[XMR] rpietila Monero Economics thread

[Este Nuno]

In my case, after correctly estimating that Bitcoin has a 75% chance to die after dropping 90% from $32 in 2011, but a 25% chance of recovering to the ATH, I should have invested 25% of my net worth to it. And so should you

I think you underestimate the probability of XMR achieving large magnitude gains.  But I would argue that you (probably - I do not know) have already reached a share of market cap such that further increases would only damage the upside, and hence should not make the Kelly bet.

The irony is that even today, I explained to 2 wealthy ~50y guys, how the 3 investment approaches compare:

- cash flow regardless of valuation (Buffett, RE owning)
- valuation regardless of cash flow (RE development, speculation)
- long shot: +EV regardless of the chance of losing all (Kelly betting)

They are so mentally inclined to the 2 former ones that even the presenting of mathematically clear case of 1000x return in 5% probability in 3 years (268% expected APR), did not make them invest the 5% of their worth (or any smaller amount for that matter) to it.

If you can accurately predict your EV on all three situations employing a full Kelly strategy with regard to money management optimizes growth in all cases. On high EV high perceived probability bets though it often turns out to be very aggressive and large percentages of the bankroll.

Accurately predicting EV in investing though is quite difficult of course though.

[jehst]

Bump

Would you like to talk about something in particular?

[rpietila]

Hello guys!

I took an hour to read the thread from beginning to end, as I was thinking what platform to use as the high-quality high-SNR medium of talking about Monero.

It was funny to find that I've been preaching essentially the same things ever since the beginning, with of course more information coming and changing the tone of voice and focus to different things.

Just today, I made the appearance to the Polo trollbox as HM_The_King (a tribute to my character in Crypto Kingdom) and told that the failure of Monero is in my estimation 75% certain and significant gain happens at 15% probability (10% being a wash) in 5 years' timeframe. And that due to these numbers, XMR is the best investment I have ever encountered in my life.

My thinking has not changed, this aspect is visible in my earlier writings, just more pronounced in the more recent ones. I think it is especially important to open this up when promoting XMR as investment, because:

- In the longer term, people who have no concept of the VC investment strategy, end up blaming you if the investment goes bust (and it's depressing to be blamed most of the time, since most of these investments do go bust - 70% is a typical VC total_loss rate). Yet they attribute all gains to their own foresight.

- In the shorter term, even if you can coerce somebody to buy, chances are that he is clueless about what the value is, and sells way too early, no matter at a profit or at a loss. Professional Venture Capitalists never sell prematurely. They only EXIT, which is defined as selling the investment at its full and realized value. They take the risk of variance in returns, and get rewarded handsomely. So should you.

[jehst]

In the shorter term, even if you can coerce somebody to buy, chances are that he is clueless about what the value is, and sells way too early, no matter at a profit or at a loss. Professional Venture Capitalists never sell prematurely. They only EXIT, which is defined as selling the investment at its full and realized value. They take the risk of variance in returns, and get rewarded handsomely. So should you.

Don't worry about who you convince and who you don't convince. Everyone makes their own choices and must take responsibility for their own choices.
Betting on a 90% chance of losing everything with a 10% chance of becoming freed from debt-slavery is a very easy decision for me, though it seems hard for others. Because I believe I can make that bet 20 times before I die.

[wpalczynski]

You can lead a horse to water but you cant make him drink.

In the shorter term, even if you can coerce somebody to buy, chances are that he is clueless about what the value is, and sells way too early, no matter at a profit or at a loss. Professional Venture Capitalists never sell prematurely. They only EXIT, which is defined as selling the investment at its full and realized value. They take the risk of variance in returns, and get rewarded handsomely. So should you.

Don't worry about who you convince and who you don't convince. Everyone makes their own choices and must take responsibility for their own choices.
Betting on a 90% chance of losing everything with a 10% chance of becoming freed from debt-slavery is a very easy decision for me, though it seems hard for others. Because I believe I can make that bet 20 times before I die.

[rpietila]

Hmm... if only I had time to present them, I have many nice charts

[opennux]

Hmm... if only I had time to present them, I have many nice charts

PM 'em to me, or some data to me and I'll see what I can do (no promise) over the next few days?

[wpalczynski]

Yeah Risto lets see the charts please.

Hmm... if only I had time to present them, I have many nice charts

[KennyTheMartian]

Hmm... if only I had time to present them, I have many nice charts

Who is dumping all this xmr, I sold only 5000 xmr to take the price down to .00161. Will hold or buy more to my stash if the price falls below .0013 but we'll see. Let's see some graphs Risto.

[dEBRUYNE]

Hmm... if only I had time to present them, I have many nice charts

Who is dumping all this xmr, I sold only 5000 xmr to take the price down to .00161. Will hold or buy more to my stash if the price falls below .0013 but we'll see. Let's see some graphs Risto.

I guess you missed this -> https://vid.me/ima7

[cAPSLOCK]

Hmm... if only I had time to present them, I have many nice charts

Who is dumping all this xmr, I sold only 5000 xmr to take the price down to .00161. Will hold or buy more to my stash if the price falls below .0013 but we'll see. Let's see some graphs Risto.

I guess you missed this -> https://vid.me/ima7

LMAO

That's a very swanky suit you're wearing there,,,

[rpietila]

Code:

148,9	146,0	144,7	147,8	146,4	145,7	147,6		41,9	83,8	59,0	54,7	48,5	44,8	46,3
SUN	MON	TUE	WED	THU	FRI	SAT		SUN	MON	TUE	WED	THU	FRI	SAT

For the last 140 days, Monero average price (ksat) and average volume (kXMR) in Poloniex, by weekday.

Results do not show statistically significant variance in price by weekday, but do show that the average volume on Mondays is far higher (83.8k XMR) than in any of the other weekdays (41.9-59.0k XMR).

[vokain]

Can you please update the output to reflect the number of moneroj outstanding currently, preferably keeping the same number of holders?

[MalMen]

Code:

148,9	146,0	144,7	147,8	146,4	145,7	147,6		41,9	83,8	59,0	54,7	48,5	44,8	46,3
SUN	MON	TUE	WED	THU	FRI	SAT		SUN	MON	TUE	WED	THU	FRI	SAT

For the last 140 days, Monero average price (ksat) and average volume (kXMR) in Poloniex, by weekday.

Results do not show statistically significant variance in price by weekday, but do show that the average volume on Mondays is far higher (83.8k XMR) than in any of the other weekdays (41.9-59.0k XMR).

Missives related moviments ?

[smooth]

Code:

148,9	146,0	144,7	147,8	146,4	145,7	147,6		41,9	83,8	59,0	54,7	48,5	44,8	46,3
SUN	MON	TUE	WED	THU	FRI	SAT		SUN	MON	TUE	WED	THU	FRI	SAT

For the last 140 days, Monero average price (ksat) and average volume (kXMR) in Poloniex, by weekday.

Results do not show statistically significant variance in price by weekday, but do show that the average volume on Mondays is far higher (83.8k XMR) than in any of the other weekdays (41.9-59.0k XMR).

Missives related moviments ?

Good thinking! I was somewhat puzzled by that statistic, but I guess missives (and even trading in anticipation of missives) could very well be part of it.

[rpietila]

Code:

148,9	146,0	144,7	147,8	146,4	145,7	147,6		41,9	83,8	59,0	54,7	48,5	44,8	46,3
SUN	MON	TUE	WED	THU	FRI	SAT		SUN	MON	TUE	WED	THU	FRI	SAT

For the last 140 days, Monero average price (ksat) and average volume (kXMR) in Poloniex, by weekday.

Results do not show statistically significant variance in price by weekday, but do show that the average volume on Mondays is far higher (83.8k XMR) than in any of the other weekdays (41.9-59.0k XMR).

Missives related moviments ?

Good thinking! I was somewhat puzzled by that statistic, but I guess missives (and even trading in anticipation of missives) could very well be part of it.

Funny that it does not correspond to any divergence of the price

[cAPSLOCK]

Hmm... if only I had time to present them, I have many nice charts

Who is dumping all this xmr, I sold only 5000 xmr to take the price down to .00161. Will hold or buy more to my stash if the price falls below .0013 but we'll see. Let's see some graphs Risto.

I guess you missed this -> https://vid.me/ima7

LMAO

LMAO a little louder now, yes?  Anonymous joker gave up at least 75BTC to us bulls.

[rpietila]

LMAO a little louder now, yes?  Anonymous joker gave up at least 75BTC to us bulls.

Anonymous jokers never had 50k to begin with. The guy was a miner, he needed the money and would have sold anyway.

Making the video gave him some good laughs when compiling it. But I don't believe he lost anything since he did not sell for the video.

He probably soon has the stash replenished and needs to consider the prudent course of action. 

I am not downplaying the legendary timing of the video and am grateful of the nice pic in it 

[smooth]

Code:

148,9	146,0	144,7	147,8	146,4	145,7	147,6		41,9	83,8	59,0	54,7	48,5	44,8	46,3
SUN	MON	TUE	WED	THU	FRI	SAT		SUN	MON	TUE	WED	THU	FRI	SAT

For the last 140 days, Monero average price (ksat) and average volume (kXMR) in Poloniex, by weekday.

Results do not show statistically significant variance in price by weekday, but do show that the average volume on Mondays is far higher (83.8k XMR) than in any of the other weekdays (41.9-59.0k XMR).

Missives related moviments ?

Good thinking! I was somewhat puzzled by that statistic, but I guess missives (and even trading in anticipation of missives) could very well be part of it.

Funny that it does not correspond to any divergence of the price

I wonder about volatility over the course of the day though. But I don't wonder enough to actually calculate it

[Lloydimiller4]

It is always good to see how you rank compared to others in owning a coin. But how?

With Monero, the blockchain provides no help in determining balances. So the distribution of holdings must be constructed purely theoretically. What we use in the analysis of this post is just the following information:

- Number of XMR (about 2.2 million when this was done);
- Assumption that the distribution follows power law for the highest 3% of the holders (it does if we are talking about general wealth) - the power law distribution has the property that the owners of 100-200 coins collectively own the same number of coins as the ones owning 200-400 coins etc. But their number is 2x higher (because the other group was 2x richer), and the density is 4x more (because not only there was 2x the number of people, but also the bracket is in absolute terms only half the size);
- Below that, the distribution forms a nice bulge centered around the median holding and drops quickly towards insignificant holdings;

I have calculated 2 possibilities that give the result for both 5,200 and 13,200 holders. The results are presented in logarithmic brackets that are 0.333 log10 units wide (unlike my usual precision of 1 log unit, this gives 3 times more information). The exact form of the very top (holdings of the top-5 or so holders) affects the distribution somewhat, but with XMR it cannot be deduced either directly or statistically. I have assumed that the Case A scenario has a large outlier but Case B does not have it.


Case A - 5,200 holders:

Code:

	min		max	avg	#ppl	tot.xmr
17				280 000	1	280 000
16	100 000	-	215 443	142 600	1	171 034
15	46 416	-	100 000	66 189	3	171 034
14	21 544	-	46 416	30 722	6	171 034
13	10 000	-	21 544	14 260	12	171 034
12	4 642	-	10 000	6 619	26	171 034
11	2 154	-	4 642	3 072	56	171 034
10	1 000	-	2 154	1 426	120	171 034
9	464	-	1 000	662	300	198 468
8	215	-	464	307	750	230 301
7	100	-	215	143	1 349	192 413
6	46	-	100	66	1 349	89 310
5	22	-	46	31	750	23 030
4	10	-	22	14	300	4 276
3	5	-	10	7	120	794
2	2	-	5	3	36	111
1	1	-	2	1	11	15

Largest holdings:
1. 280,000 XMR
2. 147,000 XMR
3. 80,000 XMR
4. 65,000 XMR
5. 50,000 XMR

top holding:  280,000 XMR
top 10:  22,500 XMR
top 100:  2,200   XMR
top 1000:  285 XMR
      
# of holders: 5,188   
avg holding:  427 XMR
==  1.92 BTC
==  1,211   USD
median holding: 100 XMR   
half of the coins belong to 43 people


Case B - 13,200 holders:

Code:

	min		max	avg	#ppl	tot.xmr
17						
16	100 000	-	215 443	142 600	1,2	165 745
15	46 416	-	100 000	66 189	2,5	165 745
14	21 544	-	46 416	30 722	5,4	165 745
13	10 000	-	21 544	14 260	12	165 745
12	4 642	-	10 000	6 619	25	165 745
11	2 154	-	4 642	3 072	54	165 745
10	1 000	-	2 154	1 426	116	165 745
9	464	-	1 000	662	291	192 329
8	215	-	464	307	726	223 179
7	100	-	215	143	1 816	258 976
6	46	-	100	66	3 632	240 412
5	22	-	46	31	3 632	111 589
4	10	-	22	14	1 816	25 898
3	4,6	-	10,0	6,6	726	4 808
2	2,2	-	4,6	3,1	291	893
1	1,0	-	2,2	1,4	87	124

Largest holdings:
1. 137,000 XMR
2. 80,000 XMR
3. 65,000 XMR
4. 50,000 XMR

top holding:  137,000 XMR
top 10:  20,500 XMR
top 100:  2,150   XMR
top 1000:  270 XMR
      
# of holders: 13,234   
avg holding:  167 XMR
==  0.75 BTC
==  473   USD
median holding: 46 XMR   
half of the coins belong to 150 people.

I believe these holding calculations are a bit outdated, Risto, would you be willing to give us an update on what you believe the current distribution of holders is now?
I would be very interested to see where I am at.