The Bitcoin Bubble
techcrunch.com
techcrunch.com
Both transactions excluding popular services that post very high volumes of low value transactions, and USD value of all transactions, are much closer to reflecting the recent rise of bitcoin.
https://blockchain.info/charts/n-transactions-excluding-popu...
https://blockchain.info/charts/estimated-transaction-volume-...
There is no simple and reliable indicator of Bitcoin activity. The simplest indicators can be very variable (eg. spamming the network with transacitions). Indirect indicators, like the number of merchants using Bitcoin are better. And looking at these indicators, it is very clear that Bitcoin activity is dramatically increasing. For example BitPay recently announced 10,000 merchants using their bitcoin payment processing platform (it took them more time to go from 0 to 1,000 merchants than from 1,000 to 10,000!).
This Techcrunch article was written by someone who did bad research and can't even draw correct conclusions from the graph :-/
I linked to graphs of two better indicators. Did you read my comment past the first sentence?
- Number of transactions exclusive of very low quantity transactions, approximated by excluding very high volume transactors.
- Overall value of transactions, converted to a more stable currency, in this case USD.
Both of these indicate increased usage approximating tracking the increase in bitcoin's money supply.
The concept of "moneyness" is also explained very well at JP Koning's blog: http://jpkoning.blogspot.com/2012/12/why-moneyness.html
These guys have more insight, into the monetization of bitcoin, in their little finger than Joe Wiesenthal has in his bromide producing brain.
As we know, there's a max of 21 million bitcoins (which we won't hit for years) - spread that across ~500 million users, and I think we'll see the value of a single bitcoin be 10x-100x higher than what it currently is.
It'll be a bumpy ride to get to that value, and I think this is the very beginning of it.
Moreover, price is a function of demand. While there may be fewer transactions over the short term, those transactions may be larger in and of themselves. For instance, in April, there may have been more people purchasing single coins, but in November, there may be fewer people purchasing hundreds of coins.
Two charts do not tell the complete story.
We can especially not be sure when we look at the graph of transactions per day and see nothing special on October 2nd... Good job reading patterns into noise there.
https://blockchain.info/charts/n-transactions-excluding-popu...
So could it be that SatoshiDice transactions have dropped a lot (flattening the overall graph) but other transactions have been increasing?
Reminds me of comic books and baseball cards in the 90s.
They basically declared any coin "horded" if it was currently assigned to an address which had never spent. But the default behavior of the reference client is to always send your change to a never used address, which will only ever be spent from once. Additional, the common and strongly recommended pro-privacy behavior is to use a new address per transaction, and businesses need to do that to sort out which payment is which.
So it was actually surprising that the figure was as low as it was... but what it wasn't measuring was "hording".
<checks>
Aha! A local food truck is now accepting BTC. Will have to visit when next they come through the neighborhood.
http://www.coindesk.com/now-accepting-bitcoin-seattle-based-...
Also, while big % changes makes people shout bubble, they clearly are not looking at BTC in the same way early adopters and speculators are. BTC is not stock (which can look like a bubble if its up 100% in short period of time) it is closer to a newer better version of gold that only 0.00001% of the population owns. People excited about BTC are thinking about what happens if 1% of the population owned BTCs.
Bitcoin might fail (sometimes better technologies do), but it is clearly a big improvement over current currencies and that's pretty exciting.
For those that don't know, this is a nasty little piece of work that encrypts your entire drive and any connected drives it can find, then gives you a warning that you have to pay $300 in bitcoin within 3 days or your data is deleted.
I just had this thought a couple hours ago but I'm not able to find any significant, verifiable data on how widespread CryptoLocker is. Hence, a hypothesis.
This is why newer coins that actually correct for hoarding - like PPCoin - will start to see some traction because they will be more stable, since they encourage spending, encourage transaction volume. There will be less of a risk of the decoupling of the bitcoin economy and the bitcoin value.
People only "hoard" Bitcoin until the temptation to buy something awesome now is higher than the temptation to have more savings later. In my case having a longer runway to work on my own project is worth more to me than savings later in life.
There's nothing fundamentally inflationary about Bitcoin. In fact, because the supply is algorithmic, it's fundamentally not likely to either inflate or deflate. Prices are going up as financial markets and consumers wrestle with what it's worth, what it's good for, and how to use it. When that process levels off the price will stabilize, and it will be far more stable than any other currency.
This is wrong, or at least, not for the domain term 'deflationary' in economics. BTC is deflationary because there are only a finite number of BTC, while the population is still growing.
http://en.wikipedia.org/wiki/Deflation#Money_supply_side_def...
Pretty much. It's taking off like gangbusters as a popular investment vehicle there.
Can somebody set me straight on this?
E.g. on MTGOX right now the best bid is $271 and a market order to sell 100 bitcoins right now would net 27056.5448 USD and would take the last price down to 270.1650 USD, resulting in an average price of 270.5654 USD/BTC.
Selling 1000 BTC would result in an average price of $266.9482.
Its certainly not the most liquid thing and getting funds to and from exchanges (or buying other things) isn't as available as one would hope, but it's not highly illiquid by any means. There are good markets for other major currencies too, though none are quite as liquid as the USD ones.
I know that its supposed to be an alternative form of currency and all and not just there for speculation or whatever, but realistically, I think there must be a lot of people just speculating.
Anyway in that case I don't care if it is a bubble, I just want it to go up one more time after I buy it.
But the idea is really supposed to be using bitcoin instead of dollars for normal transactions right?
This is a decrease in the velocity of money, not necessarily a decrease in its demand. Sometimes and increase in the demand for money can cause a drop in velocity. It's one of the justifications for constant inflation (to keep us out of a deflationary spiral where people would rather starve to death than spend $0.01 on a year's worth of foodstuffs)