A few thoughts - Tuesday, May 13, 2014

Detailed posts regarding cryptocurrencies
Forum rules
Purpose
This forum is a place to discuss bitcoins, altcoins, cryptocurrencies, and random thoughts about life.

Topics
Topics may include bitcoin prices, outlooks on altcoins, cryptocurrency development, economics, and more. Feel free to share outlooks on other things as long as the major focus is on cryptocurrencies.

In-depth topics only
Replies to posts may be of any size, but new topics must contain original research and be at least two paragraphs in length. While references to external articles are allowed within topics, simply posting a link without discussing its importance or debating its truth is disallowed. Consider this place a huge blog where anyone can post.

For the full list of PROHASHING forums rules, please visit https://prohashing.com/help/prohashing- ... rms-forums.
Post Reply
User avatar
Steve Sokolowski
Posts: 4585
Joined: Wed Aug 27, 2014 3:27 pm
Location: State College, PA

A few thoughts - Tuesday, May 13, 2014

Post by Steve Sokolowski » Tue May 13, 2014 12:00 pm

Some ideas for today:

1.

It looks like the authors at http://www.cryptocoinsnews.com/news/bit ... 2014/05/12 are still at it, predicting that bitcoins will crash down to $260. For many reasons I've discussed before, I think this article is wrong.

Notice that they now make no mention of their previous prediction of prices falling as low as $120. In the previous article, they also said that the price would reach its bottom in "mid-May." Instead of admitting they were wrong, it looks like they just removed references to the date and the lowest number and put out another article.


2.

My brother joined in yesterday, purchasing another two bitcoins. That makes two of us now. He agrees with me that even if Bobby Lee gets arrested next week, the bad news will happen on a weekday, or in the middle of the night, and the price will recover before he is able to take advantage of it.

Don't get surprised when nothing happens for 3 or 4 weeks. The bubble cycle suggests that is to be expected at this phase.


3.

Some people, unfortunately, have lost lots of money in altcoins. If I were an altcoin trader, I would stick to a few solid rules.

First, in general, buy altcoins that are new, rather than those that have been around for a long time. New altcoins tend to skyrocket immediately after their introduction. But only buy if you can get in during the first few hours they show up on Cryptsy; otherwise, you will be too late. The only "old" altcoins I would buy are the established ones, like litecoins.

Second, research the altcoin and determine if there are any coins set aside for "development activities," premining, or distribution to a favored class. These coins should be avoided at all costs. The developers can destabilize the market, and even if they don't, such a scheme shows that the developers are not interested in the coin's technical success, only in making its value rise. Developers interested in coins' technical successes have ways to make money through use of the coin, not by giving themselves coins for free. Coins like this are Auroracoin (50% reserved for citizens of Iceland), Ripples (90% of coins held by the corporation for profit), Ethereum (22.5% for development activities), and Quark (which had 98% of its coins mined in first 6 weeks).

Third, buy altcoins based on their communities, not on their technical merits. For some reason, reddcoin is extremely profitable to mine right now. There's nothing new about it; it just has a community on reddit that backs it and talks about it. Communities convince friends to buy into altcoins and drive up the price. Remember, altcoins have a simple problem: they aren't bitcoins. There is almost no technical advantage at this point that can overcome that issue.


4.

One of the reasons bitcoins are going to do so well is that there are companies whose best interest is to actively persuade people to use them. Bitpay, for example (http://www.coindesk.com/bitpay-closes-3 ... -ventures/), is hiring 70 people. They have a sales office whose job it is to call people up and promote bitcoin adoption.

These companies are being paid by venture capitalists to do the work of convincing people to use bitcoins for us.


5.

The block rewards of altcoins are getting ridiculous. We now have over 50 altcoins in our pool, and some coins like the reddcoin I mentioned above give out 100,000 coins every few seconds. I had to increase the precision of columns to deal with these coins, because the pool will end up with billions of these worthless coins.

This trend of denominating things in larger numbers has now gone too far, and there are coins where 100,000 are worth a penny, like the Zimbabwe dollar used to be. Dogecoin started this, and now other coins have taken it to the extreme.


Other
  • Yesterday, I posted a joke about Mark Karpeles and the overflow of numeric columns. Someone asked me in reply to the joke why one shouldn't use Doubles to get around that problem. For those not aware, you can save a lot of grief by adhering to a simple rule: never use Doubles for anything in a bitcoin program, ever. If you don't know why this is, look it up on an Internet site; I don't need to repeat it here. Not only that, be sure that the software you're using doesn't cast stuff to Doubles during intermediate calculations and then back again to store it in the database.
  • Days until July 24: 72
Post Reply