Go read a book, seriously. It's called a tangled hierarchy, multiple things influencing one another in such a way that they sometimes influence themselves indirectly. It doesn't matter which direction you see the causality as traveling in (away from the miner, thus giving him the power or away from the market thus giving them the power) the fact is you've just confirmed my point, even while arguing it - the two are linked. The directionality of the link simply doesn't matter for my purposes. Whether the price drives the difficulty, the difficulty drives the price or some tertiary underlying factor influences both, the fact is that they move together.

As for the "sounds like socialism" guy, I said nothing whatsoever about evening out rewards. More GPU power = more BTC = more USD at any exchange rate, where did you get the idea that I was promoting a communist BTC variant?

Don't feel like quoting the mass of text in your post, W.O.O. but I'll say I agree with most of it - the part that I don't agree with is that the value of money fluctuates nearly as wildly as the value of bitcoins. If this were the case, you would have to re-tag every item in every store multiple times a day. The value of a dollar, yen, peso etc. changes daily, certainly, but at such tiny rates of movement that the "dollar menu" doesn't become the "two dollar menu" or the "twenty-eight cent menu" within a single day. Yes money is allowed to fluctuate and I expect it to fluctuate around such a set price recommendation but if I can't price an item in BTC today and have that price be valid and meaningful tomorrow, then it's not really a usable currency yet.

No, because the controls aren't forced, merely suggested. Gold miners have to be able to demand a price for their product that pays their cost of living. This represents a "floor" below which the price of gold can't really fall since below that floor no more gold is available - the miners simply take up another profession. Right now BTC's "floor" is zero, which is a game-ending event. Miners are still free to mine however many coins they can and sell them for whatever price they deem fair. This is unlike government regulation because no one is required to follow "controls" I'm merely making suggestions. If a "wall" of BTC exists at a given exchange rate then it becomes more difficult to drive the price above or below that wall via speculation and the currency becomes more stable. If you don't like my idea, don't follow it - you won't hurt my feelings. I'm fairly certain, however, that there are a lot of people who treat this more like a business than a playtoy and I'm pretty sure they'd like bitcoin to behave like a proper currency, only deflationary. Eventually perhaps the market will grow large enough to avoid manipulation and I'll just take down the site, but as was made obvious yesterday there are still individual people who can destroy this thing (even unintentionally) if we don't actually work together to prevent it.

I guess what I'm saying is that I recognize that the value of 1 BTC goes up because more people are using them and the "pie" gets divided more ways, as opposed to it just being more miners demanding the same money for less product. What I'm also saying, though, is that the difficulty is a measurement of the number of miners and that the number of miners is a slightly varying but fairly steady percentage of the number of users. Therefore, the difficulty can be a good predictor of the user base and is therefore a valid measurement of how many ways the pie is being split. Thus, we can use it to determine a fair approximation of 1 BTC's value at any given time.

OK so you're not against the math, you're just against the concept? I'm not even entirely sure what you're complaining about here... Yes, as more people join the network, more miners join the network, difficulty goes up, number of BTC mined daily goes down, value of each BTC goes up and we all hold stable. It's not just based in the fact that "gee, we miners would really like to always make stable income" it's based on the basic concept that the pie does in fact get split more ways. If the number/power of new miners is proportional to the number of people joining the community (which it should be, over a long enough timeline) then difficulty is just as good a metric as anything you can provide.

In short, please either provide me with a better method for the measurements I'm trying to take or a concise well-worded argument as to why exactly you're against this.

Then give me a metric for total number of users that I can pull via API and I'll change the formula thusly. I based it on difficulty because difficulty tends to grow proportional to population size (more participants brings more miners). If I had a more accurate metric for the number of active users I could use that, but I've tried to find one and I can't. Besides, difficulty has in fact remained proportional almost since day one.

Try http://btcunion.com/api/ and tell me if that looks like valid JSON to you. It looks valid to me but again I'm not a JSON expert

I've never worked in JSON. Give me a few to figure out the format and I'll go change my code. Should be easy enough.

My API is ridiculously simple by the way. It's just "value1,currency1;value2,currency2;" etc.

I'm also having some difficulties getting JPY and INR to work properly, I use Google's API for currency conversion and I think I screwed something up somewhere... In any case I'm aware of the issue and working on a fix.

I'm mostly a web guy, not sure my programming skills would be up to this task, but I'm sure there's someone out there who knows Mt. Gox's API to get real price and can also figure out mine (http://www.btcunion.com/api) and whip something up.

I have written a few simple Android apps in the past, assuming it's not too much more difficult to make a Widget I could probably whip something up for that platform at least.

Any takers? Shall we start a bounty perhaps?

I was wondering why I deposited BTC, had 12 confirmations and still didn't see it in my account. I really hope their systems can account for transactions that happen during this outage, I'd hate to lose my BTC

Hi everyone, I've been working on the technical aspects of an idea I've been chatting about a little since the whole "market correction" yesterday. The bitcoin economy has grown far too speculator-centric to see much success as a real currency. In order for BTC to truly remain/become useful for purchasing goods and services some level of stability is necessary; a slow steady rise is fantastic, a continuous roller-coaster of huge peaks and valleys is not. Furthermore, as a miner it concerns me greatly to see prices dip low enough to damage my business when these bubbles eventually burst.

So I have a proposal: It begins with the miners since we/they are the initial source of all bitcoins (some 7200 per day, a fairly substantial number) but it hopefully sees adoption by many others too. If you're not a speculator, if you're a miner or someone who does business in bitcoins you want a stable exchange rate that increase proportionally to important factors like adoption levels or hash difficulty (which is actually sort of a factor of adoption levels) not on the whims of a bunch of get-rich-quick investors! If you want bitcoin to take off and stay useful in the long term, to survive the media madness and become a viable dominant e-currency, then we MUST do something about the volatility. The advice to "buy when it dips then resell high" doesn't help the market as a whole, it only helps the speculators who buy into the methodology and eventually, such a low will not have a corresponding recovery. You can only crash a market so many times before it stays crashed.

So I suggest that we adopt a new ideal value for what those of us treating this like a business are willing to accept for 1 BTC. We set up an exchange rate that is pegged to difficulty and assume that to be the value of 1 BTC. If a mountain of miners and traders all decide that 1 BTC = X dollars then speculators will have a hard time increasing or decreasing the value by as much. They have to buy their way through the mountains of BTC available at $X before they can effectively raise the price above or below it. This means that significantly larger amounts of money can move about in the market without affecting the exchange rate. If you look at the market depth data on Mt. Gox right now you'll see two large spikes of sell orders at $25 and $30. These spikes represent such a "wall" and we've seen before the stabilizing effect that such walls can have on value.

I've created a simple web site (changed: http://www.bitcoinreference.com) with a forum attached that displays what I believe to be a fair market value for BTC which is automatically calculated from the current difficulty setting and converted into several world currencies. The data updates automatically so it should change immediately when the difficulty does. Right now I'm using P=D/25000 to set the price, which seems to roughly follow historical data if we ignore the recent bubble and its associated correction. This pegs the price at $22.69 USD currently. I am of course open to suggestions on more accurate or reasonable formulae should you have any input.

If we all buy/sell/trade at this assumed value with at least a meaningful portion of our BTC we can create a new "wall" set where WE decide. We can stabilize the value of the bitcoin, which makes it more attractive to existing and new businesses and gives it the image to match its potential as the new world currency.

Edit 2011-06-13: Changed URL, my proposal wasn't really a "union" per se so bitcoinreference.com is much more appropriate. Site content has not changed, nor has the URL structure, so the API can now be found at http://bitcoinreference.com/api

Edit 2011-06-14: Changed displayed market valuation and API. Site now shows market valuation based on a four-hour moving average and shows standard deviation for the same period. Ranges based on one or two standard deviations from average can be used for a number of purposes as discussed in my post below and on the "how to use this data" page on the site ites.f

Note: The purpose of the site has changed from what is specified in the post above. I am no longer interested in starting a cartel or union of any kind. bitcoinreference.com exists only for informational purposes and I now hope to help stabilize the market through education and dissemination of information.

And this kind of attitude will lead to the demise of bitcoin as a currency. Too many speculators, not enough people accepting it as actual currency. Bitcoin is too unstable in value to be used as a regular currency right now. If we tie value to difficulty, which is itself tied to adoption rates (to some extent) the value will be proportional to the number of people using it.

I don't want to buy low, sell high and make a bunch of money while the project flounders. I want this thing to succeed. I'd like to someday not HAVE to exchange my BTC for USD in order to pay my electric bill and to that end, anything which smooths out these obscene peaks and valleys is a good thing.

I'm not doing this for the speculators, I'm doing this for the community because what's good for the speculators is often NOT what's good for the currency in general.

Suggested rates (based on P=D/25000 in USD) are now on the main page (http://www.btcunion.com).

I've also got some code that's converting the suggested rate to other currencies using Google's API. At the moment it's not working correctly for INR and JPY so those won't be on the list until I figure out why.

For automation purposes, a text-only rate set is available at http://www.btcunion.com/api
Format is "amount1,currency1;amount2,currency2;" and so on.
I've got all the currencies currently offered by TradeHill listed. If there are other currencies not in the list that you'd like added, let me know and I'll add them.

I keep having to say this...  Union is probably the wrong word and I'll probably end up changing the URL at this point.

1. Don't care if someone is a miner. If speculators want to choose to sell at the suggested price for miners they're welcome to do so as well. The more people involved in such a price-stabilizing system the better.
2. Since there's no actual "union" with costs and such to support, there will of course be no fees. I'll probably put a bitcoin address on the page to take donations at some point in the future, but right now even this seems wrong. I just want to see stability in the bitcion - if that costs me a few bucks a year for a web site then so be it.
3. Aside from one thoroughly stupid story about a guy purportedly getting heat stroke from his mining rigs (which I absolutely do not believe) I haven't really heard of anything happening in the course of bitcoin mining that would deserve any special health insurance. In the average setup I think an electric fire might be more of a risk than injury

OK folks, site is online and forum is open for registration and discussion. I have to go unconscious for several hours during which time I will suffer from temporary paralysis and vivid hallucinations. Shortly thereafter I will suffer partial amnesia regarding the event.

See you all in the morning (hopefully with a better-looking market price )

Thank you so much, supa. Much as I love FOSS my formal training is all in ASP so the switch to Linux hosting has been fun

For anyone else who is interested, forums should be up/open at http://www.btcunion.com/forum if you'd like to discuss the specifics of this thing. I'll probably be up for maybe another 30-60 minutes before I'm required by biology to go pass out, but I promise to start working on this site first thing in the AM. I don't necessarily want to put it all out there as though it's official until I hear some input from other miners: Difficulty/price ratios, what's too high what's too low, should we enforce pricing in both directions to provide stability or only seek to enforce a minimum, etc. There's only the one forum for now and I've appointed one moderator I know I can trust (since she's sitting 3 feet away from me and I'm marrying her later this year) but I'd love to have a couple good mods if anyone feels like volunteering (send a PM and as long as you don't have 2 posts to your name, and one titled "TEH SKY IZ FALL! SELL SELL SELL!!!" you're probably in).

Well I probably won't have anything really worth looking at until tomorrow (standard drupal landing page for now) but I've got a functional (if half configured) PHPBB install that I'm hoping to have ready before I go to bed tonight, at least to encourage some discussion until I can get to the rest of the site. Also, if anyone has a ready-made PHP snippet to pull the current difficulty I would be forever in your debt for a copy of such a time-saving bit of text... send me a PM?

Again, "union" might not be the correct word, but I've already bought the domain so.... 

I'm working on a web site now, you'll have to give me a bit to actually have something up but I just purchased btcunion.com