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1  Economy / Exchanges / Your support response times are inacceptable, Poloniex on: January 15, 2018, 07:00:42 PM
I've been a customer of Poloniex for many years now. I've always had a good experience with them: trading went smooth, and withdrawals were never a problem. However, this changed recently.

I submitted a support ticket, requesting an increase of my withdrawal limits, on December 6th. I noted that, given my current limits, it would take months for me to withdraw even a fraction of my funds. I asked which documentation they require to enhance my verification level -- and haven't received a response for 40 days now.

I can understand that under the current load of new customers, support times across all exchanges tend to be longer than usual. But 40 days of waiting time is no longer acceptable. I'm not overly fond of public ultimatums, but since Poloniex choses not to interact on any communication channel, I don't have much of a choice:

If I haven't received an answer to my support ticket #554603 within 10 business days, I will take legal action to take possession of my funds currently held on Poloniex. I still hope this outcome can be avoided, but I will not allow Poloniex to effectively hold my funds hostage without an explanation or any sort of response.
2  Bitcoin / Electrum / Minor tweak to increase usability on: December 08, 2017, 05:13:42 PM
Since the recent change that shows 'change' addresses separately, the 'coins' tab is now effectively the best way to get a quick overview of your funded addresses. The label used there however seems to be taken over from the last transaction, not the corresponding address label.

I think it would be more consistent, and increase usability, if the address list inside the 'coins' tab would use address label information instead. If you agree, perhaps you could consider making that change at some point in the future.
3  Economy / Speculation / All speculators invited: 2015/6 Price Prediction Contest. Win 0.44 BTC. on: November 18, 2015, 04:59:44 PM
Intro

How about another prediction contest? Last time I ran one of these, the prediction horizon was 90 days. This time, let's make it a year from now!

Participation is free, but I'd kindly ask you to send a tx of any value (one satoshi even, if you manage to get it through) to the address below, to confirm that you're a network user. In return, I pledge to pay a prize of 0.3 BTC (or $100 in BTC, by my choice) to the winner of this contest.

Entries are submitted hidden through a form, but will be made public at the end of the submission period. Details follow below. If you're not a fan of long explanations, skip to the summary (in red) at the end of this post.

Feeling interested?


The rules

How to participate:

* Submit your entry by November 30th 2015, 23:59 UTC.

* To do so, open up this form on Google Docs: November 2015 to November 2016 Bitcoin Price Prediction Contest

* Enter your forum name in the first field, and your interval estimate for the price per bitcoin in USD, evaluated against the value of a 20 day SMA on November 30th 2016 on Bitstamp, in the third and fourth field. For example: Entering 1 (USD) in the "lower bound" field, 1,000,000 (USD) in the "upper bound" field, is interpreted as: "The USD value of one bitcoin (understood as the value of a 20 day SMA) on Bitstamp on November 30th 2016 will be between $1 and $1,000,000". Got it?

* Send a Bitcoin transaction -- any value will do, no matter how small -- to this address under my control: 1M3QWNsug3hAL6W26VugAQpmzDFHWSAaZC

* Enter the txid of your transaction in the second field of the above Google form. Press 'Submit'. Wait a year. Win 0.3 BTC (or 100$ in BTC)... if your estimate is the winning entry, that is.


Details:

* Prize: I hereby pledge to pay a prize of 0.3 BTC, or $100 in BTC, to the winner of this contest. Which of the two values will be the prize is my own choice at the time the contest ends. In addition, the value of all participation transactions will be sent to the winner(s) as well.

* Entries: As a contest entry, you are asked to submit a price range, e.g. $100 to $10,000. You are free to make this range as wide or as narrow as you wish. If you prefer to enter a point estimate, simply enter the same value in both fields (the "lower" and "upper" field). Both values must be integers, and the "lower bound" value must be smaller (or equal) to the "upper bound" value.

* Price as moving average: These two values are compared to the value of a 20 day simple moving average over USD per BTC on Bitstamp at the end of November 30th 2016. The correct value, i.e. the value of 20 day SMA upon daily close on November 30th 2016, is determined on bitcoinwisdom.com.

* Source of correct value: In case either Bitstamp or bitcoinwisdom is dysfunct by the evaluation deadline (November 2016), or it is generally agreed that one or both of these sources do not accurately reflect the price per bitcoin anymore, I will chose an alternative exchange and/or charting site that represents the "gold standard" at that time.

* Winner determination: The winner of this contest is determined as the narrowest correct valid entry. "Valid" means it contained a txid to the above address, and contains valid data for the estimate. "Correct" means the actual value (of the 20 day SMA) on Nov 30th 2016 must be within the range you entered. "Narrowest" is defined as  the lowest value of "upper bound - lower bound" of all "correct" ranges submitted.

* Mutiple winners: In case there is more than one winning entry (i.e. correct, and same width of estimate) the prize will be split among all such entries. In case no winner can be determined (because no entry is "correct"), the prize and total value of the participation transactions will be donated to a charity of my choice.

* Usage of the participation transaction: The entire value of all txs sent to the address above will be added to the prize money, either to be paid out to the winner(s), or to be donated to a charity (in case no winner can be determined).

* Entry details: Entries must be submitted by the above Google docs form. During the submission period, participants will not be able to see the other participants entries, to avoid entry coordination. After the submission deadline (November 30th 2015), I will open the above form, allowing everybody to see all other entries. Since I am able to see all entries at any point, I will not participate myself in the game.


Summary

(1) Submit your prediction for the bitcoin price (compared to a 20 day simple moving average) on November 30th 2016 on Bitstamp, via this form, no later than November 30th 2015. To participate, please include a txid of a transaction to 1M3QWNsug3hAL6W26VugAQpmzDFHWSAaZC.

(2) ...

(3) Profit! (if you win)

4  Economy / Speculation / How well does Technical Analysis perform? on: September 06, 2015, 12:16:19 PM
Or rather: How well do /you/ perform at TA?

Alright, this is the Bitcoin speculation subforum, I'll do my best not to be off-topic. I mean, we discuss (future) Bitcoin price, often by means of TA, so it kind of makes sense to occasionally discuss how TA performs (or how we, individually, perform at it). Hence a meta discussion about TA is (sort of) on topic in this forum? *

Anyway, here's a great site. Found it somewhere in this forum, forgot who posted it originally (thanks, whoever you were). Only S&P500 stocks (no crypto yet :D), but I love the simplicity of this game. Play it, then post your summed up results (against buy & hold) here.

Two remarks:

It's stocks from the S&P500. The exact stock name or period isn't shown, but keep in mind that the index as a whole has been going up since the beginning of time, so trade accordingly.

There's two small things about this game that "punishes" trading when compared to B&H. Not so bad that you cannot beat B&H, but it eats a bit into your profits. See if you can find what I mean, or add your own thoughts.

Here's the link.


Chartgame.com


(EDIT) Maybe I didn't phrase it very well, so to be clear: the above website is a chart *game*, not real trading for money. You press 'play game' (no registration, so you're anonymous), then you get a budget of virtual $10k, you are served a fragment of a "nameless" chart, which you then "trade" for ~1 year, skipping forward by days or weeks by pressing a button. At the end of the year, the name of the stock you traded is revealed and you're ranked against a b&h of that chart. Then, you can go to the next chart if you want. Total playing time per chart is about 5 minutes or less, unless you plan to go all EW on each of them :P

Disclaimer: I'm not affiliated with the site or the owner, I just happen to like it a lot.


* Yes Blitz?
5  Economy / Speculation / Two semi-random thoughts on the market and our predictions on it on: June 11, 2015, 12:35:50 PM
Two thoughts recently formed in my mind, nothing very coherent yet perhaps, but thought I'd share it anyway, see what your responses are...

(1)

Sometimes, the market (and by that I mean: our little market, Bitcoin) acts kinda predictably. Sometimes, less so. Right now, we're in the second kind of phase, I'd say.

Don't get this the wrong way: this is coming from someone who practices TA himself... No wide ranging claims coming from me that TA is all b*shit. Just saying that there seem to periods where the market seems to send very clear signals where it is going, and sometimes, less so. For example:

* Mid May 2014. At the very least when the breakout happened, it was pretty clear we'd see some decent rally. Less clear when and where it'd stop, but buying and selling at a ~50% profit was not really rocket science.

* Mid August 2014, this time: down. When the rally just mentioned had run its course. Again, exact targets are a different matter, but the general direction was pretty clear.

It's hardly the same now, is it? We fail to rally /and/ we fail to crash. I suspect a large part of our predictive inventory relies on some form of momentum, and right now, there's pretty little of that. I think anyone is well advised to admit this to him/herself - at least from my perspective, it looks like right now, almost everyone I follow is a bit at a loss.



(2)

Shower thought on 'trained behavior' and exploiting it for profit: What if the market can be seen as different phases of *training* the masses to a certain reaction, and then smaller groups taking advantage of that trained behavior, until it disappears?

Example: The 2012/2013 era taught the Bitcoin masses to "hodl". Nothing but up uP UP! Enter a small perturbation - like a record high, cracking thousand, and people wondering "is it really worth that much?", and a resulting crash, predictably.

Not a problem, the trained behavior (over the last 2 years) was always "just buy when it's low, it'll go back up again". And so people did, again and again, in 2014.

Now, what if a smaller part of the market starts taking advantage of this? These traders (intuitively, or algorithmically - doesn't really matter) a) identify the above pattern, and b) take advantage of it. Which means: they take profit when the FOMO rallies really get started. No ill intention, just profiting from some lazy trained behavior, i.e. skinning the hodlers. Fair deal, it's a market, not a Steinerian playground.

What next? That small group (conventionally called: "bears", but in reality just traders that value actual profits over paper profits) becomes "trained" itself. Perhaps overtrained. Also, they accumulated quite a bit of capital, so they're now larger (in market terms) than they were before. They're now (not *now* now, but in a hypothetical world where the last bull is dead) the dominant group.

You can probably see where I'm going with this.

What if that group is in the process of being "taken advantage of" as well? The reaction to sell at the drop of a hat became almost automatic (like the automatic reaction to "hodl" by the other group before), so there's profit in it for another group of traders to take advantage of that. Not sure if that's already going on, or if we're just going through some low volatility phase before the bear rocks on again, but it's an option: overtrained buyers -> profitable counter strategy -> counter strategy becomes dominant and overtrained itself -> profitable counter-counter strategy.



Do me one favor please, don't give me the usual bull/bear bullshit. I'm not interested to hear why the market's going to drop to $50 next month, and I don't care why it's guaranteed to go to $5000 either. Other than that, pick apart my two ideas above.
6  Economy / Speculation / And this, ladies and gentlebears, is why we like the WSJ on: March 11, 2015, 09:43:17 AM

Same story. Two outlets. Two ways of spinning it:








"a shadowy company called 21 Inc" vs. "... some of the biggest names in venture capital".

CNBC is just one among many papers spinning Bitcoin news that way, NYT is probably even worse. WSJ is the exception, really.


Bonus question: Which of the above two publications' reader bases do you think has the higher average net worth?*
7  Economy / Speculation / Mid-Term Market Prediction Contest (Round 1 - The Results) on: January 31, 2015, 04:34:00 PM
I had the idea for a game like this in another thread... I thought it might be fun to get a prediction contest going, similar to dnaleor's very entertaining trading simulation, but instead of (daily) estimations and trading, going for a mid-term time scale instead - not trying to look years ahead, but to speculate about the market a few months ahead of time.


The rules:


(1) Post your prediction of the following three key market points.

(a) The highest price (any executed order counts that is not reversed by the exchange or a glitch in the exchange data) during the past 90 days, at the evaluation date, as per Bitfinex.

(b) The lowest price (any executed order counts that is not reversed by the exchange or a glitch in the exchange data) during the past 90 days, at the evaluation date, as per Bitfinex.

(c) The value of a 90 day volume-weighted moving average (daily_close*daily_volume/sum_volume) on Bitfinex data, at the evaluation date. (*)


(2) To participate, please send whatever minimal BTC amount you want to the following address: 19j98wABmLk7QXaNN1ZHRqjBJiLPG7jvhA.

To be clear: This is not a participation fee, and I am not asking for donations.

Send whatever dust amount you can get through, I don't care. I want to add this rule to make sure that only people with at least a bare minimum of interest in BTC are making predictions.

Post your predictions together with the txid of the transfer you just made. First post using a txid is counted, any subsequent post mentioning the same txid is ignored.

Alternatively, sign a message from any of your addresses. Again, it doesn't matter how much it contains, this rule is just to make sure you're actually on the network and not just a troll bystander. Make sure it can be related to your forum account, e.g. by mentioning your username.


(3) Evaluating the winner.

All valid predictions (= numerical values for all of (a), (b), (c), plus txid or signed message condition met) entered in here are compared at the end of the prediction period to the actual values of (1) (a), (b) and (c).

For each individual question, whoever is closest to the actual value is ranked highest on that question, followed by the poster who submitted the next closest prediction, and so on.

In case of a tie between participants on an individual question, the date of post is used to break the tie, such that the earlier post is ranked higher than the later post.

To determine the overall winner, a final rank is calculated as follows: [rank in answering question (a) + rank in answering question (b) + rank in answering question (c)], with the lowest resulting number determining the overall winner of the game.

In case of a tie at this step, the poster who is ranked highest on question (b), the 'lowest price' question, is the overall winner. (**)


(4) Dates and Deadlines (all in UTC).

(a) Submit your predictions by posting in here no later than Sunday, February 8, 2015.

(b) The evaluation date, i.e. the date at which questions (a), (b), (c) are evaluated by looking back 90 days, will be at the end of Saturday, May 9, 2015.

In other words, the prediction period is February 9 2015 (including) to May 9 2015 (including).

(c) The winner will be determined and declared in here shortly afterwards. Same for the transfer of the award specified right below...


(5) The award.

I pledge to transfer 0.5 BTC, or the BTC equivalent of 115 USD (= 0.5 BTC by current valuation) to the winner of this game, with the choice which of the two amounts will be sent being my personal choice at the time of winner determination (I'd say you should probably expect to receive the lower of the two ^_^)

A note to the mods: If offering an award like this means my post counts as "gambling" and would have to be moved to the gambling ghetto subforum, please let me know. In that case, I'd rather remove the award, but have the post stay in this forum.


Summary:

Post your prediction of (a) highest price during previous 90 days, (b) lowest price during previous 90 days, (c) value of 90 day VWMA, all on Bitfinex, as evaluated on May 9 2015, in this thread, no later than Sunday, February 8 2015. Include the txid of a nominal amount transferred to the address posted above, or a signed message mentioning your forum name.


Disclaimer:

The above rules are subject to change (for example, if someone discovers a game-breaking loophole in them), until the submission deadline on February 8. Only the rules as defined by that date count, including the possibility that the game cannot be held at all (if, for example, forum rules prevent having a game like this in here).



Who's in?



Notes:

(*) "Volume-weighted average" (VWMA) =/= "weighted average " (WMA). This prediction is about price weighted by volume. Current VWMA value is ~$290. Here's a graph of it over the past months.

(**) Because most of our discussions right now are about whether "the bottom is in" or not.
8  Economy / Speculation / A quick calculation on Bitstamp's loss due to the hack in relation to their fees on: January 10, 2015, 12:58:49 AM
The basic idea: summing up over the past 365 days of trading volume multiplied by (H+L)/2 we should get a decent approximation of the yearly trading volume on Bitstamp in USD.

That value peaked in November this year at around 3.5 billion USD. The lowest value during the past 365 days was at the beginning of 2014, around 1.5 billion USD (lower price, and smaller market share of BS during 2013).

We happen to know Bitstamp's fee structure (between 0.2% and 0.5%) but we don't know exactly which share of the volume commands which fee. Assuming that a lot of smaller trades make up a bulk of the volume, we'd get closer to 0.5%, assuming (more likely, imo) that large trades and volume coming from payment processors linked to BS make up the bulk, it'll be closer to 0.2% (in fact, the really big players might even get better fees).

That said, let's estimate the range of fees Bitstamp could expect to rake in within a year in the past:

max: 3.5 billion at 0.5% ~= 17.5 million USD in fees
min: 1.5 billion at 0.2% ~= 3 million USD in fees

So by my approximation, in the worst case they lost about 20 month's worth of fees in the hack, and in the best case, 3.5 months worth of fees.

Note that the above is resting on a few more important assumptions:
a) 19k coins is indeed what they lost, not more, not less
b) they "cash out" fees, i.e. my calculation of using USD volume corresponds to how they run their business i.e. they don't store profits in coins (only)
c) they weren't insured against a hack (no idea if that's possible anyway).
9  Bitcoin / Electrum / Not to be impolite, but has development stalled a bit? on: November 28, 2014, 01:53:18 PM
I'm just wondering because I remember reading about adding a USD exchange rate based conversion feature (e.g. tell Electrum to transfer X USD and the client will transfer X*current rate in BTC) a long time ago, but so far, it hasn't been implemented.

I continue recommending Electrum to friends as the single best lightweight client for new users (and old users as well), but it looks like there's a bit of a slow down in updates and new features.

My apologies if this sounds confrontational - it's not intended that way. I'm just trying to figure out what goes on behind the scenes, and if there's a chance I or the community can help in some way.


EDIT: Just read ThomasV's post about leaving INRIA. Good news! (although leaving INRIA must have been tough.... you must be crazy, other CS people would die to get in there :P). So I guess in principle, development is more of a focus now than before?
10  Economy / Speculation / We made it, boys and girls. on: November 28, 2014, 10:24:35 AM
I guess a lot of people, even in here, even those who are in general pro Bitcoin, don't fully understand just exactly how fucking bullish this is. No, not "We're going to rally to $2000 next week" bullish. Not even "We will never go below $300 again" bullish. But "We've made it. Bitcoin is here to stay" bullish. The important kind of bullish.





A hint: It's not about the semantic content (the identity statement). It's about the pragmatic effect (the order of terms): he's saying gold is like Bitcoin, not the other way around.


(edit) Here's the full report:
https://drive.google.com/file/d/0B_GhvGyl1tuQN3N5WUpJOTJCSXM/view?pli=1
You will note he calls gold (and, by implication, Bitcoin) a "bubble". You will also note he points out it might be a "bubble" lasting another 6000 years.
11  Economy / Speculation / Take a step back. Do the right calculations. Then stop panicking. on: October 30, 2014, 01:13:22 PM
(But don't get too confident either.) <-- Wanted to add that last line to the title, but the character limit got in the way.


Alright. So we all like talking about daily Bitcoin price in here. Hourly even. Individual big buys or sells even. How the price rises to a new all-time high, and how it crashes afterwards.

No problem with that, this is the speculation subforum after all, and for those of us who trade those spikes, those values are relevant after all.

But it's also easy to forget the larger picture when doing so, and I notice an increasing number - even of "old hands" - are starting to declare this funny little cryptocurrency experiment failed already because of the bear market we are in for about a year now.

That's a bit premature maybe...


The goal

Let's look at the larger picture for a moment. Not the local price tops and bottoms, but at a large view of the market. Note: This is still market analysis (as opposed to looking at the fundamentals of the Bitcoin economy), but instead of focusing on the extreme values (that are exciting, but not all that important for Bitcoin as a whole), let's zoom out a bit...


Step #1: 'Market cap' instead of 'Price per unit / BTC'

Easy to forget, but important to note: Per unit price, i.e. USD per BTC as traded on a public market, matters for traders and for the value of your individual account, but is a poor representation of the 'total market' of Bitcoin. Market cap, i.e. current price times total number of bitcoins in existence, isn't perfect either (for example because of "lost" bitcoins, or those not being in circulation), but it is already a big improvement. The market now, at around 13.4 million BTC is a vastly different size than in 2011, at around 5 million BTC.


Step #2: Volume-weighted price, averaged over a reasonably long time span, instead of daily price spikes

Said it already: price highs and lows matter a lot for traders. Those who sold at previous peaks and bought back at the lows made a fortune. Those who bought at $1000 and sold at $300 lost one. But it doesn't accurately reflect the weight of buying and selling as a whole, the amount of coins bought and sold at those prices.

Yes, price briefly got near $1200 in 2013. Yes, price briefly fell back to $2 from $32 in 2011. But in either of those cases, only a relatively small number of coins (in relation to total volume) were traded at those prices. It makes no sense to think that the Bitcoin market lost half its value in a few days when price fell from $1200 to $600, and neither does it makes sense to think the Bitcoin market size (sustainably) increased by a factor of 32 when it rose from $1 to $32 in 2011 in a short amount of time.

This is, if you want, a reminder for both bulls and bears: don't think the spikes matter all that much. What matters is the larger trend, unless you are actively trading the extremes on a daily or weekly basis.


Putting it together...

So, let's look at the market capitalization of Bitcoin based on a volume-weighted average of the last 200 days. That's a bit more than half a year of "smoothing" the price, and it takes into account the trading volume of each price that enters the average, i.e. on a day with much trading, the price is weighted more for the final value of the average than on a day with less trading.


In the following two graphs, you are looking at the market cap of Bitcoin (the thick blue line), in millions of USD: total coins mined at the point of calculation times volume-weighted moving average of price over the last 200 days.


2011 to 2013 (MtGox data)




2013 to now (Bitstamp data)




What to conclude?

That's up to you, ultimately. You will note that we are currently "trending down", even in a smoothed view like the 200 day (volume weighted) average and the corresponding market cap. That's pretty bad, you have to admit... means Bitcoin is in a deep bear market (or: was in one. It's a delayed representation after all because of the 200 day lookback period).

However, you'll also note this is hardly the first time this happened: The 2011 bear market brought the "smoothed out" market cap down from its peak of ~70 million  USD to ~38 million USD, almost cutting the peak value in half. Compared to that, the current bear market is still rather gentle: from the peak of 8.4 billion USD to currently about 6.4 billion USD. Down about 25% from peak market cap as of now. Pretty bad, but hardly the "death of Bitcoin" some like to talk about.

(Note also: billion now, million back then.)

The above is, in a nutshell, why I can't really take the doomsday prophets all that serious that claim Bitcoin is dead and the crypto experiment is a failure. Maybe if the larger picture I presented here changes drastically, say, if the market cap falls back to below a billion USD, I'll start wondering if it is really the end for Bitcoin.

Until that happens (if it ever will), I think the same way of Bitcoin the way I thought of it when I learned about it in early 2013: It's a brilliant idea, a truly interesting social movement and experiment, and it has a real shot at making it. As long as you don't delude yourself in thinking its success is a "sure thing", it's worth keeping an eye on, and maybe even holding a few of those funny little coins. Just not so many (in relation to your total net worth) that any price drop makes you want to throw up - but that's warning that applies to investors in all markets.





A word on self-moderation

I used to dislike self-moderated topics, but I also dislike the rampant trolling that has become commonplace in here. This is the first self-moderated topic I ever opened, and I do so reluctantly. As a sort of  compromise, between keeping signal-to-noise in an acceptable range, and not stifling free expression of criticism, I will:

(a) Only remove posts that can uncontroversially be called "trolling". Example: JorgeStolfi's posts are not "uncontroversially troll posts" -  most seem to dislike them, but some (including me) see them as at least not completely devoid of any information. So posts like this won't be removed. Content-free posts troll posts on the other hand, with the only intent to stir up emotions, will be deleted. Example: fallllling's or his alts' panicky one liners, or notlambchop's pony memes.

(b) To allow for some accountability for my moderation, I will move all deleted posts into an unmoderated topic in the off-topic subforum. That way, if you really want to read what btctalk's finest have to say (and decide if I perhaps deleted something without justification), you're able to do so over there: 'Garbage can' thread for my self-moderated speculation subforum threads
12  Other / Off-topic / 'Garbage can' thread for my self-moderated speculation subforum threads on: October 30, 2014, 12:38:00 PM
Will post (as quote) those comments in here that I deleted from my other threads (usually in the Speculation subforum). The idea is to introduce some amount of accountability for the mod decisions in my threads...

Is this allowed in here, by the rules of 'off-topic'? Let me know if that's not the case.
13  Economy / Speculation / Wouldn't it be nice... (the LazyWhale algorithm) on: October 15, 2014, 11:02:02 PM
LW Live Signals:

(don't take them too seriously, I'd suggest)

Buy @239-241, 2015-05-03

Sell @236-244, 2015-04-09

Buy @236, 2015-02-13

Sell @311, 2014-12-19

Buy @372, 2014-11-10
14  Economy / Speculation / The Wall Street Myth on: September 15, 2014, 10:31:24 AM
Quote
The motto for Wall Street has always been to find an edge - an arbitrage model, a high frequency algo, a long/short pair trade, credit vs. equity, offsetting risk to retail investors, fundamental analysis, event-driven plays etc - and then to lever up and trade on that edge. Rinse and repeat.

Quote
Everything they knew and everything I was able to explain about Bitcoin didn’t fit that mode of operations at all. The proposition sounded like Wall Street was supposed to buy coins next because they were sophisticated enough to understand Bitcoin and its potential and had the capital at hand to speculate on it.

…And they were supposed to do that with 100% cash on no leverage, and then just park the bitcoins and bank on the next wave of adoption and investors to come.

Quote
In essence, Wall Street will be there when Bitcoin is big enough for them to take their cut or ‘edge’ on the daily trading volumes. They will be there to provide liquidity and offer various investment vehicles. They are not going to be a pawn in the Bitcoin enthusiasts’ plan - as a source of significant speculative capital to pump Bitcoin up another 10x.

from: http://jackcliu.com/post/97546140332/why-wall-street-has-yet-to-enter-bitcoin


There's this persistent idea that "Wall Street" is going to "drive the next bubble". Alternatively that idea is expressed as "once big money arrives" (we're going to the moon).

Just finished reading this post by Jack C. Liu, and I wanted to share it here because it puts into not-too-many words what I've been thinking myself for a long time now: don't count on Wall Street to drive the next price jump.

I'm sure you will (correctly) point out that this Liu guy is just another dude with an opinion. Absolutely true. I'm not claiming this post is interesting because of deep insider knowledge. It is interesting in my opinion because it makes sense.

Let me know what you think.
15  Economy / Speculation / Love this quote. Do you? on: August 09, 2014, 11:27:20 AM
Quote
But stability could have a self-reinforcing positive impact. Flushing out the “To the Moon” crowd might be just what the doctor ordered for bitcoin to gain respectability and mainstream acceptance.

from: http://blogs.wsj.com/moneybeat/2014/08/08/bitbeat-learning-to-love-a-boring-bitcoin-market/
16  Economy / Speculation / Should we (the investors, I mean) help incentivize p2pool? on: June 27, 2014, 12:22:12 PM
Opinions are divided (to say the least) on how dangerous a single pool reaching 51% or more of hash power really is.

Some say it's not a big deal and it's all hysteria, others go as far as calling Bitcoin "ghash coin". I tend to think the answer is somewhere in the middle: it's a serious problem, in the sense that our "trustless network" becomes a bit less trustless when a single pool can get close to a hashrate majority, but I also don't buy that it's an imminent & practical danger - no rational pool operator would risk the entire base of this wealth to earn a few extra bucks.

First, a disclaimer: I'm not a miner myself, so some of the finer points of mining and mining pools probably elude me. That said, I am under the impression that a lot, if not: most of the 51% pool problem would disappear if a majority of "floating" hash power would join p2pool.

Agreed so far? Let's say p2pool is the solution. There seem to be reasons why miners don't use p2pool more often yet. The most common reason I've heard so far is that p2pool requires the participating miner to run a full node (while regular pools need only a light client). I never quite understood why that is exactly such a big obstacle (if you can spend thousands on ASICs, how hard can it be to get the hardware/connection to run a full node?), but I'm not here to argue with the miners. They are economical actors, so I'll assume they know what they're doing.

Alright, I'll come to my point:

1) It would be preferable for everyone who has a stake in Bitcoin if a majority of hashing power would join p2pool.

2) Miners, by and large, aren't doing that. Currently p2pool sits at around 1% of total hashing power.

My conclusion:

Those who have a large stake in Bitcoin should try to give more incentives to miners to join p2pool, as it will benefit themselves in the long run.


Do you agree? If so, what's the most effective way for us (as investors/traders) to provide such incentives? The wiki mentions p2pool donations already exist, but I couldn't even find the total of donations received so far. Also, it looks like Bitcoind is required to donate, which limits the number of potential donators.

How about a to do list?

  • Set up donation address
  • Advertise, and convince large Bitcoin stakeholders to donate to p2pool, arguing that it is in their own self interest
  • Make sure there is little room for embezzlement of the donated funds, i.e. guarantee and check that donated funds are distributed among p2pool miners.


That's my pitch. Any input welcome.



Some links:

P2Pool Wiki article

P2Pool thread on bitcointalk

Hashrate distribution, by pools
17  Economy / Speculation / What a difference half a year makes... on: June 19, 2014, 11:48:15 AM
Ladies and gentlemen, I present to you Mr. Bob Shiller, Nobel prize laureate in economics of 2013.

Here's him, in a statement in January 2014, at a Davos conference:




And here he is again, less than half a year later, in an interview with Forbes (link)




Notice how you do it? Never admit you were wrong, always gradually backpedal. From "It's a bubble, and not that interesting.", to "It's pretty interesting, but still needs lots of work to become usable". Expect "It's going to revolutionize the financial world, and I _TOLD_ you so years ago." anytime soon...

JorgeStolfi, maybe a role model for you as well? ^__^
18  Economy / Speculation / The recovery in one picture, or: why bulls shouldn't salivate too much yet on: June 18, 2014, 08:58:08 AM



There it is: one picture to summarize why and how we got out of the bear valley in May. But also: why you shouldn't really expect price to reach the moon anytime soon.

Huh?

Oh, alright, I'll state the obvious: selling pressure declined, buying pressure is only up slightly. The order book history (I picked stamp) shows that pretty well. In other words, our recovery is - so far - driven mainly by the reluctance to sell, not by overwhelming desire to buy.

And that's okay for now. Just keep that in mind when we get near $700 again and you start feeling that urgent desire again to post pictures of rockets and moons.


(disclosure: I'm long. Will trade big enough swings should they arise, but I see more potential to the upside right now than to the downside. Just not that much upside potential, see above.)
19  Bitcoin / Electrum / Donations to the devs? Welcome, yes or no? on: June 16, 2014, 10:06:45 AM
A question, Thomas:

I appreciate Electrum and how you and the other devs maintain and develop it, a lot. Any way I can contribute?

You're not exactly openly asking for tips/donations (on the frontpage of electrum.org, for example), so maybe you don't want or need any, but I thought I'd ask rather ask, because I feel like I should contribute at least financially to this fantastic project.
20  Economy / Speculation / "Bitcoin only has speculative value". Are you sure? on: June 05, 2014, 10:37:08 AM
It's a recurring comment, even in this forum: "Bitcoin value is purely speculative".


Or: "Bitcoin is too volatile as a store of value, and besides (pseudo) anonymous transactions for shady businesses, it doesn't have any intrinsic value."


Let's see.

This morning I read about the new pricing layers of Bitpay. Next, I looked up pricing on other payment providers, something I wanted to do for a while but never got around to do. So what follows is a short summary of what I learned.


Let's say you're a small business owner (transaction volume: 10k USD per month). Or maybe a bit bigger? (100k USD per month). Or maybe you're reasonably big (1M USD per month) What are your options?

Until recently, your obvious choice for case #1 (10k), and probably #2 as well (100k USD) was pretty clearly...


PayPal -- open about fees (sort of), but f*cking expensive

When you go to the Paypal website, then the site for merchants, they pretty clearly show their pricing model: 2.2% to 2.9%. Let's give them that at least: they're open about it.





When you read a bit more about it though, it turns out there's a number of hidden fees that PayPal places onto the merchant, like unfavorable (for the merchant of course) transaction rates during the calculation. In effect, as a small to medium business you're looking at PayPal fees around 3% of your transaction volume.



Next, let's look at the 800 pound gorilla of payment processing:

Visa -- Cheaper, but fees are one intransparent mess

There's no easy way, it seems, to find Visa's pricing model for you as a merchant from their website. There's this FAQ-style subsection...





but basically, it just tells you "There are fees. How much depends". Which is probably on purpose: it seems fees are (to a degree) negotiable with a large processor like Visa. The bigger your business, the more favorable the rates will be, presumably.

A bit later, I found this, which seems to give a more detailed overview of their fees. It's only a partial screenshot, by the way. The full list is much longer...





Yes. You read that right. There's a "Kilobyte (KB) Access Fee". Gotta pay for those precious KBs for each transaction, even in a centralized network.


To summarize: it looks like you are going to pay, on average, as a company big enough to work with Visa, around 1.5% to 1.6% fees over transaction volume. About half of the PayPal fees. But from what I can tell, it's not really an option for small businesses (as defined above).



Bitpay -- "Purely speculative, no intrinsic value"

Just kidding.


Look at this... "Pricing" is mentioned right at the top their frontpage, unlike Visa's page, where you couldn't possibly find that information. One could think their price is like a unique selling point for Bitpay...





So how much is it? Depends again on the size of your business...





Remember how I defined "small business" and "mid size business" above? 10k USD per month, 100k USD per month? Both of those would easily fall into the first category: a flat fee of 30 USD per month. So Bitpay fees are equivalent to 0.3% over transaction volume (small business) and 0.03% for mid size business.

Only interesting for small fish, you say? Say you're in the range of 1M USD transaction volume per month. You'll get into their 2nd tier of pricing, paying 300 USD per month. That's 0.03% fees again, as above. With a factor of 3 to grow, and still be in that tier (in which case your fees would be 0.01%).


I realize this is starting to sound a bit like an infomercial for Bitpay ("John, can you believe their super low fees?! It is just amazing!"), but it seems plain obvious to me that, in terms of raw transaction costs, Bitcoin is absolutely unparalleled, otherwise Bitpay couldn't offer prices like that.

Either the other payment providers (Visa, PayPal) drastically lower their fees (we are talking an order of magnitude lower here), which is not going to happen, or they are going to suffer.

Alternatively, they can switch to Bitcoin as the underlying transfer mechanism, but then they'll need to justify their fees through additional services, like escrow. Which might actually happen, and it will probably be a viable business model to a degree. But almost certainly not to the tune of a factor 10 higher fees when compared to Bitcoin-based payment providers. Who could offer escrow services as well, if there's demand for it.


Hypothetical objection #1

So let's say you object with "Volatility risk!".

Bitpay gives you the option for settling your payments 100% in fiat (USD, Euro, etc), 100% in Bitcoin, or any ratio in between. The merchant chooses the amount of volatility risk he's willing to take, up to and including "0%".


Hypothetical objection #2

What about confirmation time? "10 minutes is too long in a brick and mortar store!".

Using raw Bitcoin transactions, that might be true. I claim that for Internet businesses, 10 minutes processing time is simply not a problem. It's not as if you usually ship within 10 minutes anyway. For brick & mortar stores, 10 minutes is too long, granted. So they'd have to take the rout of 0-confirmation transactions. Which opens them up to the risk of double spending attacks, right?

True. How convenient that, if Bitpay handles the transaction, they take the double spend risk. I guess they calculated it through and can see that the effort to execute a 0-conf double spending attack simply isn't worth it for everyday transactions. Whatever way they arrived at their conclusions, the merchant doesn't have to bother with it, so both Internet businesses and brick & mortar stores can use Bitcoin-based payment systems, risk-free.


tl;dr Paypal fees = 3%. Visa fees = 1.5%. Bitpay fees = 0.3% to 0.03%. There's your "intrinsic value" of Bitcoin, right there.





Addendum #1: This post isn't really meant as a raving, positive appraisal of Bitpay. I just picked them to illustrate a point: that, all other questions aside ("is Bitcoin a true currency?", "will it be a store of value?"), Bitcoin already has real, intrinsic value as a payment system, by being cheaper than anything else available.





Addendum #2: Alright, so let's tie this in with a bit of price speculation. I will make three assumptions, argue why they are relatively uncontroversial, and will derive a minimum price to represent the fair valuation per bitcoin, based on a barely speculative assessment of the fundamentals.

Assumption #1: The Bitcoin network proper will see yearly payment volume at least as high as the current yearly payment volume of Paypal.

This is what ties this calculation in with my post above: I think it is extremely likely that, within a few years at most, Bitcoin will be used for payments (perhaps chiefly for Internet commerce) in the same range that Paypal is doing business. I personally believe it will far surpass Paypal, but I'm trying to find a minimum here.

Paypal payment volume is about 200B USD per year. Source.

Note: I prefer not to equate "payment volume" and "USD denominated transaction volume over the network". "Payment volume" implies a necessary minimum valuation necessary to enable that payment volume denominated in USD, while "USD transaction volume" can freely rise and fall with the exchange rate.


Assumption #2: There are at most about 10M bitcoins in free circulation.

You can convince yourself by searching for the various calculations done on this forum that number being relatively conservative. Less than 13M bitcoins have been mined so far. Knowledge of permanently lost bitcoins + seized amounts + high value wallet addresses that haven't moved in years amounts to a number probably lower than 10M, but again: the goal is a minimum prize.


Assumption #3: 'Velocity of circulation of money' for Bitcoin is not completely determinable yet, but almost certainly below V_year = 10.

It's another regular exercise on this forum and blogs, to determine the velocity of money for Bitcoin. Here's an analysis that looks at USD transaction volume and derives a value of around 7.3.

Like I said above, I don't completely agree that USD transaction volume is quite the same as "meaningful payment volume", so I'd also like to look at the velocity of fiat currencies. We could reasonably hope Bitcoin to be as fast as cash (or monetary assets with liquidity similar to cash), so the comparison I feel is suited best is with M1 money supply, which had a yearly velocity between 6 and 11, during the last 20 years. Source.

I would argue that setting the yearly velocity to 10 is a rather unproblematic choice then, as it is almost certainly too high, not too low. At a yearly velocity of 10, it certainly wouldn't be worse than what is usually considered the most liquid asset of choice (cash or cash-like instruments) in our economy.


Putting it together: (200B USD / 10) / 10M bitcoin = 2000 USD per bitcoin


Here's how I see this number: 2000 USD is the currently lowest possible fair valuation per market traded bitcoin, based on fundamentals that are not true yet right now, but very likely to become true within a time frame of at most a few years.


My original post about payment provider fees serves as the justification for why I consider the change in fundamentals to be likely (i.e. Bitcoin will grow at least as big as Paypal), for the other values of the formula I have provided fairly conservative estimates, so I feel certain enough that 2000 XBT/USD is a currently fair valuation of Bitcoin assuming only very weakly speculative changes in the fundamentals.

Note please: this is a minimum for a currently fair valuation per coin. There are many here on this forum who believe in vastly higher valuations (100k USD per coin. 1M USD per coin), but I'd rather not comment on the likelihood of those scenarios.

I claim that the above calculation is fundamentally different: instead of having to assume that relevant portions of the gold market migrate into the network, or that the Eurozone collapses, it simply assumes that Bitcoin succeeds in the one field where it arguably already gained a foothold: payment processing, and that it does so without becoming the largest processor (like Visa), but simply occupies a mid-sized niche (like Paypal).
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