Here is a chart illustrating the Log10 delta of actual bitcoin price from my manually-fitted logistic model trendline. Rpietila has been discussing Log10 deviation from the Log10 trend as an indicator for buy, sell or hold. It is clear from the chart how such limits could be derived from the April 2013 and November 2103 bubbles.  |
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Eureka! It is this simple: - Every predictor gives two prices in log scale eg. "In 2014-5-16 the price is between 2.7 and 2.85 (roughly 500 and 700)" - When the actual price is known, you take min [ abs ( actual - upper_limit); abs ( actual - lower_limit) ]- Whoever has the lowest average error after a reasonable number of predictions (predictions can be renewed as often as you wish regardless of their maturity) is the best!  - Proof omitted  I would be very grateful if you could explain this to a simpleton like myself. Whoever was the closest to the actual price with the narrowest range was the best. I think he's being a little facetious here, because this is, of course, obvious. Except that it doesn't actually work. Proof by counterexample: Imagine a forecast range of 50-100. If the outcome if 95, i.e. within the range, the formula produces a score of 5. However, if the outcome is 105, i.e. outside the range, the formula produces a score of 5. But clearly, the first situation should score better, but with this formula it does not! QED? Edit: I can think of more examples where it doesn't work too, can I leave those as an exercise to the reader? Edit 2: For those wondering how to do it properly, I suggest searching the meteorology literature - it's much more comprehensive on this issue than the financial/economic/econometric literature. Suppose rpietila's formula was amended to yield zero in the case that the prediction is within the range. Then your offered counterexample fails. Did you have others that would prove the amended scoring formula invalid? Note, to anyone interested, that the reduction of the price to log10 form allows the predictions to be compared on widely differing timescales, in which price values might be 10x larger or smaller. rpietila has been talking about deviation from the log10 trendline in terms of these log10 deltas. Accordingly, I added a column to my own logistic model of bitcoin prices which produces this log10 delta for each day's data that I record. https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdFIzNDFMeEhVSzhwcEVXZDVzdVpGU2c |
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This means that the value you bring to the community (ΔV) is proportional to how productive you are (ΔN) but scaled up by the square root of the value that already resides in the community. In other words, if you know yourself to have positive productivity and if you want to maximize the value of your contributions, you should join the cryptocurrency community that already has the most value.
Assume that the Bitcoin blockchain protocol is slightly modified to support sidechains, i.e. merged mining of sidechain blockchains. To the extent that interoperability and value exchange closely couple a sidechain peer network to the Bitcoin network, your results indicate that it would be better for developers to build new features as a sidechain rather than as an altcoin. http://letstalkbitcoin.com/blockchain-2-0-let-a-thousand-chains-blossom/#.U04XsR__5k8 |
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I am out, if I wake up tomorrow and Bitcoin is at $700 then I won't give a shit
ResignationYet another sentiment data point that we leaving the bottom of the November bubble collapse. |
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Ah. The beauty of zero-fee trading and plenty of market making algorithmic bots to add liquidity. Some day a US based bitcoin exchange may get a clue. |
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At the moment, China is just waking up and volume is smoothly climbing on Huobi's 30 minute chart as displayed at Bitcoin Wisdom. On the daily Bitstamp chart, $550 appears to be the trend line of resistance.  |
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Here is the Blockchain adjusted transaction quantity chart, for 180 days using the 7-day moving average. The rightmost 4 days appear to confirm the reversal of the price trend.  |
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Thanks. I ordered it. It may be helpful in my work observing the bitcoin price data series. My own trading, if any, is limited to selling at the bubble peak and buying back later. I am very happy making small almost daily purchases from my nearby Robocoin ATM, when the price is below the trendline. |
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I have not thought it through, wanted to have feedback!  Wisdom of Crowds theory says that the average of our guesses should be more accurate than any single guess. This should be a motivation for us to contribute our predictions regardless of our self-supposed expertise. What I would add to your thinking is to distinguish bubbles as the chief bitcoin price phenomenon. Furthermore, I suggest a survey in addition to particular predictions. Survey data to be gathered would include . . . - whether the participant agrees that there are bubbles
- what is the current bubble phase, i.e. pre-peak, post-peak, pre-bottom, post-bottom
- what is the predicted time to the next bubble phase
- peak price of the next peak
- month of the next peak
- price of the next post-peak bottom
- month of the next post-peak bottom
- year during which 50% adoption occurs
If there is no better place, I would conduct such a survey each month on my logistic price model thread. |
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There's good evidence of late that any truly competitive cryptocurrency cannot be a tweak of the Satoshi design. For one, Peter R's ledger hijack proposal has a great deal of merit. In addition, the side chains proposal from Adam Back suggests that the purpose of the main bitcoin blockchain could evolve to that of a super-asset, one from which all other innovated assets on their respective side-chains derive their value. The function of all alts and/or information service hybrids (e.g. Namecoin or StorJ) can be run as a parallel, inter-operating branch of the main blockchain. The sidechains can compete with one another for the same service, or could be created to serve the purpose for real-world conditions that are only temporary. Experimental sidechains can flourish or die.
So the case for bitcoin's being the "only" system is looking more likely, at least while it's hash rate and fundamental properties remain unblemished. I suspect that a different paradigm is the only system that will supersede bitcoin.
Sidechains from the Bitcoin blockchain are very interesting. http://letstalkbitcoin.com/blockchain-2-0-let-a-thousand-chains-blossom/#.U0w8Eh__5k8We have known for a while that Bitcoin is more than a deflating store of value, and more than an efficient peer to peer payment mechanism. We have known that Bitcoin is a disruptive technology platform. Sidechains, as I understand them, are merged mined with a slightly modified Bitcoin protocol that permits two-way pegging to Bitcoin. The only coins mined are the Bitcoins mined by Bitcoin miners, and any bitcoin can be purchased into a sidechain where they are stored until such time as they may be sold back into the Bitcoin blockchain to again become available for ordinary bitcoin transactions. Each of many potential sidechains motivates Bitcoin miners to merge mine a certain sidechain by way of sufficient transaction fees - the Bitcoin reward, and fixed 21 million limit, are left alone. Sidechains are isolated from the Bitcoin blockchain, and are likely to be less conservative than, and more innovative than Bitcoin. Sidechains seeking bitcoin will have to outbid other users, and therefore prices will rise should sidechains gain acceptance. Altcoins do not have the interoperability offered by sidechains, and most distinguishing features of altcoins could be implemented as a sidechain, e.g. very fast transaction confirmation, micro payments, etc. I t is hard to see how Bitcoin could be superseded, but is it is obvious that Bitcoin is a flexible platform for building upon. |
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It is wise to remember that in all investments, historical performance is no guarantee of future performance.
It is pragmatic to set aside conventional wisdom, but not mathematics, when analyzing the adoption of an unprecedented disruptive financial technology. For example, nothing we ever experienced would help us understand the future value of a deflating currency. The price series suggests that given a fixed limit of 21 million bitcoins, the value will continue to trend higher as it has done in the past. Mathematics and statistical evidence of adoption rates may allow us to recognize the halfway point of adoption as it happens, at which point the exponential rate of price increase will rapidly diminish. Those who wait for bitcoin price increases to be guaranteed will be very late adopters. |
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Here is a log chart of bitcoin's historical market capitalization, along with what I refer to as its (adoption-based) "Metcalfe Value." This chart empirically shows two things:
(a) bitcoin's market cap has grown roughly proportional to the square of these two chosen measures of "adoption."
(b) "adoption" (based on these two measures) has grown roughly exponentially for five years.
Will bitcoin adoption continue to grow?
This is the post, the chart, and the question that everyone who has heard about Bitcoin should be confronted with.
Btw. do you have a theory about which one is leading the other? It seems to my old eye that in >50% of the cases price has been leading the transaction growth, but judging from a laptopscreen is not the way to do research... I have been watching the adjusted transaction quantities reported by Blockchain.info for a reversal. I believe price is leading transaction quantity, to the extent that price and transaction quantity are weakly independent. There is a hint now of a reversal to confirm what we have seen in price action for a few days. https://blockchain.info/charts/n-transactions-excluding-popular?showDataPoints=true×pan=30days&daysAverageString=1&scale=1&address=Chart display options include a 7 day average, and also a longer duration of data. |
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Any particular reason you deleted my post? I would have edited out the captcha part if you had just asked. I feel my other points were valid and politely articulated.
Deleted for Very large bold cursing. No issues with it aside from that. keep it clean. To date I have deleted 3 posts for advertising and 2 for large bold cursing. I also hate the capcha. As computer AI gets better at correctly recognizing the obfuscated characters, the challenge becomes correspondingly more difficult. It is impossible for me to log in on my mobile for example. Please make it an option that I can turn off. |
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Have not seen any major news to push last night/this morning surge in prices. Any ideas?
Bitcoin Rallies Over 10 Percent, OKCoin to Launch ATMIn China related news, exchange OKCoin announced that they’re working on a bitcoin ATM. One of the main features of the machines will be complete trading, the ATM can act as a bitcoin trading platform on itself. The notice goes on to say that the bitcoin market is not very large and is more concentrated in some areas, thus the overall demand for ATM machines is still very small and volume on online trading facilities is far greater than offline transactions. The rollout of the ATMs should help shift the balance somewhat.
Along with this, OKCoin officially launched the recharge code (voucher) scheme. The move is aimed at circumventing PBOC’s bank deposit ban. It remains to be seen how the People’s Bank of China will react to the latest evasion moves by Chinese bitcoin exchanges.
Re-charge code and an ATM, responsible for worldwide rally? Think thats possible? According to trendlines published here and elsewhere, the recent bitcoin price was so far beneath the trend that simply the absence of bad news was probably enough for a short-covering rally. |
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Have not seen any major news to push last night/this morning surge in prices. Any ideas?
Bitcoin Rallies Over 10 Percent, OKCoin to Launch ATMIn China related news, exchange OKCoin announced that they’re working on a bitcoin ATM. One of the main features of the machines will be complete trading, the ATM can act as a bitcoin trading platform on itself. The notice goes on to say that the bitcoin market is not very large and is more concentrated in some areas, thus the overall demand for ATM machines is still very small and volume on online trading facilities is far greater than offline transactions. The rollout of the ATMs should help shift the balance somewhat.
Along with this, OKCoin officially launched the recharge code (voucher) scheme. The move is aimed at circumventing PBOC’s bank deposit ban. It remains to be seen how the People’s Bank of China will react to the latest evasion moves by Chinese bitcoin exchanges.
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The bitcoin price weekly candlestick chart is now showing a nice hammer, which often occurs at a bottom. Not a certainty of course, but comforting for those expecting a trend reversal from the bubble collapse. The bubble collapse low last July 2013 at $61 was characterized by a hammer.  |
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I am proud to be a bagholder ever since $3... Not that I felt any obligation to disclose, but I am happy to say that I finally managed to source BTC200 @400 off-exchange! UP, UP... At the moment you have $23 per bitcoin unrealized gains. Your insights and open discussion of your whale sized trading are of course commendable. No other whale is so transparent. I am glad that this forum permitted you to find sellers at $400 off exchange. I hope you gain as much from this forum as we others gain knowledge from you. |
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The trend is based on a model and rpietila's model has one major shortcoming. I came to this conclusion by analysing the early 2010 and 2009 data. The fact that there is something wrong here becomes clear when one looks at the graph and focuses on 2009 and early 2010. My first thought was that the data from this period was way off; however rpietila provided enough anecdotal evidence to convince me that his estimate was at least in the right ballpark. This led me to question the model instead. My conclusion is that using price for the log fit is incorrect and that market capitalization should be used instead. The impact of this is most profound in 2009. My preliminary results predict a trend-line right now of around 4000 per BTC rather than around 900 USD per BTC. It also predicted from the 2010 and later data a constant price around 0.005 USD per BTC for a significant part of 2009, vindicating rpietila's guess that I had severely questioned.
This is a very interesting idea, modelling bitcoin market capitalization rather than price. I maintain a logistic model of price that I can adapt for market cap. Did you estimate the historical data series for the number of circulating bitcoins, or is this available for download somewhere? I am currently away from home and will not return until Monday, at which point I will continue buying fractional coin from my local bitcoin ATM. |
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