Topic: Logarithms for Dummies (or those who are used to linear thinking) (Read 1759 times)

I feel bad for all the people who are "Waiting for it to go back down" in order to buy. It's like they're stuck in a nightmarish rendition of Waiting for Godot. If I had a bitcoin every time a friend said to me "Oh, I'm waiting for a dip to buy in..." well I'd be filthy rich.

Well, we didn't expect it to double in a week (nobody really does at first).  After that we bought every day for a while.  Putting loads of cash into a random stranger's bank account was a bit unnerving (Bitfloor).

We have friends now that want to buy, but they are put off by it going up so much every day.  Like many people on this board used to trading stocks, they are waiting for it to go down.  Which is why I started this educational post.

One is never enough!  



Is it?  



I guess I should put something in here for those who come from the other side too.



Anyway... Mr & Mrs Bitchick: Just think about how BTC was $48 only eight months ago and now it's nearly 10x that. What if the price increases another tenfold in another 8-16 months if we speak "conservatively"? Would that make the current price more palatable? That would be buying more sooner from a future perspective, no?

Well, it's a good thing we have a lot more than one then... 

no, sadly, one is not enough.

Case in point: is 5 dollars fluctuation a big deal? It depends. When we were at single digits it was about the entire rally from $2 to $7.22, but how about now? Consider the current price $430, if the price suddenly dips for $5 to $425, and gets back to $430, and you have accurately predicted the entire move! How much is that going to make you? Well, selling 1BTC at $430 will cost you, assuming basic Gox fee of 0.6%, 430*0.6%=$2.58, and when you buy back at the bottom it will cost you another 430*(1-0.6%)*0.6%=$2.565, in sum it will be 2.58+2.565=$5.145, when the price is at $430, a 5 dollars fluctuation would not even enable you to pay the fee and make back the cost!

The take away from this case is, you really should measure the price movement in percentage, rather than in currency units, if you understand this, you can appreciate the logarithmic scale.

One is enough isn't it? 

Compared to some people on this board we are not big holders, unfortunately.

We just were on the fence about how much to buy at $48 like a week or two before the April run up and did not put much money into it then. It was a bit unnerving buying any back then and we did not take advantage of the opportunity like I wish we would have.  I keep telling my husband every day, "I wish we would have bought more sooner."  He is getting sick of hearing it now. 

please tell me you have more than 1 coin.

Hubby,  you know what I am going to say about all this right?  Why didn't we buy more sooner? 

I know.  I just need to shut-up and be thankful for the coin we have and enjoy the ride.  It is just starting to speed up it looks like!

So, because the Bitcoin price is reflecting exponential growth then half the time the price will begin with a 1 or 2, the other half 3+.

http://en.wikipedia.org/wiki/Benford%27s_law

Awesome, thank you.

Edit: see https://bitcointalksearch.org/topic/bitcoin-is-still-inflationary-333390

3600 newly minted plus change in difficulty... So maybe 4k-4.2k a day.

How many coins are entering circulation everyday?

Here are some price points with logarithms (× 8 for convenience):

Price  Log  Months
100   14.0   3
200   16.1   2.1
300   17.3   1.2
400   18.2   0.9
500   18.9   0.7
600   19.4   0.6
700   19.9   0.5
800   20.3   0.4
900   20.7   0.4
1000   21.0   0.3


So, let's say that bitcoin spent 3 months in the 100s.  It will only spend 2 months in the 200s and it will spend about 5 weeks in the 300s.

Next, it will spend 1 month in the 400s and 3 weeks at 500 and 600.  

Then it will spend less than 2 weeks each at 700 and 800 less than a week at 900.

So, yes, every $100 point will be faster than the last.  This is to be expected.  Not "OMG!  It's going too fast!  Crash imminent!  SELL SELL SELL."


By the way, the numbers on the right represent (exactly) the 10 months that bitcoin has traditionally taken to go up 10×.


So, all that said, if we only spent a week at $300, then yes, we are going too fast.  But not "It's going back to $150" or "Double digits" fast.  Because we already spent way too long in the 100s and bitcoin had some catching up to do as it was under the line.  More like 300 should probably take 5 weeks instead of 1 to get back to the correct line.

By the way, the same will hold true in the 1,000s.  In the 10,000s it may start to level off somewhere if we reach the very top.


TL; DR.  We are probably looking at a correction back to the 300s soon, but don't expect it to last more than a couple weeks.