From
http://www.solerinvestments.com/Online-Trading/Stock-Market-Crash.htm


Yes, I know there isn't really any credentials backing this up.
Yes, I know Bitcoin is not the stock market.
Yes, I know we should look to the past for answers to the present or future.

I'm adding this because it's interesting and others may find it's a useful contribution to the discussion.

The 3 bubbles:

2011


April 2013


Now


Log & volume as currency:
2011: http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-06-03zeg2011-06-03ztgSzm1g10zm2g25zvzcvzl
April: http://bitcoincharts.com/charts/mtgoxUSD#rg360zczsg2012-04-08zeg2013-04-08ztgSzm1g10zm2g25zvzcvzl
Now: http://bitcoincharts.com/charts/mtgoxUSD#rg360zczsg2012-11-24zeg2013-11-19ztgSzm1g10zm2g25zvzcvzl.

Stick those in OP if you're making that sorta thread.

I stand corrected. I should have said something more along the lines of "transaction volume isn't going up at anywhere near the same rate as the price"

Still though, the transaction volume is only 15% higher than in April so doesn't fully explain the 100%+ increase in price.

Not sure, transaction volume isn't actually going up though.


I agree with this. China is leading the rise, because they're discovering Bitcoin. But as I said, it's rising too quick, same as when the west discovered bitcoin in 2011 causing the first bubble.

Nobody can explain it. Some will say the chinese discovering it (to them, I would say, what happened when the West discovered it in 2011...?) others say it's with silkroad being gone (to them I would say: why is a few hundred million dollars worth of bitcoin not being spent yearly a good thing?)

Some will say it's hype, a rise in value without anything to back it up. People getting excited for no reason. Sort of like what happen in a bubble....

Make your own mind up. Don't take what anyone says as fact without learning why.

Again, depends on who you count as the press. If you count Max Keiser as press, then I think it would be silly to assume he didn't buy any LTC before mentioning it in his twitter feed this morning knocking LTC up 50% against the $.

It depends what you define as manipulated:

If I sell one BTC, that price changes. Have I manipulated the markets?

If someone does the same with 1000BTC, is that manipulating the markets?

What if a whale dumps to cause mini panic sell so they can buy back a few % cheaper? Is that manipulation?

If yes to any of the above, then yes, by your definition, market is being manipulated.

If you mean the exchanges are fiddling the numbers, then I doubt it, purely because there's that many exchanges, it would have to be done on all of them.


Regarding your original point 1 & 2, to me, that's just a bubble or hype: price rising rapidly with not much to back it up. The bigger this effect becomes, the more people spot it, the more the confidence in the overinflated price drops, the closer to the pop.

You can't say that without knowing the state of the orderbook which isn't included in the graph. For all you know, there may only be one person left willing to sell Bitcoin and he's holding until $1600 (so $1600 would jump the price right up to $1600) or alternatively, everyone that's holding bitcoins maybe trying to sell them for $1000, in which case it's going to take a shed load more to get about $1000, let alone up to $1600.



One thing I have noticed that is interesting (probably not worth drawing conclusions from, but interesting nonetheless) is the massive sells that seem to happen almost exactly 8 months before the crashes (that is assuming there's going to be a crash any day now.)

2011: start of Nov
April: Aug - Sep
Now: April

If you look at 3 graphs in a vertical line, there's big red bars in exactly the same place on each (or within 2 weeks.) Most likely pure coincidence, but interesting:)


What makes you say that? Are you hinting at the bubble in April raised the start price of this bubble, and accounting for that, we have a way to go? Definitely possible. Although given what I mention above about the 8 month pre sells, the same could be said about all the graphs (there's a mini bubble that sets the start higher than the start of the graph.)

You can put it on log scale yourself if you'd like. I don't think the pattern is as clear on logarithmic scale, links:
2011: http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-06-03zeg2011-06-03ztgSzm1g10zm2g25zvzcvzl
April: http://bitcoincharts.com/charts/mtgoxUSD#rg360zczsg2012-04-08zeg2013-04-08ztgSzm1g10zm2g25zvzcvzl
Now: http://bitcoincharts.com/charts/mtgoxUSD#rg360zczsg2012-11-24zeg2013-11-19ztgSzm1g10zm2g25zvzcvzl
(note: they're also volume in currency. This makes more sense to me. As the price of a BTC goes up, of course volume of movement is going to go down because 1BTC costs more. Same amount of people come onto exchange with e.g. $100, but they can buy less volume in BTC.)

I understand the logic of using log charts - it should supposedly be going exponential on a linear chart, as that's the same as linear on logarithmic, and that's how things grow, in relation to each other (percentage scale and whatnot.)

But it bugs me a little. In 2011, and in April I pointed out the same things and the riposte of most was "nooo we're meant to be going up at this speed, log scales duuuh BTC to the moon $1000 by next hour herp" and low and behold, we crash.

So people suggest we should be going exponential on linear, but if you look at the linear graph history of Bitcoin, it's pretty obvious that when we go exponential on linear, we crash shortly after. Could someone explain why this is?

2011


April 2013


Now


Take what you will from this.

This seems quite hard to believe. There are so many Web based services that don't use port 80. Mail clients, flash streaming, messengers, HTTPS, login for most web control panels. That's what I use at least, so that's at least 5 - 10 ports for me, and I'd say that's pretty average web use.


If they do this, then they are going to have to have enough phone staff to handle several calls from every single client of theirs over the next few days. After the initial surge of calls, so long as people keep writing software which utilizes the web, they're going to have a constant stream of phone calls from angry customer because the favourite new IM doesn't work, or they can't skype their grandma in Scotland.

Is there any evidence of any other ISPs doing this ever? I'd be intrigued to find to find out how they handle it.


Who is "this person"? Some random drunk you met in a pub? Your best friend who you can confirm works for an ISP?

I'm really surprised that everyone that has responded so far seems to have just accepted this is true. I suppose even if it's not true, it's still helpful/useful to consider how resilient Bitcoin would be if someone did actually choose to do it.

Why shouldn't someone with more power than you walk into your house and castrate you? The alternative is nobody is restrained by legal means and we get a state of anarchy where I guarantee someone bigger (and with a bigger gun, if that's going to be your defence) than you will waltz into your house and make you his bitch.

The purpose of the legal system is to balance the rights of both parties and create a level playing field. Whether it works this way in practice is debatable though...

Furthermore, if you take illegal means such as harassment, the potential gains for you and losses for the other person are significantly reduced and you risk reducing the impact of legal recourse when it does come.
(e.g. you harass someone, it's a pain in their ass. If they've done something really illegal and you take them to court, they can go to jail - then they'll get a different and worse kind of pain in the ass. If you harass the person, when legal stuff does happen, your harassment is only going to weaken your case against them.)

http://en.wikipedia.org/wiki/Trusted_Platform_Module


If people share your logic for concern, so should Windows 7 and Vista users.


How do you generate your paper wallets? How can you be sure there isn't a back door in the website you use to generate it, or your connection, or the software you use to generate it, or the printer you use to print it out, or the paper/pen you use to write it down?

Out of interest, Moonshire, where do you draw the line?

TPM and such has been around for so incredibly long (edit: 10 years.) I remember many years ago reading about this and the potential damage it could do and there were plenty of e-petitions that could be signed to stop it.

http://en.wikipedia.org/wiki/Trusted_Computing_Group

IIRC, my uni issued laptop has a TPM module in it. It encrypted the drive and prevented bios access. It's circumventable. I imagine most business issued devices probably have this or similar protections.

Users will always have the choice whether to use this platform, and there will pretty much always be a more open alternative.

The underlying thing in this story is that there's a platform which some companies have control over what runs on it. This isn't really that much difference from the Apple ecosystem - they could easily remove bitcoin apps from their store (if there are any that is.)

If someone creates something, and they want control over it, they should be allowed that control. It's only a really big issue when there are no alternatives.


Unless you're willing to build, from raw materials, your own computing device, or scan and understand every single little circuit in your device, then you must place trust somewhere (you can always say "well maybe there's a backdoor in this little chip")

As someone pointed out, you're far from the first person to suggest this.

Perhaps look at other people who are doing it and try and help them.

One similar project that springs to mind (more business targeted) is blueseed.

They've already secured a few million $$ funding and appear to have put some thought into a lot of the issue with ideas like this. Although I'm going to avoid counting my chicks before they've hatched and will believe it when it sets sail.

I think the state of the Bitcoin economy depends on the context and expectations you examine it with.

If you're expecting Bitcoin to be the new individual global currency to rule the world and to render all currencies worthless, the the Bitcoin economy is still very far away from achieving that.
If you do see Bitcoin this way, I may be wrong here, there's no comparison that can be drawn as there hasn't recently been a global currency, but for all we know, Bitcoin my be doing exceptionally well at becoming a global currency compared to other attempts!

If you're seeing Bitcoin as a piece of open source software (which ultimately is what it is) then it's doing pretty good: lots of users, lots of publicity, lots of active development.

Regarding the Bitcoin economy, personally, I think usability or understandability as a result of marketing is still an issue. I'm in 2 minds about this though. The computer scientist nerd side of me that loves the amazing technology thinks that everyone should know about Bitcoin just to appreciate it's ingenuity, and that a person shouldn't use Bitcoin unless they fully understand how the block chain works and other core concepts otherwise it's almost a waste.
However, the average Joe non-computer-scientist side of me remembers that the whole point of a currency is convenience and practicality. From that side, a user should be able to use Bitcoin without knowing or having any understanding of the tech behind it. After all, I'm sure a lot less people would use cash if you thought you first had to understand quantitative easing, fractional reserve banking and futures trading.

At the moment, it's very rare to see people sell the concept Bitcoin to the average joe. Most people sell it to the techie or the libertarian or the anarchist. Most of the time, people are selling ideas and beliefs associated with Bitcoin, e.g. "Bitcoin is this really cool piece of software. It's a p2p currency with some really novel uses of cryptography." or "Bitcoin is this new currency that's going to overthrow the banks and solve problems of quantitative easing and distribution of wealth."

I think, in reality, Bitcoin should be marketed more as "it's quick cheap payments. Go to <insert BTC payment processor or online wallet> sign up and you can accept payments far quicker and easier even than PayPal!" Arguably that's still selling my idea of the benefits of Bitcoin, but the point I'm making is that we need to sell Bitcoin for what it is at the moment for the average joe, not what each of us believes it should be or what we each think is amazing about it.

Also, giving away bitcoins would probably help. That's obviously not what a lot of people and to do and is highly contradictory to the current trend which is to hold your Bitcoins. Imagine if the Winkelwhatever twins stood in the middle of New York or London giving away their Bitcoins for free on memory sticks, gox vouchers, casascius coins etc. If someone gave you something you weren't familiar with and said it was worth nearly $100 - you'd probably go away and learn some more about it.
If only it was legal tender, then merchants that do deal with Bitcoin could give all their change in bitcoins, even for fiat transaction - now that would boost things a bit!

In the UK, we are pretty far up the creek still after this whole recession hoohaa. Our country could really do with a bit more money.

That is why you should pay tax in the UK. Residents consume numerous tax funded benefits such as roads, healthcare, schools, firefighters etc. If a country doesn't have money, it can't offer these services.


http://en.wikipedia.org/wiki/United_Kingdom_government_austerity_programme#Cutting_back_quangos
"NHS Institute for Innovation and Improvement"  (health/hospitals)

Our tuition fees have tripled (education/schools)
http://www.bbc.co.uk/news/uk-england-london-22932618 (fire fighters)
http://www.bbc.co.uk/news/uk-england-birmingham-22512584 (police)
http://www.transport-network.co.uk/DfT-facing-10-budget-cuts-in-next-spending-review/8609#.Ub8mbPmRDW4 (roads)

In the UK, with the majority of taxes, individual taxes don't go to solve individual problems - money from tax is put into a pot and then divided between required causes. So the argument "well other tax pays for x" is invalid.

The argument "well we've only paid tax since x year, how did we survive before then?" We've only had the NHS since 1948, we've only had a semi-comfortable rail, road and communications infrastructure for a couple of hundred years. It's possible to absorb the costs of doing nice things for a small community, but when it's millions of people, it costs.

We can spend all day bickering about who's fault it is that it's like this, or how much some idiots in power waste money on stupid things, exclaim how big corporations can get away with it so it's okay for us to lower ourselves to that level, but that's not going to help.

One thing that will help reduce cuts on vital services: pay your taxes. Not because there's a law that says so, but because you live in a country, in most cases, in a civil society and that doesn't come for free. As someone above said, by not paying taxes is a crime against society, not against authority.

Not only is it a crime against society, it's a crime against Bitcoin and cryptocurrencies.  If you want cryptocurrencies to be outlawed, or perceived to only be for criminals, then using them to avoid tax, and make outlandish claims such as "the whole point of Bitcoin is to avoid paying tax" is one of the fastest ways to do it.


As observed, there's a lot of people in here that have the mentality "there's no law making me/nobody will catch me if I don't pay tax so it's okay." There's no law that says you have to go to work, but if everyone stopped doing that, we'd be even further up the creek and casting away the paddle. There's probably a lot of sick/twisted things a person can do and not get caught - that doesn't make them right.

A minor personal comment about the FinCEN document - I enjoyed reading it. It's nice to have a human response to an issue - it serves as a reminder that they're humans too, just like us.

I agree with most of what you are saying - they're definitely stuck betwen a rock and a hard place. I'd go as far as saying it's an issue not with those laws being old, but laws being old in general as a result of the legal/political process. Cryptocurrencies move a lot faster than the law can.

I'm surprised that you can't see any reason at all to treat miners like money transmitters though. Considering their talking about dealing with money laundering, one of the ways the do deal with it is by being aware of suspicious transactions in all places where there's likely to be large volumes or transactions of money. In the grand scheme of things ($6billion laundered money) most miners don't handle large amounts of cash. But in relation to the Bitcoin ecosystem, they do. Miners at some point, have hold of every Bitcoin ever in existence.  If the Bitcoin economy continues growing, the miners are going to be very very useful people to know if you want to know where money is being made, and where it's initially being distributed - both of which are useful nuggets of info in the context of preventing laundering. As you mentioned, they either sit and do nothing and watch money get laundered, or try and do something. Even if that something is something stupid, the sooner they try it, the quicker an optimal solution for both gov't and citizen can be reached - it's better to have the inconvenience now whilst Bitcoin is small.

Most places where people make money or where money is created are subject to monetary laws. If someone mines a shed load of Bitcoins, and someone else buys them in cold hard dirty laundered cash, how are FinCEN supposed to know about that to prevent it? They can't just assume the person will honestly come forward and admit it - Liberty Reserve certainly didn't. Although the method of trying to know about all the money that moving everywhere, I suspect, is probably quite a inefficient and possibly/probably ineffective, but that's the way it is until someone comes up with a better way of doing it. It's certainly not ideal though.

I've been thinking about this lately - the implications of block production time on security. It's discussed a bit in the following paper:

Rosenfeld, M. (2012). Analysis of hashrate-based double-spending, 1–14. Retrieved from https://bitcoil.co.il/Doublespend.pdf


Regarding orphans - someone mentioned that the time it takes a message to get from one end of the network to the other is 10 - 20seconds (don't know where that number comes from) but the indicator of how many orphans there are going to be is some function of the time it takes for a new block to propagate and the proportion that is of the block production rate.

e.g. 30 second block time, 30 second propagation time results in huge orphan rate.
10 minute block time, 2 second propogation time results in tiny orphan rate.

The issue of orphan transactions as well is slightly negated by quicker block production time.

e.g. it doesn't matter as much if your transaction gets orphaned once in a 30 second block rate, because it's only delayed by 30 seconds, but in a 10 minute block rate, that's 10 minute delay at least.

And to think some people have said our education system is going to crap....