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Author Topic: Stephen Reed's Million Dollar Logistic Model  (Read 122423 times)
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SlipperySlope
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December 11, 2013, 02:57:22 PM
Last edit: December 11, 2013, 03:54:30 PM by SlipperySlope
 #21

May be interesting to compare to smartphone adoption s-curve and the total population.   Slope is likely to be similar from a technology adoption perspective.   If you assume all fiat replaced then not sure 1M is enough.  

In my application of the model, the population consists of all speculators who will ever buy bitcoins.

Problem is that speculators sell, and adopters of washing machines didn't (c.f. the linked chart of technology adoptions over the past 100 years).

Wrong model.

You are right insofar that speculators sell.

To clarify, my model assumes that bitcoin prices climb higher over time to a guessed-at maximum price due to increasing numbers of speculators. The logistic model is justified because eventually the number of new speculators taper off, e.g. limited by the global adult population. The motivation and behavior of these speculators affects price action - but I am abstracting these properties by simply counting speculators as the modeled population. When I guess at a certain maximum bitcoin price for the model, that translates to a certain degree of speculator commitment and resources.
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December 11, 2013, 07:20:50 PM
 #22

Wish I had Bitcoins in 2009...

I urge you to invest whatever more you think is prudent NOW.


You can ask Bitchick, we have invested as much as we can afford to lose (and probably a little more than she is comfortable with).

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SlipperySlope
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December 11, 2013, 07:44:23 PM
Last edit: December 11, 2013, 07:59:55 PM by SlipperySlope
 #23

Bitcoin price doubles about three times a year on average, and will keep going up at this rate until the final growth slowdown

Wish I had Bitcoins in 2009...

I urge you to invest whatever more you think is prudent NOW.


You can ask Bitchick, we have invested as much as we can afford to lose (and probably a little more than she is comfortable with).

You both are so fortunate to completely share this amazing adventure.

When I performed parameter sensitivity analysis on the hand-fitted logistic model, I found that the rate of logarithmic growth is the about the same regardless of the value of the maximum-bitcoin-price parameter. So no matter where it ends up maxing out, the price will get there doubling about three times a year on average.
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December 12, 2013, 06:29:52 PM
 #24

The Million Dollar Bitcoin S-Curve

I added an S-Curve graph to the bitcoin logistic model for 1 million USD maximum price. The midpoint at $500K occurs in late 2016.

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December 12, 2013, 07:12:51 PM
 #25

May be interesting to compare to smartphone adoption s-curve and the total population.   Slope is likely to be similar from a technology adoption perspective.   If you assume all fiat replaced then not sure 1M is enough.  

In my application of the model, the population consists of all speculators who will ever buy bitcoins.

Problem is that speculators sell, and adopters of washing machines didn't (c.f. the linked chart of technology adoptions over the past 100 years).

Wrong model.

You are right insofar that speculators sell.

To clarify, my model assumes that bitcoin prices climb higher over time to a guessed-at maximum price due to increasing numbers of speculators. The logistic model is justified because eventually the number of new speculators taper off, e.g. limited by the global adult population. The motivation and behavior of these speculators affects price action - but I am abstracting these properties by simply counting speculators as the modeled population. When I guess at a certain maximum bitcoin price for the model, that translates to a certain degree of speculator commitment and resources.

Incorrect assumption.

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December 12, 2013, 08:19:20 PM
 #26

Quote
First, I am not clear yet if price must return to the calculated trendline which assumes linearity over log base 10 apparently. I need to do some curve fitting on past bubble manias to see if the exponential rate remained constant during the blow off phase. Bitcoin appears to have reached the maturity phase (no longer in the stage where those who were holding as a wildly speculative option and a very small % of their net worth and were working hard on it as a currency) and is preparing to enter the blow off stage when the dumb masses come rushing in.

Quote
You see I entirely believe in the concept of how we take over the fiat system, it is just that Bitcoin's price is moving up too fast. (this is orthogonal to my view that Bitcoin is also technically flawed and would succumb to the government any way)

I hand fit the million dollar logistic model to place equal weight above and below the trendline. There will be a bias towards a return to mean, and most observers believe that we are well above that mean now.  In the $1M logistic model the masses come rushing in during 2016-2017, when the price climbs from $100K to $1M.

Quote
The Austrian theory of how a commodity becomes money is that first it is widely sought and held as a commodity, then this naturally leads to it being widely acceptable as medium-of-exchange.

Coinbase reports that 80% of wallets are buy and hold, the remaining 20% are used for transactions. That supports the idea that when fully adopted, the majority of bitcoin will be held as a deflating store of value, and the smaller portion held as working capital by transacting entities. I do not distinguish intrinsic value aside from the contextual market price. Please enlighten me with regard to the two main uses of bitcoin as partitioned above.

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December 12, 2013, 09:40:08 PM
 #27

Bitcoin price doubles about three times a year on average, and will keep going up at this rate until the final growth slowdown

Wish I had Bitcoins in 2009...

I urge you to invest whatever more you think is prudent NOW.


You can ask Bitchick, we have invested as much as we can afford to lose (and probably a little more than she is comfortable with).

You both are so fortunate to completely share this amazing adventure.

When I performed parameter sensitivity analysis on the hand-fitted logistic model, I found that the rate of logarithmic growth is the about the same regardless of the value of the maximum-bitcoin-price parameter. So no matter where it ends up maxing out, the price will get there doubling about three times a year on average.


I know.  I was the one that asked somebody to do it to begin with because I was busy that weekend.  Smiley

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December 13, 2013, 05:30:46 AM
 #28

Coinbase reports that 80% of wallets are buy and hold, the remaining 20% are used for transactions. That supports the idea that when fully adopted, the majority of bitcoin will be held as a deflating store of value, and the smaller portion held as working capital by transacting entities. I do not distinguish intrinsic value aside from the contextual market price. Please enlighten me with regard to the two main uses of bitcoin as partitioned above.

This:

Lets look at it psychologically. When the BTC price stops rising because the capital that can and will be moved into Bitcoin has slowed (or peaked), then those who own $100,000 to $millions (which probably includes all those who own $10,000+ of BTC now) are going to want to deploy their capital productively. Unless Bitcoin is as widely accepted as the dollar, then they will find their opportunities to invest BTC in businesses without it being converted to dollars will be limited and it will prevent them from optimizing their investments.

So capital will leave BTC to the point that each person holds in BTC what is reasonable for the opportunities of medium-of-exchange that are available.
Since BTC price is rising so fast, we are looking at market cap saturation no latter than 2016 ($1m per BTC x 15m coins = $15 trillion) unless the general public is selling assets to buy Bitcoin, but more likely 2014 or 2015. That is not enough time to develop a wide enough medium-of-exchange ecosystem.

Also, Bitcoin has no utility (except perhaps as the government coin).

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December 13, 2013, 06:28:06 AM
 #29

Bitcoin price doubles about three times a year on average, and will keep going up at this rate until the final growth slowdown

Wish I had Bitcoins in 2009...

I urge you to invest whatever more you think is prudent NOW.


You can ask Bitchick, we have invested as much as we can afford to lose (and probably a little more than she is comfortable with).

You both are so fortunate to completely share this amazing adventure.

When I performed parameter sensitivity analysis on the hand-fitted logistic model, I found that the rate of logarithmic growth is the about the same regardless of the value of the maximum-bitcoin-price parameter. So no matter where it ends up maxing out, the price will get there doubling about three times a year on average.


I know.  I was the one that asked somebody to do it to begin with because I was busy that weekend.  Smiley

This "amazing adventure" feels as stressful as watching a suspenseful movie sometimes. (Although I watch them with BitChicksHusband I often have to leave the room because I get so stressed out watching them!)

That said, I am still thankful we are involved.  Better late then never.  And I have come to realize that the amount of coins we have might be irrelevant depending on when we decide to use them (with the price doubling at three times a year)  Many of the earlier adopters are using them to purchase expensive cars right now and may be left with the same amount, or less coins than we have if they spend most of them.  Of course, the smart ones will make sure to hold a sizable amount for a long time.

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December 14, 2013, 07:21:15 PM
 #30

If you click on this link: https://bitcointalk.org/index.php?board=1.17280 it takes you back to page 433 of the Bitcoin Discussion forum. When I first started reading this message board I spent a lot of time catching up on old threads. Where in the past, a new registrant with new ideas and new concerns was often cause for a flurry of forum activity, today, it's a new company, a new press release, a new application that stirs up this message board.

It's often difficult to take it all in. There's posturing, maneuvering, attempts at influencing the direction of coders and users but beyond all that there's price. If you read many of the old threads from 2010 you should note a recurrent theme, seemingly protocol ending problems solved over time, again and again. Wallets, exchanges, redundancies, I'm not qualified to list the hurdles and solved problems but there's one thing that's clear for everyone to see and that is the rate of adoption. Through all of that, price trudges along, reflecting the demand for Bitcoin and its protocol.

Personally, I've learned to enjoy these price consolidations, it's an opportunity to debug ones beliefs and pick up a few more Bitcoins along the way. I've discovered there are many avid chartists over at Tradingview and from what I've looked at, the majority of them long term bullish. Many charts from Tradingview are neater in appearance and I don't want to clutter up this thread with a bunch of charts that takes away from the picture drawn by Slippery Slope, but in the near term, I hope the channels on this chart demonstrate to holders of Bitcoin that volatility is to be expected, even welcomed as price seeks its median line. So far I like this chart and I see no reason to adjust the median line plot at this time.

Edit: here's a direct link to the chart where you can make adjustments if you with - https://www.tradingview.com/e/M1ZPd859/

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December 14, 2013, 07:51:25 PM
 #31

Not included are all the efficiencies Bitcoin will introduce into the economy if it goes mainstream. A fully internationalized, frictionless division of labor will be an incredible boon to the economy. And there's so much more. I think a price target of $100 million, conservatively, is more realistic.

If Bitcoin goes big, it pretty much has to go whole hog. We are witnessing nothing less than a global transition from physical goods and trust-based money to an unimpeachable universal asset ledger. Anything else will look archaic by comparison, and the value added to the economy in the next 10 years will blow even these first 20 years of the modern Internet out of the water.

100 million dollars per bitcoin is ridiculous, in my opinion. Given that there are 10,000 people with over 100 bitcoins, there would be 10,000 people worth over 10 billion dollars. Today, there are only 1,500 people in the world worth one billion dollars or more.

And how many of them have all this wealth in the form of money at that? What meaning would all that bitcoin "paper" wealth have if you won't be able to exchange that bitcoin for 100 million dollars of goods? How are you going to deprive those billionaires of their property with bitcoins?

What is it, wishful thinking?



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justusranvier
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December 18, 2013, 05:54:16 PM
 #32

http://www.mail-archive.com/cryptography@metzdowd.com/msg10152.html

Quote from: Hal Finney
As an amusing thought experiment, imagine that Bitcoin is successful and
becomes the dominant payment system in use throughout the world.  Then the
total value of the currency should be equal to the total value of all
the wealth in the world. Current estimates of total worldwide household
wealth that I have found range from $100 trillion to $300 trillion. With
20 million coins, that gives each coin a value of about $10 million.

So the possibility of generating coins today with a few cents of compute
time may be quite a good bet, with a payoff of something like 100 million
to 1! Even if the odds of Bitcoin succeeding to this degree are slim,
are they really 100 million to one against? Something to think about...

Hal
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December 18, 2013, 07:48:39 PM
 #33

http://www.mail-archive.com/cryptography@metzdowd.com/msg10152.html

Quote from: Hal Finney
As an amusing thought experiment, imagine that Bitcoin is successful and
becomes the dominant payment system in use throughout the world.  Then the
total value of the currency should be equal to the total value of all
the wealth in the world. Current estimates of total worldwide household
wealth that I have found range from $100 trillion to $300 trillion. With
20 million coins, that gives each coin a value of about $10 million.

So the possibility of generating coins today with a few cents of compute
time may be quite a good bet, with a payoff of something like 100 million
to 1! Even if the odds of Bitcoin succeeding to this degree are slim,
are they really 100 million to one against? Something to think about...

Hal

I also have read an argument for currency valuation based on hard-currency experience before paper that suggested equal value of wealth and the currency used to represent it. When I did the analysis, I used $500 trillion as a rough estimate of the total global wealth, including government as well as individual. With 20 million coins that gives each coin a value of about $25 million.
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December 18, 2013, 11:20:00 PM
 #34

Two charts: choose your worst fears using these lines for near term bearish price targets and extend that line out into 2015 for a pleasant surprise.

If you've seen the thread in speculation you know what I mean when I say 'I'm hodling'. https://bitcointalk.org/index.php?topic=375643.0






live chart link: https://www.tradingview.com/e/M1ZPd859/#
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December 19, 2013, 06:56:55 AM
 #35

Two charts: choose your worst fears using these lines for near term bearish price targets and extend that line out into 2015 for a pleasant surprise.

live chart link: https://www.tradingview.com/e/M1ZPd859/#

https://www.tradingview.com/v/oc3YX0JB/  Wink
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December 19, 2013, 04:09:26 PM
 #36

Before to replace "the currency worldwide" as you said, SlipperySlope, the Bitcoin needs to be accepted by merchants who choose to accept payments in cryptocurrencies.
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December 20, 2013, 05:34:13 PM
Last edit: December 20, 2013, 10:05:20 PM by SlipperySlope
 #37

What events in 2014 can propel bitcoin higher?

Here are a few plausible events happening next year to drive bitcoin prices higher . . .

  • the opening of the Winklevii bitcoin EFT - currently being reviewed by the SEC
  • at least one American bitcoin exchange opening as at least one US bank figures out how to comply with clarified Know Your Customer and Anti-Money Laundering regulations
  • Chinese bitcoin exchanges likewise figure out how to comply with KYC/AML regulations and also figure out how to directly connect with customer bank accounts, beyond the few currently supported, e.g. Merchants Bank of China by BTCChina.
  • Transaction volume increases apace with recent history, enabled by newsworthy adoption events, e.g. 10x more transactions via merchants accepting bitcoin.

In order for prices to ascend from here - $737 currently - to a 2014 year-end value of $6437 as predicted by the logistic price trendline, about 10x more speculative activity needs to occur. This increase in adoption could be realized by new exchanges opening, and especially by greater freedom of operation permitted to Chinese exchanges. I agree with many observers that 2014 will be the year in which institutional investors, and retirement account investors, begin moving large amounts of buy-and-hold funds to bitcoin. The huge success of the Bitcoin Investment Trust in the past couple of months is an indication of what is probably ahead for 2014.

I suppose that the net sellers of bitcoin in 2014 will be those who bought before April of 2013 and have 100x or more profit unrealized.
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December 20, 2013, 08:37:44 PM
 #38

Impressive work! Smiley
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December 20, 2013, 10:06:44 PM
 #39

Impressive work! Smiley

Thank you.

And may you swiftly become a $ billionaire.
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December 21, 2013, 08:10:58 AM
 #40

Impressive work! Smiley

Thank you.

And may you swiftly become a $ billionaire.

Even I cannot fail it in this short time Wink
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