Topic: [poll] Estimate how many took noticeable losses (Read 2165 times)

The only way to achieve this goal is to forever suppress the market value of the coins. Greedy people with no better purpose than looking for easy money will always try to get in if there is a profitable trend going. This popped bubble provided a painful experience for a microscopic portion of all the greedy people on the internet. Next time the value starts climbing a new crowd will take their place.

We can also look at this argument as one which concludes that the greedy people are needed, otherwise the bitcoin system will stay just where it is and fail to be adopted wider. It looks quite much like someone is trying to suppress the value of the coins right now... Eventually this will run out of steam and the greedy crowd will come running in.

Serious investors only rarely lose much of their money. They are experienced, conversant with typical market movements like speculative price bubbles, they have a good idea how much a bitcoin should be worth, they know the Kelly Criterion by heart, etc.

There are lots of serious idiots though who should lose their money as quickly as possible and go somewhere else instead of damaging the reputation of bitcoin.

There are only 12(?) Million Coins in existence most of them are not even available on the exchanges.

If you now only count serious investors (bought at least 1000$ worth of coins) it can't be very many.

It is over 9000!!!!!

Let me put it this way: I want the negative emotional impact maximized, because I want the idiots who destabilize and damage the bitcoin market to disappear.

The destabilizers are those who buy high and sell low, i.e. exactly those who lose their money.

With over 60 votes we got some numbers to plug in.

The poll seems to guesstimate that we have about 20k people who would consider themselves damaged from the bubble bursting. This is a higly unreliable number but its safe to say its likely correct within an order of magnitude. The truth lies between 2000 and 200000. We should probably nudge it up to 50k for good measure.

We can figure out the total volume of trade by integrating the volume bars for the last 4 days. Counting only mtgox and usd we get about $200M in volume. The total volume is probably about twice that.

It's unlikely that all of this volume would be considered losses either, we can estimate half to be.

This has us with about 50k people sharing the cost which in total appears to be about $100M. Then there is some sort of standard distribution across these 50k people which should leave the majority of them taking insignificant losses and a few carrying the weight.

All in all, this is TINY gimpass bubble compared to anything previously called a bubble. Its more akin to a poorly managed construction project.

I see a rather surprizing number of votes for the 100k - 0.5M range.

What kind of a calculation would reasonably lead to this huge number?

As PT Barnum said there is a sucker born every minute.  I'm sure there are plenty of "idiots" out there to help fund our retirements.  Also a lot of smugness today from those who thought we would never go under $200 and were headed straight to $1000 (short term memory much?).  The market has calmed down today (and is higher than I expected) but, that doesn't have anything to do with what happens next week.  Just like with speculation on stocks you always see speculators running them up and down until they finally get bored and find another thing to go broke on.  I believe there will be many more ups and downs and I may just start looking more at option on Bitfinex than buying coins for anything other than using them.  Right now it seems a lot easier to predict when it is insanely valued based on very short term gains and volatility than to predict a bottom.

I might just give LTC a try after a week or so if the price stays stable on BTC.  With all the new speculators interested another run up and bubble burst is feeling more likely all the time.

I bought coins at 76 (awhile back) and If I sold my litecoins before it crashed i would have been a lot wealthier in cryptocurrency.

Well you've missed the point entirely... this is a question of consumer confidence.  The "Idiots" are funding your retirement...bitcoin isn't getting the majority of its value from its dedicated population of computer geeks (I use that term endearingly). Nobody is worried about the confidence of the bitcoin community here it is what this destabilization has done for consumer confidence in light of the boom that took place with the influx from Cyprus and the press surrounding it.   It's going to take a much longer time to replace the money lost because John Q. Public got burned on this one to satisfy the profits of the few.   

Don't get me wrong a correction was due but the compounded problem of MtGox not being able to handle their own traffic really shook bitcoin's public image.  You'll be feeling the ripples of this for probably months or even the next year as fresh money is much more unlikely to join in now.  There will be the same steady influx of miners and mining tech as long as the value stays above 60ish and the difficulty doesn't radically outpace it but we (as a community of investors, miners, etc) just shot ourselves in the foot with massive profit taking (which kicked this off) and a failure to address the forest as a whole vs the trees right in front of us (inadequate bandwidth/protection dedicated to preserving real $ investment).   

Lots of valuable lessons have been learned at the expense of John Q.'s pocket book and our own pocket books in many cases.  Hopefully we utilize those lessons going forward.

I have seen a couple of fun graphs which try to plot wallet sizes against the number of wallets. I doubt their reliability though as they showed a cutoff with the top 1% of all wallets containing more than about 120 coins. And a totally huge number of wallets at less than 1 coin (more than half of all addresses from what I recall).

Perhaps someone knows more about digging these statistics up from the blockchain, i'll give it a try but I doubt i'll succeed.

If we knew the total number of active BTC holders, it would help too (in relation to the market cap). 

How many active BTC'ers are out there?  When I watch the trollbox on btc-e, there are so many screaming folks, and a lot of them surround
holdings of .5BTC or 20 LTC or ... you get the point.  While their activity can set the tone of the market, a sale at $40 shows up on the chart whether it was for .1 of a BTC or 100 BTC.  The real question is, how many BTC folks have holdings of 100, 500, 1000 and so??

Market cap at peak should be between 2 and 3 billion usd (260usd * 11M bitcoins).

Current market cap will be around 0.8 billion usd (77usd * 11M bitcoins)

This does not however reflect the actual value of the system, but I don't know if it can be calculated any other way...

Is it really irrelevant?

I'll have to defend its relevancy somehow as we are currently looking at speculating about the consequences of a burst bubble.

Consider the case that there was only one single individual who bought all of the "profitless" bitcoins and then this person failed to sell any of them at a profit. This hypothesis has a single loser and everyone else is a "winner". If this hypothesis was to be true (in our fantasy world) then the emotional consequences of a burst bubble should be close enough to zero to matter at all. In this case the system has in practice been sponsored towards greater success in the future.

In the opposit case we have a quite more significant emotional impact. Imagine the case that only one rich person had possession of all bitcoins except for those that were bought at more than 70 usd. Then this rich person is the only individual who manages to sell any coin at a profit during the bubble burst. In this case we have quite a significant emotional impact from the bubble and it will be quite a challenge to recover some semblance of faith in the bitcoin system as a whole. It would be really hard to consider bitcoin a viable technological innovation in the future.


Reality will be found somewhere between these extremes. It should however be leaning towards one or the other extremes and the impact should adjust with the position along this imaginary axis.

Can't we get a rough idea from market cap at peak - current market cap?

Your question is aiming at an irrelevancy. Bitcoin is a success at any price, as long as people use it to pay for goods and services. Bitcoins were not made for speculation. When bitcoin stabilizes, we no longer need many speculators. Speculators are mainly needed as long as there are idiots in the market, because they collect the money from them and put it to better use.

Looking only at the number of idiots misses the point.

No matter how many, the good speculators, those who buy low and sell high and thereby stabilize the price, always win and stay. Bubbles like the current one are like rainstorms, cleaning the sky.

We will have such speculative price bubbles as long as enough idiots come into this market. This is generally not entirely bad for a juvenile, emerging market. It raises the market capitalization, because it brings in fresh money. This enables the efficient speculators to stabilize the market better.

The graph at: http://blockchain.info/charts/n-unique-addresses
Shows us that the total number of wallets which have had transactions during a single day peaks at about 100k. Now I have no idea if the transactions which result from a trade at mtgox is witten to the blockchain but i would guess that it is. (occams razor argument)

If we take this chart to its biggest extreme we can integrate the number of wallets and consider each of them to represent a single individual. If this was the case we would find roughly 1M people involved with trades over the last 15 days.

If every wallet which has been involved in any trade within the blockchain the last 15 days represent a person who has payed more than 70 usd on average for bitcoins and also failed to sell them at a profit then we would be looking at a total of 1M punished individuals.

Now if we filter this hypothesis through some sort of reality we might get closer to a decent estimate. ^^

Would't have lost a penny if my order to sell everything went trough at the first minute of that fu..ing lag. MtGox, i am looking at you.

I have bought some coins for higher than the crash low. But since I did not sell, I have incurred no losses.

Actually this current price (about 75 usd) was an all time high about 15 days ago. That's even half a month...

Compare this with the housing bubble that popped in my home town around 1994, that bubble popped down to what was an all time high perhaps a decade back in time. If you got 10 years of bubble growth to sucker in the market for experiencing the losses you got quite a different case than when you got a couple of weeks. But we live in different times...