rpietila Wall Observer - the Quality TA Thread ;) - page 292.

Peter R

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Quote from: Queeq on March 24, 2014, 03:24:19 PM

I don't think that number of transaction depicts adoption rate. It is a boom of altcoins now and they are mostly traded with BTC. So there are lots of them moving back and forth inside and between the exchanges.

I'd like to repeat this analysis with more observable variables that could be proxies for the N in Metcalfe's Law. I think number of bitcoin addresses used per day, and number of blockchain.info wallets are both decent proxies as well.

In your opinion, what is the most accurate way to estimate N?

Queeq

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I don't think that number of transaction depicts adoption rate. It is a boom of altcoins now and they are mostly traded with BTC. So there are lots of them moving back and forth inside and between the exchanges.

Peter R

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Quote from: Pruden on March 24, 2014, 03:08:08 PM

Y'all are using blockchain.info charts, which are broken! Compare the thumbnail in the charts menu to the actual chart. They changed, some of them still lack data and in many cases they paint a very different picture to before their downtime last week. I already asked about it on their thread but got no reply yet.

"Number of transactions excluding popular addresses" still gives very bullish overview, because whereas during the 2013 bear market it stayed flat after the quick drop from the peak, during this bear market it kept growing after the peak and is close already to surpassing it.

The new (broken?) versions of the TX per day chart appears to be a noisy version of the previous (non broken?) chart. The underlying pattern is the same (minus the noise) I think.

Does anyone know a secondary source from which I could download the number of transactions per day excluding popular addresses?

Pruden

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Spanish Bitcoin trader

Y'all are using blockchain.info charts, which are broken! Compare the thumbnail in the charts menu to the actual chart. They changed, some of them still lack data and in many cases they paint a very different picture to before their downtime last week. I already asked about it on their thread but got no reply yet.

"Number of transactions excluding popular addresses" still gives very bullish overview, because whereas during the 2013 bear market it stayed flat after the quick drop from the peak, during this bear market it kept growing after the peak and is close already to surpassing it.

And the transaction/trade ratio was clearly based on MtGox exclusively, which makes it look like there is much less speculation in relation to commercial transactions than it should.

Peter R

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Quote from: SlipperySlope on March 24, 2014, 02:42:09 PM

Awesome chart that well illustrates your discovery. May I refer to it in my logistics model thread?

Thanks for the compliment! I've been meaning to check this relationship out for months. Only took me 15 min lol. Yes, please feel free to use it however you like.

Peter R

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Quote from: SlipperySlope on March 24, 2014, 01:50:54 PM

Apparently there is some controversy whether Metcalfe is right with regard to N squared. N * log (N) has been proposed as an alternative. However I agree that your observation is compelling.

If it's N log N then we are presently overvalued:

SlipperySlope

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Stephen Reed

Quote from: Peter R on March 24, 2014, 02:37:54 PM

Here is the square of the number of TXs per day (excluding popular addresses) overlaying the price history and shown on a log scale. I've shifted the N²_TX curve for easier comparisons. Indeed, Metcalfe's law appears to hold (the two curves tend to have the same slope on the log curve at any given point in time).

Awesome chart that well illustrates your discovery. May I refer to it in my logistics model thread?

Peter R

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Here is the square of the number of TXs per day (excluding popular addresses) overlaying the price history and shown on a log scale. I've shifted the N²_TX curve for easier comparisons. Indeed, Metcalfe's law appears to hold (the two curves tend to have the same slope on the log curve at any given point in time).

SlipperySlope

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Stephen Reed

Quote from: Peter R on March 24, 2014, 01:27:48 PM

Quote from: SlipperySlope

Using a two year version of the chart, I read 3.2x per year transaction growth

Interesting. You are claiming that usage statistics (like transactions) are increasing at about 3.2X per year, yet price is increasing at roughly 10X per year. If we assume that usage stastics are linearly proportional to the number of users, N, perhaps what we are seeing is Metcalfe's Law play out in front of our eyes:

Metcalfe's law states that the value, V, of a telecommunications network is proportional to the square of the number of connected users of the system, N: V ~ N² .

According to Metcalfe's Law, the value of the bitcoin network increases by a factor of 10X each time the number of users increases by sqrt(10) = 3.16. If you remove the volatility in the price action, we get a pretty good fit!

Apparently there is some controversy whether Metcalfe is right with regard to N squared. N * log (N) has been proposed as an alternative. However I agree that your observation is compelling.

aminorex

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Quote from: Peter R on March 24, 2014, 01:40:34 PM

Quote from: bucktotal on March 24, 2014, 01:33:57 PM

this correlation may interest you.

https://bitcointalksearch.org/topic/18-mar-data-a-bitcoin-price-theory-441336

Thanks for the link. I had seen that before, however, I didn't really like how he used the cumulative number of addresses. I think we want to compare price with observables that are clearly linked to the present number of users, N, as per Metcalfe's law.

active wallets over 24 hours is a suitable proxy for number of users. it is a direct read of the number of nodes active in the network.

Peter R

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Quote from: bucktotal on March 24, 2014, 01:33:57 PM

this correlation may interest you.

https://bitcointalksearch.org/topic/18-mar-data-a-bitcoin-price-theory-441336

Thanks for the link. I had seen that before, however, I didn't really like how he used the cumulative number of addresses. I think we want to compare price with observables that are clearly linked to the present number of users, N, as per Metcalfe's law.

bucktotal

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Quote from: Peter R on March 24, 2014, 01:27:48 PM

Quote from: SlipperySlope

Using a two year version of the chart, I read 3.2x per year transaction growth

Interesting. You are claiming that usage statistics (like transactions) are increasing at about 3.2X per year, yet price is increasing at roughly 10X per year. If we assume that usage stastics are linearly proportional to the number of users, N, perhaps what we are seeing is Metcalfe's Law play out in front of our eyes:

Metcalfe's law states that the value, V, of a telecommunications network is proportional to the square of the number of connected users of the system, N: V ~ N² .

According to Metcalfe's Law, the value of the bitcoin network increases by a factor of 10X each time the number of users increases by sqrt(10) = 3.16. If you remove the volatility in the price action, we get a pretty good fit!

this correlation may interest you.

https://bitcointalksearch.org/topic/18-mar-data-a-bitcoin-price-theory-441336

Price = #ofUsedAddresses^2/(e^27.5)

or

Price = #ofUsedAddresses^2.26/(e^32)

edit: today is at ~ 31,500,000 addresses.... P = ~1150

Peter R

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Quote from: SlipperySlope

Using a two year version of the chart, I read 3.2x per year transaction growth

Interesting. You are claiming that usage statistics (like transactions) are increasing at about 3.2X per year, yet price is increasing at roughly 10X per year. If we assume that usage stastics are linearly proportional to the number of users, N, perhaps what we are seeing is Metcalfe's Law play out in front of our eyes:

Metcalfe's law states that the value, V, of a telecommunications network is proportional to the square of the number of connected users of the system, N: V ~ N² .

According to Metcalfe's Law, the value of the bitcoin network increases by a factor of 10X each time the number of users increases by sqrt(10) = 3.16. If you remove the volatility in the price action, we get a pretty good fit!

SlipperySlope

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Stephen Reed

Quote from: windjc on March 24, 2014, 12:47:09 PM

Quote from: SlipperySlope on March 24, 2014, 12:39:31 PM

Quote from: Biodom on March 24, 2014, 11:37:53 AM

I found some very strange statistics: apparently, average number of transactions barely budged in the last 12 mo (to my eye it looks like 10-15% growth max).
https://blockchain.info/charts/n-transactions?timespan=1year&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address=
If bitcoin is growing in utility-why transactions are barely growing?

I believe that the number of Bitcoin transactions is a good indicator of the underlying economy, and very useful for fundamental analysis.

Most analysts and pundits who refer to the number of transactions prefer an alternate chart available from Blockchain.info . . .

https://blockchain.info/charts/n-transactions-excluding-popular?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

Popular addresses are excluded from the preferred chart because of the issue with numerous dust transactions related to gambling sites, e.g. Satoshi Dice last year.

It appears from that indicator that the number of Bitcoin transactions increases at about 5x per year and the trend continues. Given the bitcoin prices have increased at a rate of 10x per year, one may ask whether prices have gotten far ahead of transactions. I hypothesize that prices are ahead because speculators have the future in mind, not the present.

Using data presented by http://www.coinometrics.com/bitcoin/tix, the sum of competing payment network transactions is 345,292,000 per day. Using the Blockchain.info figure of 58,620 for adjusted current daily Bitcoin transactions, then at 5x increase per year, the number of daily bitcoin transactions will exceed the current bank card, amex, paypal, etc. competition in five or six more years.

It seems like growth on this chart is more like 3.5-4x instead of 5x.

Agreed.

Using a two year version of the chart, I read 3.2x per year transaction growth. Which yields a 7-8 year time frame before the number of daily bitcoin transactions will exceed the current bank card, amex, paypal, etc. competition.

Biodom

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Quote from: SlipperySlope on March 24, 2014, 12:39:31 PM

Quote from: Biodom on March 24, 2014, 11:37:53 AM

I found some very strange statistics: apparently, average number of transactions barely budged in the last 12 mo (to my eye it looks like 10-15% growth max).
https://blockchain.info/charts/n-transactions?timespan=1year&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address=
If bitcoin is growing in utility-why transactions are barely growing?

I believe that the number of Bitcoin transactions is a good indicator of the underlying economy, and very useful for fundamental analysis.

Most analysts and pundits who refer to the number of transactions prefer an alternate chart available from Blockchain.info . . .

https://blockchain.info/charts/n-transactions-excluding-popular?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

Popular addresses are excluded from the preferred chart because of the issue with numerous dust transactions related to gambling sites, e.g. Satoshi Dice last year.

It appears from that indicator that the number of Bitcoin transactions increases at about 5x per year and the trend continues. Given the bitcoin prices have increased at a rate of 10x per year, one may ask whether prices have gotten far ahead of transactions. I hypothesize that prices are ahead because speculators have the future in mind, not the present.

Using data presented by http://www.coinometrics.com/bitcoin/tix, the sum of competing payment network transactions is 345,292,000 per day. Using the Blockchain.info figure of 58,620 for adjusted current daily Bitcoin transactions, then at 5x increase per year, the number of daily bitcoin transactions will exceed the current bank card, amex, paypal, etc. competition in five or six more years.

This is quite 'selective" statistics when you have to remove popular addresses. Even with that, the growth is roughly 3X, not 5Xfold in 12 mo
https://blockchain.info/charts/n-transactions-excluding-popular?timespan=1year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

windjc

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Quote from: SlipperySlope on March 24, 2014, 12:39:31 PM

Quote from: Biodom on March 24, 2014, 11:37:53 AM

I found some very strange statistics: apparently, average number of transactions barely budged in the last 12 mo (to my eye it looks like 10-15% growth max).
https://blockchain.info/charts/n-transactions?timespan=1year&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address=
If bitcoin is growing in utility-why transactions are barely growing?

I believe that the number of Bitcoin transactions is a good indicator of the underlying economy, and very useful for fundamental analysis.

Most analysts and pundits who refer to the number of transactions prefer an alternate chart available from Blockchain.info . . .

https://blockchain.info/charts/n-transactions-excluding-popular?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

Popular addresses are excluded from the preferred chart because of the issue with numerous dust transactions related to gambling sites, e.g. Satoshi Dice last year.

It appears from that indicator that the number of Bitcoin transactions increases at about 5x per year and the trend continues. Given the bitcoin prices have increased at a rate of 10x per year, one may ask whether prices have gotten far ahead of transactions. I hypothesize that prices are ahead because speculators have the future in mind, not the present.

Using data presented by http://www.coinometrics.com/bitcoin/tix, the sum of competing payment network transactions is 345,292,000 per day. Using the Blockchain.info figure of 58,620 for adjusted current daily Bitcoin transactions, then at 5x increase per year, the number of daily bitcoin transactions will exceed the current bank card, amex, paypal, etc. competition in five or six more years.

It seems like growth on this chart is more like 3.5-4x instead of 5x.

SlipperySlope

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Stephen Reed

Quote from: Biodom on March 24, 2014, 11:37:53 AM

I found some very strange statistics: apparently, average number of transactions barely budged in the last 12 mo (to my eye it looks like 10-15% growth max).
https://blockchain.info/charts/n-transactions?timespan=1year&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address=
If bitcoin is growing in utility-why transactions are barely growing?

I believe that the number of Bitcoin transactions is a good indicator of the underlying economy, and very useful for fundamental analysis.

Most analysts and pundits who refer to the number of transactions prefer an alternate chart available from Blockchain.info . . .

https://blockchain.info/charts/n-transactions-excluding-popular?timespan=2year&showDataPoints=false&daysAverageString=7&show_header=true&scale=1&address=

Popular addresses are excluded from the preferred chart because of the issue with numerous dust transactions related to gambling sites, e.g. Satoshi Dice last year.

It appears from that indicator that the number of Bitcoin transactions increases at about 5x per year and the trend continues. Given the bitcoin prices have increased at a rate of 10x per year, one may ask whether prices have gotten far ahead of transactions. I hypothesize that prices are ahead because speculators have the future in mind, not the present.

Using data presented by http://www.coinometrics.com/bitcoin/tix, the sum of competing payment network transactions is 345,292,000 per day. Using the Blockchain.info figure of 58,620 for adjusted current daily Bitcoin transactions, then at 5x increase per year, the number of daily bitcoin transactions will exceed the current bank card, amex, paypal, etc. competition in five or six more years.

aminorex

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Sine secretum non libertas

Quote from: Biodom on March 24, 2014, 11:37:53 AM

Not to disagree, but to discuss (see comments in text and below).
I found some very strange statistics: apparently, average number of transactions barely budged in the last 12 mo (to my eye it looks like 10-15% growth max).
https://blockchain.info/charts/n-transactions?timespan=1year&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address=
If bitcoin is growing in utility-why transactions are barely growing?

Number of transactions is not important. Number of participants and total value transferred are important. (Mid-2013 dust transactions < 5430 satoshi were effectively stopped.) For a useful transaction value, multiply estimated transaction volume by BTCUSD rate, adjusted for USD inflation.

Biodom

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Quote from: rpietila on March 24, 2014, 05:32:47 AM

So what did I understand:

- Bitcoin is a technology
- Technologies have a known adoption cycle
- To adopt Bitcoin, you must buy bitcoins You can just mine. Some companies (KnC) immediately sell mined BTC for $$$-is this adoption?
- Buying bitcoins from a rigid stock increases its price to induce existing holders to sell
- The value of Bitcoin network is correlated with the number of its members Members are an unclear category. Who is a member? Number of wallets cannot be used because many of them do not have any BTC-were probably created during purchase, then emptied.
- The purchasing power of one bitcoin is roughly linearly correlated to the number of bitcoin owners in the world and it can be expressed with the following equation: 0.0005*U (USD/BTC), where "U" is the number of bitcoin owners.

So I am all for listening to other viewpoints, as long as they conform to observable reality like the ones I presented.

By the way, the excellent clarity of the message was supplied by Cohiba Siglo VI.

Not to disagree, but to discuss (see comments in text and below).
I found some very strange statistics: apparently, average number of transactions barely budged in the last 12 mo (to my eye it looks like 10-15% growth max).
https://blockchain.info/charts/n-transactions?timespan=1year&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address=
If bitcoin is growing in utility-why transactions are barely growing?

aminorex

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Sine secretum non libertas

Quote from: creekbore on March 24, 2014, 07:45:11 AM

Quote

because statistically you can't break out of it. Because you don't have the insider view I have being a programmer. I can evaluate things that you can't.

I didn't think anyone could out do aminorex for pomposity and arrogance, but I reckon you're getting there.

I don't mind being ranked with AnonyMint on an axis which correlates positively with intelligence, because I think he's rather clever. But did it have to be this one? Time to review Dale Carnegie I guess.

Topic: rpietila Wall Observer - the Quality TA Thread ;) - page 292. (Read 907227 times)