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).

Right now, that entity gets 25 BTC (~6000 USD) for each validated block, and the average block contains 750 transactions.  So the miners are being paid ~8 USD for each transaction that they process, on average.

In percentage terms, the transactions in a block move about 280'000 USD, on average (excluding presumed "return change" outputs); so the miners' revenue is about 2% of the money that they move.

There is not much room for misunderstanding there.  Right now,  the bitcoin network is way too expensive for the service that it renders.  If the price were to rise to 2'400 $/BTC before the next halving, and the volume numbers doubled until then (which is what they barely did over the last 2 years), the miners would be paid ~40 dollars per transaction , or 10% of the transaction amount, on the average.

As you all know, those 8 bucks (or 40 bucks) come entirely from the pockets of new investors -- the people who are buying bitcoins today to increase their holdings.  For the price to increase to 2'400 $/BTC over the next year, there would have to be a 10x increase in the money brought in by those investors.  I hope that everybody here is aware of that.

The money earned by the miners will never get back to the system; therefore, the only hope that those new investors have of recovering their money is that there will be enough new investors' money coming in tomorrow to pay for tomorrow's mining and to buy those bitcoins that they are buying today, hpefully with some premium. 

Thus, at current prices and rewards, the bitcoin protocol is creating every day another million dollars of naked debt: money which the bitcoin holders have put into the system, and expect to get back from it --- but which has been given to the miners, and will not be returned by them.

By pushing the cost of the network to those new investors, the protocol allows the users and entrepreneurs to entertain the illusion that transactions have almost zero cost, and therefore are cheaper than international bank payments and remittances.  This whacky "business model" cannot go on indefinitely.

Actually I can't find a quotation by Goldman or IDG where they mention 'bitcoin' or 'cryptocurrencies'.  The ones I saw only say 'digital payments'.  The conclusion that they are interested in 'bitcoin technology' seems to be the inference of analysts and reporters.  Not even Jeremy Allaire seems to be saying that they are.

The most pro-bitcoin reading I can make of those quotes is "bitcoin will die, but maybe we can make a nice xylophone out of its bones".

I wasn't  thinking of the impact of trading those coins, but of the bad press, and possibly bad actions by the SA government.

(However, MLM schemes may easily involve millions of people, not just poor by also middle-class, and therefore move a lot of money.  And, if the owners of that ponzi run away, at some point they may want to move the BTC that they are collecting in SA to some exchange outside of SA, to cash out and buy gold or something less traceable than BTC. 

Come to think of it, perhaps those reckless buys at BTC-e last week were those guys buying BTC with the cients' money, as a preparation for the disappearing act...

?  You mean BitcoinRain?  No, that was over before I even knew of Bitcoin.

I only skimmed through them, yeah.  What exactly is your problem with posting that news here?

(1) 297 $/BTC is not as high as 350 $/BTC at OTCQX, but it is more relevant to this egregious forum, being a quote for real BTC at a real exchange;

(2) If the comments that I read are correct, that ponzi must be about to collapse, that must be the reason why they required that emergency payment in bitcoin.  Then soon there will be thousands of South Africans as angry as hornets whose nest has been busted.  Bitcoin will be right in the middle of it.


When I first heard of bitcoin, around Nov/2013, a really huge MLM scheme called TelexFree had just collapsed here in Brazil, costing over a billion dollars to millions of victims.  My first reaction (and of many other people) to bitcoin was "oh no, here we go again, another TelexFree".

OK,  OK, bitcoin is not just another Telexfree.  Unlike TelexFree, bitcoin was not meant to be a pyramid scam.  Unlike TelexFree (that sold some worthless VOIP phone cards), bitcoin is a serious technical project that was expected to work and be terribly useful.  However, bitcoin has now become primarily gambling game ("day trading" to its players) and a pyramid schema (that moves money from the pockets of people who buy BTC today to the pockets of the early adopters); its orginal goal being now only an excuse used to attract investors.  The latter is basically what Bitcoin is in Brazil.  I don't mind gambling, as long as everyone knows that what they are doing is gambling; but I would like to see every pyramid scammer behind bars.  Is this such a bizarre wish?

By the way, the creator of the very first Brazilian exchange (MercadoBR) also created a bitcoin ponzi called "Bitcoin Rain" that promised ~10% return on (bitcon) investments per month, supposedly to be made in arbitrage between international exchanges.  Of course, the payoffs to early investors all came from new investors money.  When that Ponzi collapsed, the owner claimed a hacker had stolen everything (several thousand BTC from Brazilian investors) and that was it.  The owner claims to have sold the MercadoBR to new owners, who of course refuse to be responsible for the BitcoinRain losses.

I find it extremely unlikely that Kobayashi will buy bitcoins as a favor to creditors, to save them the work of buying BTC on their own.  He will not buy EUR or USD to satisfy those who prefer those currencies; why would he do that for BTC?  For one thing, if he were to get a bad deal while doing so, he would expose himself to lawsuits from the losing creditors.

Kobayashi is considering the possibility of distributing the BTC as BTC only because converting BTC to JPY would be a lot more work and risk than converting EUR and USD to JPY (which he will surely do).  BTC payouts still require agreement from the court, however, since by law and tradition he would have to convert everything to JPY.  

By the way, suppose that, by the September deadline, the approved claims times the reduction factor would require distributing (say) 6 billion yen (G¥), and the clients state that their prefernces are 3 G¥ in JPY and 3 G¥ in BTC.  But the assets he has are 1 G¥ in JPY and 5 G¥ in BTC.  What will he do?  He cannot force users who want JPY to take BTC...

The BTC price was/is ~297 USD in some South African exchange.  It seems that a local Ponzi shcheme (Kipi) is demanding an urgent payment in bitcoin from all members, otherwise they will lose all their investment:
http://np.reddit.com/r/Bitcoin/comments/34lvmc/btc_is_trading_at_equivalent_of_297878_usd_on_the/cqw0025

Exeunt omnes in 3... 2... 1...

AFAIK it is still not certain whether this is legally possible, and whether the judge will approve of it.


IIRC this detail is defined in the latest documents.  However, it is still not clear how Kobayashi will decide whether the claims are valid.  He has until Sep/2015 to figure those things out.

I don't know how such a prediction could be "substantiated", given this video.  For totally unsubstantiated predictions, there is this thread:

Predict the price of Bitcoin on 1 April 2016 - win CBX (Crypto Bullion)
https://bitcointalk.org/index.php?topic=1012254.0

Check also last year's contest:

Predict the price of Bitcoin on 1 April 2015 - win CGB's
https://bitcointalk.org/index.php?topic=553123.0

You will never guess who won it...

Have you asked for a professional estimate of the cost of that project?

Building costs for a low rise office building (excluding furniture) in central US are about 150 $ per ft² of floor area.  The central building in your project apparently has 3 floors, each with at least 100 x 100 ft², i.e. some 30'000 ft² total.  if it were built on land it would cost at least 4.5 M$.  Now consider how much more expensive it is to build something on a hurricane-swept platform at sea, far from any industrial port.

But OK, you may be aiming to build only one 5'000 ft² platform, without the superstructure.  Even so, you may be underestimating the cost by an order of magnitude.

You may consider buying a second-hand outfit to begin with:

http://www.seasteading.org/2011/11/for-sale-well-maintained-20-room-platform-sale-panoramic-sea-views-and-a-heli/

EDIT: On the other hand, people who can afford an antigravity flying yacht can surely afford an apartment on a sea platform.  

Last night's micro-bubble was apparently pulled by Huobi or BTC-e again.  If it was Huobi, could this be the reason?

Huobi Bridges Bitcoin with China’s ‘Booming’ Shanghai Stock Exchange
http://cointelegraph.com/news/114126/huobi-bridges-bitcoin-with-chinas-booming-shanghai-stock-exchange

Maybe.  However it seems that BTC-e is again leading this rally, so it may be just a repeat or sequel of whatever happened 2days ago...

Have you read Stanilsaw Lem's Cyberiad?  There is a story in there of how the two robot-heros defeated the pirate Pugg, that is the best description of the Internet I have ever seen -- and written maybe 10 years before the internet was invented.  Pay attention especially to the device that they built.   

I am listening, but I don't hear anything that makes sense.

The news of Circle getting 50 M$ of investment has been posted and discussed umpteen times here, and no one complained.  And that is appropriate, because it is being interpreted as "good news for bitcoin" by many people -- and the only identifiable factor that moves price is news and rumors.  Indeed, the current micro-bubble  may be due to it.

Now, just because I urged people to actually read the damn press release with their eyes open and brain engaged, that topic it is suddently off-topic.  Even though a proper understanding of what the announcement means could enable people to better guess what the price will do next.

Remember what happened with "Microsoft accepts bitcoin", "McDonalds will accept bitcoin on Valentines Day", "a three-billion-euro hedge fund will start trading on OKCoin", and many other "good news for bitcoin" in the past?

Bitpay's business is bitcoin-to-USD.  Circle and Coinbase set out to do USD-to-bitcoin.  Circle's new announcement is about USD-to-USD, eventually USD-to-CNY or CNY-to-USD.  Where am I wrong?

There have been many errors of judgement in bitcoin land, like in any other field.  Unfortunately the Antonopouloses have been magnifying the supposed advantages and inflating the probabilities, while minimizing or ignoring the problems.  When I started looking into it, at the end of 2013, everybody was saying  that bitcoin would 'obviously' replace credit and debit cards in a short time, because of the high fees and charge-backs of the latter.  Well, it did not happen.   Companies that invested heavily into that market are now in trouble.

You tell me.  We are talking about a customer who starts with dollars in hand and a merchant who wants dollars, correct?  (Otherwise it is the old fiat-to-bitcoin service that they allready had.)


Like BitPay and Coinbase, when they started they certainly expected the fiat-to-bitcoin and bitcoin-to-fiat market to grow "exponentially".

Please ignore my cheap shot about "the main barrier", and tell me what is wrong with my description of Circle's new service.

Circle may have intended to be a bitcoin-centered company when it was created.  However, BitPay's numbers show that the market for fiat-to-bitcoin and bitcoin-to-fiat services is small and shrinking, and the chances of recovering the VC investment and making a profit out of them are slim.  Circle and Coinbase must have realized this a year ago already.   So Circle (and Coinbase) are adding fiat-to-fiat services, whose market is orders of magnitude larger -- perhaps using bitcoin internally, but only if and when it pays.  From the quotes in teh article, it is evident that GS and IDG are interested in Circle as a digital payment processor, not as a bitcoin exchange. 

In case someone is wondering, none of that 50 M$ will go into buying bitcoins.  VC investors do not give money to startups for the startups to play the market with it, or invest it in something else.  If GS wanted to invest in bitcoin, they would do it themselves.  Charlie Lee explained that himself when he was asked how many million would Coinbase invest in BTC.

When you use their new service, they will take your USD, pretend to convert it to BTC, but keep the BTC as USD to avoid volatility losses, then pretend to convert the BTC back to USD, and deliver USD to the merchant.

That certainly removes the biggest barrier to bitcoin adoption -- which is bitcoin itself.

About 1.4 million shares have been sold, mostly before May 2014. We know the net sales by day: see the first post on this thread the SecondMarket Observer thread.  According to the SEC/FINRA filings (look for them in the OTCQX page) there have been a few redemptions; but most of the shares listed on that post have have never been redeemed, so that table gives a fairly good idea of the ages distribution of the extant shares.