Monero (XMR) Speculation thread

[ArticMine]

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I agree that DRK, XMR, and BTC would have all likely provided the same situation, currently. What I was trying to point out was that .. well .. anyone can put up a website and sell drugs for money and schedule exchanges for cash/whatever. FBI may or may not go after them. In this case though, the situation was that exactly how much value exchanged hands was easily accessible and knowable. I wouldn't think FBI would be putting nearly as much resources into finding a small time exchange over a big time one (likely the reason this continued for so long? Or, perhaps there's an ulterior motive where they were collecting information .. or maybe just that it really was 'anonymous' enough and they had no idea what they were dealing with). Anyways, I'm saying that the possibility of finding out the exact amount of money flowing through the website allowed them to know exactly how much effort they should put into stopping it.

If SR was just a cash/drug drop system .. the first thing they would do is try to figure out how many people they should put on the case. If it's only a few thousand dollars, there would be much less people involved (if any at all), as compared to an exchange with millions of dollars involved. The ability to determine that so much money was accumulating in one place beforehand was just a bonus to them, because as you said above it was a needle that wasn't in a haystack. If, instead, the funds had all been going through an exchange or mixed transaction (be it cryptographically mixed, or tumbled through a mixer) .. well that would have likely hampered the investigation in that they would have had to place more initial resources into it from the start (where even then they might not yield good enough results). Maybe they'd take their time, searching out the service amongst whatever has hidden in it?

Maybe they'd locate the most common mixing services/exchanges and place them on a gag order for months .. slowly accumulating information the values of transactions and their sources and destinations by IP if possible (which would likely be supplied by the operator under order, and would circumvent the mixing service .. it would be hampered by TOR usage OFC). In this case though, that information was already accumulated and placed directly onto a blockchain as infallible proof that a transaction occurred and the details of exactly how much that transaction was worth (even if IP's weren't recorded and placed onto a database .. which many likely weren't because it used TOR) were easily tabulated. They didn't have to find sources, or rats, or even put someone under cover trying to infiltrate to find out how much volume they were dealing with. They didn't even have to put resources into funding TOR nodes and hoping that they were both exit and entry for enough people that they could paint their own picture. All they had to do on their end was confirm that the service was legitimate with a few purchases .. and then find location of the service.

They didn't have to ask the questions of: Well I see this website has a lot of traffic, and a lot of orders are placed .. but are they all legitimate? Could this site be making fake orders to create a 'haystack' so that the users of the site had some sort of plausible deniability? Or, in the very least, how can I be sure that this wont be a waste of my time and taxpayer dollars (however little that means to them) .. IE: is this an actual threat? Or my current favorite .. How much money do people spend on drugs, using magic internet money in 2014?

They didn't have to ask these questions because the entire business ledger was available for download in its complete form in under a day. This includes both the ledger they'd normally show in court, and the one that stays encrypted on your secretary's computer (or deep down under all the folders in their desk). The decision was effortless, because the exact magnitude of the offense was known beforehand.

And then there's the question of how did they find the service (though this isn't really the point I'm trying to make)? Wasn't the service using TOR? Did they catch their IP by serving up enough nodes, and then cross reference that with known wallet deposit addresses (or links to such addresses) to track them down? Or did they just find someone and 'ask' where it was based? This part isn't really relevant to my point .. which is that knowing the actual magnitude of the transactions was what would have signaled them to be investigated in the first place. That magnitude was revealed by the medium of exchange that was used. You would have a very tough time putting together an accurate picture with cryptographically-mixed values. You'd have a tough time putting together an accurate picture with non-cryptographically mixed transactions as well, but people are still going to ask (who have never met you, or even likely have ever heard of you): 'Where did this person get all this money from, and who is this person?' unless they go through a lot more work to keep the value hidden and not accumulated (something people tend to do naturally with money -- so it's kind of counter-intuitive).

It may well be possible that XBT gives and advantage over DRK or XMR in law enforcement determining the size of an illegal drug market. My point is that there are fairly straight forward ways to measure this. For example: A law enforcement agency knows how many drugs they intercept. All they need to know is the fraction of the drug shipments they are intercepting, and they can figure out the size of the market. How to measure the fraction? Simple place a sample number of undercover orders, determine the fraction of the undercover others that are intercepted, and bingo you know the size of the market.

The real market here is not illegal drug sales but rather the growing number of law abiding citizens that are getting sick and tired of being tracked left right and centre by large corporations intent of manipulating them for the purpose of generating sales. The XBT blockchain is potentially a massive marketing gold mine, and a coin like XMR solves this issue. A weaker solution such as DRK could be cracked by the marketers, since they can muster significant resources.

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It may well be possible that XBT gives and advantage over DRK or XMR in law enforcement determining the size of an illegal drug market. My point is that there are fairly straight forward ways to measure this. For example: A law enforcement agency knows how many drugs they intercept. All they need to know is the fraction of the drug shipments they are intercepting, and they can figure out the size of the market. How to measure the fraction? Simple place a sample number of undercover orders, determine the fraction of the undercover others that are intercepted, and bingo you know the size of the market.

The real market here is not illegal drug sales but rather the growing number of law abiding citizens that are getting sick and tired of being tracked left right and centre by large corporations intent of manipulating them for the purpose of generating sales. The XBT blockchain is potentially a massive marketing gold mine, and a coin like XMR solves this issue. A weaker solution such as DRK could be cracked by the marketers, since they can muster significant resources.

That does seem to be a pretty good definition of who's being marketed to here. I don't think that was included in the fundamental valuation of the currency that was mentioned a couple months ago. What types of costs are currently being expended on marketing to people based on metadata of previous purchases? I would imagine it's astronomical. Point is - these companies are already paying 'x' amount of money to get this information. If Monero were to potentially allow some of it to be choked off, while at the same provide the possibility to optionally offer the data to these same companies at a lesser cost because of less resources required to compile the information (while also optionally protecting identity) .. what value could that bring to the currency?

Specifically, these companies pay millions/billions to collect and analyze this information already. Using blockchain technology, this information is inherently inside of the blockchain .. and I would argue it would be much easier (based on your previous response about XBT's blockchain being a goldmine) to compile than present methods they're using today. What would they pay for this type of information, provided I can continue to keep my identity away from them (again, optionally) and instead only offer them transaction details (provided it can be done - yet another job provided by crypto )? I think the answer is simple: the same or less than what they're already paying.

In this case, the demographic would cover not only people who are sick and tired of being tracked .. but also includes those who are sick and tired of being tracked and letting whatever companies that sell this information currently to capitalize on the information. You only get half of the story when you get sales information from the store, they don't know who bought what (unless they go and talk to the cc companies). I just wonder what kind of price tag they'd put on the other half? I'm not advocating this, just wondering if there's something there I guess.

[mmortal03]

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Yeah, it's a weird statement. How did the FBI determine that SR was even worth raiding if BTC was so anonymous? I'm sure they didn't go after them thinking they were only playing around with a few thousand dollars .. so I wonder what tipped them off that there were millions of dollars flowing through SR, and it was a worthwhile target to make some auction money   ?

I serious doubt the anonymity or lack thereof of BTC had much to do with the SR bust. Furthermore I suspect it would have happened just the same with DRK or XMR as the currency. We must keep in mind that cash based drug dealers are busted all the time, so in reality this is not that different. There are all sorts of techniques law enforcement can use that are not dependent upon the anonymity of money. The other issue is that all privacy crypto-currency solutions are ultimately based on the concept of a small needle in a large haystack. When one talks about terrorist organizations or large drug cartels this fails because in these cases we have a large knitting needle in a comparably small haystack. There is a reason why Mexican drug cartels had to use HSBC to launder their money. They needed a large haystack in order to try to hide their knitting needle.

I agree that DRK, XMR, and BTC would have all likely provided the same situation, currently. What I was trying to point out was that .. well .. anyone can put up a website and sell drugs for money and schedule exchanges for cash/whatever. FBI may or may not go after them. In this case though, the situation was that exactly how much value exchanged hands was easily accessible and knowable. I wouldn't think FBI would be putting nearly as much resources into finding a small time exchange over a big time one (likely the reason this continued for so long? Or, perhaps there's an ulterior motive where they were collecting information .. or maybe just that it really was 'anonymous' enough and they had no idea what they were dealing with). Anyways, I'm saying that the possibility of finding out the exact amount of money flowing through the website allowed them to know exactly how much effort they should put into stopping it.

If SR was just a cash/drug drop system .. the first thing they would do is try to figure out how many people they should put on the case. If it's only a few thousand dollars, there would be much less people involved (if any at all), as compared to an exchange with millions of dollars involved. The ability to determine that so much money was accumulating in one place beforehand was just a bonus to them, because as you said above it was a needle that wasn't in a haystack. If, instead, the funds had all been going through an exchange or mixed transaction (be it cryptographically mixed, or tumbled through a mixer) .. well that would have likely hampered the investigation in that they would have had to place more initial resources into it from the start (where even then they might not yield good enough results). Maybe they'd take their time, searching out the service amongst whatever has hidden in it?

Maybe they'd locate the most common mixing services/exchanges and place them on a gag order for months .. slowly accumulating information the values of transactions and their sources and destinations by IP if possible (which would likely be supplied by the operator under order, and would circumvent the mixing service .. it would be hampered by TOR usage OFC). In this case though, that information was already accumulated and placed directly onto a blockchain as infallible proof that a transaction occurred and the details of exactly how much that transaction was worth (even if IP's weren't recorded and placed onto a database .. which many likely weren't because it used TOR) were easily tabulated. They didn't have to find sources, or rats, or even put someone under cover trying to infiltrate to find out how much volume they were dealing with. They didn't even have to put resources into funding TOR nodes and hoping that they were both exit and entry for enough people that they could paint their own picture. All they had to do on their end was confirm that the service was legitimate with a few purchases .. and then find location of the service.

They didn't have to ask the questions of: Well I see this website has a lot of traffic, and a lot of orders are placed .. but are they all legitimate? Could this site be making fake orders to create a 'haystack' so that the users of the site had some sort of plausible deniability? Or, in the very least, how can I be sure that this wont be a waste of my time and taxpayer dollars (however little that means to them) .. IE: is this an actual threat? Or my current favorite .. How much money do people spend on drugs, using magic internet money in 2014?

They didn't have to ask these questions because the entire business ledger was available for download in its complete form in under a day. This includes both the ledger they'd normally show in court, and the one that stays encrypted on your secretary's computer (or deep down under all the folders in their desk). The decision was effortless, because the exact magnitude of the offense was known beforehand.

And then there's the question of how did they find the service (though this isn't really the point I'm trying to make)? Wasn't the service using TOR? Did they catch their IP by serving up enough nodes, and then cross reference that with known wallet deposit addresses (or links to such addresses) to track them down? Or did they just find someone and 'ask' where it was based? This part isn't really relevant to my point .. which is that knowing the actual magnitude of the transactions was what would have signaled them to be investigated in the first place. That magnitude was revealed by the medium of exchange that was used. You would have a very tough time putting together an accurate picture with cryptographically-mixed values. You'd have a tough time putting together an accurate picture with non-cryptographically mixed transactions as well, but people are still going to ask (who have never met you, or even likely have ever heard of you): 'Where did this person get all this money from, and who is this person?' unless they go through a lot more work to keep the value hidden and not accumulated (something people tend to do naturally with money -- so it's kind of counter-intuitive).

Not sure if you are familiar with all the background on how they connected him to an account here on bitcointalk, and at least one other spot: http://www.cnn.com/2013/10/04/world/americas/silk-road-ross-ulbricht/

[kbm]

Not sure if you are familiar with all the background on how they connected him to an account here on bitcointalk, and at least one other spot: http://www.cnn.com/2013/10/04/world/americas/silk-road-ross-ulbricht/

I wasn't, thanks for the article. Of course it was a gmail account (allegedly) that did him in .

[ArticMine]

It may well be possible that XBT gives and advantage over DRK or XMR in law enforcement determining the size of an illegal drug market. My point is that there are fairly straight forward ways to measure this. For example: A law enforcement agency knows how many drugs they intercept. All they need to know is the fraction of the drug shipments they are intercepting, and they can figure out the size of the market. How to measure the fraction? Simple place a sample number of undercover orders, determine the fraction of the undercover others that are intercepted, and bingo you know the size of the market.

The real market here is not illegal drug sales but rather the growing number of law abiding citizens that are getting sick and tired of being tracked left right and centre by large corporations intent of manipulating them for the purpose of generating sales. The XBT blockchain is potentially a massive marketing gold mine, and a coin like XMR solves this issue. A weaker solution such as DRK could be cracked by the marketers, since they can muster significant resources.

That does seem to be a pretty good definition of who's being marketed to here. I don't think that was included in the fundamental valuation of the currency that was mentioned a couple months ago. What types of costs are currently being expended on marketing to people based on metadata of previous purchases? I would imagine it's astronomical. Point is - these companies are already paying 'x' amount of money to get this information. If Monero were to potentially allow some of it to be choked off, while at the same provide the possibility to optionally offer the data to these same companies at a lesser cost because of less resources required to compile the information (while also optionally protecting identity) .. what value could that bring to the currency?

Specifically, these companies pay millions/billions to collect and analyze this information already. Using blockchain technology, this information is inherently inside of the blockchain .. and I would argue it would be much easier (based on your previous response about XBT's blockchain being a goldmine) to compile than present methods they're using today. What would they pay for this type of information, provided I can continue to keep my identity away from them (again, optionally) and instead only offer them transaction details (provided it can be done - yet another job provided by crypto )? I think the answer is simple: the same or less than what they're already paying.

In this case, the demographic would cover not only people who are sick and tired of being tracked .. but also includes those who are sick and tired of being tracked and letting whatever companies that sell this information currently to capitalize on the information. You only get half of the story when you get sales information from the store, they don't know who bought what (unless they go and talk to the cc companies). I just wonder what kind of price tag they'd put on the other half? I'm not advocating this, just wondering if there's something there I guess.

I consider private sector marketers and their thirst for data the single biggest threat to privacy in the 21st century, far worse than most government spy agencies. The latter depend to a large degree on private sector marketers, via programs such as PRISM, for their spying anyway. https://en.wikipedia.org/wiki/PRISM_%28surveillance_program%29#mediaviewer/File:Prism_slide_5.jpg The fact that XMR can frustrate these marketers in their thirst for data alone makes the technology very worthwhile. There are of course many more important reasons for privacy in crypto-currency, with some examples in the following excellent post by gmaxwell https://bitcointalk.org/index.php?topic=648656.msg7963150#msg7963150.

[Vanderi]

fully anonymous will attract criminals and will not be accepted as a widely adopted crypto

Just like cash huh? Never adopted? Idiot.

[MoneroMooo]

DRK provides enough privacy for 99.9% of people. If you're trying to fund a terrorist movement or buy weapons of mass destruction ( the cases where you would need "bulletproof" anonymity), no solution will ever be perfect. That's why I just don't understand who Monero is targeting. They won't get the privacy market, there will be tens of coins offering privacy by the time Monero achieves decent usability. The only reasons I can think of for wanting to cross the bridge from privacy to complete anonymity all involve breaking the law. So criminals? Dissidents in totalitarian countries?

This argument would explain why people wanting privacy in communications would not use something like AES when DES (or "tens of" other similarly "good enough" block ciphers) can keep most people away already.

And yet...

That said, in a way, you may not be that far off with your "breaking the law" comment. There have been many attempts to make encryption illegal. Whether straight off banning it, mandatory key escrow, or as we've seen recently, plain pervasive subversion. So it is not outrageous to think that the mere fact of trying to keep one's private communications (resp, transactions) private will some day break the law.

<insert obligatory quote about the day when transaction privacy will be illegal, only outlaws etc>

[TTM]

I think monero is currently lacking public exposure. We need to raise volume in other exchanges in order to drive more interest, many users haven't acknowledged about Monero. Why don't people just shift their trading activity to Mintpal to build volume there ?, Monero has only 2 BTC daily at Mintpal. Adding to Cryptsy should be a must, Cryptsy is crappy now, but still has big loyal customer base.

[rpietila]

The real market here is not illegal drug sales but rather the growing number of law abiding citizens that are getting sick and tired of being tracked

The outlawing of substances serves the same fundamental aim of the government - control and suppression of liberty, freedom and privacy.

[nakaone]

good enough privacy for xx% of the population is from an economics perspective not an argument. in the case one transaction is decrypted the utility of the system is no longer given - if this happens to darkcoin it is a worthless system. this argument holds true for all anoncoins.

we had the discussion on the altcoin observer regarding the utility function (in the economic sense) of privacy - the consensus was that half-baked privacy is useless.

[rpietila]

As I have said in the Monero Economics thread, and here, I will say now once again:

Monero price is not cheap even now, but it will not stay this cheap for long. And the reason is this:

Daily investment flows.

1. Monero's adoption is currently 275 newcomers per day (2.2% increase per day). This is a very fast adoption rate if it lasts any longer, and this number was taken from the last 20 days, it is a product of estimation etc. you know all that. These people buy on average for $200 == 100 XMR. So the aggregate buying is 27,500 XMR/day.

2. Inflation is 21,650 XMR/day.

This already leaves us with the deficit of 4,850 XMR/day. But wait, it gets worse:

3. There is a number of large bitcoin holders who are interested in Monero. These holders own 10,000s of XMR per person but seek to buy more. Selling does not make any sense for them if they are in accumulation mode, they can only buy. On average it can be estimated that they add 10,000 XMR/day to their stash especially now as the price is cheap.

4. So the deficit is about 15,000 XMR per day. Where do the coins come from? Existing holders. Small speculators. Since Monero has been in a downtrend for weeks now, these speculators have felt that they can make an easy buck by selling all of their speculative stash, with the intention to buy back cheaper when the trend change is confirmed.

5. This is a fallacy though, since this has been going on for 3 weeks, it can be estimated that up to 200,000 XMR as thus "short-sold", of the total speculative position of perhaps 600,000 XMR. They can only continue providing such a number of coins to the market a few weeks maximum, otherwise they run totally out of coins. Actually they would like to buy back, but: All of them can in no way buy back cheaper than they sold. The coins sold have disappeared to the whale cold wallets, and newcomers are already buying more than the inflation. This is a classic game of holding a bag of bitcoins with which to buy monero. When the music stops, the number of monero actually buyable at even close to the current price proves to be lacking.

6. Do not believe the ask depth. "As long as an ask wall causes people to sell, the ask walls are mainly used by buyers."

7. The adoption growth in an exponentially increasing phenomenon. The inflation is an exponentially decreasing phenomenon. The deficit is thus growing super-exponentially. For certain this cannot go on another month. My educated guess would be that the lows are seen next week, after which the permanent uptrend will start.

[PizzaTraveler]

Monero price is not cheap even now, but it will not stay this cheap for long

Why i have a bad feeling of a trap?

And what do you mean "not stay this cheap for long?". Do you confirm the fact the price is low or you mean that it will be cheaper?

[WaxMan]

Monero's adoption is currently 275 newcomers per day (2.2% increase per day). This is a very fast adoption rate if it lasts any longer, and this number was taken from the last 20 days,

Where can i see this number? Your subreddit is empty and topics on this forum is not so popular. Can you give us some proofs?

[darlidada]

Monero price is not cheap even now, but it will not stay this cheap for long

Why i have a bad feeling of a trap?

And what do you mean "not stay this cheap for long?". Do you confirm the fact the price is low or you mean that it will be cheaper?

I had trouble understanding this too. Maybe its a typo? If not,  I think what Risto means is that XMR is not cheap short term as there are still some sell pressure that can keep going for about 10 days; but it is cheap long term as the deficit is growing super-exponentially.

Otherwise, great post risto! thanks a lot!

Monero's adoption is currently 275 newcomers per day (2.2% increase per day). This is a very fast adoption rate if it lasts any longer, and this number was taken from the last 20 days,

Where can i see this number? Your subreddit is empty and topics on this forum is not so popular. Can you give us some proofs?

Everything is in the monero missives, i suggest you read them. What you're looking for is the number of download clients/blockchain in order to estimate growth.

[CheesyCoiner]

as there are still some sell pressure that can keep going for about 10 days; but it is cheap long term as the deficit is growing super-exponentially.

What kind of "pressure" are you talking about? What "pressure" can change situation with XMR from a short term upgoing into long term deficit?

[saddambitcoin]

Monero's adoption is currently 275 newcomers per day (2.2% increase per day). This is a very fast adoption rate if it lasts any longer, and this number was taken from the last 20 days,

Where can i see this number? Your subreddit is empty and topics on this forum is not so popular. Can you give us some proofs?

This post from the Monero Economics thread contains all the info you request.

https://bitcointalk.org/index.php?topic=702140.msg8209493#msg8209493

[WaxMan]

Monero's adoption is currently 275 newcomers per day (2.2% increase per day). This is a very fast adoption rate if it lasts any longer, and this number was taken from the last 20 days,

Where can i see this number? Your subreddit is empty and topics on this forum is not so popular. Can you give us some proofs?

Everything is in the monero missives, i suggest you read them. What you're looking for is the number of download clients/blockchain in order to estimate growth.

Maybe you didn't understand me, but my wondering about reddit and other topics here is not foolish. They give us a real picture of community activity. It give us an image of community, not a number of "how many times cliend was downloaded duh"

[pinky]

1. Monero's adoption is currently 275 newcomers per day (2.2% increase per day).

I think your numbers are way off based on https://bitcointalk.org/index.php?topic=583449.msg7822527;topicseen#msg7822527 :

	13.7	10.8	Remark
Reddit Subscribers	512	600	Last week only ~15 new users
People on IRC	150+	157	all time high 180
Forum topic pages	497	590
Volume in BTC (today)	90	92	Poloniex

From this numbers I can only see only 20% increase in new users in last month - less than 0.7% increase per day meaning your numbers are 70% off. Number of transaction is one more indicator that shows stagnation. Trend is not in a high acceleration mode and based this numbers I think we are going to slowly grind lower to the next support 0.0025-0.003 or stay in this area 0.003-0.004 for some time until lower daily inflation create shortages or adoption accelerates (marketing).

[saddambitcoin]

Monero's adoption is currently 275 newcomers per day (2.2% increase per day). This is a very fast adoption rate if it lasts any longer, and this number was taken from the last 20 days,

Where can i see this number? Your subreddit is empty and topics on this forum is not so popular. Can you give us some proofs?

Everything is in the monero missives, i suggest you read them. What you're looking for is the number of download clients/blockchain in order to estimate growth.

Maybe you didn't understand me, but my wondering about reddit and other topics here is not foolish. They give us a real picture of community activity. It give us an image of community, not a number of "how many times cliend was downloaded duh"

Fair enough - but it is not mandatory for a Monero user to subscribe to the subreddit. All they need to do is have the client, so in many ways that is the most important metric to get an idea about adoption.

Quoting the Monero Missive - from July 15th to August 3rd there were 15,000 downloads of the Monero client.

[MoneroMooo]

Fair enough - but it is not mandatory for a Monero user to subscribe to the subreddit. All they need to do is have the client, so in many ways that is the most important metric to get an idea about adoption.

Quoting the Monero Missive - from July 15th to August 3rd there were 15,000 downloads of the Monero client.

It is true that not everyone will subscribe, but if you assume that the percentage of new users subscribing is similar between the two populations (the batch of users starting using Monero a month ago, and those starting now), which does not seem like a bad assumption at first glance, then the percentage of growth in subreddit subscribers should not be too dissimilar to that of client downloaders.

Another possible confounding factor would be whether a new client was released/advertised. Shortly after that point, there will be a glut of downloads, not only due to the increased awareness, but from previous users of Monero merely updating to the newest client, artificially inflating numbers (not that I've no idea if this applies in the time frame that was looked at).

Estimating growth using various methods should allow you to get a "middle ground", or at least a better estimation of whether your estimate is likely to be accurate (all calculated growths cluster around a similar value) or not (wildly disparate estimations).