A few thoughts - Saturday, May 3, 2014

[Steve Sokolowski]

Some comments for today:

1

You can see that the turnaround is happening by the predominant news that is coming out of the newspapers. There have been more Chinese exchanges than ever closing up shop; yet, all the news is about new products, services, and controversies about the protocol itself.


2

Maybe people still do pay attention to flairs. Historically, the bulls-to-bears ratio is a leading indicator. As you can see at http://coinsight.org/reddit, it has been increasing significantly over the past two weeks.


3

To me, this isn't surprising at all. Even if this bubble phase lasts longer than the 234-day cycle predicts, it seems to me that everyone, especially those who frequent /r/bitcoin, have very volatile emotions. It's as if this hasn't all happened before over and over again.

I'm wondering if the reason why so many people get worried every time there is another fall is because a large number of people haven't been around for more than one bubble. Therefore, I creased a "poll" that I replied to this post. Downvote the post that most appropriately reflects your situation, and we'll see what the proportions are.

I edited this post because someone sent me a message asking why you should downvote the posts. I'm not sure what the rules here are, but in /r/bitcoin, they are worried about karma and if you make a post asking people to upvote it, you get banned. This is a way to avoid that. The downside is that the "comment score is below threshold," so you need to click the plus sign.


4

I started the process this week of having family members open Coinbase accounts. The reason is that Coinbase's sell limit is only $50,000, but with multiple accounts, we can get rid of huge numbers of bitcoins in an emergency, should the price start rising too fast.

Remember that in November, the price started going up at a rate of $100/hr. In April, it was rising at $10/hr before that bubble ended. In both cases, it was only hours until it was all over. When this happens, you don't want to get caught unable to liquidate. Coinbase is an effective means of selling instantly and having the money be transferred to your bank account within 4 days, without worrying about funds being in the hands of unknown Eastern Europeans who charge hefty withdrawal fees (or, you have to buy back in to withdrawal, which is very risky in times of high volatility).

It is important to start the process now so that you have an account available whenever the next bubble occurs. Coinbase's default sell limit is $3000, and that may not be enough to sell even one bitcoin. It takes 34-37 days from the time you open an account until you get the "level 2" limits, so you can't just decide on a whim to open an account when prices start going up. Even if you were able to get verified at an exchange (Bitstamp never replied when I sent my passport), it's still worth having a backup plan.


5

I strongly oppose any effort to change the default unit of bitcoins to "bits." I'm going to make an effort to express this opposition in as many forums, threads, and polls as possible without being a troll today and tomorrow. The problem is that the word is already commonly defined and used in another context.

Imagine a system where people pay to listen to music. You associate a wallet with the site, and the next to a song it says "128 kilobits." What does that mean? Does it mean that the song's bitrate is a common MP3 standard that has been in use for a while? Or, does it mean that you have to pay 128 millibitcoins to listen to it?

People think that the system now is confusing; just wait until that sort of stuff starts showing up. If developers want to move decimal places, then choose a different name for the things. Every other currency system in the world has two completely unrelated terms. Nobody gets confused between "cents" and "dollars."

My stance is to do nothing, and to continue using the commonly accepted terms like mBTC and uBTC, because metric notation is well understood in all countries except one. If an official word is needed, call them "microcoins," which is easy to say and the relationship with bitcoins makes sense.

This push towards "bits" is a disaster. If someone wants to come up with some other, less confusing, slang for uBTC, then I would be willing to change my mind. In the meantime, when my pool launches on May 24, all units will be displayed in uBTC, mLTC, DGC, and so on, even if others choose to use the word "bit."