rpietila public diary -- Episode II

[cAPSLOCK]

Again. I see your point.  But governments cannot control bit coin.  At least not yet.  They would have to own most of it which will likely never happen.

State backed digital money might be something to be frightened of. But bitcoin's design will frighten states.  It could be bad for the usd, but bitcoin isn't to blame for our demise there.

As to china... Ignore the hysterical headline and 51% stuff, but this article will show how bit coin is growing up into something bigger than a 'ponzi bubble'.

http://money.cnn.com/2013/11/18/investing/bitcoin-china/

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[thoughtfan]

I am sorry but as eloquently written as that is, I think it is mostly wrong on the facts.

....Bitcoin right now is as a ponzi scheme....

You can not deny that the vast majority of people holding Bitcoin are doing so because they expect the exponential appreciation in price...

Sorry but I find it difficult to take your points seriously when you start by criticising another on facts then making spurious claims.

You keep referring to Bitcoin as a ponzi scheme.  I understand why people may say tulip bulbs but a ponzi scheme is something else.  This is simply incorrect.

What is your evidence that people's primary incentive for holding bitcoin is exponential growth?  I would like to see your sources.  We can to a large extent determine people's behaviour with bitcoin because the evidence is in the block chain.  But the 'why' is not written in the block chain.  Your deductions from people's behaviour as to their motives may well be 100% correct but you're doing yourself no favours by claiming your deductions as fact.

When I first bought bitcoins I was enthused by its potential.  The decentralised potential to by-pass the banking system for remittences and, as was discussed in the hearing last night, the potential for the world's unbanked (I have to admit I had not even considered you have a considerable number of US unbanked too).  I said to myself I don't care if the value of what I hold goes to a fraction of what I paid for it if it serves this purpose.  I just want to be involved.  As it happens, people 'getting involved' means the price goes in my favour but to me it is secondary.  Tell me, how, looking at my transactions on the block chain would you tell that I am not holding coins primarily to sell them to someone else for more?  And if you can't tell mine, how can you be sure you know others' motives?

Just a question

[rpietila]

Thank you. I am sure that no one can rationally argue with you, so please make the altcoin before we are all doomed.

[Siegfried]

Anonymint, you are clearly very intelligent and your theories are certainly plausible, but I find the absolute certainty of your claims to be disconcerting. Could you at least acknowledge the possibility that you are wrong. Also, I am not aware of any other geniuses who constantly proclaim that they are geniuses as you do. Anyway, I appreciate your vigilance in defense of freedom, and if your bitcoin conspiracy theory is correct, I wish your altcoin success.  

[2dogs]

Contrary to popular thinking here, the dollar will actually get stronger! Because the QE has been going to emerging markets as dollar bond issues. I confirmed this for myself, watching the Asian newspapers business section and the $billions of bond issues denominated in dollars for corporate expansions. So as the global debt crash comes in spades by 2016, the rest of the world is going to desperately need dollars to service their dollar debt. Thus the emerging market currencies will crash.

Why couldn't (or wouldn't) the emerging markets just default? 
If so, then there goes that demand for the dollars to pay back the debt, correct?

[Impaler]

Amazing, Larry Summers has basically endorsed the principle behind Freicoin.  Though they don't use the terminology it's basically demurrage that's being discussed.  Naturally from a centralized point as with current FED which is different from FRC, but the basic idea that Interest rates SHOULD be negative is a huge statement and a HUGE break with orthodoxy.

[2017orso]

I do think you mean well, I think...you know your life would be a lot easier and less stressful if you just bought a few bitcoins and got over the anxiety of not getting in on the ground floor right?

[2017orso]

I see, excuse my assumption then.  Best of luck.

[freedomno1]

Is Bitcoin a Ponzi scheme?
In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.
A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.

I digress that is off topic here but the point must be stated for the record


Is Bitcoin a Ponzi scheme?

In a Ponzi Scheme, the founders persuade investors that they’ll profit. Bitcoin does not make such a guarantee. There is no central entity, just individuals building an economy.

A ponzi scheme is a zero sum game. Early adopters can only profit at the expense of late adopters. Bitcoin has possible win-win outcomes. Early adopters profit from the rise in value. Late adopters, and indeed, society as a whole, benefit from the usefulness of a stable, fast, inexpensive, and widely accepted p2p currency.
The fact that early adopters benefit more doesn't alone make anything a Ponzi scheme. All good investments in successful companies have this quality.

I asked you to post that in the linked thread that discuss why it is a ponzi scheme. And you have not refuted the reasons given in the thread I linked to. Indeed early adopters can only profit at the expense of late adopters. The statistics prove bitCON can never be a currency. Distribution is lacking and can't be fixed. Read the linked thread for why. And reply there if you want to.

And I only see one point and it is this give them out in point form or something

And quotes on the math, noting that there is no ongoing income to support a P/E ratio that would keep dividend investors invested (thus mathematically it is a ponzi scheme and this is unarguable unless it is currency distributed to the masses):

Rebuttal:

Bitcoins have value because they are useful and because they are scarce. As they are accepted by more merchants, their value will stabilize.

When we say that a currency is backed up by gold, we mean that there's a promise in place that you can exchange the currency for gold. Bitcoins, like dollars and euros, are not backed up by anything except the variety of merchants that accept them.

It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value – hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value.
Alternatively it needs to be added that while the law of supply and demand applies it does not guarantee value of Bitcoins in the future. If confidence in Bitcoins is lost then it will not matter that the supply can no longer be increased, the demand will fall off with all holders trying to get rid of their coins.

An example of this can be seen in cases of state currencies, in cases when the state in question dissolves and so no new supply of the currency is available (the central authority managing the supply is gone), however the demand for the currency falls sharply because confidence in its purchasing power disappears. Of-course Bitcoins do not have such central authority managing the supply of the coins, but it does not prevent confidence from eroding due to other situations that are not necessarily predictable.

[AnonyMint]

Most people that own BTC, own 10 to million times more than they would keep in a checking account. When it stops growing in value, they will reduce to what they would keep for spending, and invest the lion's share in something that can grow.

Thus BitCON is a ponzi scheme and will implode to 1/10 to 1/millionth of its peak price.

You didn't refute. Re-read the rest of the original post from that quote down. And don't fail to refute any point. You can't.

An alternative link where I summarized why bitcoin is a ponzi scheme and the reason the 21 million coin limit makes it unarguably so:

https://bitcointalk.org/index.php?topic=339876.msg3649398#msg3649398

[rpietila]

OK guys, now for something completely different:

Bitcoin Dealer Network.

During last summer, I had time to develop this matter, but now I have not had the energy to push it. The failure of all the exchanges to cope with demand again, proves that it is of systemic nature. The new demand is coming in waves, and it is not economical for the exchanges to invest in advance. Systemic nature means, the problem will not go away, ever, as long as the exchanges are a dominant way of trading bitcoins.

The dealer network would relieve a great burden from the exchanges, enable large new holders to buy and existing holders to exit effortlessly, and would reduce the volatility to a fraction of what it is in the current system. It would also scale faster and better to the growing size of Bitcoin economy and remove the central-point-of-failure problem that is still plaguing us despite that there are now more exchanges than just one.

The text is quite technical, I hardly understand it myself after a few months Please bear with that and comment on the subject matter instead. Have a nice read!

[AnonyMint]

- Instawallet type services can keep almost complete anonymity, because you don't divulge personal information in any step (not exactly know about IP stuff)

If you think that is anonymity, then you are not qualified to speak on the matter. Yeah you don't know about the IP stuff. You are a technical neophyte. So your opinion on the matters I write about is not worthy, because you can't see the big picture.

Besides I am much deeper studied on what has been going on with the various nations, while you've been busy building silverbank and doing deals. I've been researching these past years on true state-of-affairs.

Merkel lied. As soon as she was re-elected, she signed over sovereignty of Germany to the EU. The push to federalize is being accelerated under your nose while you are not looking.

I am not going to try to teach you any more. I've deleted most of my posts from your thread (I still have copy for my private records). Enjoy the bliss. My day to sigh will come...

As for other tax jurisdictions, you will be taxed based on your country of birth. Even if you buy a new citizenship, this will likely be revoked because the developing nation governments will be under immense financial pressure from the USA and the EU as the global economy implodes and they need dollars. There are a few tricks that can be used to gain a citizenship in a developing country that can't likely be revoked no matter what. Marriage is one but only in some countries, and most developing Asian countries not possible. And there is another option that doesn't require marriage, but it is my secret and I am only telling those who I are very close to me and I feel deserve it.

[AnonyMint]

I am obviously a troll who doesn't want you to understand my ideas.

That is why I deleted most of my posts from this thread.

And when you all go to jail, do not PM or contact me and say I was correct. I won't care. Because you didn't either.

What I did notice is not a single person could refute anything I wrote. The best I read was "we trust the situation will change, but we have no clue how it might specifically, just decentralization and innovation will save us". But then you don't even know what IP address has to do with anonymity and you think you are qualified to make that judgement?

Besides I will reveal a new vulnerability I found in Bitcoin just an hour ago. I will make a new thread on this. Bitcoin is indeed doomed. This is much more imminent than the Transactions Withholding Attack. It has to do with the fact that transaction fees % can not stop increasing.

[rpietila]

I have adjusted my assessment of the exchange rate and its near-term development as follows (originally posted in Wall Observer):

I have also increased the odds that we are in a bubble correction to about 75%. That said, I expect the following things happen:

- Lowest recorded trade will be in $2XX range, bigger volume around $300.
- It will take only 3-6 months to regain the old highs.
- Volume will all the time be lower than in previous situations, there is no widespread panic or general capitulation

Two bubbles in 2013  Who could have thought...

Beating the yesterday's intraday high (BS: $640, Gox: $750, BTCC: $1000) makes me increase the odds that this is just a weekly consolidation. Every day in declining trend erodes the new investor confidence and induces more and more sales from the earlier investor community.

[rpietila]

Today was a really intense day. I turned bear. That does not happen often, and there is always the chance to be wrong. If you want to reap the juiciest rewards, you have to act before the others. Then you better bear the uncertainty.

During the bubble top, BTC China had a maximum of 75% premium over Bitstamp. I set myself to explore this opportunity, whether it is viable to open an account there and sell bitcoins, even though the chances of receiving fiat currency in return are slim (CNY has currency controls and I don't have many links to Chinese banks). I decided that the arbitrage opportunity even without the fiat exit is good enough reason to go China, and opened the account.

During the day I bought 10 million CNY, which kind of feels funny. (Until Tuesday I had had no plans to play in China.) In addition I sold coins at Bitstamp, which rose higher than I expected a few hours ago, providing an opportunity.

The following 48 hours are most critical concerning the bubble/no-bubble issue. If we fail to surpass yesterday's highs, and make even lower highs (and potentially lower lows), then this was indeed a bubble, and it will get weeks to sort it out, with the opportunity to buy at $300s at some point(s).

In the complementary scenario, highs are broken and/or flashcrashes abate, we enjoy a week or so of high consolidation ($500 or over) before assaulting new highs. This is a possibility, but I stick to my evaluation that it is less probable than bubblepop. I have written extensively in Wall Observer about the matter. Perhaps open a new thread inspired by SlipperySlope's bubble collapse journal.

There are so many things that can happen but have not yet happened. DDoS, hacks, scams, bubblepop articles, REAL dumps, etc. If we evade all this and happily continue up despite that we are already 1.8x the trendline, I am gladly wrong.

In this case, somebody help me how to spend the ¥10M...  


To whom it may concern: The trades revealed in the public diary have been executed on behalf of numerous entities in multiple jurisdictions. As such, they do not correspond to the ownership, holding, position or change thereof, or realizing of taxable or tax-deductible gains/losses or income of any natural or corporate Person.

[AnonyMint]

Clever you sold $1,641,310, thinking you can always buy back in BTC China at lower prices thus no risk on the spread if you are unable to convert CNY to $ to arbitrage it.

But you (and others who follow you) will provide increased liquidity on the ask, thus you may lose spread. No risk, no reward I guess.

Good deed of deploying capital to provide liquidity to the Chinese to obtain BTC and break out of the yuan FX jail which is one of the major factors propping up the corrupt sovereign debt bubble and suppressing China's internal potential. Hope you don't lose.

Now if they can deploy that BTC in the real economy outside of China, instead of sitting in BTC as a ponzi speculation, then we will be onto something viable. Yet it is difficult to invest in anything else when those expected outsized exponential price gains in BTC are compared to the return on real economy investments.

But if this becomes significant (which is very unlikely since most are probably just speculating on the ponzi gains), do you think China's government will not react, considering this would accelerate the adjustment from the current FX induced imbalances (i.e. suppression of salaries and interest rates on savings, subsidizing exports and fixed capital investment and state-owned enterprises) faster than the vested elite of China are allowing for in their recently released master plan?

I hope the Chinese BTC buyers are skilled at deploying IP anonymity. Or maybe China has turned the corner and there will be no more repression.  

I surmise the Chinese leaders would happily accept speculation in Bitcoin, since it could potentially (if grows large enough) reduce pressure from the speculation in the stock and real estate markets. And it poses no real threat to FX stability since most are probably buying not to use for FX but rather to speculate on the BTC ponzi price.

P.S. Clever to place your assets in a managed fund so that trades are not registered as individual capital gains. I bet there is some rule for US citizens which limits our ability to do this and be the manager of the fund (other than in a managed IRA), and you don't accept USA and Canadian accounts. Any way, I don't think any of this cleverness will help you, because we are not addressing the fundamental threat, which is the bankruptcy of western civilization and that the socialism will force the write down on the millionaires, not the billionaires and trillionaires. This plan was enunciated long ago by the elite. As far as I can see, there is nothing you are doing to change that outcome. Helping Chinese invest in a ponzi scheme isn't going to change that dynamic, rather worsen it.

P.S.S. The threats you mentioned are not catastrophic and would only cause a temporary drop in price. The catastrophic threat would be some flaw discovered that renders Bitcoin fundamentally broken. But assuming such couldn't be fixed and would have near-term impact, is extremely unlikely. So ponzi road ahead is rest assured.

[Voodah]

Following.

Very interested to know how the Chinese adventure goes.

[farfiman]

Today was a really intense day. I turned bear.

Just to clarify. Is the a short/medium/long bearish sentiment?
thnx

[rpietila]

Today was a really intense day. I turned bear.

Just to clarify. Is the a short/medium/long bearish sentiment?
thnx

In my terminology, a bear is someone who holds fiat in hopes of buying back the coins. If I did not trust bitcoin in the medium/long term, I would sell out and not waste a word on this forum. These are not bears. (Being "bearish" on something that you don't have and don't intend to buy, is just talk, because only money has a vote.)

The long-term is outlined in the trend analysis thread. Bitcoin has a very convincing history and promising future from an investor point of view. AnonyMint has broght some political dangers to our attention, which is good. You should carefully monitor if the promise of conquering the fiat system still holds, because most of the exchange rate is based on speculation that this would be the case.

In medium term, we are ahead of the trend. Like a rubber band, when it starts to contract, it has a tendency to contract to the lowest energy state, which is about $400 in December. I sold at an average price of $672. If it goes down to $400 and below, I will buy back. If not, I have several months to buy back before the trend catches my sell price. It does not matter even if we go to $2000, because it will be followed by a crash due to exchange dynamics etc.

The "worst" outcome for me is that this is 2010 all over again. That year price could go up 10x, followed by a bull trap with no real retracement in price, then go up 10x again. Technical analysis was helpless because everyone just wanted a piece of the pie. If this materializes, bitcoin can go to 5 digits next year, and I will still have most of my position intact in a paper wallet.

For a large holder, selling is a win-win. If it runs away from you, your remaining coins are worth more. If it crashes, you get more coins.

[AnonyMint]

(Being "bearish" on something that you don't have and don't intend to buy, is just talk, because only money has a vote.)

That is shockingly astute and insightful.

Insights like this are what originally made me appreciate Risto's intellect.

I have a theory that just came to me a few minutes ago. Risto is an expert of exchange. This is where he wants to focus his talent, because that where his talent is. He has demonstrated it numerous times with his various silver exchange clearing houses which have grown in volume (I assume, haven't asked him in recent years).

So he needs something like Bitcoin. He doesn't care if it is Bitcoin or JoeCoin, as long as it is a growing market with the most audience and has the noble objectives (regardless of the details of whether it can actually get there).

So I think I can clear up what occurred recently with myself in this thread. I was expecting Risto to see what I think I see. But this isn't Risto's area of talent as follows. And I shouldn't expect it to be.

Another key distinction is that while a Ponzi scheme always involves the ringleader lieing about what they are doing, a Pyramid scheme often WILL disclose EXACTLY how it works to everyone involved, after all in a decentralized system everyone needs to know the 'DNA' of the scam to perpetuate it.  The problem is that  greed and a lack of 'categorical imperative' (aka failure to think about the systemic effects of everyone acting some way) in most people moral thinking allow them to blithe-fully engage in the Pyramid activity without actually believing it is fraudulent.  You would be appalled at the simplicity of some of the pyramids people will engage in, shit like "recruit 10 people each of which gives you $100 then they recruit 10 people each", literally it can be that simple on it's face.  So the overall attitude of 'it's not fraud because I understand it' that comes from BTC folks is very much like what we would expect in a Pryamid scheme.

Actually for a trader, they need to be emotionless and not influenced by such considerations of complex moral truth, e.g. he couldn't have made the BTC China trade if he had to pause and consider all the things I wrote in response on that. I would have been hamstrung by my conflicted thoughts on the matter. That is why I suck at speculation.

In short, carry on and I apologize for stomping on your thread. I hope you forgive me for my myopia about the differences in areas of talent and interest of others.