Topic: New miner-centric site with hopes to stabilize the BTC economy - page 2. (Read 9147 times)

These are the kind of questions one might ask when deciding whether to accept a job offer. The data I'm trying to come up with is a reasonable estimate of what that job might pay with a shelf life of more than 20 minutes. I also believe that if people are aware of a reasonable, expected average then they are more likely to trade around it. If you recognize what the current valuation of a commodity should be and see that it is actually trading significantly higher, you might recognize a bubble more rapidly and responsibly sell. Enough responsible selling will suppress the bubble without causing drastic market corrections. The same works in reverse - if you recognize that a commodity is under-valued at the moment, you would certainly be best served to buy some and then re-sell when it becomes correctly or overly valued again.

The big problem that I think we've come to an agreement on is that factors like MtGox's dark pools, unmonitored black/gray market exchanges and transactions etc. make it very difficult to determine proper valuation of bitcoin as an asset. Thankfully we all have the ability to peek directly into the block chain and attempt to extract data from the transaction database itself. This is what I'm currently attempting to do (or what I will be attempting to do once blockexplorer comes back up).

Then I guess bitcoinreference.com is an appropriate domain 

But in all seriousness, yes I intend to work out something volume-based from what I can mine out of block explorer's API. Speaking of which, anyone else having trouble getting to block explorer right now?

You're just going to get buried in the rabbit hole.

What you want to do is to define your parameters:
How many hours can you put up with being distracted from family and community?
How long do you think the money you make should last?
How much loss of purchasing power and earning power are you willing to sacrifice for exchanging into fiat?
How much personal energy will you have left to be active in what you care about?

Work is worth what amount of time you have to put into it aside from other things you need to do.
Time is worth what you could be doing with it and how much more time that will take if you are distracted.
Money is worth whatever amount allows you to live at those parameters above.

Labor is a commodity. Work is not. Let's start acting like it.

Rather than suggested price, it should be reference price, window of variation that will not interfere with the above, the change in value of the fiat as well, and whether the price is moving in the wrong direction.

All this tweaking needs to include the tweaking by central banks.

And what we really need are trade recycling patterns. Using the same BTC 5x to buy a car by cycling them through the community. That's how you get stability.

Exactly right, that's what my current work is all about, knowing what the work is worth. You can't "refuse to trade coins below what the work is worth" if you are legitimately missing that data. Give me a bit to find some math that matches the data and we'll all know what the work is worth. 

OK I think I have some good data sources and sound math to work with now, give me a few days to figure out a proper volume/price ratio with standard deviations and make sure the calculated curves fit within some reasonable distance of reality and I'll bash out some code to produce new improved numbers which should update with every block instead of every difficulty change - much better resolution

Stability comes from anchoring to productive transactions.

The right way to do this is to take the gains, be productive, and refuse to trade coins below what the work is worth.

Stability does not come from numbers. It comes from valuation in terms of work.

All right, consider it done! Well... Give me some time to write the code and figure out how/where to keep it running without hammering my poor little shared hosting box and THEN consider it done!

Oh, and that's if you're lucky enough to have a 100A main breaker. If you live in an apartment (like me) or an old house, you might get stuck with 50A (like me) or 60A main breakers, so cut that in half.

I pop breakers all the time

@Angelus: There is also an upper limit to how many rigs the average miner can sustain. Not many people are mining out of data centers right now and believe me you start running out of available electricity after a point. Assuming ~400W for a decent rig and ~1300 BTU/h of heat that will need to be removed via additional air conditioning at average efficiency levels, we're talking ~550W per rig. If you're lucky and live in a house or a decently large apartment you might have a 100 amp main breaker, meaning ~11,500 watts are available to your entire house. Roughly enough to power 21 rigs if you had no other power consuming devices to run and no other heat producing devices to cool off. According to the US Dept of energy the average U.S. household consumes ~14,000 kWH per year, which works out to about 1600 watts at any given moment, averaged out. That leaves enough room for 18 rigs if you're average and I'm guess most miners were above-average power consumers long before bitcoin existed. There is an essential upper limit to any mining operation. Most are not willing to lease a separate space to expand operations so once they hit the power/heat ceiling they are unlikely to continue expanding. To this end, yes some portion of the difficulty increase will always reflect old miners buying new rigs but I'm willing to bet that the better portion of it is new miners. Also, old miners couldn't buy new rigs without demand for the currency which I still believe is coming from growth of the network more than speculative demand (especially now that the $31 bubble popped)

@chodpaba: I agree that darkpools are frustrating and bad for the market. The whole system was built on the concept of "open but anonymous" transactions. Since those dark pool transactions still require a transfer of BTC between accounts, perhaps we could combat this by using blockexplorer to compile the total BTC transaction volume for a given day and find some correlation to average price for that day which fits? That would almost certainly be a more accurate measurement than what MtGox chooses to give us via the API, though considerably more complicated to gather data on

Of course we could also vote with our feet and just start using TradeHill. I have the feeling there will be a fairly meaningful migration once TH's API becomes available...

To the OP (original poster):

Regarding difficulty and the value of BTC: You are confusing "accidental" correlation with "essential" correlation.

Yes, up till now there has been an accidental correlation between increasing difficulty and more Bitcoin users. But it's not essential.

It's essential for a computer to have a CPU -- without one, it's not a computer.
Having lots of LEDs is "accidental" -- that is, it's just icing on the cake. It doesn't take away the fact it's a computer if it's lacking that feature.

A man having red or brown hair is accidental.

Anyhow, it's more likely that someone with 20 rigs added 3 rigs, than finding 3 new miners to add 3 rigs. As time goes on, this will be more and more likely. When someone has 20 rigs, they have lots of money coming in and adding a rig is nothing. It's harder to find 3 more people who are interested in mining.

Anyhow, just because 10 miners add a rig (with 3 cards) and raise the network hashrate by 0.3% doesn't mean that the Bitcoin base went up by 0.3% -- it's not essential. Even if it's gone that way up till now, it won't in the future.

Matthew

How about this, then... I've agreed before that speculation within certain bounds is good and CAN have a stabilizing effect, but that much of the speculative trading that is occurring today is doing little more than creating unsustainable bubbles and profiting from both their rise and their crash. What if we find a way to create a reasonable valuation of 1 BTC, perhaps an exponential moving 7-day average or something. We publish this information in an easy to find easy to use manner and suggest that people buy when the market dips more than a small amount below and sell when it climbs more than a small amount above. This would still be a profitable trading scheme, though riding the bubbles and crashes is potentially moreso. The major benefit to this scheme is that if enough people trade around a reasonably estimated average price for a given day, their trades will help correct the trading price back toward the average. Given enough users and enough time this should lower the obscene variances at least enough to make it usable without being pegged to a fiat currency in a much shorter timeline.

I would have no problem with this kind of a system and it doesn't have any of the dramatic components people have complained about before - no controls or demands, merely information and education as well as a set of recommendations that can be profitable for those who follow and are good for the market as a whole. Given a bit of time I could whip something like this up from MtGox's API feed fairly easily. Questions/comments/complaints?

talked about miners union days before. anyone laugh. now - nobody laugh.
talked about distributed marketplace - anyone laugh. now [almost]anyone programming engines for it.
talked about telecom investments - sceptics eyebrow. now satcom sales high as never before.

Here is my proposal.  We build something like MtGox with calculated rates and limited trades.

Here is how it works.  Pools can add an optional fee that will automatically transfer bitcoins to this new trading site.  (non-miners can just contribute in a non automated fashion.)  These coins are available for purchase at the 7day average of the other exchanges+10%.  When coins are sold, the miner that contributed them (selected round robin) gets 3% into their account.  The rest of the money goes to buying bitcoins.  Bit coins can be sold at the 7day average-10%.  Again, the bought coins go back to the miner who sold his coins that generated the cash that was used to buy the coins.

The non-contributors (i.e. speculators) have the option to buy and sell at these fixed rates.  However, their max volume is determined by a percentage of available funds left at the trading site.

What I think this will do is cause normal people to reconsider if they really want to buy at more than 7day+10% or sell less than 7day-10%.  "I can go to MtBitcoin and buy from the miners for less."

Also, I think we should try to get stores to use a stable rate of 7day (+/-5% which they choose).  If I had my store up and running I would seriously consider trying it.

I'm not trying to make the math work against the math. I'm trying to make the math work for the people against instability and the formation of market bubbles.

This thread is getting cluttered with anger, pedantry and semantics. I'm simply not responding to it any more. You can go argue somewhere else if you have nothing constructive to add. Anything that looks sounds or smells like an ad hominem attack will be ignored and, if the attacks get bad enough, reported. I will update the first post as new developments occur on the site and I'll gladly respond to meaningful criticism but I'm tired of playing this game where we all just call each other names and get nothing accomplished. Be constructive, be productive or go home.

My original reply was an angry ad hominem attack and I realize now that I foolishly allowed myself to be baited into irrational anger. I apologize and have decided to step away from such conversations. I'll still be here if you'd like to rationally discuss things without name-calling.

Solution: Build something that justifies that price. The network gave us a gift. I started coding. Stop trying to make the math work against the math. You'll only drive yourself bonkers.

Best thing I could find is the MtGox "recent trades" JSON feed, which seems to go back about a week. I'm fairly sure I could hack something together to pull that data into a temp database, calculate a moving average and then dump the temp table. I'll have to play with the data a bit but I think an exponential moving average might fit the data better with less lag. I feel like I'm heading dangerously close to speculator territory with the bot idea, but I suppose there's a difference between speculation with my own interests in mind and speculation with the interests of the market in mind.

I don't know, but I'll be interested in helping with the programming part in 2-3 weeks (I have exams now).

This Trading Bot should be used mostly for savings, Meaning that because we not only sell but also sell, in average you won't be able to retrieve the money exactly at the moment you want, only when price is above the calculated price.

Or we could make two bots, one that only sells and another that sells and buys. But, the problem for the bot that only saves is how to send the money in $/€ to the people... I'd rather we only use a bot that both sells and buys and when people want to retrieve the money they retrieve it in bitcoins...

EDIT: Or yeah, that could mean a miner strike when prices go down! Fuck Yeah!

Absolutely brilliant, I love it! Any idea where I could find an API feed with, say, daily average prices for the last 7 days as well as daily average mining power for the same period? Such a value would be likely to increase steadily during each difficulty period which would show much closer to the real trend of slowly increasing value rather than big spikes every time the difficulty goes up. Yes I understand that difficulty lags price (because it's calculated after the fact) but if you smooth the lines of that jagged stairstep they tend to match price quite nicely.

The 7 day average bit is precisely what I was talking about when I was asking for ideas to improve the formula... Now let's try to make it happen lol.

I can't agree more that we need to both buy and sell around the limit, it's just much harder to get people to agree to buy at any given point than to convince them to sell