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881
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Economy / Speculation / Re: SecondMarket Bitcoin Investment Trust Observer
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on: May 05, 2015, 03:33:20 PM
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The number of bitcoins that will be required (“Basket Bitcoin Amount”) for each creation basket or redemption basket will be determined from time to time by dividing the number of bitcoins owned by the Trust at such time by the number of Shares outstanding at such time and multiplying the quotient obtained by 100. The Basket Bitcoin Amount may gradually decrease over time if the Trust’s bitcoins are used to pay the Trust’s expenses. I find this confusing because it sounds like the authorized participants (Second Market is presently the only one) should be able to arbitrage the price difference already (which is different from the idea that all new shares must sit "dormant" for a year). When the Authorized Participant (AP) redeems 100 shares, he gets 10 BTC minus whatever "expenses" the Trust had. So this is worth doing only if the AP bought the shares from some shareholder for less than the price of 10 BTC. Those shares must have been issued a year earlier or more, but the AP may have bought them yesterday. Conversely, in order to get 100 new shares issued by Greyscale, the AP must give Greyscale 10 BTC. That is only worth doing if the AP can sell those shares for more than the market price of 10 BTC. However, my understanding is that the AB must wait a year before selling them. (Or is the guy who buys from the AP who has to wait?) |
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882
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 05, 2015, 12:13:15 PM
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Could it be that the rises of April 30 and/or May 3 were due to the expectation of BIT trading on OTCQX, and the current dump is due to the disappointing volume there? Or perhaps they were due to the 100 M$ Circle investment nws, and disappointment with that? Can't [ a big investment ] fund strike a private contract with a sufficiently reliable middleman, who would buy the bitcoins on the exchanges or other places, shouldering the risks, and then sell them to the fund?
yeah like SecondMarket, in the future COIN and other ETF's and etc. Shares of BIT and COIN and PBP etc. are IOUs for bitcoins that are held by the respective companies. The question is why can't institutional funds invest in actual bitcoins directly, but using a middleman to avoid the risk of sending money to foreign/unregulated exchanges. Why does [ the GBTC page ] say approximately 0.1 bitcoin, and not exactly 0.1 bitcoin per share?
Fees. Indeed, there is a one-time fee when redeeming or issuing the shares, plus something like an administration fee of 2% for each year that the bitcoins sit at Greyscale. So BIT does provide something that you don't get by buying raw bitcoins: perpetual inflation.  So, now that Silbert and GBTC has fallen a little flat, who is the next Messiahtm in the pipeline?
http://np.reddit.com/r/Buttcoin/comments/34assy/the_list_of_things_that_are_going_to_save_buttcoin/ |
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883
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 05, 2015, 01:10:55 AM
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I updated my "sum of 10 bubbles" model of the historic BTC prices, with slight tuning of the parameters and one extra "bubble" to account for the movement in March-April 2015:  [ Figure 1. A bubble model for the price of bitcoin, showing the smoothed actual price (grey), the modeled price (green), and the individual bubbles. The brown line near the bottom is the ratio of the actual price to the model price. Click on the image for a full-size version. ]Here is an extended (20-bubble) model that also describes the major variations in 2014--2015 as eight rectangular pulses or spikes added to the tail of the "Chinese" bubbles, plus one spike to model the "stuttering" halfway through the rise of the main 2011 bubble:  [ Figure 7. A 20-bubble model for the price of bitcoin, showing the smoothed actual price (grey), the modeled price (green), and the individual bubbles. The brown line near the bottom is the ratio of the actual price to the model price. Click on the image for a full-size version. ]Can anyone guess which events may have caused the bubbles that peaked before 2013-10? A longer explanation and discussion of this model has been posted to this thread. Note that this model is only intended to be "descriptive", perhaps "explanatory", but not "predictive". If anything, it is "anti-predictive": if it does indeed describe the way the price evolves, then whatever happened before 2013-11 has no effect on the future price, and any future bubble will not be predictable from the price, until it is well underway. |
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884
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 05, 2015, 12:54:26 AM
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anyone could explain the hell is "Each GBTC share represents ownership of approximately 0.1 bitcoin" supposed to mean? is one share 1/10th of an <imaginary> bitcoin or not?
My understanding is that they refer to the fees that Greyscale will discount from the BTC returned if/when they redeem BIT shares. [ Institutional funds ] would never, ever, send money to unregulated exchanges. It's simply against their basic policies. Institutional money has no mechanism of acquiring significant amount of BTC, except for the FBI auctions which is not usual way how they do business. Even if they want to buy BTC they can't, putting aside question whether they want to do that or not. That's why I've said any "good-intended" announcement of big money entering BTC which ends up being false, leaves much more damage then idiot who announced it imagined.
Can't such a fund strike a private contract with a sufficiently reliable middleman, who would buy the bitcoins on the exchanges or other places, shouldering the risks, and then sell them to the fund? I consider the GBTC the first "crystal clear" way for someone to get BTCs and not worrying about losing their money.
Unless Greyscale loses their BTC because of hacking, accidents, embezzlement, etc.? If I recall correctly, they are not insured against those things, and refuse to be held responsible for any resulting losses. The price will definitely find its way - thats how free market works.
My understanding is that discrepancies between the GBTC price and the market price of "raw" BTC will take many months to be equalized by arbitragers, because the BIT shares would have to be redeemed by Greyscale (at turtle speed again, perhaps?), or issued by Greyscale and then held for a year. is this correct? |
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885
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Economy / Speculation / Re: SecondMarket Bitcoin Investment Trust Observer
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on: May 05, 2015, 12:20:17 AM
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Seems like this will have little effect on exchange prices since no new bitcoins are being bought.
Well they're buying existing Bitcoin. The influence on the price is just about the same influence as any trading on a regular exchange has on the price, nothing more, nothing less. Of course the influence isn't as direct and immediate, but overall it's a closed system, actually. Any large discrepancy between the GBTC price and the market price of "raw" BTC will probably take months to a year to be equalized by arbitrage, since shares will have to be redeemed, or created and then held for a year. Isn't this so? |
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886
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Economy / Speculation / Re: SecondMarket Bitcoin Investment Trust Observer
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on: May 04, 2015, 05:26:14 PM
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Well, given the fact that the investors in the fund most likely all bought in at a higher price than the current BTC spot price, it's only fair for them to make at least some money by doing some arbitraging now the fund finally started trading!
The opening post and this plot show how much was bought at what price. (Those are net investments. There have been some redemptions, but not enough to significantly change the conclusions, IIRC.) |
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887
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 02:47:18 PM
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He gets status points which can be redeemed for dinner party and conference invites.
I am afraid that the only conferences that would host presentantions about bitcoin are those organized by bitcoiners, who would never invite a critic, much less a hard skeptic. As for dinners, my dinner friends won't let me talk about bitcoin for more than 30 seconds each night. And they are as surprised as you are that I be wasting so much time with this [ expletive deleted by self-censorship subroutine ]. |
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888
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 02:39:59 PM
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So why DOES he dedicate so much time to something he doesn't believe in?
I spent on bitcoin about as much time as I spent following the cold fusion saga, in the late 1980s, which I did not believe in either. Why is that strange? There are people who devote a lot more time studying scams and religions that they don't believe in. There are people who know all Start Trek episodes by heart, and of course they don't believe in them either. I myself spent a lot more time studying the Voynich manuscript. Unlike many of my voynichologist colleagues, I do not think that it contains anything important (but i am convinced that it is not random text, either). |
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889
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 01:58:29 PM
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Indeed the price must grow for the experiment to succeed, but it's more important that the price be the right price to best distribute coins to those who want them.
I cannot possibly disagree with this statement, but the question is what is the "right" price. The bitcoin "business plan" would make a lot of sense if there was no speculation, and the price was determined only by its use as currency, according to the money velocity equation. Then the price today would be 5 $/BTC or lower, any interested person could mine and get some coins (even at a loss), big money would not try to take over mining, people would not be pushing it on the "unbanked poor" or pestering Wikipedia and Mozilla to "accept it", no one would pay Bloomberg time to sell it, etc. The user base would just grow naturally if/as people found it useful, and the price would slowly grow in proportion. But things obviously did not work that way, and the current "business plan" makes no sense, sorry. |
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890
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 12:19:19 PM
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Only problem is that its from Vox. Its a bit flag wavey. Actually the FAQ slideshow at the bottom is reasonably sane: People have made a lot of money investing in bitcoins. Should I buy some?
Probably not. Bitcoin is an immature technology and holding it is extremely risky. Bitcoin’s value is highly volatile. If you buy at the wrong time, you could lose as much as 80 percent of your investment in a matter of days.
Even worse, bitcoins are difficult to store securely. You can save bitcoins using an online wallet service, but this type of service hasn’t had a great security record. Several wallet firms have gotten hacked or gone out of business, taking their customers’ deposits with them. You can also store bitcoins on your own hard drive, but then you’re vulnerable to hackers, hard drive failures, and other technical glitches.
So unless you have significant technical expertise and a healthy appetite for risk, you should probably leave this to the pros.
Is using Bitcoin a good way to fight inflation?
In recent years the dollar has had an inflation rate of around 2 percent, and it has been higher in the past. Some have advocated using Bitcoin as an alternative to inflationary fiat currency.
But Bitcoin is not a good choice for preserving the value of your cash. Bitcoin’s value is extremely volatile. While Bitcoin’s value has generally increased in the last few years, it has also experienced dramatic declines in value. Between June and November 2011, for example, the currency lost more than 90 percent of its value.
Hence, Bitcoin should be seen as a high-risk investment like a technology stock, not as a stable store of value. If you want a hedge against inflation, the United States Treasury offers inflation-protected bonds for just this purpose.
I hope thay my Latin American fellows, and especially those south of the Plata, will at least get and heed these warnings. |
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891
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 10:37:08 AM
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Ask Stofli to analyse the downsides experienced by multiple devaluations of the Brazilian money? Especially for the victims of those fiat money scams perpetrated by the governments he champions at every turn. He is an unashamed cheerleader for the financial destruction and poverty bought about by all the worst economic theories entrapping hundreds of millions.
First ask the victims of PirateAt40 and Karpelès and all the rest how your good, sound, deflationary Austrian money protected their wealth from those ancap libertarian champions. You are an unashamed cheerleader for the financial destruction and poverty bought about by all the worst economic theories, and the scammers who are trying to fleece hundreds of millions... |
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892
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 10:29:43 AM
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well, no harm then in letting us crazy libtard anarchist criminals try [ bitcoin ] out then, right? It will just fail instantly and you and your statist brethren will have definite proof that it can't work and you'll get to suck big brothers dick in peace forever and ever  It would be "no harm" if you did not require a constant supply of money from new investors to make money while trying to save the world, and you did not go about telling pensioners and the "unbanked poor" to pay 250 $ for one BTC because it will make them rich and save them from inflation and bank seizures and taxes and also lbuy cocaine safely. |
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893
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 10:23:55 AM
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Within the big picture as described above, do you believe is still possible to have another future hype (fueled maybe by the interested actors and human psychology) or rather a continuous series of crashes/resistance?
Surely there may be another big bubble, if something happens that will create another big surge in demand. The Nov/2013 bubble was created by demand from the amateur commodity traders in China. (You will never read that in the bitcoin media, because it is a very unpleasant fact standing in the way of any entrepreneur who needs to convince people to buy bitcoins, and bitcoin reporters know who is paying their meals.) But I have no idea whether, when, or where such a big demand would arise. After 15 months of falling prices, bitcoin has lost quite a bit of its charm as investment. People are looking at Latin America, Africa, India, but of course I hope they won't fall into it. People's big hope is the ETF, which would perhaps attract money from the small investors in the US, such as the savings and retirement funds (IRAs) that currently cannot be put into bitcoin. |
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894
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 10:00:42 AM
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I'm curious about that bolded part. What, in your opinion, would be a more "ideal" distribution method?
There wasn't (isn't) any good distribution method for a private currency. Solving that sub-problem would require another genial invention that hasn't been invented yet. Giving the coins to the miners who create them may have been the "least bad" decision, but it was still bad. It wouldn't have been so bad if the price had remained low enough for mining to remain distributed among most users, and remained so while the currency became widely adopted, until most of the coins were issued. That would have made transaction fees relevant since the beginning ("users pay"). Instead, hoarding and speculation pushed the price to 1000x its "natural" level, transaction fees became insignificant compared to block reward ("ïnvestors pay"), mining became industrialized and concentrated and 1000x more costly than what it should... And the price bubble attracted all those snake oil salesmen and ponzi operators... |
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895
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 05:09:34 AM
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Poor Stolfi, again I'm reminded of Dr. Robert Stadler.
Enjoy your socialist, inflationary paradise while it lasts, professor.
Is that the "villain" of Atlas Shrugged? If so, well, I guess I am it, what can I do. It is far from a paradise, but at least it is survivable. As for the ancap libertarian utopia, the only good thing I see in it is that it will collapse immediately if it ever gets implemented... |
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896
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 03:39:21 AM
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Miners don't sell all 3600 coins. I don't sell the coins I mine (never have), along with many many many other miners.
Then, besides being a miner, you are also one of those "new investors". You are efectively buying your own coins. I.e. you have been financially supporting the bitcoin system with your own money. The day when you will finally decide to get your due payment, whether in dollars or in lamborghinis, you will have to get it from other new investors -- who will have to buy all the coins that your collagues will issue that day, and also buy your coins for whatever price you expect to get from them. |
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897
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 03:24:25 AM
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Tim Swanson (who understands bitcoin's economy much better than most bitcoin gurus) is looking at the miners as an entity that performs a service to the "bitcoin system" (validating and securing transactions) in return for a payment (the block rewards and transaction fees).
That's where you and Tim are mistaken prof. You are completely ignoring the main function of the block reward, which is to distribute the tokens. That may be one intended function of the block reward; but now it is effectively the main payment that miners get for their work. (It is far from ideal for both purposes, though. The 25 BTC reward would be adequate if the price was in the single-digit range; which would be the case, if Satoshi had not been brainwashed by his libertarian friends with that Austrian Economics fiction about deflationary money...) |
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898
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 03:16:33 AM
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Do they say what price they are using? If it is the price on March 31, 2015 (~250 $/BTC), then it would be ~940 BTC. On their 2014 yearly report they declared to have 340'000 $ worth of bitcoin on Dec 31, 2014, "recorded at the lower of cost or market based on an average unit cost". For comparison, at the end of last year they also held ~10'000'000 $ worth of precious metals (!) and ~180'000'000 $ in "cash". I.e. their bitcoin holdings were about 0.2% of their "money" holdings. |
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899
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Economy / Speculation / Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
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on: May 04, 2015, 03:00:15 AM
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money which the bitcoin holders have put into the system, and expect to get back from it --- I've put dollars into bitcoin but I don't expect to get back dollars. I expect to get back goods and services. It does not matter. If you buy 1 BTC today, the only way you will get 240$ worth of goods tomorrow is if tomorrow's new investors, after buying all the 3600 coins that will be issued tomorrow, will also buy from BitPay the 1 BTC that you spent on said goods. |
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