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A few thoughts - Wednesday, August 20, 2014

Good evening! A few thoughts for dinner tonight:

The VC bubble and a domino effect of failures

The latest fad in /bitcoin is that the price of bitcoin doesn't matter. One thread was titled "Sean's Outpost can give meals whether bitcoin is worth $35 or $1200!" That's true, but bitcoin is more complicated than that one use case.
I talked about the insane amounts of venture capital being poured into the industry right now a few weeks ago. The price of bitcoin is important for these people because it affects all sorts of businesses. For example, mining businesses can't profit if there is a crash after they design their chips. Exchanges make less money if the price is lower because a lower price can't support high volume. People who build projects on top of the network and who are sitting on donations can fold. Altcoins that are promising can be forked because it is no longer profitable to mine them.
Even at higher prices, there was not enough money to go around to prevent most of the VCs from losing on their investments. The piece of the pie that the VCs can earn shrinks as the price of a bitcoin falls. These people have deep pockets, so most of them can survive a brief downturn, but as the network expands, the lower bound price that would precipitate a complete collapse is rising.
When bitcoins averaged around $50, there weren't lots of employees getting paid in bitcoins and bankers wanting returns on investment. Now that bitcoins tend to average around $600, the size of the economy has increased significantly. Previously, the price of bitcoins could have dropped to $10 and everyone could still have looked forward to a recovery. Now, the minimum price is much higher (I've said $200) where a cascading chain reaction of business failures would take out the whole industry. In the future, that minimum price will likely rise to $1000, and then to $10,000, and so on.
The price falling below $200 or whatever the minimum is doesn't itself signal anything wrong with the promise of bitcoins. Instead, the low price will cause the failure of some critical part of the infrastructure like a major exchange, which could then cause businesses that depend on the exchange to be taken out, and so on. Even if everyone who owns bitcoins believed that the technology would succeed and there were many people spending bitcoins, the businesses would all be forced into bankruptcy simply because other businesses they need to offer their services failed in a chain reaction.
This VC bubble is dangerous and the best thing that could happen right now is for the VCs to stop temporarily with their investments so that this does not happen. Otherwise, the industry will end up in a fragile state where there are startups depending on other startups that have business models depending on a base price.

The "technology adoption curve"

One of the popular graphs making the rounds nowadays is the "technology adoption lifecycle" graph at http://setandbma.files.wordpress.com/2012/05/technology-adoption.png. According to the people who agree with the theory, bitcoin is currently in the bottom of that huge valley in the middle of the chart. One writer suggested that bitcoin was somewhere near the top of the curve still, with a long ways to fall down the valley before the technology ends up as a fraction of what it was thought to become.
While this chart may be relevant to other technologies, it isn't relevant to bitcoins. The most obvious problem with trying to explain bitcoin adoption using this chart is that there have been many bubbles, but the chart only contains one bubble. It would have been possible to pull out this "technology lifecycle" chart after any bubble in the past few years and state that bitcoins were stuck in the "chasm" and will be permanently damaged. For example, someone could have drawn this graph after the period where bitcoins fell from $50 to $2 and stated that the use of the technology will never be valued at more than $20.
Another reason to ignore this chart is that many of the other technologies that are often compared against it didn't follow the chart either. Some people suggest that the Internet followed this chart, because there was a bubble in 2000 that later crashed, and that the high hopes of the Internet transforming daily life never came to be. The way I see it, the Internet has grown far beyond anything imagined in 2000. Whereas pets.com might have failed, Wal-Mart is now losing customers because Internet shopping has become so cheap that it is a bad idea to go to their stores anymore if your goal is to save money. Cell phones have made many people oblivious to the world; I recently compared what it was like to ride the bus when I went to college and what it is now like to ride the same bus system. Now, everyone on the bus is engrossed in their phones and nobody even bothers to look out the windows, and in ten years people will probably be playing video games with their friends in their glasses, oblivious to the world around them.
Bitcoins are also not "just another technology." There are some technologies like bitcoin that can completely change the world. The Internet, television, and radio were a few of them, because the way the world worked was fundamentally changed by these technologies. Most of the other technologies listed on these charts, like facebook, self-driving cars, and virtual reality are not things that fundamentally change the way the world works. The economy ticks on without being changed significantly by facebook, but any company that has no Internet connection is obsolete.

Unbelievable deals on PS4s

Newegg has unbelievable deals on Playstation 4s right now. If you pay with bitcoins, you can buy one for $319.99, almost 30% below market rate. These are brand new and sealed, and it's likely that Sony will not lower prices to this rate for at least a year or 1.5 years. If you want to make quick money, you can buy a PS4 and then undercut sellers on Craigslist to pocket 50 bucks. For some reason, the market of these bitcoin-discounted PS4s and the dollar-denominated PS4s is decoupled and there is significant profit to be made.
I was trying to figure out what the catch is with these consoles yesterday. Newegg must be losing money on these, because they have a limit of 1 per customer. If they were earning money, there would be no reason to have such a limit. If they were simply offering a loss leader to get people to shop at Newegg or to upsell accessories, then they would offer the same price or close to it in dollars.
Therefore, there are three possibilities for this pricing. The first is that Newegg is being killed by so many transaction fees that they can actually afford to discount the PS4s to this insane price rather than give most of their profits to banks. The second is that bitcoins are priced low, and the company is gambling on a 30% loss now to gain more when this panic subsides. The final reason is that they simply want to promote bitcoins as a currency because in the long-run, the money they can save from transaction fees if bitcoin were the world currency far outweighs the losses they are taking on these items now.
I will take a risky position and say that #2 has played a role in this sale. If a company were looking to promote bitcoin adoption, and hold some percentage of assets in bitcoins, then the best time to do it would be when prices are very low. They can sell thousands of these consoles and take $30k in losses, but they end up with 1000 bitcoins in return. In the process, there are a certain number of people who bought accessories that are very profitable, there are new customers who will now return to Newegg in the future, the price of bitcoins is likely to rise eventually, and they have encouraged people who otherwise would never have bought bitcoins to do so, so that the transaction fees they pay in the future are more likely to be lower. Someone in the accounting department was tasked with adding together all these probabilities and came up with how much they can discount the units to make a profit in the long term.

How long a transaction takes

I read an article this morning where someone mentioned that the average time a person needs to wait for a transaction to process is five minutes. The number is derived from the incorrect assumption that blocks occur every ten minutes, so if you picked a random point between these ten minute intervals many times, it would be, on average, five minutes away from the next block.
Some people also state that it takes ten minutes to process a transaction, which, again, is inaccurate. What's alarming is that journalists for big-name newspapers spread false information to the public when they publish articles about the supposed "10-minute confirmation time."
Hashing for the bitcoin network is independent. If people have been hashing for 60 minutes without finding a block, there is no greater chance of finding a block in the next minute than there was 60 minutes ago. Therefore, one cannot say that blocks occur "ten minutes apart," because that isn't always true. Having done lots of work on a block does not mean that the next block is any more likely to be found sooner.
The time until the next block can be calculated using an exponential distribution. If the hashrate has not increased or decreased since the last difficulty change, publishing a transaction right now means you can expect for it to be confirmed in about 6.9 minutes, not 5 or 10 minutes. This calculation does not make intuitive sense, but results from the random nature of independent hashing. This is good news for those who mistakenly believe that it will average 10 minutes for a merchant to receive a transaction.

Other

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Updated bitcointip stats, includes charts

In reply to this question I decided to give it a go.
I've found a script from a previous stats post which should to be able to extract all the tips from Bitcointip.net
I used the script to download all tips and generated the following data:
According to my data there have been 7,934 tips totaling $50,959.84
With an average tip value of $6.42 and a median tip of $1
The largest tip is $4,680
Here is a histogram of tips up to $5
Here is a histogram of tips above $5
Here is a plot of the 143 tips above $50 with a logarithmic scale and sorted by time, with the left being most recent. You can clearly see a huge number of $200 tips given out by BitcoinBillionaire.
The data used only returns dollar values, and has a very annoying time format, because it goes from xx minutes, to hours, to weeks, to months, to years. So there are no exact times, which make it bad for plotting. I was able to classify the time the data into monthly bins.
Here is a chart showing monthly number of tips, and total amount
Something does appear to be wrong with the data, as it is missing the biggest tip, this one of $7200, but it also doesn't show up in the feed. I don't know why this is, so I can't say much on the reliability of the data. Getting access to the logs of the bot would make it much easier and more precise.
submitted by cybrbeast to Bitcoin [link] [comments]

Subreddit Stats: bitcoin top posts from 2013-07-04 to 2013-08-03 01:56 PDT

Period: 29.36 days
Submissions % Comments %
Total 1000 27091
Rate (per day) 34.05 850.72
Unique Redditors 635 4416
Upvotes 73437 80.7781151003168% 125121 74.27826819987058%
Downvotes 17475 19.221884899683204% 43328 25.72173180012942%

Top Submitters' Top Submissions

  1. 1745 pts, 38 submissions: xezirone
    1. Foodler bitcoin orders growing by 30 percent a month (229 pts, 29 comments)
    2. I walked into a bar and watched as people swapped thousands of dollars for bitcoins (196 pts, 74 comments)
    3. Newlyweds Will Live Only On Bitcoin For Three Months, Starting Today (130 pts, 63 comments)
    4. Bitcoin exchange opens in Hong Kong (117 pts, 13 comments)
    5. Did Thailand really ban Bitcoin? Don’t be so sure (112 pts, 13 comments)
    6. Articles: The Mind-Boggling Implications of a Bitcoin Economy (79 pts, 10 comments)
    7. Afghanistan's first recorded bitcoin transaction (69 pts, 12 comments)
  2. 1350 pts, 22 submissions: IWillNotBiteYourDog
    1. Internet Drug Dealers Are Really Nice Guys (325 pts, 172 comments)
    2. Hand Over Your Dollars! Argentinian Government Issues Pseudo-Currency In Exchange For US Tender (209 pts, 154 comments)
    3. Rogue Employee Fired for Turning Game Network Into Bitcoin Mining Colony (107 pts, 33 comments)
    4. Bitcoin’s greatest value is in the world’s least stable economies (102 pts, 17 comments)
    5. Why Iceland Should Use Bitcoin (73 pts, 22 comments)
    6. How China Spawned a Bitcoin Industry in Three Months (and Why it Might be Doomed) (73 pts, 35 comments)
    7. Arrested suspect denies that DEA-seized bitcoins are his (57 pts, 29 comments)
  3. 1061 pts, 14 submissions: waspoza
    1. 300 Year Old Russian Watch Factory Raketa Accepts Bitcoins (197 pts, 14 comments)
    2. Africa's first Bitcoin wallet launches in Kenya (179 pts, 40 comments)
    3. Venezuelan-owned coupacafe of Palo Alto now accepting bitcoin. Medium latte = 0.048 BTC (140 pts, 19 comments)
    4. Bitstamp bitcoin trading volume overtakes leading exchange Mt. Gox for first time (130 pts, 28 comments)
    5. Why I Accepted Executive Director Position for Bitcoin Foundation (95 pts, 9 comments)
    6. Will bitcoin ever be used for gas pumps, parking meters and pool tables? (75 pts, 29 comments)
    7. Bitcoin just made a giant leap in Africa (57 pts, 6 comments)
  4. 1014 pts, 3 submissions: xrandr
    1. Bitcoin ruled illegal in Thailand (800 pts, 274 comments)
    2. Gavin suggests two-factor protection of wallet files (161 pts, 91 comments)
    3. Bitcoin Foundation's letter to FinCEN against proposed rule it says "could be misinterpreted to suggest that virtual currency transactions in general are inherently suspect" (53 pts, 24 comments)
  5. 868 pts, 16 submissions: bitkeef
    1. Kickstarter pulls “Bitcoin: The Movie” project two weeks after launch (131 pts, 24 comments)
    2. HMRC: UK bitcoin exchanges don’t have to register under money laundering regulations (125 pts, 25 comments)
    3. Bitcoin Foundation forms committees for legal defence and regulation (114 pts, 17 comments)
    4. BTCTurk becomes the first Turkish lira-to-bitcoin exchange (105 pts, 3 comments)
    5. Sweet success for Bees Brothers, world’s youngest Bitcoin entrepreneurs (73 pts, 19 comments)
    6. Two UK Football teams fundraise using bitcoin (71 pts, 15 comments)
    7. Jeff Garzik, one of Bitcoin's core developers, talks about his views on Satoshi Nakamoto and the future of Bitcoin. (64 pts, 14 comments)

Top Commenters

  1. Anenome5 (853 pts, 256 comments)
  2. physalisx (692 pts, 200 comments)
  3. ButterflySammy (685 pts, 232 comments)
  4. SeansOutpost (676 pts, 76 comments)
  5. 17chk4u (669 pts, 133 comments)
  6. hardleft121 (604 pts, 215 comments)
  7. throwaway-o (589 pts, 169 comments)
  8. zeusa1mighty (523 pts, 187 comments)
  9. Julian702 (478 pts, 121 comments)
  10. xrandr (477 pts, 60 comments)

Top Submissions

  1. Bitcoin ruled illegal in Thailand by xrandr (800 pts, 274 comments)
  2. In Austin TX this afternoon by r3st0r3 (754 pts, 106 comments)
  3. Bitcoin Owners... by serversidesandwich (729 pts, 98 comments)
  4. Petition to have /bitcoinmarkets on the sidebar here (just upvote to vote) by Pete489Z (648 pts, 310 comments)
  5. Avalon took 150 BTC from me and wont respond by shwag (608 pts, 150 comments)

Top Comments

  1. 240 pts: AlpineWolf's comment in Listen to Bitcoin contains malware!
  2. 214 pts: jewishmother69's comment in Bitcoin ruled illegal in Thailand
  3. 188 pts: ajm__'s comment in Stop freaking out about the price and look at this damn picture. It's a log chart, which is necessary for viewing since bitcoin value has always grown exponentially over the longer term.
  4. 186 pts: thealmightydru's comment in I tried to order a deck of Cards Against Humanity using Bitcoins but was surprised by this negative response. What do you guys think?
  5. 185 pts: sfgayatheist's comment in If you get caught selling Bitcoin hardware on eBay, Paypal will "sever business relationships with you".. read:
Generated with BBoe's Subreddit Stats SRS Marker: 1375509388.0
submitted by wildncrazyguy to subreddit_stats [link] [comments]

Bitcoin Chart Technical Analysis for 04-27-2020 Sean's Outpost - Al Jazeera America Bitcoin Chart Timelapse 2011- March 2019 Bitcoin CRASHING BELOW $4,000!!  The Never Ending BLOODBATH!  Key Support BROKEN! Bitcoin-Price Bitcoin TA & Outlook - YouTube

Meanwhile, Sean’s Outpost has opened something it calls BitHOC, the Bitcoin Homeless Outreach Center, a 1200-square-foot facility that doubles as a storage space and homeless shelter. Developers of the platform Sean's Outpost in 2013 began to accept donations in the cryptocurrency, including Litecoin, to provide lunch and accommodation for homeless people in Florida. Enthusiasts managed to collect a considerable sum: 733 bitcoins and 300 LTC. Conclusion Litecoin is an attractive payment tool. The user also pledged to send roughly 20 BTC to Sean’s Outpost. However, others weren’t so altruistic. In fact, the “Buy Bitcoin” sign got so popular that it was bound to attract scammers, a scenario one sees often in the cryptocurrency landscape. - Bitcoin/liberty activist Michele Seven - Jason King from Sean's Outpost Homeless Outreach - Drew Phillips from Bitcoin Not Bombs - Numerous other Bitcoin-loving founders, CEOs, and activists We also occasionally broadcast a LIVE Bitcoin news/opinion show. Tune in now and see what the craze is all about! There is also a link to Sean’s Outpost website that lets you read about their efforts towards serving the homeless people in Pensacola, Florida. Their app has a live bitcoin price chart and

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Bitcoin Chart Technical Analysis for 04-27-2020

BTC Chart Timelapse from 2011 to March 2019. Skip navigation ... Sean Brattan,primary; Album ... $100,000 bitcoin is not crazy talk ... Well, I want to talk about why the Bitcoin price is crashing right now. I'll use technical analysis on the Bitcoin price to make a Bitcoin price prediction. Watch the video to learn more! The Bitcoin Group #34 Silk Road Bitcoin Sale, Expedia Accepts, Sean's Outpost, BitGive, D C - Duration: 1 hour, 11 minutes. thebitcoingroup. 5 years ago; 639 views; Al Jazeera America coverage of the bitcoin fueled homeless outreach "Sean's Outpost" in Pensacola, FL. This video is unavailable. Watch Queue Queue. Watch Queue Queue

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