Two people, two bubbles
It looks like there are now competing bubble charts. /u/moral_agent continues to post his usual charts, which predict that "phase 2" is approaching in about a week or so. But now we also have /u/lowstrife, who started building bubble charts of his own. His charts disagree with /u/moral_agent's in that they suppose that we are in an earlier "stable" phase in the cycle. According to /u/lowstrife, this phase should last for several months rather than several weeks.
I disagree with /u/lowstrife's charts. While he does make some interesting points and many parts of his graphs look correct, he ignores the long period in the 400s, which does not appear in any of the other bubbles. In the other bubbles, the catastrophic crash occurs, and then there is a slow rise to stability, followed by the huge rise afterward. There isn't any evidence of a two-step rise in previous bubbles, and that is what /u/lowstrife is proposing here. It makes more sense that we already saw the stable period that has appeared in all previous bubbles.
I hold to my and /u/moral_agent's predictions that the bubble will develop on or within a few days of the 234-day period, and disagree with the idea that it will be delayed until September.
Another 51% attack averted?
Just as in January, another supposed game-ending event by GHash.io was averted. There is a reason why people who start panicking when a pool reaches 51% are often wrong: pools are made up of individual people.
If there were one miner who controlled enough ASICs to make up 51% of the network, then that person would be able to exert undue influence on how transactions are processed. However, in all the cases where 51% attacks could have been executed, even in that recent issue with litecoins, it was pools (not individuals) who were almost in control.
Whereas the pool owner might have a nefarious goal, the individuals in the pool do not share that goal. They stand to lose a lot of money if their pool's owner attacks the network, so they self-regulate to prevent that from happening. A 51% attack is not going to come from a pool, because there is no way to convince all the pool members to stick around for the attack, which costs them money and provides an advantage only to the pool owner.
"Whales" don't care about each other
Many people like to say that the market is manipulated by "whales," who gain from fixing prices at the expense of normal investors. However, the problem with this assertion is that the people making it fail to realize that it is not usually in whales' best interest to collaborate with each other. At the very least, whales don't trust each other.
Whales are like normal investors - they want to make as much money as possible. At the end of the day, other people with lots of money are their best tools from which to earn that money.
There is a game called the "prisoner's dilemma," which states that there will never emerge a circumstance here where people will cooperate, even if it is in everyone's best interest to cooperate. If all the whales were to fix prices at a low level so that they could slowly corner the market, then one person could buy up huge numbers of bitcoins and make a lot of money, while the remaining people have to buy at much higher prices after the ensuing run. Similarly, if all whales had agreed to hold prices high by not selling, someone could cash out and then buy back in after the panic sale to rake in huge profits.
This is why the idea that bubbles are manufactured by whales is misguided. There can never be cooperation in an unregulated market like this, because there is no penalty and a huge gain in breaking the agreement.
Here's an example of the 1MB limit
In /r/bitcoin, /u/Rism posts the following complaint: http://www.reddit.com/r/Bitcoin/comment ... urchase_a/. As you can see, the 1MB limit is starting to rear its head already.
The more and more I look at this, the more it seems that an acceptable solution would be to simply eliminate the limit and see what happens. Miners ignore recommended fees and go with what is in their best interest anyway based on bandwidth available to them. If a miner is able to publish large blocks to the network without having too many orphans, then perhaps it might make sense to allow them to do so.
This is an incredibly simple solution, and the first thing you learn in software development is that you shouldn't waste effort unless the change is absolutely a benefit. The only issue with it is that someone could attempt to upload a 1TB block, consuming disk space. But even if someone were able to upload such a block, the nodes to which he is connected are likely to be unable to upload it to the next nodes before a more reasonably-sized block comes along. Smart miners aren't going to produce unprofitably huge blocks, and they are going to mine on top of smaller blocks received from other miners because their block will only become the longer chain if the previous block is accepted first. It may be found that the network would self-correct if someone tried to submit abnormally large blocks.
Someone should create a traded altcoin that has no differences than bitcoin except for the 1MB limit being removed completely, and see what happens to it. It might be attacked in some way nobody has anticipated yet, or it might function beautifully. A testnet wouldn't work, because the coin needs to have some value in order to see how economics works with it.
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- Days until July 24: 46