No, I'm just saying that the price is determined by demand and supply.  If demand or supply change, the prices is affected.

Medium-term I predict a downward correctio.  Not sure about short-term, but I think it is likely that the BTC/$ exchange rate is 9-something in two weeks from now.

Received.  Thanks a lot!

The Bitcoin price is determined by demand and supply.  If people want to invest in a HYIP they need Bitcoins, so demand goes up.  This results in a price increase.

Back in December 2011 the Bitcoin price was at a local minimum around $2.  BTCST was started at about the same time, and we had a constant upward trend since then.  This was not only due to BTCST (e.g. SatoshiDICE was lunched in April), but BTCST contributed to the upward trend.

I also discuss this in my medium-term market analysis.

+1


So $10?

What exactly should cause a short-term price drop, and how?

I think currently people have a lot of USDs in the exchanges.  Short-term (1-2 weeks) I'd tend to assume that the price will be stable, or maybe even go up/rally.


Until mid-December 800K more Bitcoins are mined.  To keep the price at $10, somebody has to spend 8 Million USD to buy them.  I may be wrong, but I don't see where this money should come from, without people handing in their paychecks to invest in a HYIP.  I agree that media coverage increases demand.  And I also think that reward halving is a stabilizing factor.  Without that, I'd predict a stronger down trend.

Don't get me wrong.  Long-term I expect a massive up trend (with a small chance for a total collapse, e.g. because of advances in cryptanalysis).  But medium-term I'd still assume a correction.

How exactly would ASICs effect the Bitcoin price?  I would assume "not at all", no?

I'm not sure.  The price is determined by demand/supply.  If people do not invest in HYIPs anymore (or at least to a smaller degree, which I naively assume), then the demand drops.  This results in a marked correction/price drop.

See my medium-term market analysis.

I give a prognosis on the BTC/USD exchange rate.  I'll try to keep this post
updated as I learn new facts.

The Bitcoin price is determined by demand and supply.  So if we want to
understand where the Bitcoin price is going, it is useful to understand how
demand and supply will change.

Demand, or why people buy Bitcoins for fiat

• as a long-term investment
• for "legit" gambling (SatoshiDice, etc.)
• for buying products and services (SR, mullvad, etc.)
• for gambling on HYIPs

Currently, I have no indication that the momentum of the first three will
change significantly.

But due to the collapse of BTCST, most demand created by HYIPs is gone.

As a side note: The BTC price reached a local minimum around 2$ in December
2011 and has steadily raised since.  BTCST was started at about the same time.
I think this indicates, that BTCST indeed contributed to higher demand.

Supply, or why people sell Bitcoins for fiat

• to cash-in on profits (from business operations or savings)
• to cover the cost of mining

Every month about 200k BTC are created from mining.  And it is likely that most
of them hit the marked to cover mining costs.  We know that the reward for
mining will half in December.  But other than that, I can't make any safe
assumption.  So my best bet is to assume that there is no big change until
December 2012.

It is still possible that pirate will sell some of his assets, which would
increase supply somewhat.

Medium-term market analysis

So what is my prognosis until December?

I think the price will be pretty stable.  But due to less demand and constant
(or even somewhat increased) supply, I expect the price for Bitcoins to go
somewhat down.

I'm not sure where the bottom is.  It could be 8$, 5$, or even less.  I'm also
not sure when we reach the bottom, but I think mid/end-November is likely.

I don't think, that the marked will collapse medium-term, mainly due to the
block reward halving in December.

Whether the price will be stable long-term depends on how the Bitcoin economy
develops.  100k/month new BTC from mining is still a lot.  And I think without
demand due to HYIPs, the Bitcoin is currently overvalued.

It may be fun, but it will still (most likely) cost you money to do so.

This means nothing.  Do not make investment decisions based on what a (IMHO most likely!) ponzi scammer says to calm down the crowd.

Nice, looks like I qualify.

1JbBayiwiHfPDzzXoWz5Fs8Q3vuuGnKEcF

(Still, I feel a bit abashed, because I also posted to goodlord666's thread right now.)

1JbBayiwiHfPDzzXoWz5Fs8Q3vuuGnKEcF

I'll buy something really big in ten years (A decent house, or a new swimming pool? Not sure yet.).

Just to make sure that we are talking about the same thing: I assume that you need to know all transactions that you include into your block before you start the proof of work.  Please correct me, if I'm wrong.  So I do not see the point of wasted work.

Cheers, and thx for the chat so far

I agree with you, that this was a good idea for bootstrapping the system. But is it still a good idea to allow empty blocks now?

I know what you mean, but 0.0001 seconds seems very unlikely to me, because you have to learn about the previous block, first (I assume that you meant, that the second block is built on the first one, here).  Still it would be theoretically possible, if you solved the previous block yourself.

Do you think, that e.g. a requirement to include 10 transactions or some KB of transaction data would break the protocol today?  And if yes, how?

So if somebody is just after the 50 BTC and does not care about the network, would he get a (maybe very small) advantage to just ignore transactions altogether? Like:

 * If I learn about a transaction, just ignore it (saves me memory, and if I do not tell others about it, bandwith)
 * If I learn about a new block, I try to build a new block on it with just the 50 BTC transaction

I guess, this optimization is small.  But it would reduce the complexity (LOC) of my client, which may be useful for further optimizing it.

Would a minimum block size or a minimum required number of transactions per block be useful?

Do you suggest, that I can solve empty blocks and they would still get accepted?

Hello,
I just read the Bitcoin paper, and now I'm puzzled if there is a minimum block size for blocks to be accepted by the network.  If not, what is the incentive to add transactions without a fee to a block?

Ok, after virtual goods did not work out very well (see my previous post), I'll try it with something that you can hold in your hand. I sell Building Embedded Linux Systems for 1 BTC (shipping included).

PM me your shipping address, if you want it.

EDIT: If you think my price is not justified, PM me and we will probably work something out;)

I spent my last 0.03 BTC on it, and now I'm screwed and bankrupt 

A picture of my GF (with here consent!):

http://ubitio.us/file/download/276 (follow link to get a preview)

The price is 0.03 BTC. Enjoy!