I think this point is important. A mega rally on top of a mega rally is unstable. The higher it goes at such speeds, the less stable it is.

On top of that, there are newcomer speculators who jump on high prices with the reasoning "it's going up!!!!". Those add to instability, 'cause they'll need no more reason than "it's going down!!!!" to dump their coins in any situation.



@humanitee:

Comparing to the earlier Bitcoin spike is no decent argument because our current rise is still fast even for a bubble. The 2011 one was an example for a bubble at once-in-a-lifetime speed. Our current rise is not slow and quite a typical speed for bubble danger.

Now I'm not saying I know the future, but using this graph comparison as an argument for stability is wrong.

ZOMG MEGA REDDIT BITCOIN OVER FACEBOOK SILVER PARITY IS RESISTANCE BUT TRIGGER CRITICAL MASS SUY SUY BELL BELL AND DO IT RIGHT NOW!

Needs sunglasses.

I don't agree on these last three points.

• The block chain doesn't scale well -- it has O(n^2) in users when broadcasting transactions. In the end, extra infrastructure is needed. Operating cost always scales at least with the number of users and metals don't scale worse than that.
• Analyzing for counterfeit coins works in log time to any desired precision. Just do random sampling, statistics does the rest. Thus, it's not the big transactions that are problematic.
• You can't really prove ownership of a Bitcoin address either. I could pay some Silk Road dude to sign "I am a pink monkey" with some address of his; that doesn't mean Mr. pink monkey can spend any of his coins. Until the address participates in some sort of binding contract, it doesn't mean much.

I think Bitcoin's ability for block chain escrow/multisig/script contracts is a real plus. Quick payment on small scales isn't really its strength though. As soon as you get funds from and to some sort of payment processor, it can do these things much faster and much more efficiently. Bitcoin might be an interesting way to move funds to and from such providers though -- this helps stir competition and might prevent the payment processors from holding and possibly stealing savings.

I'd like to hold some silver in addition to BTC reserves. But I'm in Europe, so I'd have to pay tax on the purchase if it's silver -- not if it's gold. Whaaaat.

lol -- this is why free proxies are always doomed to snail speeds. And why it's called "tragedy of the commons".

What does that help? Unless someone checks how many of their chips are ready for activation, they'd still de facto have 51% control they can enable at will. Bitcoin is not decentralized as soon as they have the ability to control the network and thereby do things like undo transactions or require arbitrary fees for block chain inclusion.

That's not the point of precious metals and not how to speculate! People hold silver because it is secure. People gain in experimental things like Bitcoin by buying when they're cheap.

Why in the world would someone who was preferring silver to Bitcoin when their value was 1:6 suddenly want to buy Bitcoins at 1:1? That would mean he lost out on the profit in the price rise and THEN sold out his secure asset!

I don't get the point at all. On some fundamental analysis maybe, but with the price hike in the last year the analysis now has to have a sixfold better result to persuade the same person.

Why not have a healthy troll population? Admittedly they're not an endangered species. Still they can be fun to watch.

There is no point in claiming "these" numbers are out of thin air. You know where quite a few of them come from. The site itself spread some data and there is plain accounting on two block chain addresses that happens to perfectly match a deposit-withdraw-interest pattern. How exactly is this thin air? You call my reasoning "ridiculous". How so?

State the correct numbers instead of making fuzzy statements on the correctness of mine. Which are wrong, and why? How about publishing some Bitcoinmax accounting data?

Also, "Opposing side" is an interesting choice of words these days. By the way, I know of exactly one (!) person of "the not opposing side" that has apologized. Many of the rest either went silent, got scammer tags, or even banned, though none were punished directly for he case at hand. It seems nobody feels they did anything wrong and people like Hazek, Maged and Vladimir, who tried to prevent this catastrophe, don't even deserve a comment after the fact. They surely got into an unnerving flamewar for months only because it was so much fun.

Let's say it is true and through a sudden change of heart a net 5k personal coins were lost in the end. Not that I have any reason to believe it. So I also shouldn't use the block chain evil thin air numbers. How much was it then that your customers burnt via Bitcoinmax? How much was withdrawn overall by Bitcoinmax? What was the final paper balance? And, again, which of my above statements are wrong, by how much and why should we have ended up with wrong numbers?

19.) The world's largest internet security experiment

Criminals. What can 'ya say.



That said, a certain stance in this thread... is screaming for a comment.

"E&G", also known as payb.tc, operated Bitcoinmax, the largest feeder fund to Pirateat40's BS&T Ponzi scheme. His final block chain balance with the Ponzi appears to be above 83000 BTC at over 159000 deposited and over 75000 withdrawn. His paper account balance on shutdown should have been above 140000 BTC. When BS&T was attacked with serious Ponzi allegations, the user was extremely uncooperative in providing or even confirming data. His posts were deceptive and happy to undermine the credibility of critics like myself. Block chain data appears to show his account being early to withdraw back out of the Ponzi -- before he even started the feeder fund. Later he was able to claim an undisclosed 0.7% additional weekly paper profit on the entire paper balance, again only public through block chain analysis, though the withdrawn amount is unknown.

His real balance appeared to be negative with more than 3800 BTC withdrawn pure profit BEFORE the feeder fund even took off. The lack of data on the feeder fund leaves a window for personal profit far in the five-digits. He is probably the second-most important person to organizing the largest Bitcoin scam in history, and likely to rank the same as profits are concerned.

I would take this person's moral stance with a grain of salt. (This is a euphemism. He is blacklisted to me and anyone who takes my advice.)



And now: posts telling the world how being scammed can be good for your life.


inb4 absurd comparisons to the bet I negotiated.

@crazy_rabbit: Einstein had a mathematically rigorous theory, went by it, tested it and hey, it turned out to somehow be represented in physics. He could derive things that were postulates before by looking at the limits of his parameters. I got to see a derivation of Newtonian gravity yesterday -- it's astonishing. Comparing that to Junkies' physics that says chicken can destroy the statistical properties of a QRNG over a distance -- because the chicken's feelings reverse-engineer it -- is an insult to every real physicist. Einstein did not do random nonsense because "sages around the world!!!1"



Scrap mining, I'd be able to arrange much more "profit" in bets. I could arrange decent wagers that the consciousness magic does not work in the described way. But hey, why bother with that, scientists should be willing to bet more than the market cap of Bitcoin. Even if not, there are open bounties far in the USD millions for proving pseudoscience claims. Anyone who could do that has an instant path to wealth, fame, and huge attention by all those physicists desperate to find new clues for merging QM with general relativity. You'd go down in history.

People just walk up after a joint or two and claim they know it all better. No care for logic, statistics, the scientific method, or even reading up on the specific things they're so eager to "disprove". Then they run and hide when it's time for a real test. 'Cause deep down, they know it's nonsense.

Sure. I dunno how serious to take the speculation stuff anyway... some people burn all their money while others are just trolling for the lulz. (The trolls win, they get infinite% drama profit. )

Anyway, it's not normal bears. Maybe part-time bears, or mutants turning into bulls or bears at random. Now they're mostly pseudo bulls. They pulled us up, but when they start changing, the rollercoaster begins, so better fasten your seat-belts!

"Do not invest more than you can afford to lose comfortably." This common advice is really good advice. There is a multitude of reasons for that.

Admittedly, it is not the most enlightened of phrases; actually it is meaningless to an expert at statistics. Such a person will try to find an exact solution for his personal risk strategy. But as a simple phrase, spread as a meme to help people, "do not invest more than you can afford to lose comfortably" is a good choice.

There are important things people who do not heed this advice should know at the very least, but often don't.

• The Kelly Criterion helps to determine the height of wagers in probabilistic bets. An important property: betting a little less than the optimum doesn't hurt much. Betting above the optimum does.
• To even be able to use Kelly -- and for any kind of speculation in general -- it is useful to do a self-benchmark. Know your own precision and also limits on how well you know it. Overestimating oneself is one of the biggest flaws of humans, so be careful and rigorous on your self-assessment.
• Similarly, do not forget about any additional uncertainties from the surroundings. Expect the unexpected, not just on one market, but in personal life and everywhere else too. When going in deep, hidden risks that are normally acceptable suddenly become very relevant.
• The personal value of wealth to any human diminishes with wealth and grows with poverty! Your last bit of money in times of need becomes more valuable than whatever was spent before.

Of course there are risks everywhere. Speculating with a notable portion of one's savings can be a good idea. But why push a lot into a single thing when a diverse strategy has much less risk?

"Don't put all eggs in one basket" is a similar wisdom. Sure, it's not universal. Some people can prove their one basket secure. But then, better be sure to never ever make a mistake.

You seem to assume that a speculator who wants to sell wants to push price down.

This is mistaking manipulative day-trading for normal speculation. Why would a real bear sell inside such down-spikes? Serious bears either have sold already or sell carefully close to peaks. Why would they suddenly panic after sitting out three days of stagnation?

The people who cause the spikes are either trend-following, using erratic chart signals or plain confused. The same goes for those who buy at 27 shortly after they had chances to buy at 25 -- or even below 22 within the last week!

If you ask me, we have more traders who tend to suddenly change their minds than bears.

I would say this is a decent deal for Adam. Can't tell the future, but trends don't usually become more stable the longer they run.

Note that this bet does not have 1:2 odds. If Adam wins, a coin will be valued less than if he loses. Given the volatility this is quite significant for the value of the bet.

I always wonder... does it belong to a chart analyst's job to try count the other chart analysts in the market?

Though I understand TA should work if your opponents are mostly trend-followers, isn't it a dangerous game if there are too many people using TA? Everyone would compete who reacts first on any signal. (Isn't TA also vulnerable to manipulative trade activity if it's strongly represented?)

It's apparent that we have people following the trend and also people using chart signals, but what might the ratio between them be? With an excess of either type, we get different instabilities. An excess of trend following makes us unstable against classical bubbles, while an excess of Technical Analysis should make the market very erratic on e.g. a trend break. (The spike two days ago might be a possible indicator for such behavior. No normal market force causes a selling chain reaction and then snaps back to an earlier straight line.)

With just the right ratio, TA could be quite effective. This is the kind of situation it was made for after all. Oh well, I'm too much of a chicken to play it, but I'm cheering for anyone with a good tactic.

This never failed me in Bitcoin.

What I found strange is that many people use these words in situations where they don't apply. After the '11 bubble had just burst, when everybody was still confused but mostly bullish, they said "this is blood on the streets, the time to buy." However, when the market hammered down below 3 USD in a madness of shorts and panic afterward, they said "See you at $1".

Right now, the euphoria is obvious. To not see it, one has to not want to see it.




My question to you is: why are you posting this now that lots of people are in a frenzy to buy anyway?

Another question to everyone: there are many threads and posts of this type now. Where were they in September '11, when I had to get angry at bears for constantly insulting bulls or even balanced traders? We are over a factor 13 away from the low. Shouldn't anyone screaming now have screamed 13 times louder then?

Know how big the guy is? Depth is low.

I like to wonder which of the users here happens to be one of the large traders. Everybody says things like "30% of my holdings" or "the next wave" in this case, but you never know whether that's 30 BTC or 30k BTC.

I do sell, have been selling these last days.

However, I also like the idea of Bitcoin. Were it other forces driving the price up, I might have continued holding the same amount. This is why I have to find some optimum amount I still want to keep -- which takes time and analysis I might as well post. I see a small but real probability price does jump very high, through a large bubble or reaching critical mass. I'm not sure though whether the former is more help or hindrance to the latter, since I don't think hoarders contribute much to synergy effects, while they do contribute to price instability.

Should it keep going in the same fashion, in effect I'll have to do as you said and leave with at least the funds from the sales. I don't change my mind fast enough to buy back at such rapidly rising prices.

Then again, I'm reluctant to move out for another reason. This kind of (to me) uncomfortable up-spikes happened three times already and each time it just cooled off, crashed or busted and gave me some extra profit plus an opening to buy back in. In two of the cases I even ended up with more Bitcoins than before plus profit; in the third with a sizable profit. Even the worst of these turned out a good deal compared to other options.

Remember that last time we had speculation mania of this size, price crashed to the 16th fraction of the peak, at less BTC in circulation than today! Even if the market grew by a factor 4 since then and better traders cancel out the effect of minting, there's a real chance for a bust. From my perspective, the hype does not increase my personal valuation of Bitcoin by more than a factor 4, and I feel I lack diversification since the price hike. So the natural choice for me is to ponder on Kelly's Criterion to determine with what fraction of my coins I should bet on a crash.

Also, I'm not a speculator with a long history and interested in how well I can do. So short-term speculation is interesting, even with less remaining coins. There has to be money in the game to make a real benchmark. Otherwise it's way too easy to cheat on yourself.



So, uh... I guess the discomfort is mostly when I have to make a tough call on an amount that matters to me. I'm not rich, so the price hikes made Bitcoin more than a small game for me. (Which is also a reason to diversify)

(And I'm a little attached to the community. Have been doing funky stuff and crazy deals with various people, totally walking off would be hard either way. )

Even as a declared TA-naysayer, I agree on this one. "Technical Analysis" comes from historic observations of the early markets. Thus, a public horde gaining control should increase its effectiveness, possibly to the level where it's a significant indicator.

If trends this long were likely, methods like Goomboo's turtling would be incredibly effective. (It was effective enough as is. I found it hilarious how this guy fed on trend-followers.)

Another perspective is the statistical one. Look at future price as a probability distribution function and take the first three moments: expectation value, variance, and skew. For a trader, the expectation value determines which way to trade, the higher moments the risk analysis and thereby the height of the wager. We see that trends exist and are strongly linked with skew. But a strong link from skew to expectation value would be a grave inefficiency that can be exploited. (Unless variance and skew are so extreme that your risk analysis can't take it. But not even Bitcoin is that crazy in the short-term. )

Therefore, either there is a simple get-rich-method, or the trend does not have a strong link to expectation value. In other words, trend length scales up a number like (crash probability * severity).



What I'm doing here is chartism and therefore a bit crazy in itself. Of course, there is always a chance external factors cause the unlikely to happen. But it does show that we have a high amount traders using nonsensical tactics. "It seems to be going up" is not an argument to speculate on rising prices. Not a supporting point, not valid at all. It makes me nervous to be part of a market in which the main price-driver may be nonsense.