I am not aware of any time in history, any place in the world, where a society of more than a dozen people  has survived for more than a couple of months without some sort of government, laws, and law enforcement.  Even chimpanzees have leaders and rules of behavior; so government is probably in our genes, and more fundamental to human nature than language and technology.

If a society ceases to have a functioning government,  and does not get another one quick enough, some neighboring society will promptly and forcibly lend its own.

Financial regulations in particular were created in response to economic collapses such as the crash of 1929.  Conversely, the bank disasters of recent times can be traced to the waves of deregulation that started with Reagan&Thatcher and were copied by neocon governments all over the world. 

Less law enforcement invariably has meant more crime.  Why would it be different in Bitcoinland?

There may have been already more bitcoin scams than honest businesses, and more goxed exchanges than exchanges still functioning.  This list is already impressive, yet it has not been updated since last november.  Now, very few of those crimes have resulted in any criminal cases.  So, why should the criminals stop?  Without laws and law enforcement, fraudster and thieves fare much better than people who respect others's property.

Chinese Slumber Method prediction for Wednesday March 26

Prediction valid for: Wednesday 2014-03-26, 19:00--19:59 UTC (not before, not after)
Huobi's predicted price: 3596 CNY.
Bitstamp's predicted price: 589 USD.



The red and green strokes are actual hourly prices (Huobi on the left, Bitstamp on the right).  The olive-gray vertical band was inserted to fill 2 hours that are missing in bitcoinwisdom's plot.  The magenta square at right is the above prediction.  The blue square next to it is the last prediction (see below). The light blue-gray squares are the older predictions.   The blue dots are the Slumber Points, the mean prices ((L+H)/2) in the interval 19:00--19:59 UTC every day. On the Huobi plot, the size of the Albertosaurus under each dot indicates the night-time activity at Huobi. Specifically, the area of the reptile is proportional S = V_h/V_d, where V_h is Huobi's mean hourly volume in the three hour period 18:00--20:59 UTC (02:00am--04:59am China time), and V_d is Huobi's daily volume 00:00--23:59 UTC on the same date.  The largest Albertosauri correspond to the S = 0.010 or greater.   The size of each blue dot (on both plots) is proportional to its reliability weight W, computed from Huobi's ratio S.  The brown lines on Huobi's plot are trends fitted a posteriori to the Slumber Points. The orange line is the trend assumed for the Huobi prediction above.

Once more, Huobi saw relatively high volume at the Slumber Time (~1020 BTC/h, instead of the usual 50-200 BTC), possibly due to arbitrage. Today's data point too has nearly zero weight (S = 17.5, W = 0.002).  Even though the last two data points are nearly useless I tentatively assumed a straight-line trend fitted to the last three ones by weighted least squares:  A + B*(d-d0), where d is the day of the month, d0 = 23, A = 3468.97, B = 42.42.

The Bitstamp prediction, as usual, is the Huobi prediction divided by the currency conversion factor R, which was assumed to be 6.11 CNY/USD (it was 6.10, 6.11, 6.13, 6.20 at the last four Slumber Times).

Checking the previous prediction

Prediction was posted on: Tuesday 2014-03-25, 04:15 UTC
Prediction was valid for: Tuesday 2014-03-25, 19:00--19:59 UTC (~15 hours later)

Huobi's predicted price: 3525 CNY.
Huobi's actual price (L+H)/2: 3561 CNY
Error: 36 CNY (~6 USD)

Bitstamp's predicted price: 576 USD.
Bitstamp's actual price (L+H)/2: 583 USD
Error: 7 USD

NOTE: Even a broken clock gets the correct time twice a day.  That's not fair.

Because there seem to be no news about them after their opening and this reply to the central bank.  How important is the world is anyway? 

I doubt it.

That note is partly bad news (to some bitcoiners) because the IRS made it clear that all taxes apply to bitcoin transfers like they do to any other property transfer.  (I recall reading claims that payments in bitcoin, being invisible to governments, would be free from taxes.  The governments do not agree, of course.)

It is partly good news (to some bitcoiners) because the IRS recognizes that bitcoins, like cars and stock, are property and have value.  That note should help convince judges and cops who still may see bitcoins as "nothings".  The IRS view implies that stealing bitcoins or obtaining them through fraud are common crimes, that can be investigated by the police and can send people to jail.

That note does not imply, one way or the other, whether bitcoins are "solid" enough to satisfy the Securities and Exchanges Commision.  The US government is certainly much friendlier to bitcoin than most other countries, but even so I doubt that it will allow banks and the like to invest in bitcoin, or bitcoin-based funds to be traded at NYSE, any time soon.

I think I understand how money works.  I understand in particular that issuing new money transfers real wealth from the society that uses it (not just those individuals who own or use it) to  those who issue it (and "of course" keep some of it for themselves).

That is the reason why there are so many altcoins, by the way: everybody loves the idea of becoming filthy rich without working or having special skills.

And, as I wrote before, that is one of the reasons why I am very pessimistic about bitcoin's future.

It will hardly "perserve wealth".  It will transfer a lot of wealth from some people to other people.  Who will be the winners and who will be the losers depends on whether it will succeed or fail. 

Terrible analogy.  "Civilization" means government, taxes, laws, police, and, yes, banks.  Those inventions are basically good, although they can break down and get corrupted, and we must constantly struggle to try to keep them working as intended.

In contrast, the anarchic pipedream of an unregulated global economy without banks and outside the reach of governments, laws and police is not only impossible to succeed, but would be a barbaric nightmare if it did.  How many MtGOXes will have to pass before bitcoiners understand that?


Dinosaurs did not become extinct, they are called "birds" now.  Considering that dinosaurs can fly faster, better, higher and longer than any mammal, one could argue that they just left the inferior parts of the environment to the inferior life forms. 

It is not clear yet what killed all the other non-flying dinosaurs, and why the ancestors of the mammals (which were smaller than mice, AFAIK) survived.  I am not aware of any evidence that they were more intelligent.  Perhaps it was a multi-year cold spell that killed the non-flying dinosaurs, and the pre-mammals survived only because they had better body temperature regulation (oops, sorry for the dirty word  ) and lived off insects which lived off fungi that lived off the corpses of the dinosaurs.  Or whatever.

The Neo & Bee bitcoin bank in Cyprus seems to be stalled, I can't find any news after this:
http://www.cryptocoinsnews.com/2014/03/20/neobee-responds/
(And their reply to the Central Bank of Cyprus, like their pre-launch commercials, reads more like a post from this thread than a professional statement.  Do they really expect to convince the Central Bank to authorize their Bank to function, by insinuating that bankers are the biggest criminals in the world?)

People investing in something should try to have a realistic and accurate picture of its value, market etc.  Focusing only on positve side of news is not good for businesses.

I have seen a few anecdotes about companies starting to accepting payment in USD through BitPay, mostly from customers who already own bitcoins.  And BitPay's CEO said that they do not keep bitcoins themselves; they sell them as soon as they get them.

There seems to be no statistics on

   (a) how many stores really accept payment in Bitcoin, rather than USD through BitPay-like services.  (Many retailers work with rather tight
   profit margins; I don't see how they could post prices in BTC with the current volatility of the latter.)

  (b) how many people buy bitcoin for the purpose of paying for goods and services (as opposed to speculating, giving gifts, etc.), and how
  many dollars that amounts to.

  (c) how many stores have stopped accepting payment in bitcoins (directly or through BitPay-like services).

Overstock once or twice posted how much they sold through bitcoin.  Were there any updates?

I suppose that BitPay publishes some data regularly on their volume.

On the other hand, their trains don't go "choo choo" any more.

For general information, according to Google Translate:
比特币 = bǐtè bì = "bitcoin"
比 = bǐ = "ratio" (used for its sound, not its meaning)
特 = tè = "special" (ditto)
币 = bì = "currency", "money"

Daily volumes of BTC trade to/from USD and other national currencies (in kBTC):

                    !   Sun !    Mon !    Tue !    Wed !    Thu !    Fri !    Sat !   Sun !    Mon !                     
EXCHANGE            ! 03/16 !  03/17 !  03/18 !  03/19 !  03/20 !  03/21 !  03/22 ! 03/23 !  03/24 ! Currencies considered

BSTP Bitstamp       |  3.30 |   9.17 |  14.91 |   7.08 |  10.91 |  22.42 |  13.61 |  6.10 |  13.67 | USD(w,c)             
BFNX Bitfinex       |  1.90 |   3.76 |   7.74 |   3.44 |   8.10 |  19.20 |   6.73 |  4.83 |   9.28 | USD(w,c)             
BTCE BTC-e          |  2.62 |   3.90 |   7.91 |   5.48 |   7.85 |  10.43 |   4.14 |  2.43 |   6.35 | EUR,RUR,USD(w)(1)   
LAKE LakeBTC        |  3.30 |   3.05 |   3.19 |   3.24 |   4.17 |   3.57 |   3.70 |  4.01 |   3.48 | USD(c)               
LBTC LocalBitcoins  |  0.32 |   1.08 |   0.99 |   1.08 |   0.89 |   0.89 |   0.51 |  0.36 |   0.99 | (c)(3)               
KRAK Kraken         |  0.16 |   0.48 |   0.86 |   0.58 |   0.74 |   1.12 |   0.75 |  0.29 |   0.88 | EUR,USD(c)(2)       
ANEX AsiaNexgen     |  0.93 |   1.02 |   1.00 |   0.88 |   0.67 |   0.87 |   0.39 |  0.52 |   0.78 | HKD(c)               
BTDE Bitcoin.DE     |  0.12 |   0.40 |   0.42 |   0.35 |   0.38 |   0.42 |   0.39 |  0.18 |   0.48 | EUR(w,c)             
CVIX CaVirtEx       |  0.06 |   0.10 |   0.10 |   0.13 |   0.40 |   0.14 |   0.12 |  0.08 |   0.34 | CAD(w,c)             
BCUX Bitcurex       |   .   |    .   |   0.32 |   0.15 |   0.41 |   0.18 |   0.16 |  0.07 |   0.23 | PLN(c)               
VWOX VirWox         |  0.10 |   0.14 |   0.14 |   0.14 |   0.11 |   0.13 |   0.12 |  0.15 |   0.14 | SLL(c)               
BCTR BitcoinCentral |  0.01 |   0.07 |   0.10 |   0.06 |   0.08 |   0.12 |   0.06 |  0.02 |   0.09 | EUR(c)               
CPBX CampBX         |  0.02 |   0.07 |   0.32 |   0.06 |   0.72 |   0.07 |   0.07 |  0.05 |   0.07 | USD(w,c)             
BSCZ BitStock.CZ    |   .   |   0.01 |   0.01 |    .   |   0.01 |    .   |    .   |   .   |    .   | CZK(c)               

SUBTOTAL            | 12.84 |  23.25 |  38.01 |  22.67 |  35.44 |  59.56 |  30.75 | 19.09 |  36.78 |                     

OKCO OKCoin         | 40.00 |  59.00 |  82.70 |  95.00 |  58.30 | 190.00 |  79.10 | 35.90 |  82.30 | CNY(w)               
HUBI Huobi          | 27.00 |  63.80 |  84.10 |  62.40 |  48.10 | 154.00 |  53.60 | 18.00 |  73.60 | CNY(w)               
BTCC BTC-China      |  1.51 |   2.74 |   3.70 |   3.79 |   2.85 |   9.79 |   3.06 |  1.57 |   4.84 | CNY(w,c)             
BTER Bter           |  0.28 |   0.34 |   0.27 |   0.35 |   0.36 |   0.66 |   0.32 |  0.28 |   0.47 | CNY(w)               

SUBTOTAL            | 68.79 | 125.88 | 170.77 | 161.54 | 109.61 | 354.45 | 136.08 | 55.75 | 161.21 |                     

TOTAL               | 81.63 | 149.13 | 208.78 | 184.21 | 145.05 | 414.01 | 166.83 | 74.84 | 197.99 |                     


NOTES:

(1) The USD volumes for BTC-e obtained from Bitcoincharts are consistently smaller than those obtained through Bitcoinwisdom. Using the latter.
(2) Bitcoinwisdom lists only BTC/EUR for Kraken, not BTC/USD.
(3) Bitcoincharts lists Localbitcoins with many currencies, most of which appear to have negligible volume.  This line counts only AUD,BRL,CAD,CZK,DKK,EUR,GBP,USD.

All numbers were collected by hand or copy-paste from the sites http://bitcoinwisdom.com (w) and http://bitcoincharts.com (c). Beware of possible errors.

For each exchange, the numbers include only the trade volume to/from the currencies listed in the rightmost column. Trade between BTC and other cryptocoins, such as LiteCoin, is NOT included.

Dates on the header line are UTC. Specifically, "01/15" means "from 01/15 00:00:00 UTC to 01/15 23:59:59 UTC". (Beware that the same period may span part of day 01/14 or part of day 01/16 in your local time zone.)

WARNING: There are at least five additional large exchanges in China that are not on this table because they are not covered by Bitcoinwisdom: FxBTC, ChBTC, BTCTrade, BTC100, and BTC38.  Together they may have as much volume as Huobi or OKCoin.

Thanks for the explanations.

Chinese Slumber Method prediction for Tuesday March 25

Prediction valid for: Tuesday 2014-03-25, 19:00--19:59 UTC (not before, not after)
Huobi's predicted price: 3525 CNY.
Bitstamp's predicted price: 576 USD.



The red and green strokes are actual hourly prices (Huobi on the left, Bitstamp on the right).  The olive-gray vertical band was inserted to fill 2 hours that are missing in bitcoinwisdom's plot.  The magenta square at right is the above prediction.  The blue square next to it is the last prediction (see below). The light blue-gray squares are the older predictions.   The blue dots are the Slumber Points, the mean prices ((L+H)/2) in the interval 19:00--19:59 UTC every day. On the Huobi plot, the size of the Albertosaurus under each dot indicates the night-time activity at Huobi. Specifically, the area of the reptile is proportional S = V_h/V_d, where V_h is Huobi's mean hourly volume in the three hour period 18:00--20:59 UTC (02:00am--04:59am China time), and V_d is Huobi's daily volume 00:00--23:59 UTC on the same date.  The largest Albertosauri correspond to the S = 0.010 or greater.   The size of each blue dot (on both plots) is proportional to its reliability weight W, computed from Huobi's ratio S.  The brown lines on Huobi's plot are trends fitted a posteriori to the Slumber Points. The orange line is the trend assumed for the Huobi prediction above.

Huobi trade on Monday was very low during the day; in that period the price fell ~90 CNY but then recovered to its previous value, ~3460 CNY. During the night the price increased by ~100 CNY, with relatively high volume at the Slumber Time (~1260 BTC/h, instead of the usual 50-200 BTC).  Presumably the price hike began outside China and was carried to Huobi by arbitrage, without significant resistance.  The extra volume during the late night hours may have been entirely arbitrage. 

Anyway, because of that heavy nightly traffic, today's data point has nearly zero weight (S = 17.0, W = 0.003).  Following the Method strictly, the trend now should be undefined and it would be better not to make any prediction.  To avoid disappointing the Method's fans, I tentatively assumed a break before Sunday's data point, and a new straight-line trend defined by the las two data points:  A + B*(d-d0), where d is the day of the month, d0 = 23, A = 3469, B = 28.

The Bitstamp prediction, as usual, is the Huobi prediction divided by the currency conversion factor R, which was assumed to be 6.12 CNY/USD (it was 6.09, 6.20, 6.15, 6.11 at the last four Slumber Times).

Checking the previous prediction

Prediction was posted on: Monday 2014-03-24, 05:37 UTC
Prediction was valid for: Monday 2014-03-24, 19:00--19:59 UTC (~13 hours later)

Huobi's predicted price: 3316 CNY.
Huobi's actual price (L+H)/2: 3497 CNY
Error: 181 CNY (~29 USD)

Bitstamp's predicted price: 541 USD.
Bitstamp's actual price (L+H)/2: 572 USD
Error: 31 USD

NOTE: Aw, shucks!

I mailed that request to them, they said "肯定！".

Wait -- you really meant dollars? Not Yuan?

It is 08:41am there, they are starting to trade now.

There, I found another reason to be skeptic about the success of bitcoin: bitcoiners will shop at Walmart instead of at their local grocer, therefore they will eat less healthy food, therefore the genetic predisposition to believe in privately issued cryptocurrencies will soon be weeded out of mankind's gene pool by natural selection.

My impression is that this recovery is driven by the non-Chinese exchanges (did that robot seller stop dumping on Bitstamp?).  It is being taken to China by arbitrage, with no resistance since it is 2am there.  If that is correct, the price may contuinue rising for another 3-4 hours; then we'll see...

Oops, sorry, I did not notice that (it is linked in the Coindesk article as if it were by Greg).

It is good advice for long term investors and people who buy/sell bitcoins for commerce purposes.

As others have observed, however, speculative traders need instant access to their coins with no prior warning; and they seem to be responsible for almost all the trade volume on any exchange, and most of its total account balance.  The exchange, on the other hand, needs to ensure that its clients will honor their sell offers immediately. 

Linked from that coindesk article:
https://iwilcox.me.uk/2014/proving-bitcoin-reserves

An audit that aims to prove that an exchange is honest cannot assume that it is honest.

There are two easy ways a dishonest exchange could fool such an audit (and they are even mentioned in Greg Maxwell's write-up).

First, the exchange could exclude some customers from the ledger given to the auditor, or list them with reduced balances.  The Merkle tree allows an ordinary customer to verify that his own account was included in the audit; but accounts that belong to the exchange owners or conniving customers (which are suspected to have existed at MtGOX) can be omitted without risk of being caught by this test.

Second, the exchange may have sold the coins to a long-term investor, who, being an accomplice to to a theft, would want to help the exchange pass the audit, and therefore provide whatever proof of bitcoin ownership that the auditor requests -- such as moving the coins in the way specified by the auditor, or some other crytography-based technique.  It seems very difficult, if not impossible, for A to prove to B that A knows the private keys, without revealing the private keys to B, in a way that cannot be simulated by the real owner C and passed off by A as having been done by himself.

I already commented on Coinbases's "audit" by Antonopoulos, which Greg compares to Ver's "audit" of MtGOX, and was flawed on both counts: according to his report, it did not verify that the total balances provided by Bitstamp were accurate (not even by the Merkle tree test above), and relied on the "move your coins" test to verify their holdings.  Bitstamp't "audit" cannot have been better than that.

Greg's paper discusses ways to fix some of those auditing flaws, but the major exchanges do not apply them yet.

In any case, an audit does not guard against the risk of a "100% honest" exchange suddenly folding, with loss of all client bitcoins.  There is currently no way to prove that an alleged hack or key theft was not done by the owners themselves, and (as the MtGOX case shows) there seem to be no effective way for the clients to recover their "stolen" bitcoins, or even to identify them in the blockchain.

Yes, these audit flaws and risks also exist for ordinary public corporations and banks; Enron, Worldcom, Madoff, Lehmann Bros and other famous failures are proof of that.  But traditional audits are much more thorough, and rely on lots of information that is known to many staff members and/or can be independently verified, such as bank statements, payrolls, tax reports and other official records, transactions with suppliers and retailers, and so on.  Moreover, it is much harder for the owners to steal half of the company's assets without being caught and having their loot seized.

And I know of no case where a hacker invaded a bank, stole all of its clients's money, and got away with it.