What did you understand from that?

The Compleat Scammer Manual advises that, once the victims have passed the stages "shock", "rage", and "despair", the scammer should tell them that he managed to recover 20-30% of the amount lost.  That way, the victims will feel happy, may even thank the scammer and think good of him, and are much less likely to keep hunting for him and for the other 70-80%.

So, do you understand that as meaning that SecondMarket can still sell and (perhaps) redeem shares to investors using dollars?  In which case SecondMarket (but not Greyscale) would still buy and sell bitcoins on the exchanges?

It is gone, price crashed back to 500 $/BTC 

From the 2014-09-30 financial statement on that page, I understand that now the fund is managed by Greyscale, and they no longer buy or sell bitcoins and no longer buy or sell shares for dollars (page 31+).  Instead, there a 1st level broker and a few 2nd level brokers (including those 4 listed on the page).  Those brokers can buy shares from Greyscale with bitcoins only, and will get bitcoins when they sell shares to Grayscale.  In other words, it is now the brokers and the investors who must buy and sell the bitcoins on exchanges; Greyscale will just keep them safely until they are redeemed or stolen.

My guess is that those bids are just the 2nd level brokers testing the system, and the bids are not being filled because the only authorized sellers are the same 2nd level brokers, and they have no shares to sell.  They must either buy some shares from Greyscale, or wait until some of the early BIT investors gives them their shares to sell.

Perhaps those bids are just the 2nd level brokers testing the system, and the bids are not being filled because those brokers have nothing to sell yet?

That was the case before last October.  But now the procedures seem to have changed considerably.  The company that manages the fund is now (?) Grayscale, and shares are traded through a hierarchy of brokers.  From their financial report and filing dated 2014-09-30, pg. 31+, I understand that SecondMarket and Grayscale no longer take dollars and no longer buy or sell bitcoins.  I understand that brokers must buy shares from Grayscale with bitcoins only, and when they redeem they will get bitcoins from Grayscale.  Am I reading wrong?

And they would have to buy the bitcoins themselves, isn't it so?  Or am I misreading their Sep/2013 document?

If I understand correctly the above file (from page 31 onwards), the BIT fund will no longer sell or redeem shares for dollars, only for bitcoins.  That is, a broker gives 10 BTC to BIT, gets 100 BIT shares; or the reverse.

Thus the buying and selling of bitcoins for dollars will be done by the brokers or final investors.

BIT will be basically a safekeeper of the BTC, and will not buy or sell bitcoins by itself (except the BTC collected as fees, presumably).

Is this correct?

Note from page 51:


(bolding as in the original)

This file available on the OTCQX page, dated Sep 30 2013, describes how the fund works and its the situation as of that date (shortly before redemptions were suspended).

SecondMarket's BIT fund (GBTC) now has some bids on its OTCQX page, from 20.00 to 31.50 $/share (corresponding to 200 to 315 $/BTC).  

Indeed, the 30+ price is now "N/A" and there is a bid at the bottom for 100 shares at 20.00 $/share (meaning 200 $/BTC).  Hm.

EDIT: more bids, up to 31.50 $/share (315 $/BTC)

AFAIK trading has not started yet.  That number may be just the share's nominal value, copied down at some past date.

As I understand, when trading starts, their current clients who have held shares for more than 12 months will be allowed to offer them for sale through brokers, and OTCQX will record the price.  One authorized primary broker will also be allowed to buy additional shares for sale through other brokers.  (I don't know whether that primary broker would have to wait 12 months too.)

That bid price has been there for a while.  It may be just a placeholder.

Back in Jan/2014, the miners as a whole were getting something like 4 M$ per day. In Jun/2014 they made about 3 M$/day.  The big industrial miners were probably making a good profit back then.  Today, they are fighting for less than 1 M$ per day.  It seems unlikely that they are still very profitable.  It is no wonder that the majority of the hashpower is now in China, where electricity is cheap(*).

The hashpower (and hence the difficulty) is still increasing, perhaps because mining farm operations that started months ago are only now coming in line, and/or because the existing farms are replacing their machines by more efficient ones.  Either way, the capital cost of that new equipment must be adding to the stress on miners' revenue. For some miners, the expected return from their investment may already be negative; but they may keep mining, in order to reduce their losses, until the increase in difficulty makes the marginal cost negative too.

Recall that the miners (and the entire bitcoin economy) are being supported almost entirely by the new investors who buy coins to hold.  The price has fallen so much because those investors, and their money, are becoming more scarce. 

In Jun/2014 those investors were putting 3 M$/day into the system for the miners, and some more for the earlier buyers who were cashing out. How much more, no one knows; for the sake of argument, lets assume that it is the same amount that they give to miners. WIth that assumption, the new investors must be pouring 2 M$/day today.

Today's new investors are motivated by the hope that some day -- say, in early 2016 -- they will be able to sell their coins for a lot more -- say, at least 500 $/BTC.  For that to happen, the new investors on that future date would have to put 6 M$/day into the system -- 2 M$/day to buy the coins produced by the miners, and 4 M$/day to buy the coins that today's investors are buying now, assumed to be worth 2 M$/day.  And those future investors must be motivated by the hope of selling their 500$ coins for 1000$, say in early 2017; which means that, by that date (post-halving), new investors should be pouring in 2 M$/day for the miners and 8 M$/day for the previous year's investors, or 10 M$/day.  And so on.

Good luck with that.

(*) I have read unconfirmed rumours that Friedcat, the CEO of the Chinese mining company AMHash, disappeared because the government discovered that his mine was getting its power from a food factory, which was heavily subsidized by the Chinese goverment.

Are they the real Four Seasons, or the actors in the movie/musical?

Indeed.  And, besides, most of those news are irrelevant to the Chinese day-traders.  It seems that the Western markets cannot lift the price more than ~80 USD in response to good rumors. 

Also, many "good news" usually cause the price to drop because they show that the preceding "good rumors" were wildly exaggerated.  Remember the Coinbase exchange launch?

The farmer lets the goat eat the cabbage, and takes it to the other shore.  He ties the goat to a tree by the river and waits until the wolf gets hungry and swims across the river to get it.  He catches the wolf before it eats the goat. When he gets home, he trades the well-fed goat for another starving goat and a head of cabbage.

Do I get the job? 

Oops, whould I delete the previous post, since it answers a non-question with a question?

Indeed, wasn't Daniel Brewster from that Indian state between Ireland and France?

By blotch I meant the decadence of the Roman Empire, Mussolini, Berlusconi, Monti, and many others through the last 1500 years...

Sure, and in Byzantium, and many other places; but the Romans (of whatever origin) also added their lot...

Thanks. But that cartoon was not related to bitcoin, it was for lecture notes of a course on math for CS.  Posted it here just because of the "Greeks and logic" topic.
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