How To Use Bitcoin – The Most Important Creation In The History Of Man

[kevsta]

The CHART is my master.
I will not deviate from the LINE.
I will follow it where it goes.
I will hindcast where it went.
And though it take me to bankrupcy and ruin
I shall instantly have a new chart line to explain.
And lecture on, a pious and faithful Chart Reader.

The ascending tops they comfort me.
With advancing volume thy market thrusts.
The ascending triangle is my joy.
The peak to valley drawdown I fear.
Yea, though I see the bearish homing pigeons in flight
I fear no evil from the dark cloud cover nor dojis nor dragonflies.
The chartist fears nought, steadied by his cup and handle, his head and shoulders, and his gravestone dojis.

All Hail The Chart!

nope, just watching the price. it will track the lines, until it doesn't like always.

the point of inserting a trade using probably the very first strategy most novice traders would learn was only to show that absolutely anybody could do it, and so they will be.

 

[mhaze]

Bitcoin's intrinsic value is nil. This is a fact. Bitcoin does not physically exist; therefore it has no intrinsic value, nor can it. It has only whatever value is assigned to it by speculators....

False, incorrect understanding of basis.

Perhaps opinion, but certainly Bitcoin is exhibiting all of the classic signs of a speculative bubble, as discussed earlier in the thread......

That is explaining why one has a certain opinion, which is defacto admitting it is opinion. Thank you.

Bitcoin is, for all practical purposes, not a currency, as virtually no one accepts it directly as payment, alleged pizza and Hulu purchases (through intermediaries who convert BTC into USD) notwithstanding. You can call that opinion if you like, but it's a widely-held one.

Factually incorrect. Intermediaries perform escrow functions; in many cases the transaction is BTC to BTC. Anyone that has BTC already has a means of conversion to and from fiat currencies.

Any investment vehicle (or commodity) whose price swings by 30% in the space of a few hours certainly meets any reasonable definition of "volatile".

That remains to be seen. Given that bitcoin has replicated a dynamic expansion cycle three times now, superimposing those three periods and running a statistical analysis may show close similarities. If the underlying dynamic is an exponential growth similar to what is seen with bacteria or virus, then you are wrong.

The matter of volatility would have to be measured from a correct understanding of the dynamic nature of the item in question. For example, take a power line supplying 120 volts AC, a sine wave pattern. We measure noise from comparing the actual with an abstract perfect sine wave. And the difference is the useful measurement, not the peak to valley.

As mentioned above, we can easily abstract a rough equation of the performance of bitcoin over 3 major value expansions, and then use that as a model. I frankly can't see why this is not a smarter thing to do than many of the ideas mentioned in the last six pages of this forum.

 

[wrs]

no, and Im even more lost, given that the system Ive been concentrating on for the last 18 months (on and off) is based entirely around the daily Forex manipulation by the players that are all missing here

the other thing that really strikes me is that the familiar 1-2-3 rhythm that is present in all the other markets is not really the same on BTC.

ps and yes, Average Daily Range indicator is a proper laugh lol. given the razor tight response to ADR on Forex theres definitely something very different going on here.

All this is why I am just watching. It is fun though to watch it and it's a challenge to begin to try and understand.

 

[wrs]

Bah...you need to look at the fundamentals. The problem for guys like you (no offense, I am also trained in regular investment theory and practice, eg Graham, Securities Analysis, etc) is that you try to put a roundular (bitcoin) into square holes (traditional concepts on investments).

Start out by saying "Disruptive technology." Then rethink the whole thing from the start, and figure out what the fundamentals are.

Maybe go around for a week saying nothing to anyone but "Disruptive Technlogy!" and then see if it all makes sense.

As far as I can tell, there are no fundamentals. No profit, no source other than what exists and any new coins will only come at a higher and higher CPU cost. So there is no way to assume anything but a declining rate of increase in the current supply. The only result is to drive the price higher and higher and higher until it's unsustainable.

Nothing can be bought with it, it's just the ultimate number on a screen. That might be the allure. Gambling.

Those big wallets need to be emptied into a lot of smaller wallets. If that doesn't happen, bitcoin will never be a currency. It's exactly why gold isn't a currency. The bankers stole most of it and locked it up. Go look at the largest gold hoards, they are in bankers vaults. Who owns those big wallets? Bitcoin may have already been coopted.

 

[mhaze]

As far as I can tell, there are no fundamentals. No profit, no source other than what exists and any new coins will only come at a higher and higher CPU cost. So there is no way to assume anything but a declining rate of increase in the current supply. The only result is to drive the price higher and higher and higher until it's unsustainable.

Nothing can be bought with it, it's just the ultimate number on a screen. That might be the allure. Gambling.

Those big wallets need to be emptied into a lot of smaller wallets. If that doesn't happen, bitcoin will never be a currency. It's exactly why gold isn't a currency. The bankers stole most of it and locked it up. Go look at the largest gold hoards, they are in bankers vaults. Who owns those big wallets? Bitcoin may have already been coopted.

Given that you've repeatedly been told that many transactions are occuring with bitcoin, I can only say that the bolded statement above is some type of denial mechanism.

Your first and third paragraphs are just plain wrong, too. The first, because of the admission of not understanding the fundamentals is followed by an assertion of unsustainability, which can only be asserted with understanding of fundamentals.

The third, because of lack of consideration of fungability and divisability of bitcoin.

 

[kevsta]

K, I'll agree with that for the simple reason that we could say that anything had "volatility", unless it was at absolute zero, in which case it wouldn't be moving around too much, unless of course it was a big rock moving at a high speed toward our planet, in which case we wouldn't have time to discu$@#$*!_*@&

well from a trading perspective volatility is measured by daily range generally, and anything that can mimick the last 40 years of gold trading in a couple of months is pretty volatile ? the latest BTC peak to trough selloff was nearly 40% in a few hours.

In the case of Litecoin (below) it replicated the entire Silver run in 3 days. interestingly, it also peaked at the same level as silver - $48 and change, and bounced off strong support at 26.10, er, like er.. Silver.. it's er, the 50% retracement point or something.

 

[mhaze]

well from a trading perspective volatility is measured by daily range generally, and anything that can mimick the last 40 years of gold trading in a couple of months is pretty volatile ? the latest BTC peak to trough selloff was nearly 40% in a few hours.

I think I covered this well in #2751 point 4, however, the underlying question is whether this is a meaningful measure of any characteristic of bitcoin or it's utility.

This is somehow like people looking at say the changes in price of the stock, Google, and saying, well "that's volatile ... that's no good" instead of looking at the fundamentals, what is the market, what is the current market share, what percentage of it does Google have and can it gain, etc.

Or to put it another way, ponder this...

There are actual real live people on this forum in this thread who want to argue about TERMS like 'currency' or 'volatility' when if they'd just opened their eyes instead of blabbing about terms, they could have just put money in it and made out pretty nicely. So I would argue that ridiculous content is being dumped into the trash heap of bad ideas pretty consistently, yet at the same time we must acknowledge that at some point the sheer weight of the bad ideas, misunderstood concepts, and improperly used phrases is unsustainable and collapses of it's own weight...meanwhile the bitcoin soldiers on through the jungle.

 

[wrs]

Given that you've repeatedly been told that many transactions are occuring with bitcoin, I can only say that the bolded statement above is some type of denial mechanism.

Let me fix that, there is nothing I can buy with it that I actually need or want.

Your first and third paragraphs are just plain wrong, too. The first, because of the admission of not understanding the fundamentals is followed by an assertion of unsustainability, which can only be asserted with understanding of fundamentals.

The third, because of lack of consideration of fungability and divisability of bitcoin.

There are no fundamentals to understand. Algorithms don't produce fundamentals, the increase in supply of bitcoin will diminish at an exponential rate. Any increase in the use of bitcoin will only enrich current holders of the currency at the expense of new entrants (exactly like a Ponzi). Simply dividing the existing currency into smaller units doesn't diminish the slice of pie that current holders have. This is the fundamental obstacle to bitcoin becoming a currency. Bitcon is based on a false premise regarding money.

 

[kevsta]

Given that bitcoin has replicated a dynamic expansion cycle three times now, superimposing those three periods and running a statistical analysis may show close similarities. If the underlying dynamic is an exponential growth similar to what is seen with bacteria or virus, then you are wrong.

...

As mentioned above, we can easily abstract a rough equation of the performance of bitcoin over 3 major value expansions, and then use that as a model. I frankly can't see why this is not a smarter thing to do than many of the ideas mentioned in the last six pages of this forum.

So I dont see 3 expansion cycles clearly, unless it was back before my charts begin, on here it looks like we're in the middle of the second. Fibonacci is a useful tool for this because it gives you easy visible percentage expansion levels.

Fib 1 level was the first expansion from $1.50ish to $255.xx = 170x expansion peak to trough. price then consolidated around the 50% line, re-tested the 23% level, and then broke out again..

Fib 2 is from $1.50 up to the most recent high. note the neat overlaps on the extensions from Fib 1 (161.8%) with the retracement levels on Fib 2.

but if we take the price from the peak of the previous highs (255) to current we have only a 3.9 x expansion at this point.

 

[mhaze]

Let me fix that, there is nothing I can buy with it that I actually need or want.

K.

There are no fundamentals to understand. Algorithms don't produce fundamentals, the increase in supply of bitcoin will diminish at an exponential rate. Any increase in the use of bitcoin will only enrich current holders of the currency at the expense of new entrants (exactly like a Ponzi). Simply dividing the existing currency into smaller units doesn't diminish the slice of pie that current holders have. This is the fundamental obstacle to bitcoin becoming a currency. Bitcon is based on a false premise regarding money.

This is exactly like saying that the Enigma machine had no fundamental operating principles, did not involve infrastructure, and was a false premise regarding the outcome of World War II.

Actually, the math was conceptualized, then an industry created to make machines that implemented it, machines and parts were distributed, operators were trained....it was a massive operation.

Similarly the deconstructing of the and reverse engineering by the Poles was a massive operation.

Similarly, there is massive infrastructure today in bitcoin, consisting of the peer to peer network of thousands of nodes, thousands of pieces of tested operational software, and it is only in it's infancy.

Worldwide, person to person transfers of money are possible with bitcoin. That's a new thing. By the way, this morning I started to buy something with bitcoin, then found a better price with USD on Amazon.

 

[kevsta]

There are no fundamentals to understand. Algorithms don't produce fundamentals, the increase in supply of bitcoin will diminish at an exponential rate.

dont most real things do this too?

Any increase in the use of bitcoin will only enrich current holders of the currency at the expense of new entrants (exactly like a Ponzi).

not necessarily. given that there are real life constraints on it that prevent the simple "printing" that is the reason all national currencies cumulatively inflate themselves away, what is to stop it just steadily rising inversely to the paper ponzi we have now?

Simply dividing the existing currency into smaller units doesn't diminish the slice of pie that current holders have.

how is this any different to an IPO? Facebook for example? yes, the people in at the beginning will make more money than anybody else. the only difference is you can potentially one day buy something with this, unlike with AAPL shares.

This is the fundamental obstacle to bitcoin becoming a currency. Bitcon is based on a false premise regarding money.

there are a lot of false premises about money knocking about.

 

[mhaze]

So I dont see 3 expansion cycles clearly, unless it was back before my charts begin, on here it looks like we're in the middle of the second. Fibonacci is a useful tool for this because it gives you easy visible percentage expansion levels.



Fib 1 level was the first expansion from $1.50ish to $255.xx = 170x expansion peak to trough. price then consolidated around the 50% line, re-tested the 23% level, and then broke out again..

Fib 2 is from $1.50 up to the most recent high. note the neat overlaps on the extensions from Fib 1 (161.8%) with the retracement levels on Fib 2.

but if we take the price from the peak of the previous highs (255) to current we have only a 3.9 x expansion at this point.

Yeah, go back a bit...they don't show on your chart, look at how it got to 10, 30, etc.

For the Bitcoin-bubble-believer-bobbleheads...if it's a bubble it ranks up with the biggest bubbles in world history. And as this article indicates, it's "A" or it's "B". A is let us say and give credit in doing so to MichaelSuede "the most important creation in the history of man". B is "bubble".

http://bullmarketthinking.com/charts-bitcoin-vs-10-of-the-biggest-bubbles-in-human-history/

It’s either humankind’s first digital “free-market” currency here to rescue us from the evils of central banking, or it’s shaping up to be the next biggest bubble in human history.

 

[wrs]

dont most real things do this too?

Not food or things produced by the labor of man since it's either used up or wears out.

not necessarily. given that there are real life constraints on it that prevent the simple "printing" that is the reason all national currencies cumulatively inflate themselves away, what is to stop it just steadily rising inversely to the paper ponzi we have now?

The idea that national currencies inflate themselves away isn't a short term matter. If you look at banking currencies from the 1800s here in the US you get a better idea of how a flexible currency might work. A flexible currency rises and falls in quantity due to the need for it in the economy. It isn't a store of value per se and it should not vary much in value before it's quantity is adjusted. These currencies were based on the extension of short term credit secured by the future delivery of goods and services. These currencies supported a healthy economy to the extent the banker didn't create more than he was entitled to take as his return for managing this part of the system. Bankers charged interest on the credit for this purpose.

how is this any different to an IPO? Facebook for example? yes, the people in at the beginning will make more money than anybody else. the only difference is you can potentially one day buy something with this, unlike with AAPL shares.

Who would want to buy something with shares? Only the issuer and that is what companies do when paying compensation in options. Bitcoin assures that this won't happen, i.e. no dilution. However, bitcoin is not supposed to be a share, there is no dividend and you can only make money by not using it. As long as bitcoin is assured to rise in value as the number of users rises, the current holders have no incentive to use it. But of course then there won't be any decent transactional volume. The game being played with the conversion value right now isn't going to get people to use it if that is what the game players actually believe. This current behavior is demonstrating that bitcoin is not and probably never will be a generally accepted currency with a reasonably stable purchasing power. In addition, it's structure ensures that it must remain so.

 

[mhaze]

....As long as bitcoin is assured to rise in value as the number of users rises, the current holders have no incentive to use it. But of course then there won't be any decent transactional volume. The game being played with the conversion value right now isn't going to get people to use it if that is what the game players actually believe. This current behavior is demonstrating that bitcoin is not and probably never will be a generally accepted currency with a reasonably stable purchasing power. In addition, it's structure ensures that it must remain so.

This is wrong. The major holders of bitcoin all talk about it's transaction use, not it's use as an investment. Most of them advise against that. And I'm afraid you still don't comprehend the application of fungability to a digital currency in transaction.

To get there, take some sample international flows and rates, velocities, and figure how much bitcoin it would take to handle those.

For 200m transactions per month at $20 average, each transaction taking 30 minutes to 6 block chain verifications. Assume some inefficiency, so one unit of ecurrency is in use 750 cycles each month. Needful thing: 266,667 units of ecurrency to fulfill the task.

Using a price of $1000 per bitcoin, 5333 bitcoins are required for this flow. With 12M bitcoins in circulation, this wouldn't even cause a hiccup in the price.

Where fungability enters in is in considering that it does not matter whether the required amount of bitcoin based on conversion rates is 5333, or 533 or 53,333. With 12M bitcoins would this 200m/month transaction volume be affected if the BTC price went to 1/1000 of what it is currently? To $1/bitcoin? Answer: this would require 5,333,000 bitcoins or nearly half the existing currency base. Obviously, that would cause a supply demand issue that would cause the price to rise.

Thus, ultimately, transaction volume should be the major driver in bitcoin valuation. Note the impact of velocity on the above equation. If some smart guys reduced velocity from 30 minutes/transaction (which I extended to about an hour for inefficiencies) to 1 minute, they could really make out. And this is possible.

This is the general method that should be used to guess at future bitcoin valuation. Note that the 200m/month transaction rate I chose for illustrative purposes, it is actually ridiculously low. We're talking about the whole world here.

 

[wrs]

This is wrong. The major holders of bitcoin all talk about it's transaction use, not it's use as an investment. Most of them advise against that.

Then how come those big wallets aren't spending?

And I'm afraid you still don't comprehend the application of fungability to a digital currency in transaction.

E-gold is likewise fungible and has something tangible behind it.

To get there, take some sample international flows and rates, velocities, and figure how much bitcoin it would take to handle those.

For 200m transactions per month at $20 average, each transaction taking 30 minutes to 6 block chain verifications. Assume some inefficiency, so one unit of ecurrency is in use 750 cycles each month. Needful thing: 266,667 units of ecurrency to fulfill the task.

Using a price of $1000 per bitcoin, 5333 bitcoins are required for this flow. With 12M bitcoins in circulation, this wouldn't even cause a hiccup in the price.

Where fungability enters in is in considering that it does not matter whether the required amount of bitcoin based on conversion rates is 5333, or 533 or 53,333. With 12M bitcoins would this 200m/month transaction volume be affected if the BTC price went to 1/1000 of what it is currently? To $1/bitcoin? Answer: this would require 5,333,000 bitcoins or nearly half the existing currency base. Obviously, that would cause a supply demand issue that would cause the price to rise.

Thus, ultimately, transaction volume should be the major driver in bitcoin valuation. Note the impact of velocity on the above equation. If some smart guys reduced velocity from 30 minutes/transaction (which I extended to about an hour for inefficiencies) to 1 minute, they could really make out. And this is possible.

This is the general method that should be used to guess at future bitcoin valuation. Note that the 200m/month transaction rate I chose for illustrative purposes, it is actually ridiculously low. We're talking about the whole world here.

Smart guys are always gaming the current system, no reason to believe this will be any different.

 

[mhaze]

Then how come those big wallets aren't spending?

Neither known to be true, provable, or meaningful.

E-gold is likewise fungible and has something tangible behind it.

E-gold is not going to happen, regardless of what Peter Schiff would like to see happen. Regardless, you are trying to compare a fantasy concept with a real world wide implemented economic ecosystem, the bitcoin. That does not seem to have much relevance.

Smart guys are always gaming the current system, no reason to believe this will be any different.

Not an actionable premise. Related to my last comment about velocity, but you miss the point. Velocity characteristics of a true cryptographic e currency will not follow traditionally understood rules of economics about velocity and it's effects on the value of money. Additionally, reducing transit time for a transaction is not gaming the system, rather it's something anyone in their right mind would like to see happen.

 

[Puppycow]

There's a £60m Bitcoin heist going down right now, and you can watch in real-time

 

[mhaze]

There's a £60m Bitcoin heist going down right now, and you can watch in real-time

Definitely more interesting than watching Geithner steal Treasury money.

Vigilantes chase'em down.

Where dat rope?

 

[mhaze]

Priceless gems of wisdom from JREF posters

on this very thread. 6/9/2011. Michael Suede thinks he can explain something to The Central Scrutinizer.

Enjoy!

http://www.internationalskeptics.com/forums/showpost.php?p=7267700&postcount=84

Quote:
It's the Bitcoin. A year ago one was worth half a penny. Thursday morning it hit $10.50.

The Central Scrutinizer

So if a tard came up to me and offered to sell me 10 bitcoins for $100, not only would I not do it, I think I'd punch him in the head, just for being stupid.

Do not alter members' names in order to insult them.

Replying to this modbox in thread will be off topic  Posted By: Cuddles

 

[lionking]

on this very thread. 6/9/2011. Michael Suede thinks he can explain something to CentralScrew.

Enjoy!

http://www.internationalskeptics.com/forums/showpost.php?p=7267700&postcount=84

Quote:
It's the Bitcoin. A year ago one was worth half a penny. Thursday morning it hit $10.50.

The Central Screwtinizer

So if a tard came up to me and offered to sell me 10 bitcoins for $100, not only would I not do it, I think I'd punch him in the head, just for being stupid.

Yeah I saw that when I went back through this thread. That $100 would have turned into $10,000. "Tard"? "Stupid"?

Hmmm.