Topic: I am predicting a spike above $3 (Read 10618 times)

Sorry, it seems like my original reply had disappeared into the ether. You shouldn't use the phrase "prevents file copying", but something like "allows efficient detection of duplicate copy versus the original" or "detects and suppresses the attempts to multiple-spend the original value".

Other than the above it seems like what you wrote is correct or very close to correct. I will not attempt at nitpicking who was first and who was second. But your writeup reads like a pitch, not like a diligent analysis.

While I understand and somewhat share the goal of overthrowing the banking cartel, I cannot share their methods of doing that. I see absolutely no reason to dispense with the generally accepted principles of accounting like e.g. double-entry and utmost good faith. It is quite unfortunate that nobody in the core development team is familiar with accounting practice. Moreover they are quite proud of not understanding accounting, universally despise accountants and bankers (even the conscientious ones) and actually seem to cherish the opportunity to poke out their eyes and ridicule their needs.

It is my opinion that as an investor you shouldn't rely on the opinion of Internet experts like Gavin, theymos, Dan Kaminsky or 2112. You should sit with somebody whom you know well, with whom you worked with for many years, and who had deployed and integrated some financial software in a business that you understand. Only then you'll have a real knowledge of what will happen when the Bitcoin rubber will meet the dirty road of financial reality. You're saying that the Bitcoin withstood 3 years of attempted attacks. I'm asking: why during those 3 years nobody had attempted even a toy integration project and shown that the books balanced?

Since you've asked about my technical perspective, here are the three points that should become hard questions to ask the core developers:

1) Their reliance on a "gitian" build system that is pretty much a rehash of "secure Ada compilers" from the days of Uncle Ronnie fighting Star Wars using imaginary weapons. This is just pure pandering to paranoia, not a software security methodology. It is nothing more than a tar pit that actually makes serious integration work pretty much impossible.

2) Their reliance on the JSON-RPC communication protocol that is completely unsuitable to the needs of two-way communication. The band-aids of "long poll" (implemented) or "monitor" (not yet implemented) are showing lack of literacy in the available technology, eg. FIX protocol (in use by financial institutions for almost 20 years) or ZeroMQ or AMQP.

3) The overall project dynamic is completely strangulated by the vested interest of miners. Even a simple off-by-one bugs aren't getting fixed because fixing them may offend miners. Check out this post by ArtForz and the discussion on the preceding and the following page.

https://bitcointalksearch.org/topic/m.555148

This is completely unlike any other open-source project and worse than the majority of the closed-source ones.

I summed the "mining income" of the last 3 blocks: 150.0200. Of this 0.0200 was for the useful work of securing network transactions and 150 was the distribution lottery tickets that will decay exponentially to zero. If you feel that the current banking cartel is ripping you off then wait until the sole discretion at setting the transaction fees will be in the hands of the current mining cartel.

Bitcoin may be the solution to the current worldwide problems with fiscal management. But not in the present implementation and not with the present leadership.

Edit: Oh, and by "leadership", I don't mean Gavin Andresen personally.

i actually re wrote that above in response to 2112.

part of the difficulty of Bitcoin is figuring out just what it is and how best to apply it.  i've been thinking about this all day and i think that Bitcoin is the first system that allows the public distribution of a file (blockchain) that only allows modification according to a predefined set of rules.  any attempt to modify this file outside of these rules will be rejected.

Bitcoin's innovation is not that it prevents double-spending.  That was invented by David Chaum in the 1990s and formed the basis of DigiCash. Nor is "mining" new; that's from Hashcash in the 1990s. Bitcoin combines the two concepts. The end result is a lot like Digicash, but distributed. 

so what do you think?  did i at least somewhat answer your question?

You can download the historic data from the bitcoincharts API. It has mtgox trades from the time a bitcoin was 6 cents.

Mathematically I doubt it, these kinds of things are really what computers are good at solving. You could run a numerical simulation with a certain number of players each following a few simple rules about buying and selling. The distribution of players using what rules could be determined on historical data. Basically taking the model I put up there a few posts ago, each "player" would have a time scale that they buy and sell on. For some they look at days, some hours, some minutes. The die-hards would be on an infinite time scale, meaning that starting from 0, they are always optimists. Anyways, if you could distribute the concentration of money along these scales in discrete packets, and then throw in some certain amount of random fluxtuation you would have a model for the price movement. Whether that model would have any level of accuracy is doubtful, but it might be a fun exercise. Since there is a lot of data out there, you could try to model other psychological buying and selling queues and maybe throw in some data from Google Trends.

Can anyone out there describe what influences them buy and sell at certain times in simple logical terms? Is it mostly the price and history that you look at, or are you basing it on news stories, or forum posts?

 What about the long term movements though? What caused the $30 peak? I mean maybe it started with a news story, but it seemed like the momentum just built more momentum. Maybe there is some kind of word-of-mouth growth factor at can be modelled too.

Speaking of this stuff, does anybody know where bitcoinity and bitcoin charts and them get their databases? Are they building them from scratch since the start of bitcoin? Anybody have access to a downloadable price timeline?

I've always wondered whether these relatively shallow analogies can actually work out mathematically, because that would be VERY interesting.  The same principles are certainly at work; you can see parabolas all the time in mtgox.

Woot!

Interesting... If anything, Bitcoin provides good data (in its current state -- until a substantial amount of goods and services are thrown into the mix) for what happens in a purely speculative market.

In my opinion, most people are just buying and selling. The problem is in figuring out mass psychology. People have some expectation of what they think a BTC "should" be worth and they have some expectation of how much it "should" fluctuate. In general they will buy when it is below this imaginary value and they will sell when it is above it. I think it is generally a linear extrapolation of some number of previous days or weeks or months. Some people are probably looking at the last hour. And then you have expected fluctuation. And they always want to buy and sell near the peak of the fluctuations, but being a bit conservative, they don't want to go too close. As an approximation, I would say that most people try to buy and sell at around the std dev.

But the big destabilizer is when the price jumps past the expected fluctation. People buy on the way down, and then it keeps going down, and now they are freaking out. They sell at a loss. I think this is a pretty simple model. I just kind of thought of it now, so I am sure there are holes here and there. I'll have to think more on the topic.

So you have this system that is stable on a local scale, but that stability region shrinks the longer that the price remains stable as people continuously expect the fluctuations to be small and try to buy within those fluctuations, they become smaller. On top of this, there are always some random noises. You have amount of money acting unpredictably. So as the stability region comes within the scale of random fluctuations, it is possible for the price to jump beyond the stable zone and suddenly everyone is in a buy or sell panic as their expectations are turned on ear. Then you get the reaction to the initial instability, and then you get the stability pattern bringing things back again with a few oscillations up and down as people learn to accept the new level of fluctuation and begin shrinking it again.

I am working on aeroelasticity in grad school, so I may be biased towards seeing everything as a mass/spring/damper system.

Awesome! That little dip seems to match exactly the other two you pointed out.

Any speculation as to what is causing it? Margin calls or some such?

Could you post an updated chart?
https://bitcointalksearch.org/topic/m.586181

I'd love to see one with an arrow of when you made your prediction. The pattern seems uncannily repeating. Nice job noticing!

Ok, so the first prediction was off by about a day and the peak was off by 20 cents or so, but pretty good.

Time for a new prediction, a bit less specific since. I am calling for the price to continue dropping for at least a day. This is a reaction to the jump above 3 dollars. Late joiners will be buying in as those with Bitcoins are still getting out. The time to buy will be when it sits below $2.70 and it doesn't fluctuate by more than 10 cents for at least 6 hours. That is when the critical mass will start feeling confident again, and the price starts going up to a peak of something around 40 cents above wherever the low point is. This may or may not be above $3. Since $3 is kind of a psychological mark, it seems like the price sticks there for a while and then jumps one way or the other depending on where the pressure is.

Think of the early October price as being too stable. There was pressure building for movement, like a stuck tectonic plate, or um.... a sticky spring or something. The price plummit was like an overreaction, and now we are riding the waves as it settles. Eventually it will stop again and freeze up, and then it just depends where the pressure is building from and how much will make it jump.

+1

i think the randomness that the SHA 256 hashing algorithm introduces into the Bitcoin system is a big part of the economic wherewithal that will allow Bitcoin to survive and become a competing currency.  to reiterate, it forces computers to guess repeatedly to hit below the difficulty target.  it does not allow shortcuts via hacks.  this makes it an inherently democratic process.  anyone who can setup his computer and run the client has a chance to solve a block and get the reward even tho my laptop has a low chance of winning.  but the chance is not zero.  people buy lottery tickets all the time despite having extremely low odds of winning.  and if you're willing to setup and run a more computational powerful system you will mine Bitcoins at a significant rate.  everyone who climbs on board will make it that much more difficult for a non rational actor, like a bank, to attack the network.  they will be forced to guess as well which can be very expensive for them in the end.  they might as well just leave it alone.

This is an awesome thread with some really cohesive and thoughtful posts.

I just want to add my opinion that the concept that Bitcoin embodies is one that is so fervently necessary, as to exalt it to immortality.  There's really no need to worry so much as it might create more division.

i guess i left out the part of public key cryptography.  let me know if you want to test my understanding of how that works from an investor level as well.

well i can assure you i am not one of these guys.  i have never sold a single Bitcoin and have been accumulating.

first of all, even tho we had that one run in a while back, i've learned to respect your postings based on a technical perspective.  you understand the code better than most around here.  at first i just thought you were another shill based on following Nagle but i no longer see that to be the case.  i still think he's dangerous to follow.

second, what i mean by the above is that the Bitcoin sourcecode appears to be a first in that it allows a peer to peer public network the ability to prevent the copying of files (Bitcoins) for double spending.  perhaps better said, it prevents the rewriting of tx's in the blockchain ledger that are shared across the internet btwn multiple anonymous computers to prevent double spending through this same rewriting of transactions.  Satoshi has accomplished this primarily by the use of hashing, a one way complex mathematical function based on SHA-256 and ECDSA, that was necessary to introduce randomness to the production of a number anywhere btwn 0 and 2 ²⁵⁶ power when solving blocks.  each guess is based on hashing the block headers data consisting of the previous block hash, timestamp, current tx's, and a nonce,  with the only change btwn each guess coming from an incremental change in the nonce.  the solving of these blocks allows the reward of an ever decreasing number of Bitcoins (every 4 yrs) to the node that is forced to guess, as oppose to hack or find a shortcut, enough times (proof of work) to come up with a numerical result that is below a targeted numerical result to keep the number of blocks down to an introduction level of approx 10 minutes.  this target numerical result is adjusted every 2 wks to keep this 10 min interval intact.  this fixed introduction level allows a predictable amount of inflation that investors should respect, not criticize. once a block is solved, at least 50% of the other nodes in the Bitcoin network, that have a copy of the accepted (longest) blockchain have to verify that this node is not cheating by trying to rewrite tx's or double spend.  this is based on a majority of nodes >50% accepting this block.  b/c this proof of work is theoretically impractical to skirt, until perhaps a quantum computer is invented (even then this is disputed), the only way for a rational miner to pay off the costs of his hardware, electricity, and time involved in solving blocks is to go along with the program and generate as many Bitcoins as he can to pay for these expenses.  they are especially economically incentivized by an increase in the Bitcoin price in USD terms for as the higher the price goes, the more they will make.  in doing so he ends up supporting the network by verifying tx's, providing security for the network, and increasing the costs (computational power) associated with any attacker trying to undermine his work.  i know you know all this but you're testing my understanding here of whats going on.  correct anything i've got wrong.

now whether the sourcecode as written will allow this to continue i don't know but its been almost 3 yrs and guys like Dan Kaminsky who initially thought there were 9 holes to exploit have since apparently been convinced otherwise.  realize i'm not talking about scalability here.  i'm talking about as it is today and with current usage; everything seems to be progressing w/o a hitch.  i know you think its cumbersome given how its meshed various techniques together into a long complex code.  for me, since it hasn't failed despite what we know to be multiple attempts at bringing it down is very encouraging from an investment/speculative standpoint. and i know many brilliant people are working to make it more elegant.  and some think its a Mona Lisa as it is.  since this is a first for something distributed so openly on the internet, somewhere somehow it will find a purpose.

the distributed nature of Bitcoin is important as well since it is so disruptive to the current banking system.  i truly do believe the only way to shut it down is to shut down the internet.  that didn't work so well in Egypt did it now.  the ones who screamed the loudest were the banks who needed their tx's to go thru.  wasn't the internet designed to withstand a nuclear attack as well and is it not just in the US of A?


i see what you're getting at in terms of trying to understand the investors perspective so let me try and help you and maybe you can help me from the technical end.  

first, you're right, i can't read code and wouldn't be able to see holes in it if they were present.  my confidence comes from directly talking with Gavin and theymos both whom are experienced coders as well as several of the other early adopters.  how they rate compared to you i don't know. also hanging out on these forums helps quite a bit despite all the bs.  but as an investor piecing together the puzzle there is some credibility that comes from Gavin being a Princeton graduate and i understand his personal position and circumstances as to why he donates his time towards this project. he really does believe in it.  these guys also seem to understand the basics of the financial crisis and economics which matches my own and helps assure me they are moving the technical aspects of Bitcoin in the right direction.  also i hang out in the Dev and Tech section from time to time to see what all you guys are talking about.  it seems to me, rightly or wrongly, that so many technical people discussing the ins and outs of a myriad of different technical aspects of Bitcoin can't all be wrong.  the amount of time and effort devoted to this project is astounding you must agree.

even though these are technical discussions clearly an understanding by these guys of the economic motivations of investors and of the financial system as we know it usually are interweaved into why this or that should be included in the code.  i continuously weight these in my analysis and usually finding myself agreeing with them.