Topic: New miner-centric site with hopes to stabilize the BTC economy - page 4. (Read 9147 times)

To contradict something my mother used to tell me: Just because you created something doesn't mean you have the right to destroy it. Murder is murder, even if you're killing your own child.

Speculation within certain bounds is a good thing, without active speculation we wouldn't have Forbes and SmartMoney writing articles about us, but too much speculation allowed to run rampant and create bubbles as massive as this past week has seen create collapses like we saw on Saturday and I for one don't want to see any more collapses that big. It is therefore in everyone's best interest to understand what 1 BTC *should* be trading at and refuse to participate in such speculations. There will always be those who will and small inflationary bubbles and their associated crashes can still occur - I welcome them even, because they mean more investors coming to our community - but we can't allow them to get out of hand like they recently have.

I'm not talking regulation or enforcement, I'm talking education. People are still welcome to make their own decisions, but I'd like them to be well-informed decisions.

What about lots of people repeating that "price follows difficulty" which is in fact plain bullshit? It's actually difficulty that follows price - and often that's speculative price.


Well, they also "created" this market. More than 90% of the miners wouldn't be there if speculators did not exist.

I'm promoting the idea that every user of BTC should be somehow protected by the ability of the speculators to destroy the market. I'm promoting the idea that education about where this currency comes from and the factors that truly drive its VALUE - not its PRICE - might just help stabilize the bitcoin economy. If we all know what a bitcoin SHOULD cost then we can compare that to what a bitcoin currently DOES cost and make better decisions, avoid bubbles and prevent tremendous crashes like we saw on Saturday.

this is just a plea for miners to price fix right... ?

Hi,

why do you base your calculations on the speculators prices ?
10 days ago a bitcoin was worth 8.50 usd, who told it should be worth 20 like today?

did you see how little sales moved the mtgox price down ? i think like 40k coins where needed from price 32 usd to 10.
there are so much coins arround compared to this number, you will always have independent miners undercutting your suggested cartel ( union) price

You are promoting the idea that miners profit should be somehow protected from that speculative factor, thus evening out risks. I would argue that everyone invested different amount of money thus taking higher or lower risk. It _is_ communism - I see nothing wrong about someone throwing money into a risky venture such as bitcoin then losing his investments. I see no reason why wouldn't someone profit on speculative margins while others suck it up due their own greediness and stupidity.

Well, I had the same idea but am not a well web coding guy, so I am glad that you did it.
I will now, as a test first but probably going on like this (just not if you make prices really fancy), trade my bitcoins for that price (plus mtgox+exchange fees...)
greets, M

Go read a book, seriously. It's called a tangled hierarchy, multiple things influencing one another in such a way that they sometimes influence themselves indirectly. It doesn't matter which direction you see the causality as traveling in (away from the miner, thus giving him the power or away from the market thus giving them the power) the fact is you've just confirmed my point, even while arguing it - the two are linked. The directionality of the link simply doesn't matter for my purposes. Whether the price drives the difficulty, the difficulty drives the price or some tertiary underlying factor influences both, the fact is that they move together.

As for the "sounds like socialism" guy, I said nothing whatsoever about evening out rewards. More GPU power = more BTC = more USD at any exchange rate, where did you get the idea that I was promoting a communist BTC variant?

Here - I am suggesting you to do something better. Since you don't want to thrive on speculations, create a communist pool. A pool where everyone gets the same reward per block doesn't matter how much computing power he throws in it. That's because basically everyone that spent some money on GPUs actually relied on speculative BTC price at that particular moment. No need to do that. Stop buying that fancy hardware. Get the reward you think you deserve so much as if it is your human right. Get the same reward as everyone else believing in that union. Drive the speculators out. Eheh.

Nope.

The economy works totally opposite. The price of gold determines is it profitable to be a miner. If it's high a lot of people become miners. If it goes low miners flow to other occupations. Moreover the price of the good is not determined by the cost of the good. It's opposite: the price of a given good determines at what cost it's profitable to make it.

So all the efforts to set a "fair" price are ultimately futile¹. If you want to waste your efforts - it's your decision. But you have been warned.


¹. Unless you can introduce the "fair" price by force as some socialist governments do - which is totally against the idea of BitCoins.

No, because the controls aren't forced, merely suggested. Gold miners have to be able to demand a price for their product that pays their cost of living. This represents a "floor" below which the price of gold can't really fall since below that floor no more gold is available - the miners simply take up another profession. Right now BTC's "floor" is zero, which is a game-ending event. Miners are still free to mine however many coins they can and sell them for whatever price they deem fair. This is unlike government regulation because no one is required to follow "controls" I'm merely making suggestions. If a "wall" of BTC exists at a given exchange rate then it becomes more difficult to drive the price above or below that wall via speculation and the currency becomes more stable. If you don't like my idea, don't follow it - you won't hurt my feelings. I'm fairly certain, however, that there are a lot of people who treat this more like a business than a playtoy and I'm pretty sure they'd like bitcoin to behave like a proper currency, only deflationary. Eventually perhaps the market will grow large enough to avoid manipulation and I'll just take down the site, but as was made obvious yesterday there are still individual people who can destroy this thing (even unintentionally) if we don't actually work together to prevent it.

I guess what I'm saying is that I recognize that the value of 1 BTC goes up because more people are using them and the "pie" gets divided more ways, as opposed to it just being more miners demanding the same money for less product. What I'm also saying, though, is that the difficulty is a measurement of the number of miners and that the number of miners is a slightly varying but fairly steady percentage of the number of users. Therefore, the difficulty can be a good predictor of the user base and is therefore a valid measurement of how many ways the pie is being split. Thus, we can use it to determine a fair approximation of 1 BTC's value at any given time.

The value of BTC is driven primarily by speculation right now and that will continue to be the case, exerting fixed price controls for the "good" of the whole market, nothing like driving a strong monopolistic governmental concept into a market which tends to shed such principals.

OK so you're not against the math, you're just against the concept? I'm not even entirely sure what you're complaining about here... Yes, as more people join the network, more miners join the network, difficulty goes up, number of BTC mined daily goes down, value of each BTC goes up and we all hold stable. It's not just based in the fact that "gee, we miners would really like to always make stable income" it's based on the basic concept that the pie does in fact get split more ways. If the number/power of new miners is proportional to the number of people joining the community (which it should be, over a long enough timeline) then difficulty is just as good a metric as anything you can provide.

In short, please either provide me with a better method for the measurements I'm trying to take or a concise well-worded argument as to why exactly you're against this.

See, before we had some money coming in for every new miner, so the price of BTC went up even as difficulty went up.
If anything, I was making *more* with every passing week. But as we now know, that was a bubble and unsustainable.

The fact of the matter is, we should be making less and less $ per week the more people start mining (and the more mining rigs are added to the network). Any increases in price will offset this loss of income, but it should be based on true demand for Bitcoin, not speculation. I understand "the market sets the price", but "the market" tends to be driven by speculators more times than not.

Now as mining income goes down, eventually some miners will drop out because their hardware isn't efficient enough, etc. and then difficulty might level off or even decrease. But as long as the Bitcoin network wants to shoot for 7000 BTC a day, there will be less and less money (expressed in BTC OR dollars) for any given 5830.

Matthew

Then give me a metric for total number of users that I can pull via API and I'll change the formula thusly. I based it on difficulty because difficulty tends to grow proportional to population size (more participants brings more miners). If I had a more accurate metric for the number of active users I could use that, but I've tried to find one and I can't. Besides, difficulty has in fact remained proportional almost since day one.

Cool idea and all -- but here is the part you're missing:

Each time difficulty goes up, it's because there are more mouths to feed from the same pie. The pie gets sliced up into smaller and smaller portions. The size of the pie remains the same (6 blocks/hour), the only question is, will 2,000 -- 4,000, or 10,000 miners divvy up that pie.

The pie gets bigger or smaller based on what the market value of Bitcoin is -- this is where speculation drives up (or down) the price.

But if the price goes up X2, and the difficulty goes up 100%, you'd make the same amount, right? 

EXCEPT there are lots of others getting that same "amount" because they joined in the last week, which is why difficulty went up in the first place.

The question is, how big can that pie get, based on the fundamentals of Bitcoin?

So your formula is too simple. If difficulty goes up by 40% it does NOT mean that there are 40% more dollars willing to be traded for Bitcoin -- which your formula CLEARLY states.

If you don't follow what I'm saying, please ask questions and I'll clarify. It's something I didn't get at first either

Try http://btcunion.com/api/ and tell me if that looks like valid JSON to you. It looks valid to me but again I'm not a JSON expert

I've never worked in JSON. Give me a few to figure out the format and I'll go change my code. Should be easy enough.

It's not a bad idea, and historical data does suggest a strong correlation between difficulty and price (somebody post that chart, can't be bothered to do it again).