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1  Bitcoin / Bitcoin Discussion / POLL: What is the reason hard forks require broad consensus? on: November 16, 2015, 05:15:08 PM
"Hard forks require broad consensus" is a common sentiment among the Core developers and the wider community. I want to get a sense of whether this is justified more by fairness/image considerations or more by perceptions that contentious hard forks are technically unworkable.

*For example, Adam Back said on reddit recently, "the network can not reach consensus with multiple competing incompatible consensus algorithms vying for control."
2  Economy / Speculation / Optimal Coin Distribution and the Social Role of Investors on: July 06, 2014, 01:59:01 AM
  • Are speculators hurting Bitcoin?
  • Is the money distribution optimal?
    • Is the wealth held in the hands of those who will use it to most benefit the community?
    • Or is it better to start with a clean slate (alt-ledger, a.k.a. altcoin) where everyone begins with equal cash balances?

I think the answer to these kinds of questions requires a clear understanding of the crucial role investors play in society, so here I will attempt to explain that for those who've never considered it:

Simply put, a good investor can predict the future better than other people can. If, for example, you're a good investor and you predict a water shortage in a few years you can buy water rights now and have a good chance of selling them later for a profit. However, as a side effect, you bid up the price of water for everyone else, which incentivizes people to conserve water, incentivizes water producers to invest more into water production, motivates new companies to get into the water business, prompts more people to major in related fields in college, etc. The water shortage you correctly predicted will be mitigated by these actions. In this way, "greedy speculators" can even save lives. Shocked

As a good investor, you would likely sell when the water production infrastructure has become too big and society would benefit more from some of the resources/manpower being diverted elsewhere, and by pushing down the price you create exactly the right incentive structure for that. Being as most people aren't good at predicting the future and you are, you help society manage resources more efficiently than it would without you.

Not only do you help society manage resources more efficiently, even to the point of saving lives, but the better you are at that the more power you will gain to do it on a larger and larger scale since you keep getting wealthier and have more power to move markets. Think of how many lives Jim Rogers has probably saved in Africa by being such a successful and large-scale commodities investor! Conversely, if you're bad at predicting the future like most people are, you will tend to lose money and damage society - in the case of water by aggravating the shortages and bankrolling the oversupply gluts - but your ability to affect society will diminish as you lose your wealth and thereby effectively lose the "right" to divert resources in society.

In this way, the freer the market, the more it optimizes toward moving the ability to direct resources into the most capable hands: the most highly skilled investors (future prediction specialists) and the best entrepreneurs - and these people are exactly the people we want getting rich. Without them, we'd all be a lot less rich ourselves, or maybe even dead or never born because the resources for our parents to raise us weren't sufficient due to systemic mismanagement. Notice this is not centralized government management; every argument for "why we need central planners" is answered in the concepts touched on above: there is a huge distributed network of specialists at predicting the future and putting resources to the most efficient known uses. These are your planners, bringing all the benefits of having experts plan stuff, but not central planners in government offices.

Over time (not immediately), this process vests greater control over the societal ledger with those people who benefit society the most with their skills, and of course these skilled people are also motivated to do this because it directly benefits them by making them rich.  

Note that even short-term speculators and day traders - if they are good - also play a valuable role: they dampen short-term and even intraday volatility by buying the dips and selling the peaks. It's the unskilled speculators that create the volatility, but those people tend to lose their shirts pretty fast. That's a major reason why there's less volatility as a market matures, with the unskilled and therefore volatility-increasing speculators getting smaller and smaller while the skilled and therefore volatility-reducing speculators get bigger and bigger, thereby making the market ever smoother. (Note, however, that even though the Bitcoin market is maturing, it is not getting that much less volatile, simply because the market expands exponentially, so that the immature portion of it is always way bigger than the older mature portion.)

Now Bitcoin investment is a little more abstract than water investments. We cannot say that investing in Bitcoin before it got scarce helped society avert a water shortage. However, it incentivized miners to get in and secure the network to a level commensurate with the market cap, it motivated people like Tony Gallippi to divert his talents and time toward starting BitPay, and it generally created the incentive structure to support many other similar infrastructural buildouts. Of course it also attracted media and other much-needed public attention, as well as that of academics and of course investors.

It is obvious from reading this forum (and reddit) that only those with the conviction to hodl actually hodl, and those strongly tend to be people who both understand Bitcoin at a deep level (aren't spooked by FUD) and understand the necessary aspects of investing (aren't spooked by volatility because they understand the dynamics of the binary bet and exponential growth). When bitcoin went from under a dollar to over $30, then down to $2 over the course of a single year, the market was shaking out the weak hands - the poor speculators - in a spectacularly violent fashion. But what is this volatility optimizing for - that is, who's this market making rich? Here are some obvious ones:

1) Good hodlers, people who deeply grok Bitcoin and its investment aspects, who will likely dishoard in an organized fashion at peaks, dampening the bubbles and not contributing to the panic knifedowns nor to the FUD-based selloffs

2) Good traders who see the big picture, thereby decreasing the volatility

3) Perhaps warranting their own category are the people who have extremely deep or highly technical understanding of Bitcoin, to the level of what would almost seem to others like "insider information" (though there's nothing bad about this; in fact it's a good thing, if you follow the reasoning outlined above)

The main point is, besides some people who got lucky, the Bitcoin ledger is held mainly by people who most strongly believe in and most intimately understand Bitcoin (and understood it early!) and the relevant investing principles, or those who have actually contributed materially to the ecosystem. These people are far more likely than others to know where resources should be diverted to in the economy for maximum benefit to the community, and the maturity of the Bitcoin ledger ensures that they actually have the ability to command such resources (i.e., they have accumulated a lot of bitcoins to invest in infrastructure, and they have relatively little competition from unskilled investors who fund dead-end projects that waste dev time, etc.).

TL;DR: While the debate over whether the Bitcoin ledger is more or less "fair" than some other distribution may never be settled to everyone's satisfaction, we can clearly see that it is in a very useful sense the most efficient distribution for the general benefit of the community, thanks to the eminently helpful role that skilled investors play in society and how the extreme volatility over the years has continually shaken out the unskilled investors who would waste the community's resources.

If we imagine even a new amazing coin that is magically perfectly distributed to everyone, 100 coins for every person in the world, we can easily see that the initial investment decisions will be terribly skewed since all sorts of unskilled people will be throwing their coins at things and diverting resources and labor into useless, go-nowhere projects. Also, volatility would be way worse, and panic sell-offs due to FUD/misunderstandings would be horrendous. A ledger needs to grow organically through a market process, or else it will face challenges that it would only be ready to face some years later when the market is more solidified in strong hands by the above process.

By the way, are there any other things the Bitcoin ledger has optimized for (any other type of person the history of Bitcoin price movements has made especially rich (or especially shaken out))?
3  Alternate cryptocurrencies / Altcoin Discussion / Altcoin Index Fund on: November 26, 2013, 01:37:03 PM
Does anything like this exist? Either a managed fund that seeks to invest in the most promising altcoins, or just a broad industry index, would be useful for people who don't have time to keep track of all the little developments.
4  Bitcoin / Bitcoin Discussion / Has Bitcoin outgrown the "coin" metaphor? on: November 12, 2013, 02:59:22 PM
While most people who really understand Bitcoin talk about it as a ledger, the media and the public in general still talk about it in what seems a very "2011" way, speaking of "virtual coins" and how they're "created" by mining. The average person ends up wondering what the hell a "bitcoin" really is. Of course it's just an entry on a globally synchronized, unforgeable public accounting ledger, and mining rewards just assign entries to people's addresses if the come upon a solution to a math problem.

See this article's wording in the title, which just sounds scammy:

And of course the WeUseCoins video, saying, "Bitcoins are digital coins you can send through the Internet... You can purchase video games, etc." It's neat as a first promotion, but now rather than just catch people's eye we have to make a serious pitch to shrewd and skeptical people, and I think "coins" just gets in the way.

This metaphor to physical coins may have served a valuable purpose in the early days, but I'm wondering if it's outlived its usefulness.

Here's a surprisingly positive article from CNN pumping Bitcoin, but the comments show so many signs of the coin metaphor just causing confusion. A sampling:

The biggest allure for gold is that the owner can take physical possession. For this reason alone, the BitCoin is at a huge disadvantage.

What is one of Bitcoin's greatest strengths is mistaken as a negative.

Bitcoin is to money as The Show About Nothing is to television entertainment. It is simply a way for individuals, companies and countries to launder money by "investing" in something that is vapor. You cannot touch it, flip it, spend it at Walmart. Your kids won't take it for their allowance and if, like Fort Knox, you managed to sneak a peak into the Bitcoin vaults, you would find nothing. So of course, it's bound to be worth whatever individuals bid it up to.

As long as people are expected to think of it like a coin, it causes endless confusion.

Instead, I suggest promoting it from the very beginning as an unimpeachable, globally-synchronized public ledger. The coin thing can be relegated to just a cute metaphor. "Coins" have nothing to do with anything. A bitcoin is simply 0.00001% (approx.) of all the units available in that public ledger, or one of the 12 million (eventually to be 21 million (technically of course 100 million of the 2.1 quadrillion satoshis)) units available in that ledger. Of course you'll get questions about how the number of units of account available can be immutable, but that is easier to explain than what a bitcoin is, and really explaining what a bitcoin is just leads back to the ledger explanation anyway.

It seems to me that "coins" are a relic from when Bitcoin needed to be seen as an asset. Now that it's established as having a basically permanent, if volatile, market value, I think the analogy is doing more harm than good. The idea of a public ledger that keeps track of who provided value to whom isn't that conceptually difficult, when all is said and done. It's simple to imagine God's list, or Santa's list, keeping track of who did something of value for others.

What do you think? Is it time to de-emphasize the "coin" angle and move toward the more sophisticated ledger explanation as the default one?
5  Economy / Speculation / PSA: Up your tolerance for volatility when the price surges on: October 23, 2013, 08:55:56 PM
You can't have big price increases without big volatility, and that means some gut-wrenching mini-crashes will inevitably happen along the way. No need to panic during those sell-offs and lose your coins. Just put on your volatility flak jacket, strap yourself in and enjoy the ride!
6  Economy / Speculation / Long-term Log Chart: $500 by Late Winter on: October 16, 2013, 09:44:33 AM

Of course, with overexuberance we may spike into quadruple digits for a brief time.

NOTE: At this exponential growth rate it takes 3.5 months to double and a little less than a year to increase tenfold. That suggests ballpark figures of $5000 by early 2015 and $50,000 by about the end of 2015, with the market cap reaching $1 trillion around Spring 2016. That's trillion with a "T" - full mainstream adoption in 2.5 years. If this multi-year trend holds, we're the whole world's in for a wild ride.
7  Bitcoin / Development & Technical Discussion / Possible to create an oracle that can sign a tx without revealing privkey? on: September 20, 2013, 07:04:59 AM
Suppose you want to put a bounty on a problem that has a hard-to-find but easy-to-verify (computer-verifiable) solution, such as the factors of a certain prime large number. Would it be possible to create an oracle that would sign a transaction paying the bounty to the first person to send it the solution followed by a (the solver's) Bitcoin address, without enabling anyone else - even those with access to the oracle's code - to steal the funds in the originating wallet? In other words, a piece of code that maintains the ability to sign a transaction to an arbitrary recipient (only those meeting a certain very difficult criterion - this part I assume is possible) while not enabling even people who inspect the code to know the private key.

If this could somehow be done, you could have verifiably guaranteed payouts for certain types of bounties.  
8  Bitcoin / Bitcoin Technical Support / Large raw tx through, messed up the fee - Options? on: August 02, 2013, 09:53:28 AM
The "fee" was accidentally sent as another tx back to the original address. It was a multi-recipient tx with several hundred BTC sent to several addresses, one of which was the original address (the would-be "fee") so the tx ended up including one small transaction (0.005 BTC). All the coins were several months old. Will this ever confirm? It's been half a day. If not, when can I resend? seems to keep rebroadcasting the tx.

For security reasons it would be preferable to have this transaction relayed somehow rather than resending it, even if by manually paying a miner directly. If this is the only way, is there a standard way to do this?
9  Alternate cryptocurrencies / Altcoin Discussion / [XPM] Primecoin is the Monetization of Science on: July 22, 2013, 11:14:14 AM
Anti-capitalists love the old canard that "science cannot be monetized so we need government funding of science." Although many free-market proponents realize this is actually a total myth, when it comes to rarefied subjects like pure mathematics even the staunchest AnCap may flounder in arguing that the market will provide.

For millennia, the best minds alive have assumed that there is no way to monetize mathematical innovation, other than by pure charity, since there is almost never profit motive behind mathematical research. It's too basic, too removed from real-world applications.

Primecoin changes this. It's now profitable to search for prime chains. This is unprecedented in the history of mankind.
10  Economy / Speculation / 2011 vs. 2013: The Definitive Comparison on: July 13, 2013, 11:42:05 AM

(Starts of the bubble periods aligned; chart compares percentage changes)

Note three things about this log-scale chart:

  • The 2013 bubble took three months to rise from $13 to $260
  • The 2011 bubble took only two months to rise from the equivalent of $13 to about $550; that's more than twice as high in 2/3 the time
  • Even though 2011 went much higher and faster, and even though it looked like the end of Bitcoin, the price bottomed out at the equivalent of about $35-40 - then promptly tripled and held rather steady

Conclusion: If this is a repeat of 2011...

1) There's no reason to suspect from comparison alone that we will bottom out below around $60, since there isn't nearly the excess to burn off that was there in 2011. According to the "Repeat of 2011" theory, it wouldn't be at all surprising if we already saw the bottom last week at $66.

2) We'll end up consolidating at $100 for quite a while.
11  Economy / Speculation / Posters that you think are lame: Are they bulls or bears? on: July 09, 2013, 01:43:32 PM
Back in April most of the posters I considered "low-caliber" were bulls, and it got me a bit worried to be in such company. What do you think now?

Note 1 : Of course post quality is rather subjective. Feel free to answer subjectively Smiley

Note 2: I'm not asking the reverse. That is, I'm not asking whether it is the bulls or the bears who are idiots. I'm talking only about posters you find useless: what is their predominant position. For example, you could vote that the lamest posters are all bulls (or bears), but still legitimately maintain that there are many insightful, intelligent, articulate bulls/bears.

Please do not name names. Everyone has to start somewhere on the learning curve. The point of this is strictly for market insight.
12  Bitcoin / Bitcoin Discussion / New Chart of Bitcoin's "Superhero" Features for Very Rich People on: June 22, 2013, 09:42:15 AM
Why should all highly wealthy people be excited about Bitcoin? It offers several "superhero" attributes that make it the ultimate store of wealth for people who are rich enough that the possibility of confiscation or even public knowledge of their wealth becomes a major issue eclipsing whatever volatility and other risks Bitcoin may have.

Note 1: I consider the superhero attributes for high net-worth individuals to be:

  • Complete immunity to confiscation (capital controls, border seizures, account freezes upon arrest, etc.)
  • The possibility of complete secrecy of the size of your holdings (the Rothschilds will like this Grin)
  • The unprecedented combination of teleportability and lack of counterparty risk ("all gold's freedom from counterparty risk, but instantly transferable anywhere in the world" - teleportable gold).

Note 2: Chart made in 5 minutes at Compare Ninja. Feel free to copy/modify at will.
13  Economy / Speculation / Area under the 2013 exponential trendline is nearing the area above it on: May 31, 2013, 10:27:35 AM

I take this to mean the bubble grief has almost bled out and we are close to reverting to the exponential growth trendline that started in January.
14  Economy / Trading Discussion / SEPA/Banking Forum? on: May 27, 2013, 08:01:08 AM
Three things seem clear from the recent discussions on forming decentralized exchanges.

1) The actual transfer of actual fiat money is the bottleneck

2) Banks and other existing institutions will have to be the trusted parties, meaning they must be interfaced with, with or without their knowledge

3) Not enough people here know enough about banking systems and protocols to discuss the possibilities at the necessary level (myself included)

Does anyone know of a forum for such topics? There seem to be forums for everything nowadays.
15  Economy / Speculation / [Sunday, April 29] 7-day chart looks similar to the 30-day chart on: April 28, 2013, 03:49:38 PM
In terms of shape they look very similar, despite the 30-day action being so huge. Sure, the 30-day chart spikes higher, faster and dips lower, but otherwise they looks almost the same. I just reached my phone's data limit otherwise I'd post pics, but are we seeing a fractal pattern?
16  Economy / Speculation / Zangelbert's Bubble-o-Meter on: April 16, 2013, 11:56:08 AM
Based on my overall assessment of sentiment and fundamentals vs. price, with exponential growth since Jan. 2013 as the baseline trend outlook. Updated when I feel like it.
17  Economy / Speculation / Rebound or Bull Trap? A Log-scale Analysis of the Infamous Hype Cycle Chart on: April 11, 2013, 10:11:53 AM
The following image was posted in another thread, arguing that the present bounceback from $100 to $180 is only temporary and we have much further to fall:

Below I will attempt to analyze this chart in a way that is suitable for trend analysis of Bitcoin.

First of all, every fundamental indicator I know of suggests that Bitcoin adoption is an exponential growth phenomenon. Anyone who disagrees please do us both a favor and STOP READING HERE and instead supply an argument why adoption isn't exponential.

Now, exponentially growing fundamentals strongly suggest that the mean trendline (gray dotted line) in the graph that the price reverts to should be exponential, not linear. On a log chart, this means "not flat, but at a fixed slope."  

The above log-scale chart shows that so far in 2013 the slope was fixed until the Cyprus-inspired media blitz started just a few weeks ago. Since then it has been curling upward, and I have been warning gradually more loudly that this indicates some froth being introduced to the mix with Bitcoin-clueless money piling in, as the fundamental growth has for the most part remained "merely" exponential.

So where are we now? The 2013 Exponential Trendline (red straight line on the graph) above has the price at around $80 now, to reach $200 - this time solidly - by early June, $2,000 by autumn, and $10,000 by Christmas. Still silly, crazy fast growth.

We are now still floating about 2.5 times above that price, "cruising for a bruising" back down to that trendline in case of any bad news or just random jitters+goxlag.

Under this exponential interpretation of the hype chart, supposing this rebound is actually a "bull trap," if we skid down to "despair" at the end of April the desparation low should be around $30-50 (since the exponential trendline hits $100 at that time), with perhaps a mid-May return to the exponential trendline at about $130, this time soaring* higher with plenty of fundamental backing as the weak hands are really going to be shaken out.

*Slower than post-Cyprus but still crazy fast (EXPOMUTHAFUCKINENTIAL).
18  Economy / Speculation / Higher-order Exponential Growth? on: April 08, 2013, 09:57:39 PM
Hyperinflation (inverted) looks like this on a log chart, which means it is double-exponential or more:

...Meanwhile we are starting to see curving up on a log-scale chart of BTC price - note how similar the patterns are, with the little bump first and then the huge run up to total collapse of fact the two charts align almost uncannily well if you look at the bumps, though of course Bitcoin's chart has yet to complete:

My theory is that regular exponential growth (straight line on a log chart) is from the viral effect of the Bitcoin "meme," while higher order exponential growth - that is, exponentially faster doubling times - is the viral effect + a herd-instinct-based stampede. This latter one is where bubbly-ness can be introduced. However, it seems to still be mild. Here is the best Bitcoin economist I've seen, arguing against a bubble right now:

One thing he misses, though, is that the store of value function of Bitcoin is probably the main reason for the price rise now, even though it is ultimately backstopped by currency usage.
19  Economy / Service Discussion / Coinbase User Data Leak? on: April 05, 2013, 11:43:17 AM

This looks bad.
20  Economy / Speculation / This is the Part Where We Take the Wall Streeters' Money on: April 03, 2013, 06:36:08 AM
If we can just HOLD on to the reins of a rampaging bull about to kick into massive overdrive.

All the best, Gentlemen. See you on the other side.
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