and investment infrastructure falling into place, but the payment infrastructure is not being widely used - at least not yet. 

I'm backing up and trying to see a bigger picture here.  Ultimately, I wind up asking this question; does Bitcoin have value as an investment outside of speculation?  IOW, is there a legitimate specific role for Bitcoin as a long term investment, aside from speculative thinking that it's going to be valuable because other speculators will want it because it's going to be valuable because other (( recursive regress ...))? 

I think that there is.  Bitcoin has a valid investment role as a hedge against liquidity crises, capital controls, and foreign-investment tariffs.  It will be beneficial for diversified investors to hold some Bitcoins, even if in the long term Bitcoin underperforms the market, because in circumstances where their other investments post losses Bitcoin will post gains, insulating the investor against catastrophic loss.  Gold occupies a similar niche, but Gold is all too easily stolen and difficult to transfer over long distances immediately. 

But ...  How much? In a universe where Bitcoin has reached a long-term stable valuation (ie, speculators no longer a significant part of the equation) you actually need to be doing something fairly esoteric in your investment portfolio for Bitcoin to be more advantageous than some other investment.  It's hard to imagine a steady state in which rational investors keep more than a tenth of a percent of their holdings in Bitcoin. It will almost always be better for them to diversify or hedge using some other instrument with a greater upside.   Of course the same is true of going short on stock or bond positions, and a lot more investors do that than it's advantageous for.  So advantageous or not, there will always be some demand driven by short term speculation.

We live in Interesting times. 

Cryddit

http://www.secureworks.com/cyber-threat-intelligence/threats/bgp-hijacking-for-cryptocurrency-profit/

1) Get access to a switch at an ISP (or, really, anywhere in the network fabric)
2) Divert mining getwork requests to the cracker's own pool server
3) Run a mining pool that none of the participants know they're in
4) Don't pay the participants.
5) Profit!

Most currencies have value by government fiat.  Bitcoin has value by USER fiat, which has historical precedent, but  it's something that has been the exception rather than the rule for the last eight thousand years or so.

Mining is, well, it's mining.  Conversion of electricity into Bitcoin.  How much Bitcoin is produced per unit time is constant in the long run due to the diff adjustment; a declining bitcoin price would just mean converting a correspondingly smaller amount of electricity into bitcoin.  So if for example the price were to decline from $580 to $290 over the next month, you'd see about half of existing mining hardware taken offline, and newly-minted bitcoins would continue to appear on the market at approximately the same rate.  And when the price came back up, you'd see as much of that mining equipment as were still efficient enough to be profitable coming out of storage and going back online. 

The only thing the price really affects about mining is how much electricity the miners are willing to convert in order to get one bitcoin.

In any decision about which of two potential branches to accept, the transactions-as-proof-of-stake method (aka heaviest-subtree model) prefers the branch whose transactions have spent the greatest proportion of the txouts that existed at the moment when those two branches diverged. 

In order for this to work, transactions must belong clearly to one branch or the other.  So the transaction itself has to have a block ID embedded in it, and it counts as "support" for the branch that includes that block ID. 

So the 'finite resource' that must be used up to support a branch and which, if used, cannot also be used to support another branch, is coins in txouts, not hashing power.  And the people who deserve the coins for helping to secure the blockchain are everybody who made a transaction using their stake, rather than whoever came up with the winning hash. 

I believe transactions-as-proof-of-stake (the heaviest subtree model) is probably the best alternative to proof-of-work - and it isn't all that good.

The basic idea is that the "finite resource" available for deciding to prefer one chain over another, is the set of unspent txouts that exist at the point of the chains' divergence from each other.  If transactions must give the hash of a very recent block (parent or grandparent to the block they'll be in) then they can be counted as a "vote" for a chain including that block. 

In practice, this makes it possible for an attacker to spend ten coins in one chain, then support a different chain by spending a thousand coins (probably to himself) there, and if the second chain is accepted it 'unspends' his ten coins.  Obviously this only works as a double spend if he does it before everybody else in the course of regular spending puts the first chain a thousand coins ahead. 

But it gets worse than that, because at any given moment there may be dozens or even hundreds of crooks looking for a chance to double spend, and if two competing chains appear, their efforts to make a small initial expenditure in the apparent leading chain and then dump a huge transaction into the second chain all reinforce each other. 

On one hand, if everybody understands the security requirement for transactions as proof of stake and regularly transacts their coins several times a day, (which you can arrange with a proof-of-stake interest/security payment for each transaction) the crooks shouldn't be able to overwhelm that traffic with their timing games.  On the other, that would generate an absolutely enormous blockchain and have a high communications overhead.

So in the short run, it doesn't work.  In the long run, it can provide an absolute security guarantee given enough time; Once more than half of all the coins in txouts that existed before a block was created have been spent, that block becomes absolutely irrevocable no matter what proof-of-work anybody pours on or what manipulations they do with spending and transactions.   

I don't know if the hash rate solution to byzantine-generals is in fact the right solution.  In the presence of rentable computer power, it doesn't necessarily fulfil the assumptions that the security of the model is based on.

There are other solutions to byzantine-generals, but they require O(n^2) communication so they're even harder to scale to large numbers of users.

We have Eve, Sybil, and Trent to worry about. 

Eve is eavesdropping on the blockchain to discover where (what IP address) transactions originate.  In addition, she does blockchain analysis to identify actors and associate them with past transactions.  Generally, we tolerate Eve because we can't create a completely opaque Eve-proof system without creating a Trent. 

Sybil can create any number of wallets/accounts at any time, making voting mechanisms useless.  The hash rate consensus mechanism was supposed to counter Sybil, but in the presence of rentable hashing power, Sybil can (if she pays money) subvert this mechanism as well.  Sybil is endemic to anonymous trustless systems. 

Trent is the "trusted" authority - a centralized node whose defection is capable of making the system not work.  We have tried very hard to avoid creating a Trent.  The Zerocoin proposal's main problem is that it requires a Trent to set up the encryption parameters.  If Trent defects, there can be any amount of hidden coins in the blockchain and nobody will be able to show it.   Existing solutions to Sybil attacks require Trent to issue accounts linked to keys so that Sybil can't just make up as many new ones as she wants.   

Anyway:  No way to completely avoid Eve and Sybil without creating Trent.  No way to completely avoid Trent without tolerating Eve and Sybil. 

Regarding Lottocoin, during the period I've been tracking it I've observed market capitalization ranging from 23454 today to 90279 at about this time last month.  So, yes, it's lost 75% of its value approximately, but no, it isn't yet dead, even by the criterion I've been using.

Datacoin and philosopherstone removed; they were on there by mistake apparently.  Added a bunch of other things, mostly new cryptocurrencies that got onto exchanges via a bribe instead of via being valuable enough to be good for  the exchange's business.

Anything which isn't dying can stay above $5K for 90 days. 

Until then, all I can tell you is, best of luck!

Cryddit

Maybe on July 22 2014 at 3:20 PM pacific time.

 

I don't need to.  I got lucky with Bitcoin; Nothing too spectacular, but I quit my job, and my house and retirement are paid for.  Thank you Satoshi.

So aside from the occasional "gig" working for someone else with a cool project, I code for personal satisfaction rather than for money. 

Given the current, dishonorable state of the cryptocurrency market, and the predominance of people who absolutely cannot see it as anything *other* than a potential scam and/or a potential investment, and the inherent fact that as an investment it is almost bound to fall short of their ridiculous expectations causing stupid rage?  Also given that if released a lot of them would be using it to scam others, or demanding development I have no interest in to make its "investment prospects" better by making it easier for them to scam others with it?    I mean, this is the set of patterns I see in the alt markets right now....  No, I don't think I'd find that very satisfying.

So today I'm coding on a roguelike game instead - competing with nethack is a project GUARANTEED to make zero money ever, but at least it won't contribute to any scams and people won't get butthurt if I refuse to provide them with ways to get others to "make easy payments" so easy that they make them without even realizing where they're going.

There was a time when I considered doing an altcoin.  I have some good ideas for technical innovations, starting with multivalent amounts (like colored coins but built into the protocol so you can't mess it up with a stupid client). 

I even developed the code for it.

But then before launch I started seriously looking at the altcoin market, and ... ghod, it's a cesspool. 

Between exchanges that accept bribes to  list coins and blatant market manipulation scams, tactics like burst mining, the outright scamming, etc....  it's the sort of thing you just cannot do honorably any more. 

So I didn't. 

Today added Forexcoin, PHcoin, Bitquark, Wavecoin, Magicoin, Huskycoin, qubitcoin, groincoin, compasscoin, capitalcoin, and Globalboost.

Done. 

Counterparty's already on there. 

Nobody really knows, but some of us are pretty confident about our guesses.

Are you confident enough to put up 1/10 BTC on an even-odds bet?  I will cheerfully bet at even odds that the price of Doge (assuming they don't restructure their mining subsidy) will lose 50% or more of its value (as measured in Bitcoin) by 21 January 2015.  

Doge will collapse sometime in the next year. 

This is because the mining subsidy is being halved, several more times, and each time that happens, in the presence of cryptocurrencies that are providing relatively stable mining subsidies, it's going to cost doge about half its mining effort. 

At a point about six months from now, it will merit (on the basis of mining profitability) less hashing power than several other altcoins with market capitalization less than one percent of its own. 

Unfortunately, it needs security (hashing power) in proportion to its market capitalization.  When its hashing power drops as low as that of another altcoin, it becomes as easy a target for an attack as that other altcoin; but because of its higher market cap the attack on Doge will be proportionally far more profitable. 

So the attack will be launched, eventually; some major chunks of coin will get double spent, scammers will make a ton of money off attacking the coin, and then (once the scammers have spent theirs) everybody else will get a chance to revise its value downward to no more than the remaining mining effort can secure.

I'm annoyed with Spoetnik for starting this topic without pointing out the technical reason why Dogecoin will fail.  His idea of "bad" is purely hyperbole and without basis in fact.  I agree with him that Dogecoin is in fact bad, but he is supporting the idea with damnably weak arguments and in a way that antagonizes people, rather than by pointing out the facts of why it is (like most fast-mined alts) guaranteed to fail. 

Destiny coin isn't on my list of 820 cryptocurrencies.  Putincoin either.