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1  Economy / Speculation / Bitcoin price cycles on: November 21, 2015, 02:32:46 AM
(Note: This is a follow-on thread to my original one about price cycles; however, as I have re-analyzed things, I think at this point it deserves a new starting point.  See that thread for more background.)

I have been looking at trends in the Bitcoin price for a while now, and I've been noticing something, which I will detail below.  I think what I am seeing is the result of a couple of things:

  • Bitcoin is a unique ecosystem.  It has arguably been allowed to grow organically, and as such I think the price is exhibiting some natural cycles, not unlike what you would find in nature in cycles of sunspots, plant shapes, sea shells, tree rings, etc.
  • Price is, of course, driven ultimately by people.  Now, individually people's behavior is almost impossible to predict, but in large groups, certain fundamental patterns will exist.  Basic human emotions such as fear and greed are behind a lot of it, but regardless of exactly why it is, people can be somewhat predictable in large groups, not unlike animal herds or insect swarms.


With that in mind, I looked again at the price of Bitcoin over time, and tried aligning some of the peaks in price.  Previously this wasn't overly successful (although some general similarities showed up), but this time i though I would see what would happen if I looked at a full cycle between the peak in June 2011 and that in November 2013.  It turns out that there is about 903 days between those peaks, so I am going to round this to 900 and plot the data.  Observe:



All of a sudden there is clearly some repetition to the price cycles.  The scale is different, of course, but the trend is up, and the major events correlate quite well.  Know what else?  That 900 cycle divides neatly into 3 phases of 300 days each:



Each of those phases is marked by some clear trends, which has repeated each time.  (And yes, I know we would only be in the third cycles, but at least now, if the concept holds, behavior can be seen in the previous 2 cycles).  I'll break each down below.  Note that a 300 day phase is about 10 months, which is quite a long period of time in Bitcoin.  Here are the same graphs in linear scale, each on their own graph:







Phase 1: Initial runup
This phase is marked by a generally level or rising trend in the price, with one or two distinct jumps in price.  Note that the price run ups, as has happened with every major price increase, are followed by a fibonacci retracement, but in each case ends up higher than before the runup began.  In each cycle, Phase 1 ends with price being about an order of magnitude higher than at the start of the phase.  (Cycle 1 Phase 1 I didn't get the data for the first 40 days or so; doesn't really have much impact, and with such as low price and relatively low number of people trading, I wouldn't bet a lot on it's worth.)

Phase 2: Long phase exponential increase with more volatility
Each of the major runups in the two previous cycles (one in each) has been another order of magnitude increase or more, followed by a retracement valley and then up again before the phase ended.  The end of the cycle has been between about 6x and 10x higher than the start.

Phase 3: Volatility and instability
The least predictable of the 3 phases.  Cycle one showed a general increase over time (~50% increase), while Cycle 2 had a drop-off of about half.  Note again that this is over 10 months, so while a long slow decline is painful, it's not that bad in comparison to the overall trend.  Interestingly, there is a "hiccup" in Phase 3 of each of the two cycles, occuring at almost the same time (about 2/3 of the way through the phase).

What drives all this?  I'd characterize Phase 1 as showing pent-up demand (and maybe fading memories) about the last major increase, which, by this time, would have been well over a year before (previous Phase 2).  Phase 2 shows confidence gained from Phase 1 resulting in increased demand.  Phase 3 shows some shakiness in the confidence and basically is a "rebuilding" phase.  All these things are probably affected greatly by media attention, which also (I suspect) goes in cycles. 

As I said above, I think people's behavior as a group follows trends, even if individuals' behaviors are not predictable.  It is the individual volatility, such as the implosion of Mt. Gox and the clamp down by China (both back in 2014) that is trying to break trends and cannot be predicted.

What does it mean going forward?  Maybe nothing.  I'll say again, as I did before, that past history does not predict future performance.  However, look at the points and trends which correlate between those two previous cycles.  That's a lot of coincidences.  The cycling also predicts that before March of 2016 we should have expected at least one or two major price spikes.  We had one this month; if the cycle holds, there will be at least one more before March 2016.  Note also that the halving occurs part way through Phase 2 of this current cycle, which is widely expected to drive price up. 

So maybe there is something.  Maybe not.  But I have been getting tired of all the meaningless posts lately and wanted to post something new.

Oh, and if you are into numerology, there are a lot of "3"s in this analysis!

Disclaimer: I'm tired, and am not going to proofread this post now.  Have a good night, all.

2  Bitcoin / Project Development / [ANN][ALPHA] BitcoinRunner - an arcade-style scoller powered entirely by Bitcoin on: December 29, 2014, 05:25:34 PM
    I've been working for a while on a video game, fashioned after the older-style side scrollers, which is powered entirely by Bitcoin.  The game itself is playable at
http://hacknoid.ca/bitcoinrunner/ however, note that it currently is at alpha stage.  I was inspired last summer by some innovative visualizations of the Bitcoin network, such as BitListen, and it occurred to me that there is lots of (effectively)  random data created constantly in Bitcoin, and this could actually be used to created the playfield for an arcade-style game.  So, after picking away at it for the last few months, I am happy to say the game is now available and playable!  Feedback is welcome (twitter.com/hacknoid or this thread).

Note the graphics and sounds are really just cobbled together at this point from various free sources around the web, so if anybody with skills in these areas wants to contribute, please let me know.

Alpha Stage Release
Currently the game is playable and all features are there.  There are still some more parts planned, but they may be slow coming.  There may also be some serious bugs in it at this point, but hopefully nothing too major.  Again, please advise of anything you come across.  Gameplay is subject to revision based on feedback.  Biggest problem right now is probably that the game is too hard to lose at!

Bitcoin Powered
So, what does it mean to be powered by the bitcoin network?  Well, just that - all game elements are generated on the fly - there are no predefined levels, enemies are not created by a script, and all the game elements (except some random ones) are created in response to activity on the network.

Specifically:
  • Walls : walls are created from the current bid/ask walls of the bitcoin exchanges dealing in the currency of the current level.
      The top-most wall level is the ask price, and the bottom-most wall is at the bid price.  So as the bid/ask goes up and down, so do
      the walls.
  • Coins/Banks : The coins that appear along the top wall are created when a trade is executed at the current asking price; the banks
      on the bottom wall are created by trades executed at the current bid price.  The actual value of the coin is determined by the value of
      the trade.
  • Energy Coins : The flying bitcoins that give you energy are created by transactions broadcast on the P2P network; their value is
      determined by the amount of the transaction (taken from the first output), and the value in turn determines the coins size and appearance.
  • Motherships : The "motherships" that appear on the bonus levels represent new blocks mined.  The value of protecting the ship is
      determined by the amount of bitcoins in the block.  The time that the ship has to be proteced for is random, based on the historical average
      time for blocks to propogate the network (on average, 90% of blocks will fully propogate the network within 2 minutes, so this is the max
      time the game makes you defend for).

Screenshot


Planned Features
Here is what I have planned so far:
  • Local server - Currently each instance of the game will connect to the exchanges to retrieve data; this will be combined into a local server that the games will connect to in order for more streamlined supply of data (including from multiple sources)
  • Shields for the ship
  • High score list

Credits
I would be remiss if I didn't give credit to all the supporting packages I used to create this:
  • iioengine - This is the game engine the code is written on; it would have been a ton of work to create all the basic code if I had to do it myself.  The engine allows creation of games in only a few lines of javascript if you want.
  • blockchain.info - This is where I am currently getting my transaction information from.  I was using it for blocks as well, but that seemed a little flaky.
  • toshi.io/ - Current source to get notification of new blocks.
  • Soundmanager2 - Used to play the sounds in javascript.
  • Highslide - Create the popup windows for information and help in game
  • Textillate - Used to create the text animation in the opening backstory

Trade/pricing information:
  • bitstamp (USD)
  • bitfinex (USD) (in works)
  • BTCChina (CNY)


Known Issues
  • The first bonus item doesn't usually appear (subsequent ones do)
  • Sometimes the block "ship" doesn't appear... in this case the game will have to be restarted.  Looking into this one...Fixed!

  • Unpausing the game with the help or information window open does not dismiss the window (need to close it with the 'x' button)
  • Muting the sound after the game has started does not always mute the background music; to get around this, either mute the game before starting to play, or add &sound=off to the URL Fixed!

[/list]


So, that's the announcement for now... as I say - feedback welcome, and enjoy!

EDIT: I added the list of credits... sources I shouldn't forget about!  Also added known issues...
EDIT2 (10 Jan 15): fixed the block appearance and sound issues.
3  Bitcoin / Press / 2014-09-19 CCN: Bitcoin Price Goes Down? Good! on: September 19, 2014, 07:05:27 PM

http://www.cryptocoinsnews.com/bitcoin-price-goes-down-good/

Quote
If my analysis is correct, we are beginning to see a structural downward trend, and this trend is good, because it shows that the Bitcoin economy is becoming real, with less speculation and more use as a currency for every day’s life. This is the first phase of the real Bitcoin economy.

I like the points made in this piece - in my opinion, this is the first thing I have read in a while that really helps to point out why we are having the recent price drops, and counts them as actually being good indicators.  Maybe I am just looking to hear something positive, but this makes sense for me.  The argument is that we have been mainly using Bitcoin as a speculative medium for the past while (which I believe), but as people start to use it to actually conduct business the price will go down because people are using coins rather than holding.

As we start to see more businesses and suppliers accepting Bitcoin, we will eventually move into a phase where the need to convert back to fiat in the process disappears entirely, at which point price starts to rise again.

My only issue with this article:

Quote
Everyone and his dog are worried about the ongoing decline in the value of Bitcoin, but I am here to tell you that 1) This is good, and 2) The trend will eventually reverse.

Bitcoin's value has not been going down - it's price has.  Value is different than price, and value is increasing.  It increases with user base, merchant base, acceptance, new tools and applications, etc.  There is so much going on in the ecosystem right now that I think the value is stronger than ever.  It simply is not reflected by the price.
4  Bitcoin / Press / 2014-08-13 Reuters - Overstock CEO says bitcoin sales to add 4 cents to 2014 EPS on: August 14, 2014, 02:00:23 AM

http://www.reuters.com/article/2014/08/13/us-overstock-com-bitcoin-idUSKBN0GD21220140813

Quote
"I think the world expects us to make 75-80 cents per share this year. And 4 cents of that would be attributable to bitcoin," Byrne said to Reuters last Friday.

Wow...  a 5% increase directly to the investors simply by accepting Bitcoin - that should turn a few heads!

Quote
Overstock also plans to accept bitcoin payments from international customers by mid-September this year. In addition, it will allocate 4 percent of bitcoin sales to promote the currency, effective mid-September as well.

Go Patrick!  Looking forward to seeing the Bitcoin commercials during prime time...  Wink

More great support from a strong believer. 
5  Economy / Speculation / Presenting the 670-day Bitcoin price cycle on: July 30, 2014, 02:34:09 PM

OK, so many of us love looking at trends and graphs.  And for those that do, here is an interesting little tidbit I noticed yesterday.  Take it FWIW, but it's interesting, to say the least.

I was looking at the year-over-year exponential price graph as shown below:



Notice anything interesting?  2014 looks a lot more like 2012 than 2013.  And for that matter, 2013 looks a lot like 2011.
This becomes even more apparant if you adjust the data from the last 2 years to line up the peaks (adjust by 61 days):



Taking this data, I created a longer cycle graph.  I present to you - the Bitcoin 670-day price cycle!



Of course, with only two cycles to look at this means almost nothing, but I do find it interesting that it correlates better than trying to work in the 33-week cycle everyone talks about.  This trend also corresponds to a longer "development" phase between each major peak.  And it also means we are about 110 days from the start of the next run-up.

Have fun with it....

6  Bitcoin / Press / 2014-07-30 Globe&Mail - The truth about bitcoin and its impact on business on: July 30, 2014, 12:32:16 PM

http://www.theglobeandmail.com/report-on-business/small-business/sb-money/cash-flow/the-truth-about-bitcoin-and-its-impact-on-business/article19824887/

When I saw the headline I was worried this would be another FUD piece, but it's quite the opposite.  In fact, it is attempting to point out that most media articles are focussing on the negative aspects of Bitcoin, while ignoring all the positives.

The article does a great job of highlighting the Bitcoin use case.

My favorite line:

Quote
The amount of bitcoin used in illicit activity doesn’t even come close to the amount of fiat currency used in illicit activity. It’s not even in the same spectrum. No one has called for the end of the U.S. dollar because it’s used by drug dealers as that would undoubtedly be seen as ridiculous.
7  Bitcoin / Press / 2014-07-14 Design&Trend - Why An Award-Winning Architecture Firm Will Now Accep on: July 16, 2014, 02:12:40 AM

http://www.designntrend.com/articles/16672/20140714/why-award-winning-architecture-firm-will-now-accept-bitcoins.htm

They really seem to "get" the benefits:

Quote
"As a company we hadn't really considered it until we spoke to Zann Kwan from Bitcoin Exchange and she highlighted the many benefits of us as a company accepting bitcoins, especially as a number of our projects are overseas," Fan said.

Using the digital currency could also lead to expansion of the firm's international customer base, since they won't face any exchange rate.

And the best part:

Quote
The studio doesn't plan to convert bitcoin payments into other currency either — it intends to keep them as an investment and use they when they can.

"As we would like to keep the bitcoins we shall not be using a merchant payment processor, unless of course we require working capital, however we foresee that we will build up our bitcoins and hopefully use these as a means of payment for business transactions in the future," Fan said.

 Smiley

Great to see a company doing their part to fill in the ecosystem.  Hopefully soon we'll get to an end-to-end solution where suppliers are also accepting bitcoin!
8  Bitcoin / Press / [2014-07-01] Gulf Times - Kuwait finance firm suggests trading oil in bitcoins on: July 02, 2014, 03:45:24 PM

http://www.gulf-times.com/eco.-bus.%20news/256/details/398622/kuwait-finance-firm-suggests-trading-oil-in-bitcoins

Quote
The most active countries today that pursue a no-dollars-for-oil policy are Iran, which encourages all trading partners to pay for oil in a currency other than the US dollar, and Russia, whose flagship company Gazprom, the largest extractor of natural gas in the world, recently told oil importers from China and Japan that they should pay their bills not with greenbacks, but preferably with yen, yuan or even ruble.

But a new report (Disruptive Technology: Bitcoins, Currency Reinvented?) recently issued by Kuwait-based investment banking and asset management firm Kuwait Financial Centre, also known as Markaz, even goes a step further: Oil producing countries, particularly in the GCC, could benefit if they would use bitcoin in oil trading, Markaz’ research department argues.

When I first read the article I thought it makes sense (see Falkvinge's opinion a while back).  However, I quickly dismissed the article seeing as Russia had taken such a hard line against Bitcoin.  But with news today of Russia's softening stance, I thought this was actually quite interesting.  Coincidence?  Hmmm.... Wink
9  Economy / Economics / Bitcoin volatility actually GOOD for business! (with proof) on: May 02, 2014, 06:10:58 PM
UPDATE: I updated with a second example as I think the point is not clear.  The larger the volatility, the more the merchant stands to earn when the price swings back toward the average (mean) price.

(I have heard this so many times, but I had a suspicion that this was not entirely true, so I ran some numbers… this is the result.)

Here is the tl/dr: Merchants can actually reduce vulnerability to price drops and earn more for a period of time if they accept Bitcoin for payment directly than if they had used cash and certainly more than if they accepted credit card. Even if they are really lazy and don’t even watch the market price! With a very very simple plan, even in 2014, the merchant would actually come out better than accepting cash.

Even if the price remains constant, the above is true.  In fact, the price can actually slowly decrease over time without the merchant losing out (they would still be ahead).  To say nothing of an increase in exchange price…

This is an important finding.  If anyone wants to replicate the numbers or double-check the spreadsheet please do!


(Note that all the assumptions here are that there is a relatively constant amount of sales using BTC.)

Many critics charge that volatility with Bitcoin prices makes it impossible for a business to actually use it.  They argue that if the price drops by 20% in a day, how can you possibly make money?  However this argument ignores the reality of the situation, which makes it actually more beneficial to the merchant to accept Bitcoin than cash (and certainly credit cards).

First of all, reality is that nobody in their right mind is going to sell bitcoins for cash when the price drops lower than when they received them (unless absolutely necessary).  And in the event that a merchant needs to convert in a short period of time, there are options to use a payment processor.  This post is not directed to those merchants.

The key things to remember from the merchant’s point of view, when they price something in fiat (dollars for example) and then sell for the equivalent amount of BTC, is that the drop in price can actually benefit them.  Looking back at the example of the 20% price drop, that means any bitcoins in their possession before the drop are now worth 20% less.  However, on the flip side, any sales made at the lower price mean 20% more bitcoins are received by the merchant. What happens is that when the prices swings back, the merchant now has 20% more coins from the lower-priced day than if the swing didn’t happen.

Example 1

Let’s take a simple example, that is illustrated in the table below.  This example shows how as the price swings around an average price, when the price returns to the average the merchant is actually in a position to gain more than 100% cash value.  

The merchant prices a widget at $100 or equivalent BTC.  BTC price is $100 per bitcoin on day 1.  On that day, merchant makes one sale, netting 1 BTC. The next day the exchange rate rises to $120 per BTC.  The day after it falls to $80, and finally on day 4 it returns to $100.

Day  BTC Exchange Price  BTC from sale  BTC total  $ equiv total (on that day)  Avg BTC/$ price (to that day)  
1$10011$100.00$100
2$1200.831.83$219.60$110
3$801.253.08$246.40$100
4$10014.08$408.00$100

Clearly if the merchant sold his bitcoins for market value on day 3, he or she would lose money compared to having taken cash or credit card.  However, merchants try to make money any chance they can, so unless there were extreme circumstances the merchant would never sell the coins that day since the expectation is that the price comes back up later.

Sure enough, on day 4 the price swings back to the average for that period ($100 per coin) and by exchanging bitcoins to dollars then the merchant actually makes 102% of what he or she would have if they would have accepted cash.  And considering the fees for credit cards (say 3%), they would actually make about 5% more than if they had used credit cards as the accepted payment method.

Note that over the course of the 4 days the average price remained at $100 per coin, but the volatility actually gave the merchant more dollars in their pocket at the end of the period.

Example 2

This second example illustrates a larger price swing over the same period of time.  Average price remains the same, but now the merchant has even more coins at the end, reducing their need for the price to come back as high as average in order to break even (or make more if it does).

Day  BTC Exchange Price  BTC from sale  BTC total  $ equiv total (on that day)  Avg BTC/$ price (to that day)  
1$10011$100.00$100
2$1400.7141.714$239.96$120
3$601.673.384$203.04$100
4$10014.384$438.00$100

Great, but what about a real life example?

Using the data from Bitstamp, I created a spreadsheet that you can see here: https://docs.google.com/spreadsheets/d/1hPPret8qimdkB7-3SFTH5hXCYaxsuZYe5AIAUqiFyQY/edit?usp=sharing

Some notes:
- This is my working spreadsheet.  Its not the most pretty, but it works.
- prices are the 24-hour (daily) weighted average as reported by bitcoincharts.com
- assuming a regular BTC sales rate of X dollar (equivalent) per day, everyday
- all totals (min,max,avg) are calculated from all numbers (for each day), even though they may span several days. In reality, a merchant would not hit every number, but the average should still be valid
- calculations use a selling price of $10 per item and assume 1 item per day.  The actual price does not matter, as we are using percentages.
- There are two years worth of data
- Calculations do not take into account exchange fees.

The main calculations determine what the equivalent value of the exchanged coins would be if, starting on each given day, the coins for held for X days, then exchanged at the rate given.  The percentages are the percent value of the exchanged coins as compared to having received dollars directly for the sale (excluding all other taxes and fees).  Numbers are calculated for holding between 2 and 30 days (since holding for 1 day is basically selling the coin for the same price as the exchange rate when the item was bought).  In each case, when the coins are held for X days, the exchange rate from day X+1 us used.

Note that due to the calculations of holding for up to 30 days, the latest valid data in the chart is from 31 March 2014.

Without getting into too much detail about some of the things in the spreadsheet, the important use cases are noted on the third sheet of the workbook.  This is shown below.

The reference case (case 1) is using a payment processor and assuming they take basically a 1% cut.  For credit cards the number are about 97% across the board.  In each case the results are shown for the entire 2-year period, just 2014 (which has seen overall a drop in price from around $755 to $454 over the period) and for just the month of March 2014 (most recent data).

Case  Description  Results All time  Results 2014  Results Mar-14  
1Using payment processor (1% fee)99.0%99.0%99.0%
2Credit card97.0%97.0%97.0%
3Fixed conversion every 7 days no matter what102.5%98.1%96.7%
4Convert some time within 30 days (average trader)107.0%95.8%93.7%
5Hold for 7 days, then trade when limit reached (97%)103.8%100.1%99.7%
6Never cash in2249.5%67.7%77.4%

Case 3 is a merchant that cashes their coins in every 7 days without regard to the exchange rate on that day.  This is a merchant that does not want to worry about additional work, but still wants to use bitcoin, and finds it convenient to convert to cash once a week.  As you can see, over all time they enjoy 102.5% revenue as compared to cash.  Even with the volatile and negative market in 2014 they still made out earning 98.1% of what they would have vs. cash (better than credit cards).  And the month of March is just below credit cards, at 96.7%.

Well, clearly there are better days in the 30 day period.  What about trying to pick a day during those 30-days?  Results are shown in case 4, and reflect the average of the prices over the 30-day periods.  Likely someone looking at market prices could do much better, but on average, they still do pretty well.

But how about a better way, that’s still simple for a merchant to do?  Well, extending on the hold-for-7-days idea, case 5 shows the results of having a simple strategy of holding for 7 days and then cashing in as long as the price nets at least 97% of the dollar equivalent (note that if this number is not hit within 30 days, the assumption is cashing in on day 30 no matter what).  In this case, the merchant nets 103.8% over the whole 2 years, and even in 2014 would offset any dips and retain 100.1% of the cash equivalent.  Even for the month of march it would still be 99.7%.

Would a merchant do this?  Some would say its too much work, but clearly the strategy shown in case 5, which is very simple, could be managed by anyone.  And anyone running a company would be trying to optimize wherever they could, so again, with very little work, the returns are significant.  Especially when it comes to credit cards.

Note that simply holding always results in a net loss in value for both 2014 (Q1) and the month of March 2014.
10  Bitcoin / Project Development / [Idea] Could we build a service to counter wallet theft? on: March 03, 2014, 03:05:27 AM
OK, I have been thinking about this for a while now and I wanted to bounce some ideas off the community.  Note that with the recent headlines about all the bitcoin wallet stealing malware, I think a service such as what I describe here could really help Bitcoin's reputation.  Any and all criticism, suggestions and comments are welcome.  

Summary
A user would register transactions with the proposed service that would move coins from one wallet to another (safe) wallet.  In the event that the service notices an attempt to empty the contents of the wallet, the saved transaction would be broadcast in an attempt to move the coins to safety before the wallet could be emptied.

Overview
Bitcoin wallet thefts have occurred since for several years now.  There are many ways this can happen (non-password protected wallet stolen, wallet backup stolen, keylogger for password or web wallet, intercepted email wallet backup, etc.) but the common thing in each case is that the attacker gains control of the wallet then transfers the contents to another wallet under their control.

Interception
Given the nature of the way bitcoin works, the transfer to empty the wallet is broadcast and is (almost) immediately visible to the entire world.  Thus a service that is watching for suspicious transactions from a wallet could see this right away - even before it gets included in a block.

Solution?
What I am thinking is this.  If someone was wanting to safeguard a wallet, they could create a transaction that sent the contents (or some amount) of the wallet to another wallet under their control - a safe, secondary wallet.  BUT, this transaction would not be broadcast - it would be an "emergency eject" transaction.  As far as I am aware, it is possible to create transactions but not broadcast them right away.  My thought is that the user could upload the transaction to the service I am proposing, which would then watch for a "trigger condition" (generally, emptying the wallet).  At that point the service would broadcast the eject transaction and effectively initiate a double-spend race attack.  While generally frowned upon this would be a case that could potentially save a user from a stolen wallet.

NOTE: doing this means the service does not require access to the wallet itself nor the private keys. It would only need to know the wallet address, trigger condition and eject transaction.

Factors
Now, there would be probably at most a few seconds between notice of the wallet emptying and the broadcast of the "emergency eject" transaction.   If the service was well connected, it could potentially gets its transaction picked up by more nodes first.  Ideally any options that would help to get the “eject” transaction confirmed would be good:
- higher transaction fee than the hackers?
- preferred confirmation of the “eject” transaction by miners?


Drawbacks
PROBLEM:  the hacker could use the service to ensure emptying of the wallet by registering itself with the service with a new wallet destination.  
MITIGATION: service would not accept a secondary request for a different wallet.

PROBLEM: no guarantee that the emergency eject will work (see Factors).  
MITIGATION: get buy in from miners/pools to accept transactions broadcast by the service over other ones.

PROBLEM: could be used by people to perform a real double spend attempt by simply registering a wallet with the service before attempting to do a real spend.  
MITIGATION: provide api to query if wallet is being guarded and or if the requested transaction would succeed.  Note (although I am loathe to make this comparison) this would now become akin to the the credit card automated confirmation service that merchants use at a POS terminal.  However, all this would do is confirm that this particular service does not have a watch trigger on this wallet, and/or that it would actually fire.

PROBLEM: a legitimate transaction from the wallet could trigger the eject transaction to be broadcast.  
MITIGATION: the user would need to register an account with the service.  By logging in to the account and effectively whitelisting a transaction that would otherwise trigger the condition, the eject transaction could be (temporarily) offset.

PROBLEM: The eject transaction may try to transfer more coins than are in the balance of the wallet if not looked after (i.e., on an active wallet).   Thus the eject transaction would fail.  MITIGATION: Register multiple eject transaction with varying amounts of coins, leaving the service to decide which one(s) to broadcast to move the maximum contents of the wallet to safety.  (NOTE: if the transaction fee amount is a factor in which transaction gets confirmed, different transaction with varying transaction fees could also be registered).

Questions
These are the parts I am not too sure about:
- Is there any way to make a transaction that sends the entire contents of the wallet, rather than a fixed coin amount?  
- If a miner sees two transactions that cause a double-spend, does it always only include the one with the earlier timestamp?  If so, then maybe this is a non-starter (other than trying to ensure the service is better connected in the network)
- If the "emergency eject" has a higher fee would it have a better chance of getting included in the block even it was later?
- Can these transactions be created on a wallet without rendering the contents otherwise unspendable by the rightful owner?
- Is it possible to know that the transaction was broadcast by the service?  If so, then with the acceptance by the mining community to prefer the “eject” transactions, the service becomes much more valuable and effective..


**EDIT**: One other function that a service like this would serve to help with is lost or forgotten key/wallets/passwords.  In the event that for some reason a wallet couldn't be accessed any longer by the user but an "eject" transaction had been created, it could be triggered to be broadcast if the wallet was not accessed for X days.  Then the contents could move somewhere else that could be accessed.  Of course you would have to be careful with cold storage wallets, but that goes without saying.  However, the wallet that winds up in a hard drive in a landfill or is set up by a person who dies would have contents that suddenly become able to be accessed again, all automatically.

Edit: I may want to work on this after all... Since I don't seem to be getting much comment on here and I do think it's important.

... comments?
11  Bitcoin / Press / [2014-01-24] Bloomberg: Bitcoin Backed by Sberbank’s Gref as Russia Plans Curbs on: January 24, 2014, 05:29:06 PM

http://www.bloomberg.com/news/2014-01-24/bitcoin-gains-support-from-sberbank-s-gref-as-russia-plans-curbs.html

Nice to hear of more discourse in the ranks of the banking elite.  Also talks about the the proposed law restricting Bitcoin in Russia (which the title person is lobbying the Kremlin to stop). 

I almost laughed (or cried) when I read this nugget:

Quote
Lawmaker Shamsail Saraliev of the pro-Putin United Russia party, who co-wrote the bill, said the law would counter terrorism, the illicit drug trade and contract killings.

I guess it's a good thing there was no terrorism, contract killings or drug trade before Bitcoin came along....
12  Alternate cryptocurrencies / Altcoin Discussion / Guard against 51% attack? on: January 09, 2014, 01:17:07 PM
I was thinking about all the talk about the hashing power currently held by GHash.IO (currently, or whichever the largest pool is that starts to get close to 50% hashing power).  There is also the recurring talk about how an entity with enough cash could just create enough hashing power to take over effective control of the blockchain.  I was pondering whether this could be guarded against.

Could we not implement a change whereby any single entity that was approaching a calculated 50% of the hashing power (based on blocks found) would have to mine at an increased difficulty, increasing exponentially as they approached 50%? 

Now I am not proposing a whole solution here, just an idea.  I don't know how to exactly determine which pool found the blocks; I know blockchain.info lists that info but I assume that is based on the receiving address of the new coins. 

The downside is that any large pool would attempt to hide its size by not appearing as a single entity.  But maybe there is a way to overcome that?  Use IP address or something?  I don't know.  Is there anything else that uniquely identifies the pool that found a block?

The advantage is that it becomes less desireable for a single pool to be greater than a certain size, else its probability of finding blocks starts to go down.  This would guard against a single entity trying to add enough hashing power to just overtake the network, but would not help in the event of a distributed "attack" or collusion among pools.

Seems like this issue is one that will not go away (not surprisingly) so it needs to be addressed if it can be.  Maybe it can't. 

Thoughts?
13  Bitcoin / Legal / Government stance on Bitcoin - country by country on: December 06, 2013, 11:26:35 PM

Do we have a thread already that has a summary of all the governments around the world and their stance on Bitcoin, either official (preferred) or unofficial?  I'm looking for something that has a short, concise summary for each country with references to official government websites or press releases, broken down by overall legal standing (currency, commodity, illegal, undefined) and the implications for merchants, exchanges and users.

If there is a thread, can some one post a link?  If not, I'd like to include that information here in this thread.  There is so much disinformation and confusion, and its hard to get that all in one place.

14  Bitcoin / Press / 2013-11-03 Forbes: What Is Beijing's Rationale For Promoting Bitcoin? on: December 04, 2013, 03:09:19 AM
(Note this is a repost of a quora answer, as published by Forbes.  However it is apropos to the discussions on here re: China)

http://www.forbes.com/sites/quora/2013/12/03/what-is-beijings-rationale-for-promoting-bitcoin/

The Author: http://www.quora.com/Paul-Denlinger

Quote
Here are some of the reasons:

  • China’s economy is too slanted to investment instead of relying on consumer-spending generated tax revenue. This means that there is too much untaxed cash sloshing around in the system;
    Real estate prices are continuing to rise in the cities in spite of government efforts to dampen the price rise. Bitcoin offers a chance to take some excess cash out of the system, and thus dampen price inflation.
  • The party is going after corruption among Chinese officials. Even though the party needs to clean up, it needs to give its own members an exit plan, as too much prosecution would make the people think that the party is completely corrupt.
  • Since November 2008, the US Fed has been injecting liquidity into US banks at the rate of US$80B a month as part of the quantitative easing plan. This means that 4.8T has been injected into the global economy in the past five years. US banks have tightened their lending requirements, which means a lot of this hot money has made its way to China, where it is fueling inflation. This is in addition to US1-2T of cash in Hong Kong banks which has nowhere to go except China investments. Too much liquidity fuels inflation.
15  Economy / Economics / Huge opportunity for Canadians... on: November 29, 2013, 04:35:54 PM

I just thought I would point out to any fellow Canadians that, right now (29 Nov 2013), the price on CAVirtex is about 10% lower than Bitstamp.  What does that mean?  Well, considering Bitpay uses Bitstamp as it's primary price conversion rate, that means that you could buy bitcoins on CAVirtex for $985 CAD, and they are valued at $1092 on Bitpay merchants.  Effectively you are getting a 10% discount.  On top of that, the CAD exchange rate to USD is $.95 on the dollar, so that's another 5% compared to buying something priced in USD.

So... convert CAD -> BTC, and spend the BTC at Bitpay merchants (like bitcoinstore).  Boom - instant 15% saving.

16  Bitcoin / Press / 2013-11-19 WashingtonPost: Bitcoin needs a central banker on: November 20, 2013, 08:04:12 PM
 Grin Grin

OK, OK - I know, but I couldn't resist reading this article - my first thought was it was picked up from the Onion, but, sadly, no.  That title is classic!

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/19/bitcoin-needs-a-central-banker/

To save you the time, don't bother reading it - nothing new here.  Basically it's rehashing about the fluctuating value of a bitcoin and how that is terrible for a currency.  The punchline?

Quote
Fortunately, there is a possible solution for Bitcoin's volatility problem: There needs to be some kind of central institution. A bank of sorts. One with the bottomless ability to either pump extra Bitcoin into the market or suck it out, depending on what's needed to maintain stable prices. With all that power, measures need to be taken to ensure that this Bitcoin overseer is independent and credible.

Of course, you'll need somebody to run it. And if outgoing Federal Reserve Chairman Ben Bernanke doesn't get a job running a central bank for frequent flyer miles, as endorsed in this space a few weeks ago, maybe Bitcoiners can give him a call.

ROTFLMAO

Either this is one of the most uninformed people about bitcoin, how it works, and the principles behind it, or someone was just trying to get an article written in 15 minutes to meet the deadline.

Wow...
17  Bitcoin / Press / 2013-11-13 seattlepi: Ray Dalio's Surprisingly Optimistic View Of Bitcoin on: November 13, 2013, 04:27:51 PM

http://www.seattlepi.com/technology/businessinsider/article/Ray-Dalio-s-Surprisingly-Optimistic-View-Of-4977232.php

Quote
So since Dalio runs the largest hedge fund in the world and happens to be a currency master, Sorkin had to ask him what he thinks of this innovation.

Would he invest, Sorkin asked.

"I would not invest," said Dalio. "I need to understand it better."

He said that the Winklevoss talked helped though.

"I think there's a lot of merit behind it," Dalio continued.

Sounds optimistic.
18  Bitcoin / Bitcoin Discussion / Bitcoin - the verb on: November 13, 2013, 02:14:24 AM

I was just thinking - Bitcoin is one of those great rare names these days that is not used anywhere else.  Mention the word "bitcoin" and people immediately either know what you are talking about or have never heard the term.  No ambiguity.  As first mover in the realm of digital currencies, it thus has the potential to become a term with more meaning than just the literal currency (and protocol).  It could also become a verb. 

Just like we xerox papers or google an item of interest, in the future will someone "bitcoin you"?

"Hey Joe - can you bitcoin me the money you owe me?"
 Grin

What do you think?
19  Economy / Service Discussion / Site that aggregates all exchanges? on: October 19, 2013, 06:07:47 PM

I'm looking for a site that aggregates the bitcoin price from multiple exchanges.  Specifically, it would contain the following:

- total sum of all the bitcoins traded across all the accessible exchanges
- weighted total exchange price from all the exchanges
- displayed current weighted value in whatever currency you choose (based on current currency exchange rates)

I am getting tired of seeing, for example:

20K @ $150 on Bitstamp in the last 24 hours
20K @ $160 on Gox in the last 24 hours
20K @ Y1000 on BTCChina in the last 24 hours

And trying to figure out what the current value in CAD is.


I'd rather know that the current trade volume is

60K @161.37 CAD (equivalent) in the last 24 hours

(based on .16 USD/Yuan and 1.03 CAD per USD).


Anyone know of a site that has this?

Thanks...
20  Bitcoin / Bitcoin Discussion / Links to bitcoin.org skyrocketing since mid-Sept on: October 01, 2013, 05:11:35 PM

I just looked at the charts for the backlinks pointing to bitcoin.org (https://ahrefs.com/site-explorer/overview/subdomains/bitcoin.org), and since about the 19th of September the number of links has gone through the roof!  Overall the count has gone from about 4.6 million on 16 Sept to 5.5 million as of today - on September 19/20 alone, there were more then 250K new links added!  Shocked

This seems to be very good news, although I have to wonder if there is a problem somewhere just contributing to the count?  The spike is new links seems quite extreme. 

From a quick check it looks like many more places are adding support for accepting Bitcoin as payment, which is great, but seems to have come out of the blue.  Any thoughts on this?  Any anomalies in the counting process that ahrefs uses that could account for this?  Any other reason for the sudden spike?
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