Wager on year end bitcoin difficulty factor

[TTBit]

I opened a new wager at bitcoinsportsbook.com where you wager on the bitcoin difficulty factor (BDF) at the end of the 2010 calendar year. I invite everyone to join in who might be interested.

Here is the info I am using to make my predictions: http://nullvoid.org/bitcoin/difficultiez.php.

On July 16th, 2010 the difficulty factor shot up to 181.54
On September 28th 2010, the difficulty factor was changed to 1318.67

The BDF increased by a factor of 7.26 in 74 days, or 2.716% per day. With 95 days to go until the new year, a 2.716% daily increase would put the ending BDF at 16,814.51.

My gut feeling says this is possible, but not likely. Therefore, I set up certain BDF targets on bitcoinsportsbook.com, and assigned my own probabilities. Hopefully, if others participate, we can get a representation of what the outlook is for bitcoin generating.

BDF 5,000: I think this is in the bag. I wagered 100 on 'yes' and 16 on 'no', meaning I am 86.2% confident (or 100/116) that the level will be over 5,000 going into 2011.

BDF 10,000: Even though my math says otherwise, I don't think this is very likely. I wagered 75 on 'yes' and '100' on no, meaning I am about 57% (or 100/175) confident that the BDF will be lower than 10,000.

BDF 15,000: Even more unlikely, I just can't believe my math. I wagered 40 on 'yes' and 100 on 'no', giving a 71% chance it wont happen.

BDF 25,000: Bitcoins make it into the news or someone comes up with a killer generating program, which I think is unlikely - only 16 wagered on 'yes' and 100 wagered on 'no'. 86% chance it wont happen IMO.

BDF 50,000: I don't think this will happen, but I threw in a gift for all who want to wager. I bet 100 on 'YES' and only 1 on 'NO'. If the BDF stays below 50,000 my 100 coins will be disbursed to all those who bet against it. Yeah, this post is kind of a plug/giveaway for the site as well.

Betting is open now through Friday, 10/8/10 9:00pm ET, at which time wagering is closed and the final lines will be determined by the site.

Disclosure: There are no fees charged for this bet. Although BSB is nelisky's and my website, BSB is technically not taking any action, it is all my coins. In general I do not wager my own coins on the site vs the 'house' as this may cause a conflict of interest between me and nelisky. Wagers can not be retracted.

Total wagered: 648 coins, of which only 500 were needed to be put up as margin (worst case for each wager). All accounts are margined in this same fashion. A straight up wager does not receive margin. After lines are finalized, a worst case for each wager will be determined, and any excess coins can be withdrawn.

Good LUCK! If there is interest, I'll bump the thread and post final lines and thoughts!

[TTBit]

Anyone notice coins are not being produced as fast since the increase in difficulty factor to 1318?

As of this writing, we are on block 83107 at 10/1/10 11:23 ct. This puts us on schedule for the next difficulty factor to 'only' be 1449, not even a 10% increase over the current 1318. It jumped to 1318 from 917, +44%. and from 713 to 917, +29%.

[mpkomara]

why did you choose to close the year-end wager?  i'm interested in betting on this, plus I think it represents a nice hedge for bitcoin miners.

[TTBit]

why did you choose to close the year-end wager?  i'm interested in betting on this, plus I think it represents a nice hedge for bitcoin miners.

I set it up about 10 days ago, and I had to set the closing at some point, and chose 10/8. Only got a few wagers.

I was thinking the same thing, might be nice for miners. I could set up another wager with interest and a different end time.

[mpkomara]

reopen a few of the difficulty bets and leave betting open for longer. think "bitpick 6" timeframe. i think this serves a better bitcoin social good than betting on sports (which always seems to be available).  many of us are looking for a hedge tool or a speculator's tool when-- if widely used-- will dampen the volatility in dealing with bitcoins.

miners out there must be able to invest their capital for longer periods of time, but fluctuations in difficulty make the investment too volatile.  eg what if difficulty doesn't go anywhere by Jan 2011?  if they could hedge their exposure to difficulty by betting against increases, more miners would join the game for longer periods of time.

of course in that case, most of the action on the difficulty betting will be hedges for difficulties to be Over X amount.  i guess your sportsbook will determine if there are any Under bettors out there.

[FreeMoney]

Don't reopen, make new ones.

[TTBit]

Old wagers will not be re-opened. What we really need is a contract prediction market to accomplish this task.

[FreeMoney]

Old wagers will not be re-opened. What we really need is a contract prediction market to accomplish this task.

Exactly.

[mdutton]

A little late now but for the future...

Checkout http://www.intrade.com/ for an example way to handle these types of bets.