Should we question the question for him, so as not to lock up the thread?

It was explained already, do you have any questions?

It looks like GABI will not be like SMBIT.

SMBIT (for what I know) is supposed to just buy bitcoins when clients invest (buy SMBIT shares), and sell bitcoins when clients liquidate (sell the shares back to SMBIT).  Both operations use a fixed price of 0.1 BTC per share, converted to USD according to the market price at the time of the transaction (buy or liuidate), with fixed (non-trivial) fees.  Thus an SMBIt share is just a receipt for 0.1 BTC stored by SMBIT.

GABI looks more like "give us your money, we will invest it in a portfolio of bitcoin and bitcoin-related entrerprise and other things as well, as we see fit, buying and selling so as to increase our holdings and hence the value of your shares".  Is this interpretation correct?

Thanks!  Shoud we then assume that we will not know what GABI is doing for 10 months at least (assuming the reports are published or leaked then)?

I don't know whether that comment is directed a me and that old "10%" joke, but assuming it is:

I did not intend to ridicule your person (ahem, even though you wrote some nasty things about my person on another thread  ). But I did intend to ridicule your logic, "my method works because I got rich following it".

You got rich because you bought a lot of BTC at 3$ each and held most of them until now.  Period.   Your decision was certainly very profitable, but it cannot be assumed that is was wise, rather than just lucky.  Just because you used one particular reasoning to decide to hold, it does not follow that the reasoning was sound, much less that the method will give the right decision for the next year or two.  If you had used tarot cards and they told you to hold, you would be just as rich, but the method would be just as invalid, and any future predictions from them would be just as irrelevant.

You saw the WorldCom plot.  After five years of nearly perfect exponential growth, by your reasoning there should have been at least two more years of the same.  Well, there weren't.   In mid-2000, when the price was visibly below that trend, by your reasoning there should have been a sharp rise, to bring it back to the trend.   Well, there wasn't.

Will there be another Bitcoin bubble?  Analysis of past prices cannot tell you that.  The past bubbles were not caused by some mysterious Price Extrapolation Force, but by specific events that suddenly expanded the demand.  So one should ask whether similar events will occur in the future.   We just cannot tell that at this time.

Sometimes, when the price is changing fast, the Chinese will keep trading straight through the night.

Sure, but which one?

With a budget of 150 million USD, a group determined to push a "FooCoin", with similar protocol but independent blockchain, could hire the top 3-4 mining companies and switch the majority of the bitcoin hashrate to mining FooCoin, for three months at least.

Combine with some flashy bells and whistles, a TV marketing campaign, support by Apple and Facebook, perhaps some biased government regulation, and perhaps in that time the FooCoin will get enough newbie demand to stand on its own -- namely, with such a combination of market price, difficulty, and block reward that it would attract more hashrate than Bitcoin, even without the external subsidy.

That would not kill Bitcoin outright, but it would take away its "network advantage".

Could such a plan work?

Intersting.  OKCoin's  international branch is building volume only now (1.8 kBTC/day), but until a couple of days ago was less than 1 kBTC/day.

Huobi's BitVC does not post separate volume, but on some bitcoin media article they claimed that it was already close to 20% of their daily volume.

Are they using those two, or rather BTC-China, LakeBTC, Bitfinex, AnxBTC, ...?

BTC-China increased its volume quite a bit recently.  I haven checked the others.

I know that. The question is whether we will be able to follow their moves once they start.  (SMBIT publishes some data, and there is a thread devoted to digesting that data and deducing their weekly trading activity.)

You certainly can do that if you can open an account at Huobi.  (They have some AML/KYC requirements AFAIK).

But @walsoraJ was aksing about the price being sustained by Western fiat being deposited in the Chinese exchanges.  I don't know whether that happens much.

De discrepancy between daylight hours and the official work hours seems to be a common complaint in the westernmost parts of the country; the Uighur would like to have their timezone, for example.  But having justone timezone simplifies many things and presumably makes the economy more efficient (banks are open at the same hours everywhere, for example).

Huobi's volume usually goes strong until 01:00 am local time, drops to near zero between 03:00 and 06:00, starts again by 07:30 am.  OKCoin retains some residual traffic all the time (Fake trades? Autonomous robots? Arbitrage?  Chinese abroad?)

During the "sleep" hours the West sometimes appears to lead.

Does anyone know whether the Jersey regulations require that full status reports and/or independent audits of investment funds to be published periodically?  Or will those reports be available only to investors?

I mean the traders at the Chinese exchanges.  I suppose that they are still mostly Chinese citizens.

You say that one can deposit CNY into them through Coinbase?  Directly, or indirectly (Coinbase deposits at Bitstamp and arbitragers bring coins from China to sell there)?  The latter would generate volume at Bitstamp, which I don't see happening.  Or do you mean the international branches of Huobi and OKCoin?

If Coinbase is using the Chinese exchanges, when whould they have started?

Wait, if e-payment use is not what gives value to bitcoin, why is it different from litecoin or any other altcoin?  

To be a store-of-value, it does not matter whether the coin is accepted by merchants, it matters only (like gold) that it has no inflation and that there is some market somewhere that provides liquid conversion to some currency.   Problem is that its vaue (like gold's) will be sustained only by the general consensus that it has value.  Such "faith-backed" value could pop at any moment (like gold's).

All this time, bitcoiners have been saying that bitcoin will "go to the moon"  one day because of its demand as a means of e-payment.   Is the discourse changing now?

The original post is a valiant and well-argued defense of bitcoin, but it falls short in several points:


Indeed technological ideas are "indestructible", but that also includes the slide rule, the solar-powered car, the backyard trash incinerator,  ...

People understanding a technology is largely independent of them adopting it. See the solar-powered car.

Governments cannot kill a technological idea, but can effectively ban its relevant use. See the trash incinerator.  (Or Bitcoin in China.)

Technological ideas that were widely adopted and understood at one time may go completely out of use, sometimes in a matter of months.  See the slide rule.


There is a contradiction there, isn't there?  The trendline is supposed to be inferred from the data, but then the data is claimed to be below the trendline.  Shouldn't it be more logical to say that the data no longer fits an exponential trendline?

The following price plot (apologies if some have seen it already) shows five straight years of steady exponential growth, with the log of share price fitting a straight line with much better R than bitcoin's.   But then the share price simply stopped following the trendline, and did not even apologize for it.



In that plot, what was the difference between Jan/1998 and Jan/2000?

In bitcoin's history, is the present situation like WorldCom's in Jan/1998, or in Jan/2000?


That is just a statement of faith, not supported by argument.  "It is not right. It is not even wrong."

As the poster himself wrote in another thread, it is not the current 1-2 million owners who will push the price up by another 1000%.  For that to happen, bitcoin needs the opening of another market, with a BTC demand 10x bigger than China's.  Where will that be?

Some people have claimed that the approval of COIN trading on NASDAQ will create such a demand, including in the US.  Perhaps. But COIN will probably start using the private hoards of the Winklevosses and other backing investors.  Moreover, investing in COIN will be attractive only if people believe that the price will rise.  So the demand for COIN may just ride the eventual next bubble, rather than lead it.  (SMBIT has stopped selling shares since the price stopped rising.  While some early investors made a profit, real or on paper, by my estimates it has been a bad investment so far on the average -- that is, the set of all outstanding shares are worth less than the total money clients paid for them.)

Bitcoin's "intrinsic value" is supposed to be its utility as a payment medium.  All predictions that the price will eventually rise "to the moon"  are based entirely on the assumption that there will be substantial and increasing demand for that use.  In particular, its value as an investment depends entirely on that premise.   

So, how is that demand going?  Unfortunately there seems to be no reliable data about use of bitcoin for e-payments (and the top bitcoin promoters do not seem to be interested in obtaining it).   AFAIK, Bitpay and Coinbase do not regularly post their processing volume.  Bitpay claimed to have processed 100 million USD in 2013,  but it is not clear how much was really payments for goods and services.  On the other hand, there are hints that the use of bitcoin for payments is much smaller than the volume traded at the exchanges.

Moreover, considering the costs and hassle of acquiring bitcoin, it seems likely that most of the payments processed by Bitpay and Coinbase is generated by people who already owned bitcoins, rather than people who bought bitcoins specifically for payment.  Therefore, instead of generating increased demand for payment use, those processors are only encouraging the moving of old hoards to the market.

Thus, as many have pointed out, bitcoin's price is sustained only by the vague hope of it "catching" for e-commerce in the future, and by speculative trade, at various time scales (from the day trader who expects to sell in a few hours, to the "old owners" who do not believe in lasting success but are holding in the hope for another bubble or two).  And the eventual listing of COIN will not affect its use in commerce, immediately or in the distants future.


It reminds me of this old joke:

  A guy is standing at a bus stop, when an expensive car goes by, brakes, and pulls back.

  'Mick, is that you?', says the driver to the man on the sidewalk. 'Do you remember me? Jeff, from high school?'

  'Why... yes, of course! Nice to see you, Jeff!'

  'Nice to see you too! How have you been doing? You were the brightest in our class, you must have gone far...'

  'Well, I did OK... I went to university, then got a PhD in math, now I'm teaching a public college... Not a great salary, but it's enough for a decent living, can't complain... But what about you? Look at your car, you must be doing very well.'

  'Oh, I'm doing OK too, I would say. As you remember, math was not my thing at all, so after high school I went into commerce. I don't really know much about business, all I do is the basic: buy for 10 bucks, sell for 20 -- and that 10% profit is good enough for me.'

I am still not convinced that a "deflation factor" is justified there.

Volume is interesting, I presume, as a measure of liquidity.  Zero fees bring in more traders and also allows traders to trade on smaller spreads.  So there are both more coins in the market, and the same coins get traded many more times per day.

Should the second effect be discounted, or should it be counted as measure of liquidity, just like the first one?

Repeated trading does not provide liquidity for large buys or sells, but it shoud work for smaller ones.  With zero fees, a trader who just bought at 500$ may be willing to  sell again for 501$.  With fees, the same trader would probably hold back.   Thus, even with the same traders holding the same positions, a zero fee market would provide higher liquidity than one with fees.

Does this make sense?

Sorry, from the bottom caption that you put in that image I inferred that you thought so.

Just for the record, I do not think that the Chinese are going to drive the price to zero.  Quite the opposite, I believe they are the ones still holding the price at the current level.  Without them, the price woud certainly be as low as the 350$ of Apr/11; perhaps as low as 150$.  But you know that I think that.
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Do you remember who submitted the FOIA?  What it you?

I know that.  I am a teacher at a public university.