Good timeline, but some are missing:

2013 - Dogecoin created
2014 - $USD 260 bitcoin

 

The chip surely was profitable (or was expected to be) when they designed it.  They had two big mines in the US, using oil cooling, and seem to have taken a small but significant slice of the block rewards.

However, I read that they have not mentioned those mining istallatons in the recently leaked investors slides.  If the chips are now unprofitable, and they have millions of them in stock, their new "business plan" would make a lot more sense.

Beware that the Swedish crown (SEK) is losing value relative to the dollar, so the BTC:USD price implied by those trades is not increasing that much.  It seems to be tracking the price on the exchanges, within a few  dollars.

I don't know the 4004 but surely it was a competitive commercial product.  The point of my questions is to know whether 21.co is building a competitive commercial product, or just looking for a way to recover some of the money that they invested in an unprofitable mining chip.

Just because a person's  idea was once a success, it does not mean other ideas by the same person will be successes too.

Also note that Marc did not invent the WWW or graphical browsers.  He was the leader of a team who created NCSA Mosaic, an early (but not the first) graphical browser, and later one of the founders of Netscape, a company that sold the first commercial browser.

I don't think we can make much progress before we have answers (or minimally fundamented guesses) to these basic questions:

- What is the power consumption of their chip?
- What is its hash rate?
- How many of those chips do they have in stock?
- How much did those chips cost (icluding design)?

I understand thatit is Huobi's fault.  Their API only returns the first N entries of the order book on each side, for some N.  There are robots that keep spamming hundreds of tiny orders in the spread.  So those N entries do not reach very deep into the order book.

There are several hot topics to catch up with, among them the Digital Gold book and Roger Ver calling Star Xu of OKCoin a liar. 

You must have missed this:
[ if the image shows truncated, curse @theymos and click on it to see it whole. ]

That's true. 

Well, first, I doubt that it is actually "developing" and "entrenching itself".  There are many companies that need it to survive, and several hundred millions available for marketing and PR efforts (like the St. Petersburg Bowl, fat discounts for bitcoin purchases, slots on Bloomberg, etc.).  However, the few minimally reliable and meaningful data about adoption do not show that it is growing, and hint that it may be decreasing.

Second, the failure modes that I can imagine are not going to be detectable in advance.  A killer bug may surface, a much better remote payment method may arise, the price may drop further (even if there will be another bubble or two before that) causing most of the miners to stop, there may be a successful majority miner attack, the US may ban it,  etc.  More likely, competition from other digital payment systems will cause the user base to shrink.

Bitcoin's economic structure is unsustainable because mining is being supported by new investors (to the tune of 800'000 USD/day) instead of its users; and there is no plausible roadmap to fix that situation that will not go through a price and network collapse.  Moreover, the radical "free market" system that is supposed to define the transaction fees in that post-reward era, with unpredictable fees and no service guarantee, cannot possibly work.  Because of the mirage of "deflationary currency", its price is 90% o more due to speculation, rather than use as currency.  The huge and unpredictable price swings are a consequence of that.   And so on.

Another possible outcome is a mining cartel taking over and  becoming a de facto central authority, with power to change the protocol, set minimum fees, cancel transactions and seize funds, etc.. Believers have convinced themselves that such takeover is impossible because the "economic majority" has control.  I have looked into those arguments and I believe thay are just wishful thinking.  The only choice that the "economic majority" will have is to accept the cartel's takeover (and tell everybody that it is actually "good for bitcoin", hoping that the coin will not lose much value), or to lose everything.  If that happens, perhaps bitcoin will continue to exist, and will continue to be used as a speculative intrument (as it is in China) and/or as a payment system.  However, if it becomes centralized, it would have failed in its goal.
 

However, if those transactions will use freshly mined bitcoins, they will not generate any new demand on the market.  Eventually, those mined bitcoins will find the way to the markets, just as if tehy had been mined in bulk.  So those chips will not change the supply or demand.

Moreover, those additional millions of transactions will involve very small amounts and minimal fees.  One big dark cloud in the bitcoin horizon is the question of how the network will be supported once the block rewards become insufficient.  The hope was that commercial transactions would increase to the point that (a) the price would increase exponentially, thus preserving the dollar value of the block rewards, and/or (b) the transaction fees would become significant and compensate for the reduction of the block rewards.  Those millions of micropayments and tiny miner payouts from the 21.co chips will not help either (a) or (b).


They must have mined a lot of bitcoins; but have they kept them, or have they sold them already?  They must have sold some of them to pay their bills.  If they kept the rest as bitcoins, they must be in very bad financial shape, like other entities that did so (such as the Bitcoin Foundation).

The SEK/USD exchange rate has been changing these days; if you take that into account, the implied bitcoin prices are a bit different.  See my numbers here.

Ufortunately it seems that the price of bitcoin is quite unpredictable. 

It is obvious that the price responds to some news and rumors.  Since 2014 there have been a dozen or so moderately large price events -- steps, spikes and dips 50--100 $/BTC -- that are clearly linked to such media events: by their size and direction, timing, and comments in forums.

Most of those events originated in China, and affected only Chinese traders: the PBoC decrees of Dec/2013, the rumors and anti-rumors in Mar--Apr/2014 about further PBoC restrictions, the closure of bank accounts of Chinese exchanges, and the closure of one or two Exchanges.

There were a couple of moves due to events that affected everybody (Mark's claim of a "bug in the protocol" on 2014-02-10, the first USMS sale in Jun-Jul/2014,  the rumor of  "three billion hedge fund about to trade on OKCoin").

Finally there were few smaller price spikes linked to Western news and rumors, such as  "Microsoft will accept bitcoin", "McDonalds will accept bitcoin on Valentine's day, and the Coinbase "lunar" teaser.

Obviously, none of these events can be predicted in advance,  At best, one could recognize them when they are just starting, a couple of hours before everybody else.  But, even then, it seems impossibel to predict how big the effect will be and when the change will stop or reverse.

Looking at all the history up to 2013, the main price movements can be described surpisingly well by the sum of about 10 overlapping "idealized bubbles" with simple and qualitatively similar shapes.  See Figure 1 in particular. Each of those idealized bubbles has a fast exponential rise that stops suddenly,  followed by a slower exponential decay.   In a couple of cases, it is necessary to add a flat section between the rise and the decay.  Each of those bubbles could be explained as the epidemic diffusion of bitcoin through some new "market", the saturation of that market, and its gradual shrinking. 

The bubble that peaked on Nov/2013 was almost certainly caused by the opening of the "market" of amateur commodity speculators in Mainland China, a demand that was primarily served by Huobi and OKCoin, and perhaps by BTC-China.

There was a sudden rise starting around 2014-05-20, from ~450 $/Ƀ to ~680, that I cannot connect to any event.  But that rise can be well described by another small bubble, peaking in early Jun/214.  Since the decay rate of that mini-bubble seems to mtch that of the Nov/2013 bubble, peraps it is some new segment of the Chinese market, or just a temporary recovery of the same market.

The bubble that peaked in Apr/2013 may have been due to Chinese demand too, perhaps limited to Shanghai and/or Hong Kong, served by BTC-China and Bitfinex.

I do not know what "markets" could have been resposible for the previous bubbles (I only started following the bitcoin scene only in late 2013). 

According to that model, the price now is still dominated by the tail (decay) of the Nov/2013 bubble and of the Jun/2014 mini-bubble, with smaller ups-and-downs due to news and rumors.  (See  Figure 7 for a model that includes the latter.)

As for predicitions, all that the model can say is that, if there are no new bubbles, the price will probably continue decaying exponentially, by the rate that has prevailed since Feb/2014.  However, the bubbles do not seem to follow any pattern; as they shouldn't, if they are due to separate markets being opened.  Moreover, the fast exponential rise means that each new bubble cannot be detected until it is already well underway; and its peak cannot be detected until it has clearly happened.   Which would explain why no one seems able to predict the price, even in the short term.

Oh. Oh my. 

The claim that the intent is to steal power from the consumers is not mine; it is being made by several people in the forums.  I still haven't seen confirmed basic data about the chip: power consumption and hashes/sec.

Someone on reddit who seems familiar with chip design claims that the 21.co chip is 500 mm^2 in area (~22 x 22 mm), which means it cannot be integrated in CPUs etc.

The last halving occurred on 2012-11-28.  The only remarkable thing that the price did at the time was to remain constant for the next five weeks.  Then on 2013-01-05 or thereabouts a rally started, that peaked in April. 

Considering that other similar rallies occurred at other times, and that BTC-China (which had just recruited Bobby Lee as their CEO) apparently led that rally, it does not seem likely that it was connected to the halving at all.

We do not know the terms of that partnership.  21.co may use Qualcomm parts and/or expertise, rather than the other way around.  Doesn't Qualcomm have a project for self-configuring public wifi routers?  That may require some automatic micropayment system, so their interest in 21.co may be about that, rather than mining per se.

That might justify embedding the chip in the charger then; not in the battery-powered device itself. (But then, why not a separate trinket that is plugged to the wall outlet too, like a charger, and can mine 24/7 while the user takes the charger to work?)


They could do it, but why?  What is the advantage of physically attaching two chips (or subsystems in a chip) that do totally unrelated functions, neither one needing the other to function?  For authentication purposes and accessing a device-specific wallet, all that the device needs would be an hardcoded private/public key pair and a protected signing curcuit, smatcard-style.


Those chips are rather large, I gather.  Increasing the area of a chip reduces the yield and increases cost.  Increasing the power drain requires heftier power sources.  It cannot possibly be "zero incremental cost".

If the mining chips will be profitable for the consumers, the mining rig would be more so -- a "money making machine".  They should sell like beer.

So we must assume that, as many are saying, the chips will be a loss for the customer; basically a way for 21.co to mine at the customers' expense.  (Somewhere they say that the convenience of on-site generation makes the mined bitcoins more valuable than market-bought ones.  I understand this note as an admission that their chip cannot mine at a profit.)

If that is the case, then bakrupcty is the least they deserve.  Someone who steals a penny each from 100 million victims is no less a thief than someone who steals a million dollars from one.


The point is that the satoshis will not be generated where they are needed: some devices will have a surplus, some will not get enough.  "Error 407 -- cannot fetch that webpage because your router ran out of satoshis.  Try asking the fridge if it can spare some of its own."  If the devices are going to pool their mined coins, then, again, why should the chips be attached and assigned to particular devices?


It is not a design challenge, but a practical disadvantage.  The user will be persented with a more complicated device.

Greyscale BIT shares (GBTC) daily trading summary:

           !    OTX !    OTX !    FRT !    FRT !    FRT !    FRT !        FRT !       FRT !      FRT !          
Date       ! UpS_LO ! UpS_HI ! UpS_LO ! UpS_HI !   VSHR !   VBTC !       VUSD !       UpS !      UpB ! OBS      
-----------+--------+--------+--------+--------+--------+--------+------------+-----------+----------+----------
2015-05-04 |  37.98 |  42.00 |    .   | 200.00 |    765 |   76.5 |        .   |    .      |    .     | (*0)(*1) 
2015-05-05 |  55.00 |  94.86 |  50.00 | 175.00 |    435 |   43.5 |   32198.00 |  74.01839 | 740.1839 | (*0)     
2015-05-06 |    .   |    .   |  65.00 |  68.00 |    125 |   12.5 |    8268.50 |  66.14800 | 661.4800 | (*0)     
2015-05-07 |  40.00 |  66.00 |  40.00 |  86.00 |   2844 |  284.4 |  163651.00 |  57.54255 | 575.4255 |          
2015-05-08 |  49.00 |  59.00 |  49.00 |  59.00 |  14807 | 1480.7 |  750019.70 |  50.65305 | 506.5305 |          

2015-05-11 |  50.00 |  57.95 |  49.50 |  57.95 |   2756 |  275.6 |  143247.34 |  51.97654 | 519.7654 |          
2015-05-12 |  49.00 |  50.01 |  49.00 |  52.25 |   2286 |  228.6 |  113299.25 |  49.56223 | 495.6223 |          
2015-05-13 |  49.00 |  49.00 |  49.00 |  50.00 |    327 |   32.7 |   16113.10 |  49.27554 | 492.7554 |          
2015-05-14 |  44.00 |  49.00 |  44.00 |  49.95 |  20894 | 2089.4 | 1004923.74 |  48.09628 | 480.9628 | (*2)     
2015-05-15 |  38.00 |  45.00 |  38.00 |  45.00 |   2320 |  232.0 |   97444.35 |  42.00188 | 420.0188 |          

2015-05-18 |  27.15 |  38.00 |  27.15 |  38.00 |   4950 |  495.0 |  158115.83 |  31.94259 | 319.4259 |          
2015-05-19 |  27.90 |  29.50 |  27.89 |  29.90 |   4308 |  430.8 |  122327.92 |  28.39552 | 283.9552 |          
2015-05-20 |  29.25 |  32.25 |  29.25 |  32.25 |   4859 |  485.9 |  148652.00 |  30.59313 | 305.9313 |          

"OTX" data from the GBTC quote page at OTCQX.
"FRT" data from the Freerealtime site, except those flagged (*0) and (*1) (see below).

UpS_LO = Lowest price (USD/share) in the specified day.

UpS_HI = Highest price (USD/share) in that day.

VSHR = Number of shares traded in that day.

VBTC = Number of BTC equivalent to those shares (ignoring fees) = VSHR*10.

VUSD = Trade volume in USD (sum over all trades of num of shares times price per share).

UpS = Average price in day (USD/share) = VUSD/VSHR.

UpS = Implied bitcoin price (USD/BTC) = VUSD*10/VSHR.

OBSERVATIONS:

(*0) The "FRT" price range for this entry was obtained from this post.

(*1) For 2015-05-04, the values of UpS_LO, VSHR, VUSD, and UpS could not
be determined; the value of VSHR was taken from the OTCQX page.

(*2) The summary pages at OTCQX and FreeRealTime.com say VSHR = 19894, but
adding the FreeRealTime list of trades we get 20894 (1000 more). The
VSHR value given above is the latter. There were 2 trades near the end of the
day; perhaps one was undoing the other?