I am predicting a spike above $3

[cypherdoc]

1.  the first sourcecode that prevents file copying while allowing public access.

I'm curious. What does the above sentence mean? Anyone?

did i not say it right? how about the first p2p file sharing system that prevents copying?  how would you say it?

[1713506800]

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[1713506800]

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[cypherdoc]

maybe i should try to frame this differently.  

what i think has been the root cause of all our financial problems for the last decade or the last 100 years depending on your time frame is a "fiat currency crisis".  as central banks around the world print money to solve economic growth problems via sovereign currency devaluation as a means to increase exports, savers, elderly and financially prudent are punished greatly.

Bitcoin was designed as a poison arrow directed at the heart of the central banks of the world precisely to try and solve this problem.  whether it works or not remains to be seen and we can agree to disagree.

if we can't agree on these points then we should stop talking.

[mjcmurfy]

maybe i should try to frame this differently.  

what i think has been the root cause of all our financial problems for the last decade or the last 100 years depending on your time frame is a "fiat currency crisis".  as central banks around the world print money to solve economic growth problems via sovereign currency devaluation as a means to increase exports, savers, elderly and financially prudent are punished greatly.

Bitcoin was designed as a poison arrow directed at the heart of the central banks of the world precisely to try and solve this problem.  whether it works or not remains to be seen and we can agree to disagree.

if we can't agree on these points then we should stop talking.

I disagree that we should stop talking because we can't agree

I don't think it was fiat currency alone that is to blame. It is a huge part of it, but it's a deliberately complex situation that the banking elites have tried to obscure from us. In my opinion, it is more to do with the perfect storm of fiat currency, the lack of fiscal discipline in the central banks, the advent of derivative investment vehicles, and of course fractional reserve banking which resulted in swathes of investment capital flooding into virtually every market you can think of, causing massive speculative asset bubbles the likes of which have never been seen before.

If fiat currency was regulated properly and banks were held to account for excessive risk taking we wouldn't have the ability to pump money into these asset bubbles, and they would therefore not reach the levels we saw in 2008 with the housing market in the US and some european countries.

The problem as I see it is the lag in information dissemination between investment bankers and the general public. The bankers begin to inflate an asset with their large purchasing power, after which, lower rung investors begin to pile in. The bankers know they are triggering asset bubbles, and are ready to sell their holdings at the height of the bubble and then short all the way back down. They artificially create volatility so they can enrich themselves and their shareholders, taking money off everyone else.

And when their tactics fail, the government is there to bail them out with public money. They take massive risks on the behalf of the rest of society, and when they win they take all the rewards but when they lose, suffer none of the consequences. Since the 70's, and Regan's policies of abolishing financial regulation, they can do this with impunity. Nobody is held accountable, as they just conveniently blame the market when these bubbles burst claiming that 'nobody saw it coming'.

Anyone with a brain could have saw it coming, in fact, the worst part is that the people who tried to bring some sanity to the table were completely ignored or silenced, and the rest kept the information to themselves so they would have a competitive edge when the inevitable occurred. This thing resulted from a wide-ranging conspiracy between banks, governments, the media and wealthy elites to enrich themselves at the cost of everyone else.

I too love bitcoin because of what it is trying to achieve. Whether or not it is successful or not, what keeps me going is the thought that one day, bankers will wake up to find that poison arrow lodged squarely in their chests.

[cypherdoc]

maybe i should try to frame this differently.  

what i think has been the root cause of all our financial problems for the last decade or the last 100 years depending on your time frame is a "fiat currency crisis".  as central banks around the world print money to solve economic growth problems via sovereign currency devaluation as a means to increase exports, savers, elderly and financially prudent are punished greatly.

Bitcoin was designed as a poison arrow directed at the heart of the central banks of the world precisely to try and solve this problem.  whether it works or not remains to be seen and we can agree to disagree.

if we can't agree on these points then we should stop talking.

I disagree that we should stop talking because we can't agree

I don't think it was fiat currency alone that is to blame. It is a huge part of it, but it's a deliberately complex situation that the banking elites have tried to obscure from us. In my opinion, it is more to do with the perfect storm of fiat currency, the lack of fiscal discipline in the central banks, the advent of derivative investment vehicles, and of course fractional reserve banking which resulted in swathes of investment capital flooding into virtually every market you can think of, causing massive speculative asset bubbles the likes of which have never been seen before.

If fiat currency was regulated properly and banks were held to account for excessive risk taking we wouldn't have the ability to pump money into these asset bubbles, and they would therefore not reach the levels we saw in 2008 with the housing market in the US and some european countries.

The problem as I see it is the lag in information dissemination between investment bankers and the general public. The bankers begin to inflate an asset with their large purchasing power, after which, lower rung investors begin to pile in. The bankers know they are triggering asset bubbles, and are ready to sell their holdings at the height of the bubble and then short all the way back down. They artificially create volatility so they can enrich themselves and their shareholders, taking money off everyone else.

And when their tactics fail, the government is there to bail them out with public money. They take massive risks on the behalf of the rest of society, and when they win they take all the rewards but when they lose, suffer none of the consequences. Since the 70's, and Regan's policies of abolishing financial regulation, they can do this with impunity. Nobody is held accountable, as they just conveniently blame the market when these bubbles burst claiming that 'nobody saw it coming'.

Anyone with a brain could have saw it coming, in fact, the worst part is that the people who tried to bring some sanity to the table were completely ignored or silenced, and the rest kept the information to themselves so they would have a competitive edge when the inevitable occurred. This thing resulted from a wide-ranging conspiracy between banks, governments, the media and wealthy elites to enrich themselves at the cost of everyone else.

I too love bitcoin because of what it is trying to achieve. Whether or not it is successful or not, what keeps me going is the thought that one day, bankers will wake up to find that poison arrow lodged squarely in their chests.

Geezus, why are we getting mad at each other?  precisely correct.

ok, so at the very minimum, whether Bitcoin works or not, i am in it for the principle and you would seem to understand that.

fundamentally the code is working, as in the blockchain marches on.  from an economically fundamental point of view, yes the merchant economy is not there yet.  but i see it getting there slowly.  rather than pronouncing it dead at this early point, i say lets give it time.

[2112]

did i not say it right? how about the first p2p file sharing system that prevents copying?  how would you say it?

I really don't know what you are trying to convey.

I can say that I'm really interested in the perception of the Bitcoin project, both amongst those who can read the source code and those who wont understand it. For the project with about 25 thousand lines of hard-to-read code the amount of misunderstanding among the software professionals is within my expected boundaries.

For non-practitioners in software I just don't have a frame of reference. I'm just trying to comprehend what they are imagining or believing as the features of Bitcoin. And if they believe then whom and in what claims. I find this very interesting and this is what is continuing to draw me to this forum.

Clearly you are an experienced investor, since you've quickly seen through the facade of Bitcoinica and Zhoutong's posts. Also clearly, you must rely on somebody's else opinions about the actual underlying technology.

[mjcmurfy]

Geezus, why are we getting mad at each other?  precisely correct.

ok, so at the very minimum, whether Bitcoin works or not, i am in it for the principle and you would seem to understand that.

fundamentally the code is working, as in the blockchain marches on.  from an economically fundamental point of view, yes the merchant economy is not there yet.  but i see it getting there slowly.  rather than pronouncing it dead at this early point, i say lets give it time.

I'm not getting mad, I just like a little heat in my discussions.

Part of why I am arguing so strongly against excessive speculation is because I see the same bullshit being dished out by "investors" who want to do the exact same thing with bitcoin as they have done with every other asset, i.e. create artificial volatility so they can skim profits off the top while contributing absolutely nothing and simultaneously making the economic environment of bitcoin incompatible with legitimate commerce. This is my biggest grievance with the speculators here.

Few seem to understand that what has been happening to bitcoin over the past couple of months is a result of the exact same mentality that caused all the other asset bubbles we have seen since the 70s, only since the value of bitcoin is solely determined by investor sentiment, and the system has even less regulation than our current monetary system, the opportunity for pulling off these scams is incredible.

The only way to counter this is to persecute speculators who are in it solely for short term profit. Doing this, you often end up tarring all investors with the same brush. But I have nothing but respect for people who invest and hold long positions because of their belief in the future success of bitcoin.

It is the people who buy and sell only to realize short term fiat profit that I have a problem with, because they are siphoning value out of the system, away from those who believe in the project, and making the whole thing as unstable as an elephant on a pogo stick.

[wobber]

[/quote]


Clearly you are an experienced investor, since you've quickly seen through the facade of Bitcoinica and Zhoutong's posts. Also clearly, you must rely on somebody's else opinions about the actual underlying technology.

[/quote]

What Bitcoinica facade? You call it a scam?

[2112]

What Bitcoinica facade? You call it a scam?

https://bitcointalk.org/index.php?topic=42267.msg517942#msg517942

[cypherdoc]

did i not say it right? how about the first p2p file sharing system that prevents copying?  how would you say it?

I really don't know what you are trying to convey.

first of all, even tho we had that one run in a while back, i've learned to respect your postings based on a technical perspective.  you understand the code better than most around here.  at first i just thought you were another shill based on following Nagle but i no longer see that to be the case.  i still think he's dangerous to follow.

second, what i mean by the above is that the Bitcoin sourcecode appears to be a first in that it allows a peer to peer public network the ability to prevent the copying of files (Bitcoins) for double spending.  perhaps better said, it prevents the rewriting of tx's in the blockchain ledger that are shared across the internet btwn multiple anonymous computers to prevent double spending through this same rewriting of transactions.  Satoshi has accomplished this primarily by the use of hashing, a one way complex mathematical function based on SHA-256 and ECDSA, that was necessary to introduce randomness to the production of a number anywhere btwn 0 and 2 ²⁵⁶ power when solving blocks.  each guess is based on hashing the block headers data consisting of the previous block hash, timestamp, current tx's, and a nonce,  with the only change btwn each guess coming from an incremental change in the nonce.  the solving of these blocks allows the reward of an ever decreasing number of Bitcoins (every 4 yrs) to the node that is forced to guess, as oppose to hack or find a shortcut, enough times (proof of work) to come up with a numerical result that is below a targeted numerical result to keep the number of blocks down to an introduction level of approx 10 minutes.  this target numerical result is adjusted every 2 wks to keep this 10 min interval intact.  this fixed introduction level allows a predictable amount of inflation that investors should respect, not criticize. once a block is solved, at least 50% of the other nodes in the Bitcoin network, that have a copy of the accepted (longest) blockchain have to verify that this node is not cheating by trying to rewrite tx's or double spend.  this is based on a majority of nodes >50% accepting this block.  b/c this proof of work is theoretically impractical to skirt, until perhaps a quantum computer is invented (even then this is disputed), the only way for a rational miner to pay off the costs of his hardware, electricity, and time involved in solving blocks is to go along with the program and generate as many Bitcoins as he can to pay for these expenses.  they are especially economically incentivized by an increase in the Bitcoin price in USD terms for as the higher the price goes, the more they will make.  in doing so he ends up supporting the network by verifying tx's, providing security for the network, and increasing the costs (computational power) associated with any attacker trying to undermine his work.  i know you know all this but you're testing my understanding here of whats going on.  correct anything i've got wrong.

now whether the sourcecode as written will allow this to continue i don't know but its been almost 3 yrs and guys like Dan Kaminsky who initially thought there were 9 holes to exploit have since apparently been convinced otherwise.  realize i'm not talking about scalability here.  i'm talking about as it is today and with current usage; everything seems to be progressing w/o a hitch.  i know you think its cumbersome given how its meshed various techniques together into a long complex code.  for me, since it hasn't failed despite what we know to be multiple attempts at bringing it down is very encouraging from an investment/speculative standpoint. and i know many brilliant people are working to make it more elegant.  and some think its a Mona Lisa as it is.  since this is a first for something distributed so openly on the internet, somewhere somehow it will find a purpose.

the distributed nature of Bitcoin is important as well since it is so disruptive to the current banking system.  i truly do believe the only way to shut it down is to shut down the internet.  that didn't work so well in Egypt did it now.  the ones who screamed the loudest were the banks who needed their tx's to go thru.  wasn't the internet designed to withstand a nuclear attack as well and is it not just in the US of A?

I can say that I'm really interested in the perception of the Bitcoin project, both amongst those who can read the source code and those who wont understand it. For the project with about 25 thousand lines of hard-to-read code the amount of misunderstanding among the software professionals is within my expected boundaries.

For non-practitioners in software I just don't have a frame of reference. I'm just trying to comprehend what they are imagining or believing as the features of Bitcoin. And if they believe then whom and in what claims. I find this very interesting and this is what is continuing to draw me to this forum.

Clearly you are an experienced investor, since you've quickly seen through the facade of Bitcoinica and Zhoutong's posts. Also clearly, you must rely on somebody's else opinions about the actual underlying technology.

i see what you're getting at in terms of trying to understand the investors perspective so let me try and help you and maybe you can help me from the technical end.  

first, you're right, i can't read code and wouldn't be able to see holes in it if they were present.  my confidence comes from directly talking with Gavin and theymos both whom are experienced coders as well as several of the other early adopters.  how they rate compared to you i don't know. also hanging out on these forums helps quite a bit despite all the bs.  but as an investor piecing together the puzzle there is some credibility that comes from Gavin being a Princeton graduate and i understand his personal position and circumstances as to why he donates his time towards this project. he really does believe in it.  these guys also seem to understand the basics of the financial crisis and economics which matches my own and helps assure me they are moving the technical aspects of Bitcoin in the right direction.  also i hang out in the Dev and Tech section from time to time to see what all you guys are talking about.  it seems to me, rightly or wrongly, that so many technical people discussing the ins and outs of a myriad of different technical aspects of Bitcoin can't all be wrong.  the amount of time and effort devoted to this project is astounding you must agree.

even though these are technical discussions clearly an understanding by these guys of the economic motivations of investors and of the financial system as we know it usually are interweaved into why this or that should be included in the code.  i continuously weight these in my analysis and usually finding myself agreeing with them.

[cypherdoc]

Geezus, why are we getting mad at each other?  precisely correct.

ok, so at the very minimum, whether Bitcoin works or not, i am in it for the principle and you would seem to understand that.

fundamentally the code is working, as in the blockchain marches on.  from an economically fundamental point of view, yes the merchant economy is not there yet.  but i see it getting there slowly.  rather than pronouncing it dead at this early point, i say lets give it time.

I'm not getting mad, I just like a little heat in my discussions.

Part of why I am arguing so strongly against excessive speculation is because I see the same bullshit being dished out by "investors" who want to do the exact same thing with bitcoin as they have done with every other asset, i.e. create artificial volatility so they can skim profits off the top while contributing absolutely nothing and simultaneously making the economic environment of bitcoin incompatible with legitimate commerce. This is my biggest grievance with the speculators here.

Few seem to understand that what has been happening to bitcoin over the past couple of months is a result of the exact same mentality that caused all the other asset bubbles we have seen since the 70s, only since the value of bitcoin is solely determined by investor sentiment, and the system has even less regulation than our current monetary system, the opportunity for pulling off these scams is incredible.

The only way to counter this is to persecute speculators who are in it solely for short term profit. Doing this, you often end up tarring all investors with the same brush. But I have nothing but respect for people who invest and hold long positions because of their belief in the future success of bitcoin.

It is the people who buy and sell only to realize short term fiat profit that I have a problem with, because they are siphoning value out of the system, away from those who believe in the project, and making the whole thing as unstable as an elephant on a pogo stick.

well i can assure you i am not one of these guys.  i have never sold a single Bitcoin and have been accumulating.

[cypherdoc]

did i not say it right? how about the first p2p file sharing system that prevents copying?  how would you say it?

I really don't know what you are trying to convey.

I can say that I'm really interested in the perception of the Bitcoin project, both amongst those who can read the source code and those who wont understand it. For the project with about 25 thousand lines of hard-to-read code the amount of misunderstanding among the software professionals is within my expected boundaries.

For non-practitioners in software I just don't have a frame of reference. I'm just trying to comprehend what they are imagining or believing as the features of Bitcoin. And if they believe then whom and in what claims. I find this very interesting and this is what is continuing to draw me to this forum.

Clearly you are an experienced investor, since you've quickly seen through the facade of Bitcoinica and Zhoutong's posts. Also clearly, you must rely on somebody's else opinions about the actual underlying technology.

i guess i left out the part of public key cryptography.  let me know if you want to test my understanding of how that works from an investor level as well.

[Crypt_Current]

This is an awesome thread with some really cohesive and thoughtful posts.

I just want to add my opinion that the concept that Bitcoin embodies is one that is so fervently necessary, as to exalt it to immortality.  There's really no need to worry so much as it might create more division.

[cypherdoc]

i think the randomness that the SHA 256 hashing algorithm introduces into the Bitcoin system is a big part of the economic wherewithal that will allow Bitcoin to survive and become a competing currency.  to reiterate, it forces computers to guess repeatedly to hit below the difficulty target.  it does not allow shortcuts via hacks.  this makes it an inherently democratic process.  anyone who can setup his computer and run the client has a chance to solve a block and get the reward even tho my laptop has a low chance of winning.  but the chance is not zero.  people buy lottery tickets all the time despite having extremely low odds of winning.  and if you're willing to setup and run a more computational powerful system you will mine Bitcoins at a significant rate.  everyone who climbs on board will make it that much more difficult for a non rational actor, like a bank, to attack the network.  they will be forced to guess as well which can be very expensive for them in the end.  they might as well just leave it alone.

[Crypt_Current]

i think the randomness that the SHA 256 hashing algorithm introduces into the Bitcoin system is a big part of the economic wherewithal that will allow Bitcoin to survive and become a competing currency.  to reiterate, it forces computers to guess repeatedly to hit below the difficulty target.  it does not allow shortcuts via hacks.  this makes it an inherently democratic process.  anyone who can setup his computer and run the client has a chance to solve a block and get the reward even tho my laptop has a low chance of winning.  but the chance is not zero.  people buy lottery tickets all the time despite having extremely low odds of winning.  and if you're willing to setup and run a more computational powerful system you will mine Bitcoins at a significant rate.  everyone who climbs on board will make it that much more difficult for a non rational actor, like a bank, to attack the network.  they will be forced to guess as well which can be very expensive for them in the end.  they might as well just leave it alone.

+1

[Dan The Man]

Ok, so the first prediction was off by about a day and the peak was off by 20 cents or so, but pretty good.

Time for a new prediction, a bit less specific since. I am calling for the price to continue dropping for at least a day. This is a reaction to the jump above 3 dollars. Late joiners will be buying in as those with Bitcoins are still getting out. The time to buy will be when it sits below $2.70 and it doesn't fluctuate by more than 10 cents for at least 6 hours. That is when the critical mass will start feeling confident again, and the price starts going up to a peak of something around 40 cents above wherever the low point is. This may or may not be above $3. Since $3 is kind of a psychological mark, it seems like the price sticks there for a while and then jumps one way or the other depending on where the pressure is.

Think of the early October price as being too stable. There was pressure building for movement, like a stuck tectonic plate, or um.... a sticky spring or something. The price plummit was like an overreaction, and now we are riding the waves as it settles. Eventually it will stop again and freeze up, and then it just depends where the pressure is building from and how much will make it jump.

[Red]

Ok, so the first prediction was off by about a day and the peak was off by 20 cents or so, but pretty good.

Could you post an updated chart?
https://bitcointalk.org/index.php?topic=49159.msg586181#msg586181

I'd love to see one with an arrow of when you made your prediction. The pattern seems uncannily repeating. Nice job noticing!

[Dan The Man]

[Red]

Awesome! That little dip seems to match exactly the other two you pointed out.

Any speculation as to what is causing it? Margin calls or some such?

[Dan The Man]

Any speculation as to what is causing it? Margin calls or some such?

In my opinion, most people are just buying and selling. The problem is in figuring out mass psychology. People have some expectation of what they think a BTC "should" be worth and they have some expectation of how much it "should" fluctuate. In general they will buy when it is below this imaginary value and they will sell when it is above it. I think it is generally a linear extrapolation of some number of previous days or weeks or months. Some people are probably looking at the last hour. And then you have expected fluctuation. And they always want to buy and sell near the peak of the fluctuations, but being a bit conservative, they don't want to go too close. As an approximation, I would say that most people try to buy and sell at around the std dev.

But the big destabilizer is when the price jumps past the expected fluctation. People buy on the way down, and then it keeps going down, and now they are freaking out. They sell at a loss. I think this is a pretty simple model. I just kind of thought of it now, so I am sure there are holes here and there. I'll have to think more on the topic.

So you have this system that is stable on a local scale, but that stability region shrinks the longer that the price remains stable as people continuously expect the fluctuations to be small and try to buy within those fluctuations, they become smaller. On top of this, there are always some random noises. You have amount of money acting unpredictably. So as the stability region comes within the scale of random fluctuations, it is possible for the price to jump beyond the stable zone and suddenly everyone is in a buy or sell panic as their expectations are turned on ear. Then you get the reaction to the initial instability, and then you get the stability pattern bringing things back again with a few oscillations up and down as people learn to accept the new level of fluctuation and begin shrinking it again.

I am working on aeroelasticity in grad school, so I may be biased towards seeing everything as a mass/spring/damper system.

[Crypt_Current]

Any speculation as to what is causing it? Margin calls or some such?

In my opinion, most people are just buying and selling. The problem is in figuring out mass psychology. People have some expectation of what they think a BTC "should" be worth and they have some expectation of how much it "should" fluctuate. In general they will buy when it is below this imaginary value and they will sell when it is above it. I think it is generally a linear extrapolation of some number of previous days or weeks or months. Some people are probably looking at the last hour. And then you have expected fluctuation. And they always want to buy and sell near the peak of the fluctuations, but being a bit conservative, they don't want to go too close. As an approximation, I would say that most people try to buy and sell at around the std dev.

But the big destabilizer is when the price jumps past the expected fluctation. People buy on the way down, and then it keeps going down, and now they are freaking out. They sell at a loss. I think this is a pretty simple model. I just kind of thought of it now, so I am sure there are holes here and there. I'll have to think more on the topic.

So you have this system that is stable on a local scale, but that stability region shrinks the longer that the price remains stable as people continuously expect the fluctuations to be small and try to buy within those fluctuations, they become smaller. On top of this, there are always some random noises. You have amount of money acting unpredictably. So as the stability region comes within the scale of random fluctuations, it is possible for the price to jump beyond the stable zone and suddenly everyone is in a buy or sell panic as their expectations are turned on ear. Then you get the reaction to the initial instability, and then you get the stability pattern bringing things back again with a few oscillations up and down as people learn to accept the new level of fluctuation and begin shrinking it again.

I am working on aeroelasticity in grad school, so I may be biased towards seeing everything as a mass/spring/damper system.

Interesting... If anything, Bitcoin provides good data (in its current state -- until a substantial amount of goods and services are thrown into the mix) for what happens in a purely speculative market.