Topic: BTC Fractals. (Read 4749 times)

Does this mean, then, that theoretically one can ride these up and down in set patterns? I mean the market itself is what is random (unless people are working to manipulate it).


Okay, so more or less what you're saying is that you can't use the patterns to determine what is happening or about to happen, but instead use it to help write the story of the past?

They aren't random, though! When I buy/sell, I've made a choice. I choose to make the candle move. This choice is made a thousand times a day by traders. The waves are made by the weight of whoever is trading. Some people have more weight behind them, so it moves in bigger ranges. But it's still not random.

well as you can see, the chart has left some accuracy to be desired... although I do believe the market is expressed in fractals, self similar fractals. they are easy to see after they happen, but like I say, usually they are not predictive enough to use. The idea is that the chart reflects the fundamentals (often not predicable), and that unexpected net forces on the market tend to unfold in similar ways every time. just like a story, the event will have a beginning, middle and end. With fractals and fundamentals we can often pin point the top or bottom of a move that has been clearly caused by something that we know about.

Thanks! So the theory is that this shape (in this case with prices going up and down) may keep repeating itself. My issue with this is that there are just too many variables. I've always felt that the shifts (on the chart) are random and that people find ways to match them up together to make them something they aren't.

Best to read about it here  http://fractalfoundation.org/resources/what-are-fractals/

Fractals are shapes that reoccur within a self similar or identical shape many times on all scales of space. Fractals often make up the overall design of a living thing in nature.

Can you please clarify what fractals are? Like repeating events or something?

No, you are right. this I totally agree with, but for the moment Bitcoin is still a speculative tool and so far not very helpful to the greater economy.

Thank you for this reply, I think understand more deeply now.

You guys are arguing that because bitcoin is a currency, the value of a bitcoin is zero-sum with respect to demand for currencies.  Is that right?

I think I understand well the point that if demand for bitcoin goes up and we assume that the demand for currencies overall hasn't changed, then the rise in value of a bitcoin is countered by an equivalent loss in value for the collective rest-of-the-currencies.

Doesn't this reasoning assume that the demand for currencies (which are created to facilitate trade) is constant over time?  Is such an assumption tenable given a changing world population and many other dynamic factors?

That is, the more I think about you guys' argument, the more it seems to me that the creation of a more useful currency *can* create wealth, insofar as it does its job (fair faciliation of trade) better than older currencies.  I'm probably wrong though.

It's no longer a closed system because you've included other people in it (the people who are willing to pay for your btc.) It's only zero sum if you include every person involved from the start. If you add more money into the system along the way (such as new buyers) then of course its not a zero sum game.

YOU haven't gained anything by the price doubling, until you spend it. If you just sit on it, that's called paper profits. If you DO spend it, that's the same as selling it to someone else, and then someone ELSE takes the loss to counter your gain. They lost money by buying that bitcoin from you at the current price, instead of buying earlier at half price.

I'm going to chime in on this, if I may.

Ultimately, I agree with chessnut. Currency wars are a zero-sum game, as wealth is created through production, not currency creation. But I think to understand this, it's important to view the broad picture of supply and demand for all forms of currency put together. The whole point of currency is to facilitate trade, not create wealth. Within this pool of various currencies, each one has its own levels of both supply and demand. The value of each is then determined from these levels.

For simplicity, suppose BTC and USD were the only currencies in existence, and 99% of the world economy currently used USD for trade. This percentage reflects the demand of each currency, and the supply only affects the value of each unit within that percentage. So the overall supply of bitcoins, say 12 million in total, would divide over the 1% used in its part of the economy to determine the value for each coin. If the supply increases due to mining, or decreases due to hoarding, the price would adjust accordingly while staying in that 1%.

But if there is a sudden spike in the demand for BTC, say 2% of the world economy, then each coin would double in value. Of course, if more are mined or sold or whatever at the same time, the price may still rise but not as much, as it would reflect the net effect of said changes in supply and demand.

So in terms of these aforementioned direct exchanges between USD and BTC, the supply would be affected by how each user would spend or save each currency afterward. But someone who permanently dumps USD in favor of BTC has affected the demand side as well.

But regardless of how well BTC does, it can only siphon away percentage points from the overall demand for currency, which will remain relatively constant. The reason many of us here find it superior to USD though is that no one can cheat the system and print their own BTC like they can USD. In other words, BTC is superior not because it creates prosperity, but because it prevents prosperity from being systematically stolen.

If I understand your argument correctly, a crucial point is that for every btc someone holds, they released usd in order to get it (putting usd into surplus for a relative amount of btc shortage).  Is that correct?

If so, I think there's a flaw in the argument which is that not all bitcoins held were obtained by the release of usd.  Miners mine, someone purchases btc for euros (not usd), someone trades labor (puts labor into surplus, not usd).

Again, am I missing something?  Thank you for the discussion.

sorry, ill try harder.
if the value of bitcoins rise all the bitcoiners will win. but because no wealth is created at any stage in the process, that means that the USD loses an equal amount of value as bitcoin has gained. however because the market cap of bitcoin is so small and the market cap of the USD is so big, it's like pissing in the ocean. there will be no effective devaluation in the USD until bicoin reaches a significant value.

do you undersand that by paying for something with USD that I have saved, I am indecting USD into the economy that was not apparently there before. this is creating a surplus. when I offer labour for USD I am creating a shortage of USD. when I buy a BTC with USD I am creating a permanent surplus (as long as I do not sell it again). the more USD in circulation, the less the value of each USD.

every time the bitcoiners win (bitcoin is in shortage, USD in surplus), the americans holding USD lose an equal amount of value. understand? zero sum.

Your reply is timely but not very explanatory.  Can you elaborate?  Your reply is more like an assertion than an explanation.

no wealth is created by bitcoins rising in value. the appreciation of bitcoin would equally depreciate the value of USD. now a pizza would cost $10 + 0.001c in USD. the general poplulation of America would be paying for your pizza, although you would not notice the effect of 10bln dollars less to the economy.

I still don't understand how that dude spent BTC10,000 for a pizza.  It was probably the extra cheese or something.

I understand, the amount of bitcoins under discussion is a zero-sum game. Ie, i give a bitcoin away means I just lost one, there's no creating bitcoins after the21millionth one is mined.  However, the value of a bitcoin isn't directly tied to it's unit.  The value is set by whatever someone is willing to trade for it.  That seems to me to be the opposite of a zero sum game.   Example:

1) I have 0btc, you have 1btc.  for illustration, assume you can buy a pizza at our favorite pizzaria for 1btc
2) You send me 0.5btc.
3) I have 0.5btc, you have 0.5btc   (ok, zero-sum with respect to the number of bitcoins, neither of us can afford 1 pizza)
4) ...time passes..."value" of a bitcoin doubles. (1 pizza now costs 0.5btc)
5) We now each have enough money to buy a pizza.

Am I making sense or am I missing the point somewhere?

there is a finite sum of USD and BTC at any given point, and although that amount may change over time, wealth is not created by printing USD or mining bitcoin. every time someone loses money on the market, somebody makes an equal amount of money on the market, and total USD and BTC in circulation remain the same.

But I thought that market values were exactly *not* a zero-sum game.  Or maybe I'm misunderstanding you somewhere.  Can you elaborate?

Of course, though, in a way, fractals should give a sort of generalization to the next time there would be a "major event." This is assuming that the we have actually made a pattern that can be part of a fractal. Who says that we've even completed one cycle?

That cant be easily generalised. In general free market conditions, a zero sum game is always tough to make money in, fractals or no. But when fractals systems are caused by greater fundamental events, the chart begins to tell a story. If we dont know future events, the second best thing we can know is when the events that have come and gone had their net effect on the market. an unexpected fundamental event will always cause a wave, the wave will unfold in fractals, and sometimes we can see when the fractal system has terminated. 339 low was a prime example.