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TinyUrl.com/About BITCOINS : DATA, Trading and Price Dynamics

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The New Yorker;

 

Excerpt

 

"The Bitcoin Boom

Posted by Maria Bustillos

 

 

On March 16th, the Cypriot President Nicos Anastasiades, who’d been in office for about a month, announced a strategy to solve the country’s banking crisis. This plan, which would be funded in part by confiscating money directly from every single bank account in Cyprus—even the very smallest—met with instantaneous and violent opposition from the country’s citizens. Offstage, the European Union, led by a group of adamant Germans, Finns, and Danes, as well as the I.M.F. and the European Central Bank, pointed a cannon at Anastasiades’s head: if he didn’t move forward with this plan, the Cyprus banks would go bust and their hapless customers would lose pretty much all their money, instead of a measly 6.75 per cent. However, under great pressure from their constituents, Cypriot M.P.s rejected the proposal and sent Anastasiades back to the drawing board.

 

 

The following Monday, the price of the decentralized electronic currency bitcoin rose from forty-five to fifty-five dollars on the major exchanges, and by Wednesday it had nipped up to sixty-five dollars. The financial media generally agreed that the two dramas are related. According to Bloomberg Businessweek, it appears that Spaniards are liable to have been particularly active buyers of bitcoins that week, having taken the debacle in Cyprus as the likely sign of a forthcoming governmental plunder of their own savings. The evidence coming out of Spain is circumstantial—a spike in Google searches for “bitcoin,” and another on mobile-app downloads of Bitcoin-related software were widely reported—but the pieces appear to fit. Subsequent developments (including the announcement of an eleventh-hour bailout deal for Cyprus) have so far failed to stabilize the euro or cool the bitcoin fever, with the price over a hundred and three at the time of writing.

 

That a number of panicked Europeans appear to have reckoned the wildly volatile, vulnerable, and tiny bitcoin market a preferable alternative to their own banking system, even temporarily, signals a serious widening of the cracks between the northern and southern E.U. countries in the wake of the euro-zone debt crisis. It also illustrates the broader collapse of trust that is threatening the world of global banking and fiat money.

 

The weakness in existing currencies stems from lack of faith in institutions—particularly central banks, which are often in league with commercial and investment banks. When a government bails out a failed bank or insurance company—in essence, by printing money—the net effect is that the currency as a whole is debased, in favor of a few and at the literal expense of everyone else, which amounts to a fair description of today’s global financial system. Hence the sudden appeal of bitcoins, which appear, for the moment, at least, to be immune to the machinations of inept or crooked bankers and politicians.

* * *

 

In many ways, bitcoins function essentially like any other currency, and are accepted as payment by a growing number of merchants, both online and in the real world. But they are generated at a predetermined rate by an open-source computer program, which was set in motion in January of 2009. This program produced each one of the nearly eleven million bitcoins in circulation (with a total value just over a billion dollars at the current rate of exchange), and it runs on a massive peer-to-peer network of some twenty thousand independent nodes, which are generally very powerful (and expensive) G.P.U. or ASIC computer systems optimized to compete for new bitcoins. (Standards vary, but there seems to be a consensus forming around Bitcoin, capitalized, for the system, the software, and the network it runs on, and bitcoin, lowercase, for the currency itself.)

 

Bitcoin releases a twenty-five-coin reward to the first node in the network that succeeds in solving a difficult mathematical problem requiring a certain amount of brute-force computation (known as a proof-of-work calculation.) The solution is then broadcast throughout the network, and competition for a new block and its twenty-five-coin reward begins. (There’s a good rundown of the technical aspects of Bitcoin on the Bitcoin wiki; there’s also a wonderfully pellucid explanation of the proof-of-work angle from Paul Bohm, on Quora.)

 

At first, anyone armed with an ordinary computer could download and run the Bitcoin software and gather (or “mine”) bitcoins. The more computing power you can dedicate to Bitcoin calculations, though, the better your chances of arriving first at each solution. This feature of the system, by design, resulted in a kind of computational arms race that strengthened the network by rewarding increased computing power. Four years into the Bitcoin project, only very powerful, purpose-built machines have enough muscle to keep pace with existing network nodes.

 

In this way, bitcoins are mined like gold used to be, in quantities that are small relative to the total supply, so that the supply grows slowly. There is an upper limit of twenty-one million new coins built into the software; the last one is projected to be mined in 2140. After that, it is presumed that there will be enough traffic to keep rewards flowing in the form of transaction fees rather than mining new coins. For now, the bitcoins are initially issued to the miners, but are distributed when miners buy things with them or sell them to non-miners (such as jumpy Spanish bank depositors) who desire an alternative currency. The chain of ownership of every bitcoin in circulation is verified and registered with a timestamp on all twenty thousand network nodes. This prevents double spending, since no coin can be exchanged without the authentication of some twenty thousand independent cyber-witnesses. In order to hack the network, you would have to deceive over half of these computers at the same time, a progressively more difficult task and, even today, a very formidable one.

 

In 2008, Satoshi Nakamoto, the founder of Bitcoin, whose real identity is not known, cleverly combined existing peer-to-peer network technologies, cryptographic techniques, digital signatures, and the potential power of network effects to design and develop the Bitcoin system. Nakamoto was very clearly motivated in this effort by the fallout from the 2008 financial crisis. When the experiment was launched and the first fifty bitcoins (the so-called genesis block) were mined, in January of 2009, he (or she, or they) included this line of text along with the data: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

 

Until his disappearance from the Web, around the spring of 2012, Nakamoto was a visible participant on cryptography forums, where he discussed Bitcoin freely, and published a nine-page paper outlining the details of the project. These posts reveal that even in 2008, Nakamoto was able to respond to concerns regarding the scalability of bitcoin with remarkable prescience; he clearly understood the ramp-up of computing power that would be required for producing bitcoins as the system grew.

 

Only people trying to mine new coins need to run network nodes And at first, most users ran network nodes, but as the network grew beyond a certain point, mining increasingly became the domain of specialists with server farms of specialized hardware.

 

 

A casual review of Nakamoto’s various blog posts and bulletin-board comments also confirms that, from the first, Bitcoin was devised as a system for removing the possibility of corruption from the issuance and exchange of currency. Or, to put it another way: rather than trusting in governments, central banks, or other third-party institutions to secure the value of the currency and guarantee transactions, Bitcoin would place its trust in mathematics. At the P2P Foundation, Nakamoto wrote a blog post describing the difference between bitcoin and fiat currency:

[bitcoin is] completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts… With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.

 

 

Read more: http://www.newyorker.com/online/blogs/elements/2013/04/the-future-of-bitcoin.html#ixzz2Pu38Qh38"

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[bitcoin is] completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts… With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.

 

Read more: http://www.newyorker.com/online/blogs/elements/2013/04/the-future-of-bitcoin.html#ixzz2Pu38Qh38"

 

Well, I don't Trust it ... because it has appreciated too fast, and it is held by many people who may have obtained their Bitcoin wealth through dubious means

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It must surely be near the end now, according to Mt Gox, today's low was $178 and today's high $239, it's about $233 right now, so at one point today it was up 34%.

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... so at one point today it was up 34%.

 

If that is not part of a parabolic move up - and possible blowoff - then What is?

 

Chart: http://bitcoincharts...Szm1g10zm2g25zv

 

bitcointop.png

 

It should not be much longer before we discover: What follows a parabolic move... (once again?)

 

bitcoint2.png

 

So far, this is making the amazing 2010 jump in silver look tame.

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An old talk (by Max Keiser) - but still worth a look

 

http://www.youtube.com/watch?v=kEHIOi8iXqE

 

Another for the historical record - with some good questions raised by Jim Turk

... in this interview with Félix Moreno de la Cova

 

http://www.youtube.com/watch?v=wfzHC7Pf2fk

 

Jim Turk:

+ Bitcoin is not a tangible asset - the transactional exchange is extinguished with Gold

+ Ownership of the Gold asset transfers with exchange

+ Purchase with diamond (which needs valuation) may not be extinguished at purchase

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Bitcoin - Not done yet

 

bitcointop.png

 

 

Bitcoins Surge Past $200, €153 with No End to the Growth in Sight

 

Those predicting Bitcoin's impending plunge into the abyss have a bit more to wait, it seems. Just last week, the cryptocurrency hit $100, €76.7, tripling its value in a month.

 

At that point, the general wisdom was already that bitcoins were overpriced. But now, a bitcoin is worth $200, €153, doubling its value in a week.

 

http://news.softpedi...ht-344091.shtml

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What is MtGox ?

 

mtgox.png

 

Mt.Gox is the world's most established Bitcoin exchange.

You can quickly and securely trade bitcoins with other people around the world with your local currency!

/see: https://mtgox.com/

 

 

MtGox, called "Mount Gox" or "MTGOX", has been the most widely used bitcoin currency exchange market[1] since it was started, and remains the largest in terms of popularity and volume.

A registrant on MtGox has at least two sub-accounts: one for bitcoins (BTC), and one for US dollars (USD or MTGUSD) or other national currency. Bitcoins are bought using funds from the trader's national currency account, and the proceeds from the sale of bitcoins are deposited into the same account. Trading must always involve bitcoins as trading between different national currencies is not offered.

Trades on Mt. Gox's execute from balances on deposit with the exchange which in turn makes trading on the market instantaneous, compared to some other Bitcoin markets where a subsequent settlement occurs manually between the trading partners. The disadvantage of this is that a third party must be trusted with keeping the money safe.

MtGox was originally started by Jed McCaleb in July 2010, and was sold to Tibanne Co. in Japan in March 2011. It is currently operated by Tibanne Co., managed by Mark Karpeles (MagicalTux)

===

/see: https://en.bitcoin.it/wiki/MtGox

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The Russian "Pretender" - Coming up fast, 2nd biggest Bitcoin exchange

 

BTC-E | Bitcoin Exchange, Namecoin Exchange, Litecoin Exchange ...

 

https://btc-e.com/ - Cached

Currency Exchange based in Russia that trades in Bitcoin, Lightcoin, Namecoin, USD and RUR.

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Myths of Bitcoins - Debunked

 

 

AN excellent debunking of many of the popular objections against using BITCOINS as currency

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Were "the Russians" behind this?

(Another theory: "The banks are behind this... They have much to lose if Bitcoins succeed." -

)

 

Bitcoin exchange: Greedy traders to blame for DDoS attack

 

The soaring value of crypto-currency Bitcoin stuttered slightly last night - after a main exchange for the currency was flooded with network traffic and Bitcoin wallet site Instawallet was suspended.

Mt Gox, the most popular Bitcoin exchange, blamed an ongoing distributed denial-of-service (DDoS) attack for trading lags and other connectivity problems over recent days. It stated:

 

Mt.Gox has been suffering from its worst trading lag ever, 502 errors, and at one point some users were not able to log in their account. The culprit is a major DDoS attack against Mt.Gox.

. . .

===

/more:
http://www.theregist..._ddos_analysis/

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Other Alternative Currencies

 

Bitcoin, Namecoin, Litecoin, Devcoin, IXCoin, PPCoin, Terracoin ...

 

/see-Prices: https://vircurex.com/

 

(2)

MAJOR:

 

-BTC Bitcoin - first, strongest, most accepted, most mined, high volume market, a true currency

-LTC Litecoin - second only to BTC , faster than BTC, Small efficiency gap between GPUs and CPUs , ASIC - proof

-NMC Namecoin - merged mined with BTC, used for alternative p2p domain system

 

MINOR:

 

-PPC PPcoin Proof Of Stake [very innovative, low energy ] , compatibile with BTC miners

-TRC Terracoin based on BTC, fast difficulty adjustment - miner-jump resonance resistant

-DVC Devcoin merged mined with BTC, 90% of generation goes to foundation, 10% to miners

-IXC IxCoin merged mined with BTC, premined 580k coins but still alive

-NVC NovaCoin - scrypt hashing[like LTC] , proof of stake [like PPC] , controversial

-FRC Freicoin back alive. 4.89% annual demurrage. for the first 3 years 80% block subsidy goes to foundation, 20% to miners

 

NEW:

-Bytecoin- the 1:1 bitcoin copycat. really bad difficulty adjustment for altcoin, extremally high hashrate for that young coin.

 

DEAD / DYING : (MANY - see List)

 

===

/source: https://bitcointalk....?topic=134179.0

 

"The other currencies should only trade alternative currencies against each other."

 

This cuts down on the required regulation. (says: BitcoinReport)

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Objections with Trading Platforms: Transaction fees

 

 

Let's skip the question of deposit/withdrawal fees for a second, as I believe they are of secondary importance.

 

Many popular exchanges charge relatively high transaction fees: around 0.5% seems to be a common starting fee, and if you exchange a lot, it can go down to around 0.2%. btc-e.com charges 0.2% (no volume discount), and bitcoin-24.com charges absolutely nothing (they make their money from deposits/withdrawals, it seems).

 

Apart from bitcoin-24.com, it seems like a far cry from the real stock exchanges, which can go as low as 0.01% (apparently they have some sort of volume discount there, as well). I wonder why. Is the volume just not there?

 

As an aside, the volume discounts remind me of progressive taxation. What is the justification for them?

 

===

/more: https://bitcointalk....?topic=170791.0

 

 

Max Keiser: "We don't have nearly enough exchanges." (We need more arbitrage opportunities.)

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The Logic Problems That Will Eventually Pop the Bitcoin Bubble

 

Vanity Fair-7 hours ago

 

The one fundamental truism of investing, and the one most often ignored, ... went by the pseudonym Satoshi Nakamoto—to date, no one has discovered ... some open-source software, which is then stored in a digital wallet.

. . .

The essence of a currency is a rational expectation of relatively stable valuation. Yes, values can collapse or soar, but those circumstances relate to unusual events and, for the most part, are widely predictable ahead of time. Outside of those circumstances, the values of valid currencies tend to fluctuate within a reasonable range.

. . .

Hoarding has become a common feature of the Bitcoin market, as purchasers hold on to the investment in hopes that the prices will keep rising. One comprehensive study released last October found that more than three-quarters of all Bitcoins—78 percent—had been stuffed into virtual mattresses and taken out of circulation. In other words, in a system where supply and demand dictate prices, the available supply in the market is far less than might be imagined.

 

In essence, the market is a fantasy. Once the hoarders stop buying, what buyers will step up to the plate to take their place? My bet? No one. There will be, at some point, a time when some hoarder decides to unload. Prices will drop. Other hoarders will get scared and start to sell. Prices will drop further. Before long, there will be a mass rush to the exits. And at that point, the illiquidity of the Bitcoin market will be apparent.

 

A similar thing even happened to the richest, most liquid investment game of all: the United States stock market. In 1987, the market was creaking a little, and prices started to move downward. At that point, there was a popular idea called program trading, which, at its most basic, would result in sales of stocks if prices fell below a particular level. Of course, when the stock fell, the programs started selling—and all the elephants tried to run through the same door at the same time. Stocks lost 22.6 percent of their value in a single day, simply because there were not enough buyers to offset the flood of selling. That’s exactly what will happen when the hoarders of Bitcoins start to cash in.

 

===

/more: http://www.vanityfai...-bitcoin-bubble

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Bitcoin - Not done yet

 

bitcointop.png

 

 

Bitcoins Surge Past $200, €153 with No End to the Growth in Sight

 

Those predicting Bitcoin's impending plunge into the abyss have a bit more to wait, it seems. Just last week, the cryptocurrency hit $100, €76.7, tripling its value in a month.

 

At that point, the general wisdom was already that bitcoins were overpriced. But now, a bitcoin is worth $200, €153, doubling its value in a week.

 

http://news.softpedi...ht-344091.shtml

 

 

This is not a normal market by any stretch, it's a new technology, in an environment of heightened distrust of banks after Cyprus together with a lot of black money looking to find a new home. I was thinking who is buying bitcoins at these levels? Well I'm sure there are a boat load of Russians and other gangsters 'diversifying' into this at the moment. I'm no expert on money laundering but I do know that some groups launder through casinos, they are not particularly concerned knowing they will lose a % because they get clean money out the other side. I'm sure that in a city near me during the housing boom organised crime had their stake in the housing market and since this is the hot new thing they must be getting into this in a big way too.

 

Sure there will be the average joe latecomers buying but there must be large flows of black money less concerned with price and more concerned with the anonymity. A powerful combination driving prices higher. A safehaven for criminals, well at the moment it would appear that way.

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... I'm no expert on money laundering but I do know that some groups launder through casinos, they are not particularly concerned knowing they will lose a % because they get clean money out the other side. I'm sure that in a city near me during the housing boom organised crime had their stake in the housing market and since this is the hot new thing they must be getting into this in a big way too.

 

You put your finger on the essence of it:

"...they are not particularly concerned knowing they will lose a % because they get clean money out the other side..."

 

As the VF article also put it:

 

"The essence of a currency is a rational expectation of relatively stable valuation. Yes, values can collapse or soar, but those circumstances relate to unusual events and, for the most part, are widely predictable ahead of time. Outside of those circumstances, the values of valid currencies tend to fluctuate within a reasonable range. "

 

A RISING PRICE is not a big problem - Ney, it's an advantage! - But a falling price, and especially a rapidly falling price, is a huge problem. And that may soon cause the Transactional user of Bitcoins to flee like mad, and stay away, until Bitcoin prices are stable.

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Bitcoin - Not done yet

 

bitcointop.png

 

 

Was true enough!

$240 Topped. $265 Hit, and then a Good-sized correction began

 

bitcoint2.png

 

The Volume on Drops has exceeded Volume on Rises in these latest Patch.

Support just below $230 may hold, or not...

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I'm trying to get onto some of the bitcoin forums but access is very tough, the bitcoin world is in the midst of a panic. Someone is complaining that there is a lag to execute orders on Mt Gox of 1800 seconds (30 mins), so they dont know what price they are trading at.

 

If that's the end of the market we certainly gave members/lurkers plenty of warning.

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I'm trying to get onto some of the bitcoin forums but access is very tough, the bitcoin world is in the midst of a panic. Someone is complaining that there is a lag to execute orders on Mt Gox of 1800 seconds (30 mins), so they dont know what price they are trading at.

 

If that's the end of the market we certainly gave members/lurkers plenty of warning.

 

see

 

http://www.reddit.com/r/Bitcoin/

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I love it!

 

FW34gwu.jpg

 

 

This is pure comedy gold;

 

Someone's "Chart of the day"

 

k0efWXQ.jpg

 

 

You couldn't make this up. Look - http://www.reddit.co...q/go_for_a_jog/

 

Someone's comment;

 

"I understand that nerves are high but.. please just go for a jog, make a pot of coffee, masturbate violently: do something. It will all work out, just sit it out. No need to stare at the counter while people sell off thousands of coins.

 

With any flux in distribution of coins price variances are to be expected."

 

:lol: :lol: :lol:

 

 

Bitcoincharts hiding from the grim truth;

 

btcx_zpsd8874bd7.png

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I Call it: the B-B-Blowout : "The Big Bitcoin Blow-out"

 

At last, someone talking Psychology and Market Dynamics! (in that video, posted above)

 

On GEI, we all knew that the parabolic move would end with a big selloff - but the speed of this one surprised even me:

$265 to $105, in a few hours:

 

bitcoint2.png

 

There will be some broken hearts. And those who sold their cars and homes to buy Bitcoins will fell like their lives are broken for a bit,

and will be far wiser.

 

An honest currency requires Trust - AND STABILITY - not wild, wild price variations like this.

 

Buying at $101 or $106, would have looked tempting (and I might have, had I been set up for it), but it may see $41 within a few weeks

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Copied from the other thread;

---

 

^Great call on the rise on low volume. Too many eyeballs / mainstream media coverage on this, to pump this up in the short term. Warning bells should be ringing for all of us over the last few weeks. It was a bit like Apple not so long ago.

 

E.g. BBC article, http://www.bbc.co.uk...nology-21990136

Bitcoins: Could virtual cash replace money?

 

31 March 2013

 

I didn't get onto the Bitcoin ride as spreadbetters were a bit slow to get on it, and there are no ETFs that I'm aware of. This looks like it could be a 50% Fibonacci retracement, so it will be interesting to see how this pans out, technically this *could* be a buy point with a stop not far away, but I won't be buying as this isn't my style of play.

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