rpietila Wall Observer - the Quality TA Thread ;)

[User705]

Your model continues to boggle my mind.

I try to perform at least one Bitcoin transaction daily. Either by spending some, buying some, transferring some, or most often by receipt of mining earnings.

Suppose that I am responsible for permanently increasing the daily quantity of transactions by one. Today's adjusted number of transactions reported by Blockchain.info is 58,006, and your model projects a market cap of $1.50 * 58,006 * 58,006 = $5,047,044,054.00. My contribution makes the adjusted number of transactions 58,007, and the corresponding market cap is 5,047,218,073.50. The difference between the two market caps is $174,019.50. As the total number of Bitcoins at the time of writing is 12,591,775, my one incremental daily transaction lifts the corresponding price per bitcoin by 0.013 USD.

And this is why Quantity Theory of Money says M x V = value, not M alone. This is why selling out to fiat via Bitpay robs us of the square of the count of transactions and puts that value in fiat instead. The value of a network is the velocity times the position, not just the position, i.e. if all the actors (hodlers of money or nodes) don't interact then the network is a beautiful pile of do-nothing.

Using bitpay keeps BTC in the air.  That creates a churning marginal demand which decreases the supply on the fiat market.  If you buy immediately before spending, and the merchant takes fiat, then the time in the air is small.  If you buy in anticipation, V decreases, and the effective air time, from the point of view of the exchange market, is quite long.  Using bitpay also adds to the bid and to the ask on the market, thus increasing liquidity, which in turn makes bitcoin marginally more efficient (less slippage) and less risky (as liquidity is available when it is needed).

One of the ways I spend bitcoin is to buy gift cards from Gyft or Giftcard Zen. Unfortunately the coins get converted into fiat right away and my subsequent use of the gift card at, for example, Amazon does not add to the Bitcoin economy. I expect that as the Bitcoin economy grows, business to business bitcoin transactions will also grow enough to keep the flow going once a merchant receives my coin.

Actually afaik gyft owner keeps a certain % not converted.

[chessnut]

looks like up tonight.

[rpietila]

I want a Klein bottle.  There is a stock of 1000 waiwai on the wampum market.  It is not moving.  It is bidless.  But they travel well by air, so I take one waiwai from the stock, by buying it on the market.  The market moves against me.  I.e. the value of one waiwai increases.  I sent one waiwai to Alice by European swallow to pay for a Klein bottle.  Alice wants wampum, so she sells the waiwai on the wampum/waiwai market.  The market moves against her.  I.e. the value of one waiwai decreases.  Net impact on waiwai/wampum: Zen.

Youtube videos of my Klein bottle go viral.  1100 teenage girls in Uruguay want Klein bottles, at various times, 100 each day.  As more and more school girls trade wampum for waiwai, the stock of waiwai declines, the cost in wampum increases.  100 waiwai are held by pidgeons.  Alice takes the waiwai from the pidgeons and sells them for wampum the next day, but by that time 100 more Uruguayan school girls have pidgeons in the air.  For 11 days, the stock of waiwai on the wampum market is reduced by 10%.  Uruguayans 101 to 1100 pay 20% more for the waiwai, and Alice gets 118% as much wampum for her Klein bottles as she would have were the waiwai rates constant.  If Alice's ten cousins start marketing their Klein bottles to Moldovan gigolos, whose pidgeons are twice as slow, those transactions will remove twenty times as much waiwai from the supply/demand balance on the wampum markets, and the price will rise confoundedly.   The result will be a waiwai bubble.

PQ=MV, the value of the money stock is M, denominated in PQ/V.  Increasing V decreases M.  Increasing the number of times a waiwai can flip during a fortnight, say by using African swallows instead of pidgeons, will increase laden air speed, thus decreasing the wampum per waiwai.

Using bitpay keeps BTC in the air.  That creates a churning marginal demand which decreases the supply on the fiat market.  If you buy immediately before spending, and the merchant takes fiat, then the time in the air is small.  If you buy in anticipation, V decreases, and the effective air time, from the point of view of the exchange market, is quite long.  Using bitpay also adds to the bid and to the ask on the market, thus increasing liquidity, which in turn makes bitcoin marginally more efficient (less slippage) and less risky (as liquidity is available when it is needed).

If everyone makes a different color of Klein bottle, and everyone wants to collect the whole set, then there are N^2 pidgeon flights which need to occur.  The first pidgeon reduced the stock of waiwai by a factor of 0.999.  The second person, by a factor of 0.998,  the n^2 person by a factor of 1-0.001*n^2.  As a result the cost of a waiwai rises by a factor of k*e^(n^2).

I want some of that stuff that makes you think clearly 

Quick TA update:
- 6H candle color/volume: one green with high volume, awaiting for more which confirms the bottom of March 31, conclusion: hopeful
- Bid/ask strengh at market: slippage to sell 5k: $32, slippage to buy: $98, conclusion: explosive upside potential
- Trendline comparison: we are now at -0.291 log units. The trendline is at $932 and rising $7 per day, conclusion: rock bottom
- Sentiment: last week was quite extreme in fear, fud and bearishness, conclusion: supports that the bottom is behind us, deceitful
- Prognosis: intact from yesterday

I will perhaps start to publish a "rpietila we will hit $X never again" indicator, which is my tender for a binary bet where I take the side that it will "never" go that low again (in practice like 3-6 months because I want to collect the winnings). That allows the "pay up or shut up" commenters to actually pay up if they thing bitcoin is going down and not ridicule. Similarly if I'm bearish myself, I could start to offer bet that "it will certainly go that low".

I need to check the legal structuring and don't anticipate to actually make many bets but a number gives more accountability than hazy predictions.

Well anyway today I am about to play Dominion whole day with my friend and tomorrow go to the castle where I close all connections and just enjoy the countryside and the planning meetings with county officials, building managers and such.

[MahaRamana]

I want some of that stuff that makes you think clearly 

Quick TA update:
- 6H candle color/volume: one green with high volume, awaiting for more which confirms the bottom of March 31, conclusion: hopeful
- Bid/ask strengh at market: slippage to sell 5k: $32, slippage to buy: $98, conclusion: explosive upside potential
- Trendline comparison: we are now at -0.291 log units. The trendline is at $932 and rising $7 per day, conclusion: rock bottom
- Sentiment: last week was quite extreme in fear, fud and bearishness, conclusion: supports that the bottom is behind us, deceitful
- Prognosis: intact from yesterday

I will perhaps start to publish a "rpietila we will hit $X never again" indicator, which is my tender for a binary bet where I take the side that it will "never" go that low again (in practice like 3-6 months because I want to collect the winnings). That allows the "pay up or shut up" commenters to actually pay up if they thing bitcoin is going down and not ridicule. Similarly if I'm bearish myself, I could start to offer bet that "it will certainly go that low".

I need to check the legal structuring and don't anticipate to actually make many bets but a number gives more accountability than hazy predictions.

Well anyway today I am about to play Dominion whole day with my friend and tomorrow go to the castle where I close all connections and just enjoy the countryside and the planning meetings with county officials, building managers and such.

If you had an amount waiting to be invested in BTC, would you invest 100% of it right now or try to go by bits and cost-average for the case of a new bottom lower ?

[rpietila]

If you had an amount waiting to be invested in BTC, would you invest 100% of it right now or try to go by bits and cost-average for the case of a new bottom lower ?

I would check that I don't buy immediately after an intraday $20 jump but in general the answer is: YES.

[AnonyMint]

Apologies I was intending to make following correction and then we had a brown out and I fell asleep.

It is roughly saying we won't significantly surpass $1000 in 2014. I don't know where the correctly fitted curve would be right now, so I can't project where the price should be now and where it will be nominally. I think the slope projection is more close to accurate, so we can say that if the theory is correct (that distribution of money holders is a power law distribution as the cited research and common knowledge says it always is), then price appreciation will slow down specifically to 0.05 units on the log 10 chart per month where 1 unit is 10X appreciation. So if we bottom at $400, then price after 20 months should be $4000. Again this is a very rough eyeballed fit and would expect the refined fit to have a slightly higher slope maybe 0.06, so make that 16 months instead.

The red line below is a power law distribution for B=0.5 which you can see above is the value of B I fitted.



What that distribution says is that the rich hold most of the percentage of wealth, which we know is in fact always true. And the fitting of the cumulative distribution function to BTC price is the theoretical claim that earlier adopters will be more wealthy (by now) than later ones.

The research I cited points out is that the masses use money as a unit-of-exchange, not as a store-of-value.

However does the Metcalf's law value of money (which Peter R has shown BTC mcap and thus price is tracking) where the value is proportional to the square of the number of nodes in the network nullify my use of a power law distribution? I.e. do the wealthy not create (proportional to their wealth) more network nodes (e.g. unique active BTC addresses) than the masses?

I see the really diehard power users (e.g. SlipperySlope and Peter R) are both talking about creating a new node every day. Thus this anecdotally supports that the power law distribution applies correctly here.

Thus I think we need to take this theory seriously. It might be the correct growth curve. The linear one with a least squares fit seems really out-of-touch with historical data. It totally ignores the shape of the earliest adoption curve up to July 2011. Risto's explanation was the early adopters were bad speculators and bid the price up too much, but my interpretation is they are the most wealthy now and they were the most powerful because they are early adopters. The least squares fitting of a line to a curved adoption could possibly be (confirmation bias in play as) an (emotional "to the moon") attempt to force a linear projection on a growth curve which obviously was not always linear. Has it become linear since January 2012?

I very much doubt it!

Convince me? Risto how do you analytically defend your linear least squares fit that makes you so sure of everything and gives you the audacity to browbeat all the bears?

Add: why don't stocks follow this log-logistic curve? Maybe they do (?), if we don't compress the early adopters into a single event IPO. Also can a stock issue have network effects, i.e. does Metcalf's law apply to company shares? Seems to me yes if the shareholders network amongst themselves, but much less so than a network of money holders.

Add: Fact is the slope during the runup to July 2011 was 0.33 per month. Since Jan 2012, it has been 1/4 of that 0.08 roughly. Why should we expect the slope to not decline again? Why should the pace of adoption remain constant? Seems intuitively unlikely to me. Pace of adoption should slow as we slog into the less astute demographics. Larger mass with more inertia grows more slowly than smaller mass with nimble inertia.

[chessnut]

An interesting development - LTC/BTC for the first time in a while is trending DOWN in a bitcoin bullrun.

I think this is a fundamental shift that we all expected.

if LTC increases at a rate of 2^2, and bitcoin at 3^2, this is obviously what we would expect to see in a genuine bull run driven by fundamentals.

A wise move would be to short (using BTC) the LTCBTC pair on Bitfinex. this will mean full exposure to the BTC bull run as well as exposure to LTC inferior fundamentals.

[AnonyMint]

I want a Klein bottle.  There is a stock of 1000 waiwai on the wampum market.  It is not moving.  It is bidless.  But they travel well by air, so I take one waiwai from the stock, by buying it on the market.  The market moves against me.  I.e. the value of one waiwai increases.  I sent one waiwai to Alice by European swallow to pay for a Klein bottle.  Alice wants wampum, so she sells the waiwai on the wampum/waiwai market.  The market moves against her.  I.e. the value of one waiwai decreases.  Net impact on waiwai/wampum: Zen.

Youtube videos of my Klein bottle go viral.  1100 teenage girls in Uruguay want Klein bottles, at various times, 100 each day.  As more and more school girls trade wampum for waiwai, the stock of waiwai declines, the cost in wampum increases.  100 waiwai are held by pidgeons.  Alice takes the waiwai from the pidgeons and sells them for wampum the next day, but by that time 100 more Uruguayan school girls have pidgeons in the air.  For 11 days, the stock of waiwai on the wampum market is reduced by 10%.  Uruguayans 101 to 1100 pay 20% more for the waiwai, and Alice gets 118% as much wampum for her Klein bottles as she would have were the waiwai rates constant.  If Alice's ten cousins start marketing their Klein bottles to Moldovan gigolos, whose pidgeons are twice as slow, those transactions will remove twenty times as much waiwai from the supply/demand balance on the wampum markets, and the price will rise confoundedly.   The result will be a waiwai bubble.

Please cite a reference which says as demand (bids) increases, the float decreases? I have never seen such a claim. Rather as demand increases supply of float (asks) also increases to match it, but at a higher price. The supply increases faster than the demand because investors have larger and larger gains, this is why marginal price doesn't grow to the edge of the universe. The same is true in production, where the price won't go to infinity because new producers will come online to serve higher demand at higher marginal prices.

I scored in the high 90s (out of 100) in my Economics 101 university class, but I didn't major in Economics and that was 30 years ago. I renewed my interest in Economics starting around 2005. For interim decades I was doing only computer science and programming (and wasteful mischief which I am suffering from now).

PQ=MV, the value of the money stock is M, denominated in PQ/V.  Increasing V decreases M.

Or it increases P x Q.

V has been falling since 2008 and M was increased by the Fed in order to keep P x Q propped up, but that was not a free market event and after 2016 P x Q is going to come crashing down because M is mostly debt and thus we have massive P x Q oversupply in the global economy.

Increasing the number of times a waiwai can flip during a fortnight, say by using African swallows instead of pidgeons, will increase laden air speed, thus decreasing the wampum per waiwai.

You got that backwards.

Increasing the V that doesn't need to convert to/from fiat doesn't necessarily decrease the fiat price of BTC. It may decrease the supply of BTC that wants to sell for fiat, while increasing the demand for BTC of those who hold fiat, because there are more network effects within the Bitcoin ecosystem that they want to avail of.

Using bitpay keeps BTC in the air.

That is irrelevant as I have explained. What it does is reduce the network effects (merchants accepting and holding Bitcoin thus being nodes in the Metcalf law valuation) within the Bitcoin ecosystem that those holding fiat must buy BTC to attain. If everything they can buy with BTC they can also buy with fiat, then there is no great need to buy BTC with their fiat.

That was precisely my point about why lose 3-5% on double exchange, when one can just buy with their credit card for 0%.

Sorry you really dropped the logic on this one.

That creates a churning marginal demand which decreases the supply on the fiat market.  If you buy immediately before spending, and the merchant takes fiat, then the time in the air is small.  If you buy in anticipation, V decreases, and the effective air time, from the point of view of the exchange market, is quite long.  Using bitpay also adds to the bid and to the ask on the market, thus increasing liquidity, which in turn makes bitcoin marginally more efficient (less slippage) and less risky (as liquidity is available when it is needed).

If everyone makes a different color of Klein bottle, and everyone wants to collect the whole set, then there are N^2 pidgeon flights which need to occur.  The first pidgeon reduced the stock of waiwai by a factor of 0.999.  The second person, by a factor of 0.998,  the n^2 person by a factor of 1-0.001*n^2.  As a result the cost of a waiwai rises by a factor of k*e^(n^2).

Your model continues to boggle my mind.

I try to perform at least one Bitcoin transaction daily. Either by spending some, buying some, transferring some, or most often by receipt of mining earnings.

Suppose that I am responsible for permanently increasing the daily quantity of transactions by one. Today's adjusted number of transactions reported by Blockchain.info is 58,006, and your model projects a market cap of $1.50 * 58,006 * 58,006 = $5,047,044,054.00. My contribution makes the adjusted number of transactions 58,007, and the corresponding market cap is 5,047,218,073.50. The difference between the two market caps is $174,019.50. As the total number of Bitcoins at the time of writing is 12,591,775, my one incremental daily transaction lifts the corresponding price per bitcoin by 0.013 USD.

And this is why Quantity Theory of Money says M x V = value, not M alone. This is why selling out to fiat via Bitpay robs us of the square of the count of transactions and puts that value in fiat instead. The value of a network is the velocity times the position, not just the position, i.e. if all the actors (hodlers of money or nodes) don't interact then the network is a beautiful pile of do-nothing.

Using bitpay keeps BTC in the air.  That creates a churning marginal demand which decreases the supply on the fiat market.  If you buy immediately before spending, and the merchant takes fiat, then the time in the air is small.  If you buy in anticipation, V decreases, and the effective air time, from the point of view of the exchange market, is quite long.  Using bitpay also adds to the bid and to the ask on the market, thus increasing liquidity, which in turn makes bitcoin marginally more efficient (less slippage) and less risky (as liquidity is available when it is needed).

One of the ways I spend bitcoin is to buy gift cards from Gyft or Giftcard Zen. Unfortunately the coins get converted into fiat right away and my subsequent use of the gift card at, for example, Amazon does not add to the Bitcoin economy.

Bingo!

I want a Klein bottle...

I want some of that stuff that makes you think clearly  

What clearly was that?

- Trendline comparison: we are now at -0.291 log units. The trendline is at $932 and rising $7 per day, conclusion: rock bottom
- Prognosis: intact from yesterday

Arbitrary curve fitting again presented as uber confident analysis.

[Trolololo]

After a bottom it goes up. We've seen this like.. 7 times now in Bitcoin's history. 99.95% don't own bitcoins. Hundreds of millions have now heard about them, mostly negative. It takes 12-24 months for them to buy. The first 1% of them is the next 500% of Bitcoin adoption, the ones who lift the price to $5,000 before leaves fall from the trees. If 5 million people invest $1,000 per person, they can buy 10 million bitcoins. That absorbs all the lonely Chinese and stolen coins, like many times before. There is nothing new in Bitcoin. Everything has happened before. It is a fractal. Before I even bought, it was explained to me.

Take a look at this fractal:



It compares
the bubbles of Oct2010 + Jan2011 + April-May2011
vs
the bubbles of Jan-Mar2013 + Nov2013 + May-Sept2014?

The top of the next bubble would peak around 100,000 USD/XBT at around end of September 2014 (6 months from now).


Edited: dates corrected (prebubbles were in 2010, not in 2011, and superbubble was in 2011, not in 2012)

[AnonyMint]

Take a look at this fractal:



It compares
the bubbles of Oct2011 + Jan2012 + April-May2012
vs
the bubbles of Jan-Mar2013 + Nov2013 + May-Sept2014?

The top of the next bubble would peak around 100,000 USD/XBT at around end of September 2014 (6 months from now).

You see the size of the second staircase step is smaller than the first, then you make an arbitrary curve fit which makes the 3rd staircase step larger than both. That defies objective reason and rationality.

[chessnut]

I think it's a pretty smart fit actually. very interesting.

[AnonyMint]

I think it's a pretty smart fit actually. very interesting.

Which one? Trolololo's fractal or my log-logistic?

How can Trolololo's fit be sane where the 3rd is larger than the 2nd which was smaller than the 1st? That would imply the adoption decelerated in 2012 to 2014 and now will accelerate.  

Add: I am becoming more confident adoption is slowing. It simply makes the most sense and the data supports it. Needing to use fiat to add merchants is the death to adoption of BTC. Bitcoin is losing its raison d'etre.

[Siegfried]

That is irrelevant as I have explained. What it does is reduce the network effects (merchants accepting and holding Bitcoin thus being nodes in the Metcalf law valuation) within the Bitcoin ecosystem that those holding fiat must buy BTC to attain. If everything they can buy with BTC they can also buy with fiat, then there is no great need to buy BTC with their fiat.

That was precisely my point about why lose 3-5% on double exchange, when one can just buy with their credit card for 0%.

Many people prefer to use BTC rather than credit cards, even though they can use either, because BTC is faster and more convenient for online payments. They buy, wait for the price to increase, then spend when needed. It's that simple. I do not think this 3-5% double exchange loss you are talking is a significant factor in whether or not people choose to use or accept Bitcoin.

[AnonyMint]

That is irrelevant as I have explained. What it does is reduce the network effects (merchants accepting and holding Bitcoin thus being nodes in the Metcalf law valuation) within the Bitcoin ecosystem that those holding fiat must buy BTC to attain. If everything they can buy with BTC they can also buy with fiat, then there is no great need to buy BTC with their fiat.

That was precisely my point about why lose 3-5% on double exchange, when one can just buy with their credit card for 0%.

Many people prefer to use BTC rather than credit cards, even though they can use either, because BTC is faster and more convenient for online payments. They buy, wait for the price to increase, then spend when needed. It's that simple. I do not think this 3-5% double exchange loss you are talking is a significant factor in whether or not people choose to use or accept Bitcoin.

The 3 - 5% is an ancillary argument and not the core one. If they wish to be irrational and waste 3-5%, it doesn't mean they are part of a trend of new adopters who love to waste money. Whether Bitcoin holders continue to be interested in Bitcoin is irrelevant to the point I was making. I was making the point that if we don't create more merchants that accept only BTC, i.e. hold BTC and not just a useless facade for fiat, then there is no compelling need for non-Bitcoin owners to decide to acquire Bitcoin (if we are speaking about its demand as a currency and not as an investment).

On the investment demand side, the adoption is slowing and thus due to Metcalf's Law's correlation P = 1.5 x n^2, the rate of price growth (increase) has and will continue to slow. There is no linear growth on the log 10 chart "to the moon". Price growth will moderate and we won't exceed $10,000 before 2016. (note that is still a very nice gain, just not as "to the moon"). Bitcoin's price increase after 2015 will further slow, will not exceed gold. (assuming gold bottoms around $1000 in 2015 as I expect) Remember Risto was the guy calling for $300,000 by now (I've seen others write this, I wasn't around when he purportedly made that projection). How did that work out for him?

Buffet is correct, Bitcoin is just a facade for fiat. Bitpay and Peter Thiel have just put that future in concrete.

Now I sit back and watch my observations wreck havok on Risto's net worth expectations and confidence.


Add: slowing rate adoption can still be very large nominally, e.g. if going from 1 million to 100 million takes 3X longer it still happens. You see as Peter Thiel helps to convert Bitcoin to the government coin, the masses will come in as it will become essentially be a form of fiat with offchain services that Peter Thiel creates. Everything is running exactly to plan as how I expected it to go when I wrote Bitcoin : The Digital Kill Switch in March 2013 and first joined this community.

P.S. Mining is now concentrated in one pool with greater then 51% attack hash power. And there are individual miners with 7 - 10% of the entire hash power. Everything is going exactly how I predicted. Yet people still think I am wrong.

[MahaRamana]

That is irrelevant as I have explained. What it does is reduce the network effects (merchants accepting and holding Bitcoin thus being nodes in the Metcalf law valuation) within the Bitcoin ecosystem that those holding fiat must buy BTC to attain. If everything they can buy with BTC they can also buy with fiat, then there is no great need to buy BTC with their fiat.

That was precisely my point about why lose 3-5% on double exchange, when one can just buy with their credit card for 0%.

Many people prefer to use BTC rather than credit cards, even though they can use either, because BTC is faster and more convenient for online payments. They buy, wait for the price to increase, then spend when needed. It's that simple. I do not think this 3-5% double exchange loss you are talking is a significant factor in whether or not people choose to use or accept Bitcoin.

More importantly, bitcoin will be (is) finding direct ways to the wallets of people. I suspect some companies that earn bitcoin will offer their employees to be paid in part with bitcoin (rather than loosing the 3-5% on an exchange). Online freelancers of all kinds will increasingly accept to be paid with bitcoin in part or in full. Lots of jobs are going online right now and payment, especially international, is often a headache. There are no reasons why all bitcoins used to buy something must be purchased on an exchange just before. People will be (are) "making" bitcoins directly.

[Trolololo]

Take a look at this fractal:



It compares
the bubbles of Oct2011 + Jan2012 + April-May2012
vs
the bubbles of Jan-Mar2013 + Nov2013 + May-Sept2014?

The top of the next bubble would peak around 100,000 USD/XBT at around end of September 2014 (6 months from now).

You see the size of the second staircase step is smaller than the first, then you make an arbitrary curve fit which makes the 3rd staircase step larger than both. That defies objective reason and rationality.

The image   (BiscoinWisdom:   MtGox 3 days log chart (background and faded, timescale on top)   vs   Bitstamp 3 days log chart (front, timescale at the bottom),   merged with a simple photoshop resize)   simply shows that the shape of the two 2013 bubbles is quite the same than the two pre-bubbles of 2010 that ended in the superbubble of Jun 2011.

So the possibility of a new superbubble in 2014 exists.
I don't know the probability (nobody, in fact), but the possibility exists.

The image also shows that the bottom of Nov2013 bubble correction, if not 430, could be somewhere in the 300s. That would be the start of 2014 superbubble.


Edited: dates corrected (prebubbles were in 2010, not in 2011, and superbubble was in 2011, not in 2012)

[RAJSALLIN]

I think Trolololo's chart is very unlikely. The only possibility for this coming true is some serious cracks in the current economy coming to life. Of course that's not impossible

[Siegfried]

That is irrelevant as I have explained. What it does is reduce the network effects (merchants accepting and holding Bitcoin thus being nodes in the Metcalf law valuation) within the Bitcoin ecosystem that those holding fiat must buy BTC to attain. If everything they can buy with BTC they can also buy with fiat, then there is no great need to buy BTC with their fiat.

That was precisely my point about why lose 3-5% on double exchange, when one can just buy with their credit card for 0%.

Many people prefer to use BTC rather than credit cards, even though they can use either, because BTC is faster and more convenient for online payments. They buy, wait for the price to increase, then spend when needed. It's that simple. I do not think this 3-5% double exchange loss you are talking is a significant factor in whether or not people choose to use or accept Bitcoin.

More importantly, bitcoin will be (is) finding direct ways to the wallets of people. I suspect some companies that earn bitcoin will offer their employees to be paid in part with bitcoin (rather than loosing the 3-5% on an exchange). Online freelancers of all kinds will increasingly accept to be paid with bitcoin in part or in full. Lots of jobs are going online right now and payment, especially international, is often a headache. There are no reasons why all bitcoins used to buy something must be purchased on an exchange just before. People will be (are) "making" bitcoins directly.

Bitcoin payment processors like Bitpay and Coinbase should offer their merchants an additional discount if they keep (do not convert) at least 20 percent of their BTC revenue.

[fluidjax]

I think Trolololo's chart is very unlikely. The only possibility for this coming true is some serious cracks in the current economy coming to life. Of course that's not impossible

Unlikely, because this time it's going to be different.lol
Bitcoin has a habit of repeating itself.

[rpietila]

The top of the next bubble would peak around 100,000 USD/XBT at around end of September 2014 (6 months from now).

It is possible. The final parabolic ascent of the bubble goes as quickly as 100+% per week and the very top can be 50-100% per day (or as in 2013-11-18 in China: +133% in the final day). If we steadily rise to $3000 in the following 5 months, and then rise +100% for 4 weeks, and the final day is again +100%, then we are at $100,000.

What has happened before, can happen again, and - I don't know why - but with Bitcoin I have the feeling that the probability of something repeating is higher than random. I just bought a castle with the money I earned by assuming that the 11/2013 bubble will be similar to 4/2013 bubble, which it was.

The image   (BiscoinWisdom:   MtGox 3 days log chart (background and faded, timescale on top)   vs   Bitstamp 3 days log chart (front, timescale at the bottom),   merged with a simple photoshop resize)   simply shows that the shape of the two 2013 bubbles is quite the same than the two pre-bubbles of 2011 that ended in the superbubble of Jun 2012.

The previous superbubble was in Jun 2011 (instead of -12), which is why some of us don't understand your chart.

So the possibility of a new superbubble in 2014 exists.
I don't know the probability (nobody, in fact), but the possibility exists.

The probability might be quite high, because everybody knows about Bitcoin now and the bubble is nothing else but a self-reinforcing feedback loop, and we have already seen similar behavior.