[XMR] Monero Speculation

[rpietila]

When you guys think XMR will be 2k USD per coin, why do you ignore 1 major risk:

In the nearest future some superior tech coin may surge on the market. When BTC was released, people thought it was anonymous. Now we all know it is not. Moreover BTC network is not immune and it was spammed.

(Hopefully) nobody is ignoring any risks.

Rather, we are talking about a price scenario universe with very lucrative, small probability outcomes.

The more detailed calculation is back there in the same thread, but an indicative one can be summarized as:
1/100 probability = 1000x gain
99/100 probability = total loss

Nothing is ignored, all the risks are there in the 99% part. Yet the 1% makes it all worthwhile and +EV.

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[Gillette]

Have not you tried to list XMR on litebit.eu? It`s a fiat (EUR/USD/GBP) to crypto exchange.

[TrueCryptonaire]

I think the problem with Risto's scenario analysis with high expected value but low probability of success is that one needs to have plenty of such projects out of 1 will make it big.
Where to find the rest of the high outcome low probability games? National lottery perhaps?

[elrippo]

When you guys think XMR will be 2k USD per coin, why do you ignore 1 major risk:

In the nearest future some superior tech coin may surge on the market. When BTC was released, people thought it was anonymous. Now we all know it is not. Moreover BTC network is not immune and it was spammed.

(Hopefully) nobody is ignoring any risks.

Rather, we are talking about a price scenario universe with very lucrative, small probability outcomes.

The more detailed calculation is back there in the same thread, but an indicative one can be summarized as:
1/100 probability = 1000x gain
99/100 probability = total loss

Nothing is ignored, all the risks are there in the 99% part. Yet the 1% makes it all worthwhile and +EV.

The whale has spoken  
Let´s see what happens next year. I personally like the efforts that are smashed in to XMR, i am a picoinvestor and active at funding developement but i am more interested in using Monero in every day culture.
I think Monero is THE next technologie and i am eager in this tech and infrastructure. I hope Monero can keep up the decentralisation and run towards usability in REAL anonymous transactions! -> I would prefer a mixin=3 per default, maybe that could be implemented by the core dev´s  
The only "fear" i have is the adoption of the big "notsoleagalactivity" guys in the business, that could destroy Moneros reputation, although it would lift the gain like hell.....
But maybe you can do a scenario where this fact is taken into calculation Risto  

I think the problem with Risto's scenario analysis with high expected value but low probability of success is that one needs to have plenty of such projects out of 1 will make it big.
Where to find the rest of the high outcome low probability games? National lottery perhaps?

That´s a point  

EDIT: BTW, i hate the spamming of the BTC transactions, my 0,00001txfee transactions are unconfirmed for 20hours now, but maybe the not so anonymous BTC devs will apply factor 10 blockchainsize finally 

[generalizethis]

I think the problem with Risto's scenario analysis with high expected value but low probability of success is that one needs to have plenty of such projects out of 1 will make it big.
Where to find the rest of the high outcome low probability games? National lottery perhaps?

It's more like VC investing--though that range is usually significantly less than 1/100, but is closer to 1/100 than a 1/1,000,000+ lotto ticket. And there doesn't need to be total success for you to earn your investment back as selling 10% at a 10x return gives you back your initial investment (minus taxes). The probability of Monero going to $2.5-5 is much higher than 1/100 and that would be the range for those who started investing in the last six months.

[rpietila]

The detailed calc is there in the thread a few months ago. It is very pessimistic, and gives XMR only 39% chance to even be alive in 2.5 years. Significant gains happen only in 15% of the cases. Yet the EV was something like 29x.

If you think that is too much weighed to the downside, buy more, and by so doing, help it grow! 

[rpietila]

mhh thinking about to sell all my moneroj. It looks like dash will become the leader of anon

It's the difference between short and long term thinking.

To open up, I will share my latest price/scenario analysis for Monero. I did it for the following 32 months (the remainder of this year, and the 2 following years). As it was price scenario, the only variable actually mapped was price, the reasons why the price might go up, down or stay the same, were all approximated as part of the probabilities.

The scenarios had 6 possible prices: 1000, 100, 10, 1, 0.1 and 0 USD, and 0 was considered a terminal failure after which no recovery could happen. Each timepoint (end of year 2015, 2016, 2017) and price were assigned with a conditional probability based on the price in the previous timepoint.

It was always possible to go to 0, the probability that it would happen in a given period ranged from 5-24%. Also every lower price point was always possible. The increase in price was only deemed possible to be 10-200x per period though, excluding black swans. (Much larger price increases are not even uncommon in crypto - BTC had 6400x in less than a year in 2010-2011, and some premined coins have had even larger).

The complete table of conditional probabilities used (expressed in full %) is as follows:

Code:

price	2015	16/0.1	16/1	16/10	16/100	17/0.1	17/1	17/10	17/100	17/1000
10000									1	9
1000				1	5			1	12	45
100	2		2	15	50		1	12	45	35
10	15	2	15	40	33	1	10	45	32	4
1	46	20	48	30	5	10	50	32	4	1
0,1	25	54	25	6	1	65	31	4	1	1
0	12	24	10	8	6	24	8	6	5	5

When calculated, it yielded the following price scenario probability table for the end of 2017:

Code:

price	Prob....	EV
10000	0,0642 %	6,42
1000	0,7535 %	7,54
100	3,9680 %	3,97
10	11,0986 %	1,11
1	23,1005 %	0,23
0,1	27,2754 %	0,03
0	33,7398 %	0,00

It looks like that an investment in Monero will return a loss of 80% or more in 61% probability, which is not promising. Also the probability of a rise to 1000 USD or more (reaching the historical peak in BTC marketcap, in about 2/3 of the timeframe that BTC reached it from launch) is at less than 1%, a reality check confirming the conservative assumptions.

Yet the EV of XMR in the end of the period (the sum of the partial EV in the above table) is 19.29 USD, a 38x gain in 32 months, with an annual expected return of 293%. When we evaluate this result, it is notable that 3/4s of the EV is produced from scenarios where XMR achieves the current size of BTC, or more. It is these scenarios that must exist to make the coin a stellar investment.

Now I don't want to bash Dash, but I haven't seen evidence that it could realistically (<1% (above) is still realistic, 0% is not) achieve such a prominent long-term position.

To create a fat tail probability distribution, there must be few flaws in the system. Dash has too many:
- single developer
- premine
- lying about the premine
- masternodes
- deficient anonymity.

It is like physically reaching the moon. The spacecraft does not need to be high-end, but if there are 5 large holes in its different systems, it soon tilts the odds of actually reaching the moon to become slim.

Monero, on the other hand, seems quite antifragile. The only problem that is as severe as the ones listed above for Dash, is
- botnet mining.

The developers have correctly understood that the potential and payoff for Monero is not in the order of 10-100x the current price, but 1000x or more. The priorities of development are set accordingly.

If Monero and Dash are mooncraft, Monero's design philosophy is to maximize the probability of hitting moon, and the resulting payoff, while Dash concentrates on getting as many people on board as possible.

[rpietila]

The above methodology can be used with altered values.

Also even if you keep the values, you can tailor your cashout schedule to even out the gains towards a nice return at a decent probability in the expense of a stellar return at a slim probability. (SSS plan by incremental selling to the strength).

What can't be avoided is the basic tenet that there is nothing that would make XMR gain value in 100% probability, or even 70%. Every sensible long-term plan involving investing in crypto must take into account that the probability for a gain is less than 50%, and the profitability comes from the fact that losses are capped to 100% at maximum, yet the upside is not capped.

[RAJSALLIN]

I think making expected value calculations on investments in general is a good thing but when it comes to very uncertain investment vehicles assigning probabilities to different scenarios is just like grabbing numbers out of your ass. It's important to remember that it's very probable of risk or ruin but the above scenarios really say nothing to me.

[sphericon]

The American Pegasus Center For Kids Who Don't Math Good And Want To Do Other Stuff Good Too will be a reality.

OK, but the price of monero needs to be at least 3 TIMES BIGGER than it is now first 

[Bassica]

The American Pegasus Center For Kids Who Don't Math Good And Want To Do Other Stuff Good Too will be a reality.

OK, but the price of monero needs to be at least 3 TIMES BIGGER than it is now first 

What is this?! A crypto for ANTS???

[dEBRUYNE]

Crosspost for awareness:

All right guys, another funding required thread has popped up! https://forum.getmonero.org/8/funding-required/334/fund-a-developer-moneromoo-will-work-part-time-on-monero-for-260-hours-over-approx-6-months?sort=date_desc

Discussion regarding this can be found here -> https://forum.getmonero.org/7/open-tasks/328/funding-a-developer-to-work-full-time-on-monero-for-1-or-2-years?sort=date_desc

Remember, this is to speed up the development!

[TrueCryptonaire]

i dont think we have one, maybe one big Behemoth..
btw great list, should fit nicely for the next few months

lets see how much action we get the coming days, looks promising for now. xmr is so small compared..it feels undervalued for now, at least to me

If XMR stays perfectly fungible, then we have a serious contender for a great store of value on our hands.  People who risk big early may be massive winners in the long run.

Might I interfere to your musings, I'd propose a diversification of a portion from 1:3 to 1:5 or more of the BTC:XMR you have.

Do you mean dollar based or coin amount?

I assume he meant the ratio to be based on current (fiat) value.

I meant if you have 1 BTC you should keep from 3 to 5 XMR. I believe this is the most possible scenario for its price.

I think that's pretty prudent but potentially not that profitable relation.
For instance, if one owns 100 btc (28 500 usd), it means one should own only 300-500 XMR (165-275 usd) worth of Moneros. That's not big money IMO and it indeed requires Monero to reach 3000+ USD for a person to become a millionaire. Even bitcoin has not been able to perform that well even though Bitcoin's price was helped by Mt. Gox fraudsters.

[SmoothCurves]

I think the problem with Risto's scenario analysis with high expected value but low probability of success is that one needs to have plenty of such projects out of 1 will make it big.
Where to find the rest of the high outcome low probability games? National lottery perhaps?

There already are plenty of projects, the rest of the Alt market. The fact that Risto is supporting XMR means that he is making his bet on Monero after examining the other alternatives.

[newb4now]

I think the problem with Risto's scenario analysis with high expected value but low probability of success is that one needs to have plenty of such projects out of 1 will make it big.
Where to find the rest of the high outcome low probability games? National lottery perhaps?

There already are plenty of projects, the rest of the Alt market. The fact that Risto is supporting XMR means that he is making his bet on Monero after examining the other alternatives.

Even with 100 projects (completely independent) each with a 1/100 chance of success, there is no guarantee that at least one will succeed although we can use math to calculate the probability.

Risto instead is focusing on EV which I think is the correct approach.

Those who never invest in longshots will miss many +EV opportunities.

Those who put all their money in a small number of long shots (known to have a high EV) risk ruin based on the probability of failure.

Each person must choose their own risk/reward equation. While EV is important it is not the only factor in play

[americanpegasus]

I only know rpietila from bitcoin talk but he seems like an intelligent and benevolent person from what I can see.  
  
A good thing since if he keeps the faith he will likely end up as one of the richest men in history.  
  
I wish I had more resources to purchase more Monero than I do, but even one Monero will make one fairly wealthy if this project goes as it I believe it will.  
  
Does anyone know if there is a ratio or theoretical number where owning more of an asset by one individual actually decreases it's possible value?  For example, we can all agree that owning 1% will make you obscenely wealthy if Monero goes the distance.  That relies on the other 99% becoming widely distributed and a major standard for transacting goods and services across the world.  
  
But, let's say there are 100 of us and we all buy 1%.  Well, we have n-person-prisoner-dilemma-fucked ourselves because now no one can reasonably transact with the asset (and it will likely be discredited long before this becomes a fact).  
  
It would seem that buried within the mountains of magic numbers there is a game theory solution for the maximal amount of an asset a rational player should ever seek to own, even if they suspect (hope) the value/utility will one day explode to orders of magnitude above its current state.

[GingerAle]

I speculate that this flagship use of the forum funding system will set the stage for future success of the funding system, and hence, future success of Monero. If developers outside of the Monero community witness a fully functioning funding system, they will be more likely to build a reputation in the Monero community in order to get in on the action. I.e., they will contribute to core development to build a reputation, and then pitch a proposal for eventual funding. Or they might have impressive github activity which will serve as credentials.

Either which way, Monero wins.

So c'mon Monero whales - the remainder of the fund for MoneroMoo to dedicate 260 hours to Monero development is only 3930 XMR, and you can bet MoneroMoo will hodl that coin.

To all the free electricity mining outfits out there, please consider donating to Monero development. This coin is one of the few CPU coins that has a chance for the long haul - if you don't help fund development, your cash cow may shrivel up and die.

3930, thats only ~6.9 hours of emissions!!!

https://forum.getmonero.org/8/funding-required/334/fund-a-developer-moneromoo-will-work-part-time-on-monero-for-260-hours-over-approx-6-months

[newb4now]

I speculate that this flagship use of the forum funding system will set the stage for future success of the funding system, and hence, future success of Monero. If developers outside of the Monero community witness a fully functioning funding system, they will be more likely to build a reputation in the Monero community in order to get in on the action. I.e., they will contribute to core development to build a reputation, and then pitch a proposal for eventual funding. Or they might have impressive github activity which will serve as credentials.

Either which way, Monero wins.

So c'mon Monero whales - the remainder of the fund for MoneroMoo to dedicate 260 hours to Monero development is only 3930 XMR, and you can bet MoneroMoo will hodl that coin.

To all the free electricity mining outfits out there, please consider donating to Monero development. This coin is one of the few CPU coins that has a chance for the long haul - if you don't help fund development, your cash cow may shrivel up and die.

3930, thats only ~6.9 hours of emissions!!!

https://forum.getmonero.org/8/funding-required/334/fund-a-developer-moneromoo-will-work-part-time-on-monero-for-260-hours-over-approx-6-months

moneromooo From that thread

"Thanks all!

As fluffypony said, I've already started early on the translations. I'll have those ready by the end of the week I think. That should be simplewallet at least. It can now load Qt Linguist files and properly display Chinese characters. For translators, this means they'll be able to use the Qt Linguist GUI tool to edit translations. My understanding is that Transifex can also be used with those."

Progress is coming fast. This should be very helpful for those are not native English speakers.

[necrita]

It is so easy that I am crying to make it accessible for you  


- Buy XMR now at $0.35. Most people can set aside $1,000 so that'll be 3,000 XMR, a rather easy buy even in the illiquid exchange.

- Write it off. Don't care about what you could have bought with it. Work overtime to recoup the money if you must, or skip a trip, to make it emotionally OK that you have given the money away.

- Do some productive stuff, don't follow XMR unless you care about the nascent payment network and services in alpha stage.

- Wait, until it hits $2 (not that hard, we were doing it for months last summer; the ath = $5), if the day arrives, sell 500 XMR and get back 100% of your original investment. If anything, now you should be totally ok to just wait where it goes.

- Continue your life.

- Sell 500 XMR every time it goes up 10x from the previous sale. This way the schedule is:

500 XMR @ $2
500 XMR @ $20
500 XMR @ $200
500 XMR @ $2,000 (gain $1 million)
500 XMR @ $20,000 (gain $10 Mm)
500 XMR @ $200,000 except since at this point you are set for life plus have XMR that is worth 100 million in purchasing power, it's hardly necessary to sell it unless you need something.

$200,000 * 18 million coins = $3,600 billion, still <1% of the current total in USD-denominated assets, so as such, not even a win for crypto but a good start


ADD: Oh forgot to mention: never, EVER:

- sell at a loss
- deviate from the plan in any other way.

Quoting this to unearth this gem by Risto for an investing plan for newbies.
I think of it as an abbreviated SSS plan for someone who doesn't understand the divestment plan.

[cAPSLOCK]

I only know rpietila from bitcoin talk but he seems like an intelligent and benevolent person from what I can see.  
  
A good thing since if he keeps the faith he will likely end up as one of the richest men in history.  
  
I wish I had more resources to purchase more Monero than I do, but even one Monero will make one fairly wealthy if this project goes as it I believe it will.  
  
Does anyone know if there is a ratio or theoretical number where owning more of an asset by one individual actually decreases it's possible value?  For example, we can all agree that owning 1% will make you obscenely wealthy if Monero goes the distance.  That relies on the other 99% becoming widely distributed and a major standard for transacting goods and services across the world.  
  
But, let's say there are 100 of us and we all buy 1%.  Well, we have n-person-prisoner-dilemma-fucked ourselves because now no one can reasonably transact with the asset (and it will likely be discredited long before this becomes a fact).  
  
It would seem that buried within the mountains of magic numbers there is a game theory solution for the maximal amount of an asset a rational player should ever seek to own, even if they suspect (hope) the value/utility will one day explode to orders of magnitude above its current state.

This is a very interesting post and concept.   I have considered this for some time. 

I think the game theory solution to this is going to be tough due to the complexity of certain variables along with the way markets roll. And I think the number of optimal xmr owned in this regard is a curve.  And it should be high enough that for now not many could do it without being both crazy and crazy rich. I am personally orders of magnatude away from the range i suspect it is in. The divisible nature of our beloved asset, like btc, mitigates much of the potential for whale concentration screwing up the potential I think.   I believe there are considerably more than 100 of us already as well.

By the time there is really realized danger (due to the price) the masses who are entering will denominate their positions in ones and tens as opposed to hundreds and thousands and the concentration problem will be forever out of reach.

This is why fair distribution (fair as in open an free as opposed to the artificial bullshit "equal"which idiots cling to) is so important to a successful crypto ecosystem.