Fundamental analysis thread REVIVED

[ManBearPig]

This is a revival of lebing's original thread which was a great starting point for the biggest developments for noobs and old-timers alike. I shall endeavour to keep it up-to-date. Starting today with the most relevant bits to fill the gap. Sit tight while I get it up-to-date.

I'm going to keep this thread updated with the most important fundamental reasons (not technical) which will in the long term, move the price. Hopefully over the long term this reduces the number of "OMG?! why is the price going X??" I will be limiting the updates I make to this thread to only those items which have the power to significantly affect adoption/ move the market (snip)

Expedia to accept Bitcoin payments for hotel bookings, initially US customers only, for hotels not flights (yet)
http://www.bbc.co.uk/news/technology-27810008
TLDR another very high-profile name to accept Bitcoin.

Bitcoin charts on bloomberg for employees, coming soon to everyone
http://techcrunch.com/2013/08/09/bitcoin-ticker-available-on-bloomberg-terminal/
TLDR Bitcoin now officially mainstream

Bitpay partners with 3dcart
http://btcbible.com/bitpay-partners-with-3dcart/
TLDR Bitcoin now available as a payment option to 16,000 new merchants

Bitcoin finally coming to Africa
http://www.reddit.com/r/Bitcoin/comments/1hn0ue/kipochi_launches_first_bitcoin_wallet_in_africa/
TLDR A SMS/ web hybrid system is being developed now which will reach the place where bitcoin has the most potential for organic growth.

Bitcoin ETF (once approved by the SEC) coming soon
http://www.pcworld.com/article/2043473/winklevoss-twins-will-secure-bitcoins-like-gold-in-vaults.html
TLDR You might soon be able to purchase bitcoin derivatives from your stock broker

Webmoney (Russian Paypal with 11 million users) is now an exchange and wallet servicing p2p and merchants
http://www.thegenesisblock.com/bitcoin-access-expanded-to-over-11-million-users-of-webmoney/
TLDR Big pressure was just put on Paypal to integrate sooner rather than later.

Okcupid is now accepting bitcoin (7 million users)
http://arstechnica.com/business/2013/04/okcupid-says-it-will-accept-bitcoin-as-currency-falls-to-recent-low/

Hedge fund looking to inject 1 billion € into bitcoin for large investors
https://exante.eu/press/news/266/
TLDR Big €€€ starting to move into Bitcoin

Western Union looking to integrate bitcoin into services
http://mobile.blogs.wsj.com/cio/2013/04/01/western-union-eyes-digital-currency-services/
TLDR Bitcoin is on the verge of worldwide physical exchange infrastructure

Expensify Brings Bitcoin to Main Street
http://www.businessweek.com/articles/2013-03-29/expensify-brings-bitcoin-to-main-street
TLDR App with 200,000 business users is leveraging bitcoins strengths

New zealand, Cyprus & other Mediterranean countries considering/ have decided to confiscate "one time" X% of depositor funds
http://www.nytimes.com/2013/03/24/world/europe/russian-ties-put-cyprus-banking-crisis-on-east-west-fault-line.html?pagewanted=all&_r=0
TLDR The money you thought was safe from theft in your bank account is not safe (especially if you live in an at risk country in the euro zone).

FINCEN releases guidance for virtual currencies (bitcoin)
http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf
TLDR Small exchanges based in the USA will likely have a tough time due to this, but by making the grey legal area black & white, it will make larger players willing to step forward. In other words, bitcoin is now legal.

Blockchain forked, but problem solved
http://www.reddit.com/r/Bitcoin/comments/1a51xx/now_that_its_over_the_blockchain_fork_explained/
TLDR Double spend issue has been fixed in the short term and long term with the new roll out plan

Amazon fulfillment integrates with Bitpay
http://www.marketwatch.com/story/bitpay-integrates-bitcoin-with-fulfillment-by-amazoncom-2013-03-06
TLDR There is now a convenient way for anyone (registered business @ Amazon) to sell anything with bitcoins through Amazon

Bitspend.net
https://bitspend.net/
TLDR You can now buy ANYTHING on the net with bitcoins (under $100 during beta and under $1000 after beta ends)

Coinlab Bringing Bitcoin to Wall Street with MtGox Deal -
http://bitcoinmagazine.com/coinlab-bringing-bitcoin-to-wall-street-with-mtgox-deal
TLDR - Details are sketchy at this point, but it seems that there may be a deal coming up which will bring bitcoin into the forex market. I'm including this here because of the absolutely insane effect this would have on the price if this were in fact happening.

Mega - https://twitter.com/KimDotcom/status/302844443223023616
TLDR - The service formerly known as Megaupload (which was the top non-torrent based file sharing service on the net) is now accepting Bitcoins

Reddit - http://blog.reddit.com/2013/02/new-gold-payment-options-bitcoin-and.html
TLDR - One of the largest sites on the internet is now accepting bitcoin for their premium service!

Bitpay - http://blog.bitpay.com/search?updated-max=2012-12-06T10:13:00-05:00&max-results=7
TLDR - Merchants are signing up in droves with Bitpay's (and other payment processors) payment system

Wordpress - http://en.blog.wordpress.com/2012/11/15/pay-another-way-bitcoin/
TLDR - The largest blog network on the internet is now accepting bitcoins. This paves the way for wider, mainstream bitcoin adoption

Coinbase - http://blog.coinbase.com/post/42587245753/coinbase-is-now-selling-over-1m-usd-of-bitcoin-per
TLDR - It just got alot easier for users in the largest bitcoin market in the world (USA) to acquire bitcoins and it is showing up in the numbers.

SatoshiDice/gambling potential: http://calvinayre.com/2013/02/01/business/why-bitcoin-can-no-longer-be-ignored/
TLDR - While its not possible to gamble with dollars in the US, it is possible with bitcoins. The big players are starting to take notice of this fact and over the next few months its likely that we will see one emerge onto the scene

Blockchain: https://blockchain.info/charts/my-wallet-n-users?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=
TLDR - The best online wallet is experiencing exponential growth of new users (as of 2013, this exponential growth is continuing as of June 2014.

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[phelix]

Nice work. It would be cool to get notifications for updates. This could be achieved by creating yet another thread that is always locked and only unlocked by you for an "updated" post.

[segeln]

Nice work. It would be cool to get notifications for updates. This could be achieved by creating yet another thread that is always locked and only unlocked by you for an "updated" post.

hope OP does it
Nice work!

[arklan]

glad to see this got picked up. following with interest.

[kehtolo]

Great thread. Posting here so it is saved.

[molecular]

Cool. I loved lebings original. Watching.

[600watt]

ccmf

sooner or later   

[segeln]

first:congrats to OP for the list.
it is actually not an Analysis-thread but a compilation of fundamentals happening in the bitcoin-ecosystem.
Bur very good though. Go ahead, OP

[JorgeStolfi]

However it should be noted that most of the entries "XXX now accepts bitcoin" actually mean "XXX now accepts dollars even from bitcoin adopters who decided to sell some of their bitcoin".

For people who do not own bitcoin yet, going that route would mean downloading software, learning to use it, buying bitcoin with credit card or bank transfer, then sending the bitcoin to the store.  In all, probably more expensive than paying with credit card directly, and a lot more cumbersome.

Bitpay has an entry-level plan, limited to 100$/month, that delivers dollars to the merchant, has zero cost for him, and charges a small fee from the customer.  Thus it is easy to convince a store to "accept bitcoin". With such a plan, one could also get them to accept Dogecoin, Linden Dollars, Zimbabwean dollars...

So those "XXX now accepts bitcoin" events are not likely to increase adoption.  They are likely to promote movement of coins from hoards to the market, thus helping to depress the price.

It is amazing how little hard data exists on the bitcoin economy.  Companies like Bitpay and exchanges are privately funded so they do not have to publish real trade data.  The blockchain statistics do not mean anything; since address creation and transactions are free, most of the volume is clearly "fake" (transfers between addresses belonging to the same owner).  Almost all the trade at the exchanges is speculative, not people buying bitcoin to use in e-commerce; and we do not even know how much gets deposited and withdrawn each day.  We do not know how many bitcoins are owned by the Chinese, how much is used in gambling, how much the large miners get for their bitcoin...

[twiifm]

Its not Fundamental Analysis unless you can price these things

[aminorex]

analysis begins with facts

[molecular]

This piece by nakamoto institute could count as fundamental analysis:

http://nakamotoinstitute.org/mempool/speculative-attack/

the piece details how bitcoin will become mainstream:

• "slow bleed" (good money drives out bad, waves of adoption)
• "speculative attack" (on fiat currencies)
• "hyperbitcoinization" (feedback loop between fiat inflation and bitcoin deflation)

[lebing]

Its not Fundamental Analysis unless you can price these things

In the context of price analysis, this is simply not true. Fundamentals are subjective rather than objective developments.

[twiifm]

Its not Fundamental Analysis unless you can price these things

In the context of price analysis, this is simply not true. Fundamentals are subjective rather than objective developments.

Even if its subjective you have to price it.  Otherwise you dont know if the asset is underpriced or overpriced

[Biodom]

Additional positive news:
In the last 12 mo:

7Xgrowth in wallets
3Xgrowth in addresses used per day
685Xgrowth in hash rate (we overdid it here)   
12XVC investment
8Xgrowth in market capitalization

http://www.coindesk.com/state-of-bitcoin-q2-2014-report-expanding-bitcoin-economy/

[JorgeStolfi]

Additional positive news:
In the last 12 mo:

7Xgrowth in wallets
3Xgrowth in addresses used per day
685Xgrowth in hash rate (we overdid it here)   
12XVC investment
8Xgrowth in market capitalization

http://www.coindesk.com/state-of-bitcoin-q2-2014-report-expanding-bitcoin-economy/

Looking at the charts in blockchain.info:

* The number of transactions per day has increased only 50% in 12 months, and has remained practically constant (with some fluctuations) since November. 
https://blockchain.info/charts/n-transactions
https://blockchain.info/charts/n-transactions-excluding-popular

* The number of new unique addresses per day has increased 200% in the last 12 months, but it too has remained pretty much constant over the last 4-5 months:
https://blockchain.info/charts/n-unique-addresses

Note that there are 150'000 new addresses created per day, but only 60'000 transactions per day.

* The total trasaction output volume in BTC per day has decreased slightly over the last 12 months, and has remained fairly constant at 600'000 BTC/day constant since January:
https://blockchain.info/charts/output-volume

* The same holds for the "estimated real" transaction ouput volume in BTC per day (excluding the outputs guessed to be "return change"), which is now around 80'000 BTC/day
https://blockchain.info/charts/estimated-transaction-volume

* The "estimated  real" transaction ouput volume in USD per day (computed from the previous value and the USD/BTC market price of the day) varies more than the BTC volume, and tends to follow the USD/BTC price; in particular, it fell more than 50% from January to May, then recovered and is now at 50'000'000 USD/day.

If most of the "estimated real" output volume was due to coins being transferred from person A to person B in echange for goods, services, or national currencies, one would expect the volume in USD/day to vary gradually with time (hopefully increasing) and the BTC/day to vary inversely with the price.  What we see is more like the opposite: the BTC/day is steady and the USD/day varies with the price.

This observation suggests that most of the 80'000 BTC/day "estimated real" output volume is "fake", namely BTC being moved between addresses owned by the same person.  That may include traffic through tumblers, hot/cold wallet transfers, stress-testing of bitcoin software, etc.. Note that a single user could generate 600'000 BTC/day of total output volume by moving ~4200 BTC every 10 minutes between addresses of his own.

My conclusion is that those blockchain statistics are basically useless for estimating bitcoin adoption.  Much more useful would be the volume processed by BitPay and other bitcoin-to-dollar processors.  Unfortunately, that number is conspicuous for its absence in the CoinDesk report.

[CoinHeavy]

Interesting points Jorge, especially:

My conclusion is that those blockchain statistics are basically useless for estimating bitcoin adoption.  Much more useful would be the volume processed by BitPay and other bitcoin-to-dollar processors.  Unfortunately, that number is conspicuous for its absence in the CoinDesk report.

Do you know of any good sources (presumably speculative) for such data?

Thanks OP for the thread -- staying tuned.

[CoinHeavy]

What about:

http://image.slidesharecdn.com/stateofbitcoinq2-140710031106-phpapp01/95/state-of-bitcoin-q2-report-25-1024.jpg?cb=1405015507

Code:

Bitpay

* More than 30,000 total merchants
* As of January 2014, adding more than 1,000 merchants to its network each week
* Processing $1m in bitcoin payments every day
* Processed more than $100m in bitcoin payments in 2013
* Most recent VC round valued BitPay at $160m

[JorgeStolfi]

What about:

http://image.slidesharecdn.com/stateofbitcoinq2-140710031106-phpapp01/95/state-of-bitcoin-q2-report-25-1024.jpg?cb=1405015507

Code:

Bitpay

* More than 30,000 total merchants
* As of January 2014, adding more than 1,000 merchants to its network each week
* Processing $1m in bitcoin payments every day
* Processed more than $100m in bitcoin payments in 2013
* Most recent VC round valued BitPay at $160m

Thanks!  It would be nice to know how that 1 M$/day figure is evolving.

Even nicer would be to have a breakdown by type of merchant.   Are people using BitPay for purposes other than paying for purchases of goods and general services?  E.g., to convert bitcoins into dollars (instead of doing so at a regular exchange)?

By the way, last time I looked, BitPay had an entry-level plan that delivers dollars to the merchant at zero cost for him, and charges a small percentage from the customer.  Thus, there is no reason for a merchant not to "accept bitcoin" through them.