Monday, October 31, 2011

Bitcoin: A Harbor in a Currency Storm for Belarus and Ukraine

Two countries that have recently faced massive currency devaluation, of a magnitude that would have significantly impacted the standard of living of their populations, are Belarus and Ukraine.

Over a period of three months in late 2008, in the wake of the global financial crisis, Ukraine's currency, the hryvnia, was devalued by 38.4%. This wasn't the first time Ukraine had seen its currency crumble, with an even more significant devaluation happening in 1998, on the order of 69%.

More recently, on May 23rd of this year, the Belarus ruble was devalued by 56% in an effort by the country to address its overwhelming sovereign debt.

Is it any wonder then, when we look at the list of the top 15 Bitcoin-using countries, and divide the number of connected clients over the last 24 hours by the number of Internet users in each country, we get this?


It is very clear from this chart that a disproportionate number of Internet users in Belarus and Ukraine, when compared to other countries, are turning to Bitcoin as an alternative investment to protect themselves from their own currencies.

I believe this chart would remain true using data taken over a prolonged period of time, as relative Bitcoin usage in the top 15 countries has been consistent over the past six weeks.

If there is any proof that Bitcoin is being considered as a viable alternative to fiat currencies, this is it. As the European Union continues to collapse economically, it will be interesting to see how many more people begin to turn to Bitcoin to preserve their wealth.

Sunday, October 30, 2011

Is it Time to Occupy Bitcoin Street?

The Bitcoin Report produces a daily Top 100 Rich List, a list of the 100 fattest wallets in Bitcoin. I decided to compare two lists, one from the 1st of May of this year, and one from yesterday, October 29th. Here's what I discovered:

The distribution of coins among the top 100 has evened out, as can be seen in the chart below:


However, the top 100 have gone from holding 1,776,434 coins to holding 2,254,634 Bitcoins, a whopping 27% increase!

On May 1st, there were 6,249,700 Bitcoins, which means 28.4% were held by the top 100 at that time.

Even though 1,310,000 Bitcoins have been mined since May 1st, the top 100 have still managed to increase their relative wealth, and now hold 29.8% of all the Bitcoins ever created!

Is it time to Occupy Bitcoin Street before this gets out of hand?

Bitcoin: Global Economic Freedom

Here's a Google Analytics snapshot of the visitors to my blog over the past two weeks:


What's very interesting is that there is a definite correlation between the dead spots on the map and countries identified as "repressed" by the index of economic freedom, as seen on this map, in red:


This might mean that Bitcoin is being hidden from people in economically repressed countries because of what it represents. At first I thought that the dead spots on my blog traffic map were countries with poor Internet access, but that is not always the case. Iran is a good example, where 47% of the population has access to the Internet. Ecuador is another; a country with 3.3 million Facebook subscribers that is also rated as "repressed."

See the 2011 Index of Economic Freedom, here.

"Bitcoins for Christmas" Aims to Bring New Users to Bitcoin


"Bitcoins for Christmas" was launched today with the goal of introducing new users to Bitcoin.

Potential new Bitcoin users have been burdened with extensive research, poring through endless articles about hacking and malware, figuring out how to download a client and then, how to secure it. If they got that far, they then freaked out because their coins hadn't shown up until three hours later when the blockchain finally finished downloading!

Bitcoins for Christmas removes that burden.

Bitcoin & Constellation's Connected Enterprise 2011

Twitter is abuzz as the Connected Enterprise 2011 (#cce2011) speakers take to the stage and discuss the future of currency, among other topics. Various "connector" types are mentioning #bitcoin in their tweets. Could we be on the verge of a tipping point?

Saturday, October 29, 2011

A Bitcoin Bond?

Could it be?
"You will soon be able to purchase Bitcoin through a financial instrument. I will announce it when its ready and the product is readily available to purchase online and through banks on the stock market."
"Each bond has to be denominated in some sort of a price. And if I peg a bond to the price of btc then I have to find at least some similarities between the two. I am not sure yet about how exactly the whole structure is going to look like but ill let you know once I know for sure what I want to do."

Since the "bond" (more like an ETF) would be pegged to the price of Bitcoin, the organization behind the bond would have to buy and sell Bitcoins in accordance with the interest in the bond. Got to love free markets...

Bitcoin Network Hash Rate as Sentiment

Bitcoin has a built-in sentiment indicator that could be used as a tool for predicting market movements. This tool is the network hash rate, which represents the amount of processing power being used to verify transactions and secure the network.

Hash rate is a lagging indicator, and tells us if the owners of the processing power are bullish or bearish on Bitcoin. If they think the value of a Bitcoin is going to continue dropping, they might turn off their computers, causing the network hash rate to drop. If they think the value of a Bitcoin is going to hold or move higher, they might keep their computers on or add to their processing power. The following chart represents Bitcoin Price vs Network Hash Rate for 2011 thus far:


The URI Scheme - Bitcoin Becomes a Little More User-Friendly

Let's say you wanted to leave me a tip with Bitcoin. How is that accomplished? You would:

1) Open your Bitcoin client;
2) Copy my wallet address from my blog;
3) Paste it into your client;
4) Enter the amount you wish to send;
5) Click "send".

Soon, it will happen like this:

1) Click the "leave a tip" link on my blog;
2) (Optional) Update the amount;
3) Click "send".

In the near-future, Bitcoin will be introducing a URI Scheme. Think of it like the Bitcoin version of an http link. The Bitcoin link will have a wallet address, amount, label ("The Bitcoin Trader") and message ("Your Blog is Awesome") encoded in the link, where you can change the message if desired. When it's clicked, it will trigger your client to launch and show you a dialog box with all of the information contained in the link. All you would do at that point is click "Send" and off you go!

New Sites - Week of October 23rd, 2011

Blue Canary Night Light - Obscure? Yes, but, if you're in the market for a nightlight, and you have an affinity for blue canaries, this site has the product for you! You will receive a 10% discount when using Bitcoin, of course. These lights use $0.25 worth of electricity per year, which is the equivalent to the cost of expeditiously sending $27 million worth of Bitcoins to any location on Earth, 14 times over. Just saying.

Nerd Merit Badges - Now offering the "Bought This Bitcoins Badge With Bitcoins" badge for 1 BTC. I recommend also getting the "laptop sash" for mounting your Nerd Merit Badges, although the picture shows the sash on a MacBookPro, which should disqualify you from being allowed to own such badges. I digress...

Constant Sail - The Pirate and Trading Game - I'm also going to link to a forum topic posted by the owner because the site is currently down while being upgraded to support Bitcoin. Based on the screenshots, it kind of looks like a cross between Ultima Online, Tradewars 2002, and the map screen from Super Mario Brothers. In other words, "awesome!"

Bittit - Warning: Not Safe for Work. If anything, Bittit is an experiment demonstrating the versatility of Bitcoin. As people contribute to a Bitcoin wallet associated with a picture, the resolution of the picture improves. I could see this being a great way for an artist to sell their artwork. There are a lot of possibilities here. Be forewarned, some of the pictures are of an adult nature.

Bitzaar - Bitcoin merchant services. Bitzaar provides payment processing and e-wallet services for merchants, currently supporting WHMCS and OSCommerce. If you don't already have a shopping cart, they provide nine lines of code for you to paste to your website, thus giving you an instant shopping cart.

No Bitcoin Economy - Yet


About a month ago, I surveyed the Bitcoin gambling economy to get a feel for how much money was actually being pumped into those sites. While there was some activity, as a percentage of Bitcoin's "market-cap," it was microscopic.

There are no equivalent numbers to tell us about the rest of the economy, but anecdotally, we have this:

"As some of you are aware, we are selling mini-cannons at www.pocketartillery.com. Paypal has decided they do not want to be part of any of it because of EBAY'S policies. I understand eBay owns Paypal but that is kind of silly. We have offered Bitcoin payment from the beginning yet NOT A SINGLE PERSON has paid with it as of right now, with over 250 orders through Paypal. Come on people...check out with BITCOIN instead of Paypal!"

Is this story being played-out across Bitcoin-land?

Thursday, October 27, 2011

I'm Calling the Bottom

After putting in a low of $2.04/BTC on October 19th, Bitcoin's value has risen more than 50%. Additionally, seven of the last eight trading days have ended in the green on decent volume, and it's looking like we may hit eight out of nine.

With those facts in mind, I'm going to go ahead and call the bottom.

Bitcoin has faced some serious adversity since the June high. We are now in another quiet accumulation phase, and poised to steadily move to the upside in the coming months.

The media has called the death of Bitcoin, so there's really nothing more for them to do but leave us alone to develop Bitcoin's infrastructure. It's almost a relief to be out of the spotlight.

Tuesday, October 25, 2011

It's All a Giant Pyramid Scheme

No, I'm not talking about Bitcoin.



Reposted from ZeroHedge.

Monday, October 24, 2011

Ogrr.com Launches Massive Bitcoin-Enabled Virtual Goods Marketplace

---
Edit: Ogrr.com is currently in beta and invite only. It will be opening to the public in the very near future.
---

When you first visit Ogrr.com, your initial impression is that you've stumbled across your average Internet discussion forum. After a few seconds, however, you begin to realize that you're looking at something bigger - much bigger.

There are two things about the site that catch your eye, one being a little more obvious than the other. As you scroll down, you are presented with the massive scope of the community that Jesse Powell and his team at Payward, Inc. have put together. Scrolling back up to the top, assuming you are logged in, a much subtler feature greets the astute eye. In tiny writing you see the acronym "mBTC," and a number. This number, which tells you how many milliBitcoins you are holding on the site, sets the community apart from the competition and is what Ogrr hopes will win it a substantial portion of the global virtual goods market. Incredibly, sales of virtual goods generated $7.3 billion in global revenue in 2010 and, according to Powell, the market could be worth as much as $16 billion in 2012. He explains how his site is different and why users will prefer Ogrr over existing sites:

There's Something Happenin' Here...


Sunday, October 23, 2011

Robert Prechter Calls Bitcoin "Brilliant"

Over on the Bitcointalk Forums, cypherdoc brings us this interesting development:

Robert Prechter, one of the world's most renowned stock market analysts and proponent of Elliot Wave Theory, in his latest report, calls Bitcoin "brilliant:"

"In June, Senator Charles Schumer (D, NY) called the brilliant on-line transactional unit, Bitcoin, “a form of money laundering.”

Robert Prechter postulates that Bitcoin, while brilliant, will likely fall victim to government action. As with Liberty Dollars in the United States and GoldMoney in the Netherlands, he believes Bitcoin will be declared illegal, thus dissuading legitimate business from accepting it in exchange for goods and services.

Unlike other alternative currencies, however, Bitcoin can never be shut down.

Robert Prechter's praise for Bitcoin truly is a step towards its legitimization, and as long as Gavin Andresen and the core development team continue to work with government to build a framework for Bitcoin's regulation, it is unlikely that it would be declared illegal.

It should also be noted that GoldMoney's currency, called "GoldGrams" has been around since 2001, and remains legal in the United States.

Bullish Breakout Sort of Confirmed

Technically, we have now had four up days in a row, however, today's trading was extremely light and basically flat. We still need some high volume movement to the upside to definitely confirm a bullish trend. It is currently just past 0900 in the morning in Japan; it's possible that money that was deposited on Friday will go into Bitcoin over the next couple of hours. It wouldn't be the first time that has happened. Stay tuned!

Stop Joining the Forums

Didn't you guys get the memo? Bitcoin is dead. Come on people, stop joining the forums.


Data thanks to HorseRider.

New Sites - Week of 16 Oct 11

Mokimarket - Penny auctions. They're not advertising the Bitcoin logo, but see this post for more info.
Transaction Radar - Double-spend detector.
Holo Supplies - ID Supply Superstore.
Pocket Artillery - Miniature canons.
The Venusian Arts - Dating and seduction guides.
The Diaspora Project - An alternative social network. Accepting donations.

Edit:

Wisconsin Maple Syrup - I'm a little late on this one, but I couldn't allow it to be missed!

Bitcoin's First Steps into the Mainstream

The importance of this development should not be overlooked. The famous pick-up artist, "Mystery," has decided to start accepting Bitcoin for his merchandise.

Mystery has been featured on every major TV network, various talk shows, and all over the Internet. He also had his own reality show on VH1. His forums have 27,000 members, though most of his traffic is anonymous. For example, at the time of this posting, there are 215 members and 3051 guests online on his forums. Let me re-emphasize: most of his traffic is anonymous. Do you see where I'm going with this? The kids who are buying his merchandise would rather not have people know that they're studying pick-up guides or reading advice online about how to win over girls. How better to cover your tracks than to use Bitcoin?

Mystery's site, Venusianarts.com, has an Alexa ranking of 82,809 in the US and 113,798 globally.

From the Reddit post:
"Hi everyone. Over at Venusian Arts we've taken notice of your new "Bitcoin" currency.
The $30 price point, reached earlier this year, was a little bit concerning to us, but now it seems to have leveled out, so I went ahead and added "Buy Now with Bitcoin" links to our sales pages for our ebook and our dvd set (hopefully the wild swings in BTC price are done, since our interest is in using it as a currency, not as an investment vehicle)."
I guarantee he's not the only merchant that feels that way. It makes you wonder how many businesses are holding off on accepting Bitcoin while they wait for the volatility to settle out. To accept Bitcoin now is significantly less risky, especially if you're holding onto the coins for a few hours or longer, than it was between June and as recently as last week.
"Thank you all for your efforts in bringing us a payment processor for the future, since everyone knows that merchant accounts suck balls."
They certainly do.

$40,000 Thrown Up on the Bid @ 2.80

You don't see THAT happen very often! If all of the money currently sitting at $2.80 suddenly bought Bitcoins at market value, every Bitcoin for sale on Mt.Gox (at least what they're showing for sale - the data stops at $4.55) would be bought.

Saturday, October 22, 2011

Someone in Russia Just Bought 8000 BTC


That one trade, alone, counted for nearly half of the 30 day volume on the Mt.Gox Ruble market.

Bullish Breakout Could be Confirmed Tomorrow

Here's an interesting fact: there have not been four consecutive positive candlesticks on the daily Mt.Gox chart since the period from the 1st to the 4th of June, which precipitated the rise to $32, four days later.

If we close above $2.72 today, which seems pretty likely, and higher tomorrow than today's close, we will once again have four consecutive positive candlesticks. Note that we have had three consecutive on multiple occasions, but only made four in a row before the huge pop to $32.


UPDATE: Three green closes in a row. We'll need to close above $3.15 tomorrow to get four in a row.

Win 5 BTC from The #Bitcoin Trader and @StrikeSapphire!

Once this post has 36 tweets, I will spin the roulette wheel at Strike Sapphire Casino. If your tweet corresponds to the number on which the ball lands, I will send you 5 BTC! A 0 or 00 will result in a re-spin. You can sit at the table to witness the spin.

Click on the "tweet" button at the bottom of this post. Do not make any changes to the tweet except to add your Bitcoin address to the end.

Your Bitcoin address must be in your tweet!

If you tweet more than once, only your first tweet will count.

Good luck!

UPDATE: The following Tweets are valid for the competition:

1 - Ashkelon101
2 - marquo99
3 - coinbits
4 - MaaxSan
5 - exotropy
6 - PumpkinTripsa
7 - ErikVoorhees
8 - matthijsbos
9 - ww7_network
10 - andrew_nollan
11 - livondiv
12 - OccupyBitcoin
13 - parker_vmg3
14 - elBitcoin
15 - scottjp
16 - ControllerMods
17 - holosupplies
18 - WurstWesir
19 - thefounder (need your wallet address!)
20 - bdabc123
21 - DOUBLEXTREMEVIL
22 - two55309
23 - Immanue1Go
24 - locyz9x
25 - Hermetec
26 - dbfish
27 - Zenofex
28 - simonk833
29 - _Posy_
30 - Grim
31 - GPATheKid
32 - KDrewger
33 - aven1337
34 - Polymira
35 - bZoi7
36 - crkmnster

That's 36! Thank you for participating! Here we go...

And the winner is...


10 - andrew_nollan! Congrats!

Friday, October 21, 2011

The Anonymous Payphone is Back - Bitcoin Style


Three days ago, an announcement was made on the Bitcointalk Forum that a new project was under development. Currently 25% complete, the project is called Bitphone and it will be an anonymous Internet payphone that accepts payment through Bitcoin.

There is nothing nefarious or unprecedented about anonymous phone calls, but this will make it even easier and more anonymous than throwing a quarter into a payphone on the street.

Yet another awesome Bitcoin service!

Bitcoin is Not for Sale

There is an interesting anomaly associated with the drop in Bitcoin's value. The entire time, there has never been a 24 hour volume spike greater than 220,000 Bitcoins traded.


In the stock market, this simply does not happen. When investors lose faith in a stock, a much larger percentage of shares end up being traded than what we've been seeing with Bitcoin. An example I will use is Research in Motion (RIMM), the maker of BlackBerry. Although the company hasn't gone under, it's had a very rough year. On the worst day, 113 million of its 520 million shares were traded, or 22% of total outstanding shares. On that day, the stock dropped from $35/share to $26/share, or a 26% drop:


On October 17th, Bitcoin dropped from $3.50 to $2.50, or 29%, but only 220,000 of the 7,500,000 Bitcoins were traded, or 2.9% of the total Bitcoins.

The drop in value, alone, should be driving a volume increase, since each Bitcoin is worth less and therefore easier to buy or sell.

What this tells me is that a) investors are holding on for the long-term, and b) this drop is only temporary and driven by a small percentage of Bitcoin holders. If investors were truly of the belief that Bitcoin had no future, you would see volume spikes into the millions of Bitcoins.

If you are an investor in Bitcoin, this should be looked at as an opportunity to add to your position.

Thursday, October 20, 2011

The Day Bitcoin was Declared Dead




"Buy when there's blood in the streets, even if the blood is your own."

- Baron Rothschild

Most Bullish Move in Bitcoin Since the Bitcoin Conference on August 19th


Keeping a close eye on this one. Buying volume is huge. Haven't seen a move like this in two months.

UPDATE: Well, that was short-lived. Seems like these rally half-lives are getting shorter each time.

Wednesday, October 19, 2011

Send Money to China with Bitcoin and Save Huge!



Note 1: You may have to be logged in to your Mt.Gox account to see some of the links in the directions below.
Note 2: CNY (Chinese Yuan) is the same currency as RMB (Renminbi).


Step 1) Open an account at Mt.Gox;

Step 2) Open an account at BTC China;

Step 3) Verify your Mt.Gox account by scanning and sending a photo ID and utility bill. This may take a business day or two, but will not have to be repeated for future transactions;

Step 4) Go to a Chase branch and deposit the money you wish to send to your Mt.Gox account using a deposit slip. There is no charge for depositing;

Step 5) Once the funds are added to your Mt.Gox account (this currently takes one business day but will soon be one hour), buy Bitcoins by clicking "trade" and entering your order at the market price. You will be charged 0.6%;

Step 6) Using the withdrawal page on Mt.Gox, send the Bitcoins you bought to your Bitcoin address on BTC China (this will take about an hour to complete, as the Bitcoin network verifies the transaction;

Step 7) Sell your Bitcoins on BTC China for RMB. You will be charged 0.3%;

Step 8) Withdraw RMB via TenPay. Withdrawal fees are on the order of 1 or 2 percent according to this guy;

Your total cost = USD sent - (RMB withdrawn x USD/RMB exchange rate).

Example using Mt.Gox/BTC China/Currency rates at the time of this post:

$100 USD to be sent to China.

Best ask (Mt.Gox) = 2.355 USD/BTC (Determine the number of BTC you can buy, here.)

Bitcoins purchased = 100/2.355 - 0.6% = 42.463

BTC China best bid is 15.21 RMB/BTC. The entire sell order cannot be filled at this price, so we are actually selling for a range of prices. You can place a fictitious order here to verify what you will get for your Bitcoins.

42.463 x (range of bids) = 604.51 RMB - 0.3% = 602.70 RMB

After withdrawal fee (assuming the high end of 2%) = 590.65 RMB

590.65 RMB x 0.1566 USD/RMB = $92.50 USD.

Total fee for sending $100 USD to China, including currency conversion = $7.50!

Overall costs will vary depending on the bid depth on BTC China and the amount you are trying to send. If you were trying to send $10, in this example, the fee would have been 2.4 cents.

I repeat, you can send $10 USD to China, including currency conversion, for 2.4 cents, right now. Previously, this was neither possible nor practical. This is a first...

...and it's only possible with Bitcoin. Got coins?

UPDATE: Here is a handy spreadsheet to see how much your transaction will cost you. This morning, I ran the numbers for $100 USD again and you would actually earn money! Just hit "File... Make a Copy" if you want to make changes to the spreadsheet.

Quotable Quotes for 100 Bitcoins, Alex

"50 BTC = $2.50? Surely this isn't sustainable, even at the current difficulty."

        - Bitcoiner (July 15, 2010)

"Assuming that the economy is growing at around 70% per annum, I guess in 3 years time." (In response to the question, "when will Bitcoin reach dollar parity?")

        - da2ce7 (December 21, 2010)

"Bitcoin isn’t going anywhere very much except into that dustbin of interesting, tried but failed ideas."

        - Tim Worstall, Forbes (October 18, 2011)

"The Federal Reserve is not currently forecasting a recession."

        - Ben Bernanke (January 10, 2008)

Forbes Flops Part II

How does a magazine like Forbes allow such poorly researched articles to be published to their website?

From Tim Worstall:

"Bitcoin isn’t secure as the thefts have shown, it’s not liquid, as the various price crashes have shown when one single large order goes through an exchange, it’s not widely accepted so it’s not all that good as a medium of exchange and as we’re now finding out, it’s not a good store of value either."

For most of you, I'm going to be preaching to the choir, but for the sake of the Bitcoin novice who might take Tim at his word, let's break down this paragraph:

"Bitcoin isn’t secure as the thefts have shown..."

That is analogous to saying, "the dollar isn't secure, as the bank thefts have shown." I'm not going to bother elaborating any further on that one.

"...It’s not liquid, as the various price crashes have shown when one single large order goes through an exchange..."

Bitcoin is the most liquid currency that has ever existed. Any quantity of Bitcoin can be moved instantly around the world, by anyone. You can't do that with cash, you can't even do that with digital representations of cash. You definitely can't do that with gold or silver. Your proof is a non-sequitur.

"...it’s not widely accepted so it’s not all that good as a medium of exchange..."

In 2004 you could have said, "Facebook is not widely used so it's not all that good as a social network." You would have been right... at the time. Was October 18th, 2011 the deadline for Bitcoin? Was that written down somewhere?

"...it’s not a good store of value either."

Neither was Apple stock... in March of 2000.


Regardless, this is not your parents' currency, and doesn't necessarily have to possess the properties of a traditional currency in order to succeed. Bitcoin doesn't have to store value to exist as a medium of exchange. Any ability to do so is merely icing on the cake.

Tim Worstall, your proof of "The End of Bitcoin" is only proof of your lack of foresight and inability to appreciate the most important development that the Internet has seen since email. I'd like to see a follow-up to your article this time next year, but I have a feeling you're not going to want to write about the taste of crow. I hear it's good with mint-sauce.

Tuesday, October 18, 2011

Great Comments and Great Tips

No earth-shattering or mind-blowing posts from me today - I've got to catch up on some sleep. But, before I do that, I just wanted to note a couple of things.

First, if you haven't had a chance to click through the posts on this site, please do, not just for what I've written, but for the comments that have been left behind by others. I am absolutely blown away by the thought and incite that goes into your comments. Quite often, I am tempted to re-post them as articles on their own, and in one case, I did just that. There will likely be more in the days ahead. Please keep them coming and I always encourage open discussion of the articles in their respective comment sections.

Second, thank you for your tips over the last few days. Here's a screenshot that I just took of my client:


That roughly works out to $0.25, $3.75, $0.03, $0.28, $2.53, and $0.13. As the Tip Jar says, tips are always appreciated. What I want to emphasize, however, is that this sort of tipping would not be possible without Bitcoin. These tips are coming from all of the world, and cost the senders at most a penny to send, and cost me nothing to receive. No currencies had to be converted, and no one had to sign up for any accounts.

If that's not enough for you to believe in the viability of Bitcoin, especially knowing that this is the very tip of the iceberg as far as applications go, then you might as well spend your time reading another blog; my optimism is only going to get more irritating to you.

Thanks to Wired.co.uk for the nod last night. I want, more than anything, for the Bitcoin gospel to be spread far and wide, and the more readers I can reach, the better. I'll have you know that I've been contacted by a couple of developers who will be launching sites within the month that will reach tens of, if not hundreds of thousands of potential new Bitcoiners. We've all been itching for publicity, and it's coming, soon, and big-time.

Until tomorrow, have a good night.

GoWest

Monday, October 17, 2011

The Three Stages of Bitcoin

No, they are not "denial," "anger," and "acceptance." They are "Distribution," "Application," and "Transaction." The three stages overlap, but each one dominates over a given period of time. The beginning of a stage's period of domination is in line with a change of Bitcoin creation rate.

Given the rapid drop in Bitcoin's value over the last 24 hours, my hope is to put things in perspective.


Stage 1: Distribution

- Spans from 2009 until 2017;
- Dominates from 2009 until 2013, at which point the creation rate halves;
- Represents the period of time of most rapid Bitcoin creation;
- Includes the first two creation rates (50 and 25 Bitcoins per block);
- Responsible for the creation of 78.125% of all Bitcoins (16,406,250);
- Inflationary during its period of dominance (until 2013);
- Bitcoins are created, sold, and re-sold, as value fluctuates wildly, with each cycle increasing the number of Bitcoin holders.

Stage 2: Application

- Spans from 2012 until 2025;
- Dominates from 2013 until 2021;
- Represents the period of time of most rapid Bitcoin application development;
- Includes part of the first creation rate and all of the next three;
- Covers the development of applications that provide services which are unambiguously cheaper and more efficient than similar services relying on other technologies;
- Quickly transitions from inflationary to deflationary during its period of dominance as Bitcoin applications gain marketshare.

Stage 3: Transaction

- Spans and dominates from 2021 onward;
- Represents the period of time where nearly all important applications have already been developed;
- Includes all rates of Bitcoin creation beyond the first three;
- 90% of Bitcoins are in circulation at the beginning of this stage;
- Bitcoins are exchanged for increasingly valuable goods and services;
- Bitcoins are rarely exchanged for fiat currencies;
- Pure exchanges that have not diversified their services no longer exist;
- Money transfer service providers that deal in fiat currencies no longer exist.

The Bears of Twitter - Time to Buy?

I've never seen such bearish sentiment on Twitter - it's probably time to buy:

- "Thinkin' of starting a #bitcoin mining business where I sell the mining hardware."

- "Yet another speculative bubble crumbling. This time, the mythical #Bitcoin."

- "Interesting to see #bitcoin is no different from any other speculative driver of #animalspirits."

- "Bitcoins Are Virtually Worthless."

- "The Bitcoin Exodus: Only about 400 people are still using Bitcoin, down from 1500 yesterday. http://bit.ly/pdlPEn #bitcoin"

- "When the #bitcoin mining bubble existed, I worried that I hadn't set up a mining rig as it seemed everyone else was. Now... kinda laughing."

- "@longadin Yeah, the only #Bitcoin users now are those who prefer to buy their illegal drugs over the Internet. :)"

- "Now that all the hype is over, #Bitcoin value is sinking like a rock, now falls below price of mining http://arm.cx/qslGEf via @betabeat"

Bitcoin Volatility Follow-Up

[Source: Option Stalker]

Holy crap! So much for finding a bottom. Anyone have a barf bag I could borrow?

Sunday, October 16, 2011

Bitcoin is the Next Skype

An anonymous comment was left on one of my posts, but vanished, for some reason. I'm going to re-post it here (I still have it in my email), because I think he/she made an excellent point:
"Everybody talks about PayPal...

'It's like PayPal, but free!' ...etc.

But I've come to realize that PayPal is a poor analogy.

Skype.

Why did Skype take off? It was because families sundered by borders could talk to each other for free. The largest percentage of Skype early adopters were South Americans with family members who immigrated to the U.S.

By the same token (and somewhat depreciating the silliness of Silk Road), I think cross-border and cross-currency transfer of funds is what will - sooner, rather than later - prove to be the killer app for Bitcoin.

Just as with Skype, there's nothing even remotely in the same ballpark. The technical know-how and hardware requirements for Bitcoin are really pretty analogous to what Skype was, at its beginning. The usefulness of Bitcoin is roughly the same as Skype.

There are certainly valid and important political uses for Bitcoin: donations to disapproved organizations (Wikileaks, OccupyWallStreet, etc.), donations in anonymity, cheat-proof donation recording, and many others.

But sending fifty bucks back to grandma in the old country (or vice versa) is where more effort should be applied. Because that's what people are going to be using."

-Anonymous

Is the Closure of ExchB Driving Bitcoin Prices Lower?

History shows that anytime one of the exchanges goes down, usually due to hacking, the value of a Bitcoin drops significantly. This time around, the site is closing intentionally, but it looks like it may be having the same impact.


I received an email notice from ExchB at precisely the time that the significant drop started, just over an hour ago. The price at the time was $3.72. It is now $3.39. The last time the price was that low was on May 7th!

UPDATE: $3.01. Crazy.

That Goddamned Blockchain

Apparently the "topic du jour" in Bitcoin land is the frustration with having to download the blockchain when you first install the Bitcoin client. See here, here, and a slightly calmer guy here.

I agree. It's a pain in the ass and it's scaring off countless new users that probably think their computers are going to explode or that they've downloaded a virus.

Fortunately, the requirement is going away. In Gavin Andresen's "State of Bitcoin Development" update this week, he mentioned, that in the near-term, the client will be updated such that it will download only the block headers when it is initially installed, thus making the startup experience more user-friendly.

In the interim, if you're going to recommend Bitcoin to someone and they're not very computer-savvy nor dealing with large quantities of Bitcoin, I would recommend an alternative client, such as MultiBit, or even one of the mobile clients, like Bitcoin Wallet for Android. Again, that's only if they're dealing with small amounts of Bitcoin. I'm hesitant to recommend an e-wallet due to their notorious history, but Flexcoin seems legitimate. Using a MtGox or Tradehill account is probably safer.

If they're going to be storing hundreds of dollars in Bitcoins, talk them through the (secure) standard client and explain to them that they will have to take a few hours to download and process the blockchain, and that it's perfectly normal.

Bitcoin is still young and experiencing growing pains, but there's no need to be cranky about it! Remember, the developers are working for free, and the product will continue to improve.

I would like to hear your opinions on the topic, please vote in the poll on the right and leave your comments below.

What's in Your Wallet?


This is not photoshopped*. Get yours here.

*Okay, so I don't own a purple table, but the rest is real.

Bitcoin: Globalization for the People

Globalization - it's a dirty word. The free-trade agreements and corporate-friendly legislation associated with globalization allow businesses to thrive in new, world-wide markets for products and services. CEOs are able to call upon the cheapest labour from countries with the lowest standards of living, dodge environmental regulations, and set up their headquarters where tax laws are the most favourable.

Meanwhile, individuals are feeling the pain. The 99%, as coined by the Occupy movement, have become pawns in a game of corporate chess. For those of us lucky enough to make a decent income, goods have become cheaper (in more ways than one), but at a huge cost to others. Our co-humans around the world are hurting as they pocket their pennies for back-breaking, unsafe labour, and as they stew in the environmental catastrophes that are their cities and countries.

Why, you must be wondering by now, is it so easy for a business to employ thousands of labourers, move tonnes of goods, and exchange billions in currency, without regard for borders, yet you can't send Uncle Carlos in Argentina $20 without jumping through more hoops than a Barnum & Bailey white tiger while getting your wallet pillaged like a father with three teenaged daughters?

Imagine, for a moment, that there was some mysterious, magical method for an individual to move any quantity of money, across any border, instantly, for less than a penny (now bear with me, because you're probably beginning to think I'm crazy). Imagine if that method did not involve a central authority, and was not associated with a bank, a corporation, or a government?

If such a thing existed, people would become globalized. Just as a glacier melts to fill canyons and valleys with water, the wealth of the world would begin to flow freely, not among a select elite, but between all of us. The trickle-down economy would turn into a raging river, and yes, all of the boats would float.

What if a sweatshop in Thailand could sell their jeans, not for $1.50 each to Gap, but for $15 each over the Internet, and receive the entire $15? It would no longer be a sweatshop. What if a child in the Philippines could go to school and be fed because his aunt in Vancouver can send home $10 a week, and he could get the whole $10? Do you see how the standard of living would increase everywhere, and not just for the fee collectors and corporations?

Unfortunately no one had invented such a thing... until now.

Bitcoin: it's Globalization for the People. Got coins?

Saturday, October 15, 2011

thebitcointrader.com

That's right folks, thebitcointrader.com will now take you to this site.

The URL is Beaker-approved!

New Sites - Week of 9 Oct 11

BitCashRetail - Bitcoin merchant services.
Bitcoin Pie - Comparison of Bitcoin and alternative blockchains.
Bitcoin BlackBook - Bitcoin directory.
Starcraft Bitcoin Open - Starcraft tournament platform using Bitcoin.
Bitcoin Alltop - Bitcoin news aggregator.
Bitcoin Exchanger - Russian Bitcoin exchange.

Kids Want Bitcoins

I don't think Satoshi Nakamoto ever thought of himself as a marketing genius, but he very well might have been. I got to wondering today, if Bitcoin might appeal to the younger generation; without a doubt, the answer is yes.
  1. Kids and Teenagers Embrace Technology - You don't have to convince a kid that they should have the latest phone or gadget; they always want the latest phone or gadget - after all, it's probably not their money they're spending, and more often than not, their parents are willing to oblige.  Something about being young gives you super-powers when it comes to technology.  I remember being the go-to kid when the VCR flashed 12:00.  Today's generation of youth comes standard equipped with a smartphone, the exact platform needed to proliferate Bitcoin.

  2. Bitcoins are Rare - Kids love to collect things, especially if they're rare. Bitcoins are rare; there will never be more than 21 million of them.  Imagine if you're a kid and you have a Bitcoin, knowing that only a small fraction of all of the kids in the world could ever have a Bitcoin; you'll want to have as many as you can get.

  3. Kids Love to Earn and Save Money - I remember when my father opened my first savings account for me.  I was enthralled with watching my bank balance increase every time my bank book was updated.  If I was ten years old today, and I had a Bitcoin wallet on my smartphone, I would do everything I could to make the balance increase.  I would want to do so many chores around the house that I'd probably clean the whole place twice, just to see Bitcoins appear in my wallet.

  4. Kids Love to Text - Remember when people used to call each other with their phones?  Now what do people do - they text.  Texting has become an extremely popular method of communicating, because it's easier to communicate with someone when you don't have to worry about them being busy or near their phone, like with voice. Our methods of communicating have become incredibly efficient, yet not-so with transferring money. Sending money with Bitcoin is to traditional methods of money transfer what texting is to voice calls. Just like with texting, kids will be the first to embrace instant money transfers with Bitcoin. They will pay each other for a million different reasons; dares, baseball cards, toys, borrowing things, secrets, bets, etc. Best of all, when you do it with a phone, you can hide it from your parents or teachers; you can do it in secret (like texting) - kids love that sort of thing. Also, when you're young and without a car, you might not be able to get to an ATM to get cash; not a concern with Bitcoin.
Once the mobile Bitcoin apps get cleaned up and become more reliable, I can almost guarantee that a larger proportion of the younger generation will pick up on Bitcoin long before most adults. I wouldn't be surprised if, this very instant, developers are working on youth-targeted apps - if not, they would be missing out on a great opportunity.

Friday, October 14, 2011

Send Money Overseas!

I just stumbled across this ad:


Wow, great. That's only $13.49 more than Bitcoin. Let's see what we get when we click on the ad:

"You’ll save up to 5 times more than other service providers." Jesus! What are the other guys charging?

Still don't think there's a place for Bitcoin?

I'm Psychic

On October 4th, I made a post called "The Next 365 Days of Bitcoin."

Let's review:

"Day 1 [October 5th]: Seeing an ad on his college dorm's notice board, a teenager downloads Bitcoin. His download is the 933,112th."

Well, on October 5th, we hit 950,994 downloads, so, let's just say I was right about the teenager.

"Day 2 [October 6th]: Someone in L.A. buys a Mercedes SLK grill off of Craigslist, for Bitcoin."

I'm not sure about this one. How do you tell if something on Craigslist was sold?

"Day 9 [October 13th]: The estimated next Difficulty appears to bottom out. The long steady climb upward continues."

We know the network hash rate determines the estimated next difficulty, so, let's see:


Bam! I'm psychic.

Thursday, October 13, 2011

The State of Bitcoin Development

From the desk of Tom Williams Gavin Andresen:
In the spirit of open communication, I thought I'd try doing a monthly "what's up" with bitcoin development. Here's what's on my radar:

• Wladimir agreed to help pull patches, especially Qt-GUI-related patches, and is now part of the core dev team (Wladimir did the bulk of the work on the new Qt-based GUI).

• Matt and Wladimir will be working on 0.5 release candidate 1 binaries and an updated release process to either ship the Qt libraries or statically link against Qt; the goal is to have them ready this weekend.

• Network stability and wallet security are still my top concerns; start-up experience for new users (the long wait to download the block chain) is next on my list.

• Amir's Bitcoin Improvement Process proposal hasn't been getting the attention it deserves; I'm just as guilty as anybody, I suppose we're all very busy. Helping improve it and writing some BIPs is high on my priority list.

• I've setup a public-write-only bitcoin-security@lists.sourceforge.net mailing list to be used as an official way to report and then discuss potential security or denial-of-service vulnerabilities in the bitcoin protocol, and invited the following people to participate: Amir Taaki, Mike Hearn, Stefan Thomas, Nils Schneider, Pieter Wuille, Jeff Garzi and myself.

Stuff I've been working on or plan to be working on soon; let me know if you are able to take on any of these, there are too many things on my TODO list:

• Implementing/experimenting: multi-signature transactions and using OP_EVAL and a new type of bitcoin address to create 'always secure' or 'always backed up' wallets.

• Write BIPs proposing: OP_EVAL. 'standard' multi-signature transactions. Maybe an informational BIP proposing how to roll out upgrades in general.

• Denial-of-service detection/prevention (see the DoSorphans pull request). It would be really nice if somebody with experience simulating network behavior would take this over...

• Cross-platform testing infrastructure. I've made good progress on a Twisted-based tool, but still have a lot to do.

• Tighten up block-time rules to fix the potential "timejacking" attack.

• Work on 'discouraging' blocks/transactions to punish bad-for-the-common-good-but-good-for-me behaviors from miners or nodes.

• Get back to work on headers-only-for-initial-download, so initial startup experience is better for people.

Ongoing longer-term:

• Rethink/rework transaction fees; give both miners and clients more flexibility to create a market instead of magic hard-coded constants.

• Organization; many things would be much easier if there was a non-profit organization like the Tor Project to pay core developers, testers, a PR person, pay for the Jenkins nightly build server, etc etc etc.

Gavin Andresen
October 13th, 2011

A Bitcoin Evening

March 12th, 2013: Andy's on his way home from work, having just put in a long day at the office. Spirits are up, however, because it's payday. Just in time, too; the Bitcoin account was getting a little low. He stops at the bank and wires $200 to ExchangeBitcoins to replenish the coffers for the month.

A few minutes later, he pulls his sapphire-blue '09 Accord into driveway, turns it off, and heads inside. After a quick hello to his wife and a hug from his kids, he cracks open his laptop and logs into the exchange. He sighs to himself as he clicks the "buy" button, "not like the good ol' days!" The account balance updates: 1.2 BTC.

Tommy, Andy's ten year-old, takes after his father. He was always good with technology and even better at gaming.

"Dad, can I have some Bitcoins for the HALO tournament? It's only 35 millicoins! Can I, please? I promise I'll win!"

Half sure that his son probably would win, he opens his Bitcoin address book, clicks his son's name, enters "35," selects "milli" and clicks "send."

"There ya go, kid. Now go show those Koreans how it's done!"

Tommy skips out of the room with a smile on his face. Dad, however, has some other business to take care of. Last week he had posted an ad on a forum for Bitcoin-accepting artists, looking for a new logo for his business cards. "Willing to pay 80 millicoins for good work!" it read. An artist in Spain saw the ad and made him a logo, which he just received in his email today. Thrilled with the results, Andy clicks "reply" on his Bitcoin-enchanced email client:

Felix,

Your logo looks fantastic - it's exactly what I was hoping for! I'm paying you right now.

Thanks Again,

Andy

He selects the "pay" icon, types in "80," selects "milli," and clicks "send." The client automatically associates Felix's Bitcoin address with his email address, and the blockchain is notified of the transaction.

"Better pay Doug back for lunch," he reminds himself. Just like with Felix, he composes an email to Doug:

Doug,

Thanks for covering me at lunch. Here's my half. See you tomorrow!

Andy

Andy enters $11.50 USD into the pay field. The client grabs the latest exchange rate from ExchangeBitcoins, and shows him that he owes Doug 87 millicoins. He clicks "send" and off they go.

After a wonderful dinner of apple-stuffed pork chops, Andy, being an economy buff, surfs over to his favourite blog, ZeroHedge, to read the latest news. The news indeed, as that's all there is on the page - all of the advertisements have disappeared. Since the beginning of the year, ZeroHedge has been able to cover all of its expenses, and then some, on Bitcoin donations alone. After an hour, Andy gets his fill, enters 1 mBTC into the tipping application at the top of his browser and clicks send. Unbeknownst to Andy, over a thousand readers have done the same thing in the last hour.

Yawning, Andy just about closes the lid on the laptop when his wife shouts, "Andy, are you coming to bed soon? Don't forget about Sandra's birthday, she's turning eight, you know."

"Thanks honey, I'll send her a little something!" Andy loads up BitcoinBirthdayCards.com and finds a funny one with a picture of a kitten scratching records. He frowns as he reads the caption, "Have a Mew-sical Birthday!"

"I guess an eight-year old will find that funny," he decides, as he adds 10 centicoins to the card which are automatically sent from his Bitcoin wallet.

"Thank goodness for Bitcoin," Andy thinks to himself as he heads to bed, "but I bet that 10,000 Bitcoin pizza guy is still kicking himself."

Wednesday, October 12, 2011

Volatility Falls Off a Cliff - Is Bitcoin Finding its Bottom?

This interesting four-week chart is brought to us by Option Stalker:


As volatility falls, it implies that traders are beginning to agree on a longer-term valuation for Bitcoin. I'd be curious to see if volatility has ever been this low since the price peak in June, but I'm guessing that it probably hasn't.

Could this be the bottom?

Tuesday, October 11, 2011

Kiva Software Engineers Pushing for Bitcoin Implementation

I like to browse the Newbie forum over on Bitcointalk because many users who can't yet access the main forum will often make interesting posts. Well, today I stumbled across a doozy:

Hi all,

I work at Kiva (http://www.kiva.org) as a software engineer.
I'm interested in talking more about Bitcoin and Kiva, and considering the rules here, although I am no stranger to Bitcoin, it seems it may be best to give a few posts about what sort of things are going on that can bring the two together.

There are 3 engineers here in addition to me who own Bitcoins and have an interest in spreading their use further. One of the ways we realized we could do that is by first educating the organization about what Bitcoins are. Kiva has a neat concept of self-run "Brown-bags" where anyone can discuss a topic (sort of like a Google tech talk), so we put together a presentation to educate fellow Kivans on Bitcoins, both their benefits and drawbacks.

Later on I realized some of our lenders were interested in Bitcoins as well, though as you can see, they also know that there are both benefits and drawbacks: http://www.kivafriends.org/index.php?topic=5789.0

In my next post, sometime later today, I'll discuss sort of a roadmap of how Kiva could start getting a Bitcoin project going.

Don't be led astray though, I know that any project to implement Bitcoin would take at the very least 6 months, and more likely a year, mostly due to the non-technical hurdles (like legal and auditing). So in a third post, I'll talk about why those things are an issue.

Cheers,

mrchilly

For those of you who have not heard of Kiva, they are a micro-lender providing small loans to people worldwide, with a focus on developing countries, to assist entrepreneurs with their small businesses.

Since 2005, 630,000 people have lent money through Kiva, totaling $249 million.

Bitcoin would be an ideal currency for Kiva to use, as it reduces the number of currency exchanges required by half. Further down the road, if Bitcoin catches on in developing countries as some people theorize, it could eliminate the requirement to exchange currencies altogether, thus ensuring a larger percentage of the loan actually gets to where it's needed most.

This will be an interesting story to follow.

Here's the post.

Saturday, October 8, 2011

Free State Project Giving Away Bitcoins to 15,000

Excerpts from the press release:

In one week, the non-profit organization – which is an effort to encourage 20,000 “liberty lovers” to move to New Hampshire to work toward greater individual and economic freedom – will send a fraction of a Bitcoin to over fifteen-thousand subscribers on its mailing list. Each recipient will get exactly 0.01 Bitcoins, worth approximately $0.04 at current exchange rates.

This simply couldn’t have been done with US dollars and traditional banking systems,” says Roger Ver, the FSP member who donated the Bitcoin funds for the promotion. “I currently live in Japan, and this initiative required transferring the donation internationally, and then dividing that money into thousands of micropayments, all going to different people in different places. A bank wire from Japan to the US would’ve taken at least three days plus fees. With Bitcoin it took less than three seconds with no fees. Try to send someone a nickel with Paypal and you’ll find the fee itself is more than a nickel.

From the Bitcointalk Forum:

Free State Project's Liberty Forum will be accepting Bitcoin as a payment method for registration (this event occurs in February at the Crowne Plaza in Nashua, New Hampshire - past speakers have included Ron Paul, Judge Napolitano, John Stossel, Cato staff, etc.) Further, future events and FSP's online store will accept Bitcoin shortly.

And Now for Something Completely Different...

Friday, October 7, 2011

I Didn't See This Coming


Okay, I will admit, I didn't see this coming, and it's cost me a few dollars.

When you're as much of a Bitcoin advocate as I am, it can be difficult to understand why others don't feel the same way, and when those others put their money where their mouths are, you get the above chart.

FreeTrade nailed it in his "Mappers vs Packers" post. A lot of "Packers" are not seeing Bitcoin's potential, it's raison d'ĂȘtre, and they're bailing because they think Bitcoin's value will drop to something considerably less that what it can be sold for today.

Meanwhile, the Bitcoin economy continues to grow, and difficulty has barely budged relative to the price drop - miners continue to mine.

If you've been reading this blog for a while, you know I'm more concerned with the long-term potential of Bitcoin, but my blog is called "Bitcoin Trader," so I feel obligated to comment on the short-term price changes.

Are we going lower? Maybe, but there just isn't that much lower we can go. At the end of the day, there is a limit on the number of Bitcoins that will ever exist, and so as long as the Bitcoin economy continues growing, which it is, each Bitcoin will increase in value. Is the entire Bitcoin economy and its perceived potential worth less than $21 million USD, or less than $1 per Bitcoin? No chance in hell - no way.

We're talking about a new paradigm for the way money is moved around the world. Is that worth less than a company that makes little plastic shoes? Well, at the moment of this post, all 21 million Bitcoins would apparently be worth 1/22nd of that company. If the ground-breaking, mind-blowing, change-the-world potential of Bitcoin was worth the same as plastic (okay, I'll admit they're pretty comfortable) shoes, all 21 million of them would be worth $108.10 USD each.

I don't know what's going on with this valuation under $4 per Bitcoin. I definitely didn't see this coming, but I will be buying many many more at these prices, and I doubt I'll be the only one.

Thursday, October 6, 2011

New Bitcoin Sites - Week of 2 Oct 2011

Bitcoin economy dead? Me thinks not. Here are your latest and greatest:

Copper Logistics - Invest in copper.
Bitcoin Starter - A project support site (not launched just yet).
Bitcoins.aunz.ws - Sell Bitcoins in Australia.
IMCEX - New Bitcoin exchange.
Tahoe-LAFS - Free and open cloud storage system.
Spaculator - Guess the future value of Bitcoin.
Bitcoin PayMe Cards - Bitcoin wallet cards.
BTC Smoke Shop - Kind of self-explanatory.
Winnipeg Technology and Computer Renewal - Online computer store.
Exekute.net - Hosting service.
DialCoin - Buy Bitcoins via SMS.
bitfloor - Bitcoin trading system - currently on Testnet.
txt4coins - Text worldwide and pay with Bitcoin.

Tuesday, October 4, 2011

The Next 365 Days of Bitcoin

Day 1: Seeing an ad on his college dorm's notice board, a teenager downloads Bitcoin. His download is the 933,112th.

Day 2: Someone in L.A. buys a Mercedes SLK grill off of Craigslist, for Bitcoin.

Day 9: The estimated next Difficulty appears to bottom out. The long steady climb upward continues.

Day 11: A member of the Bitcointalk Forums reports that his Bitcoins have been stolen from Mt.Gox. No one cares.

Day 17: A Bitcoin is still worth $5. Conspiracy theories begin to propagate through the Bitcointalk Forums. The CIA is the primary suspect.

Day 18: Bitcoin hits $5.50. The CIA is the primary suspect.

Day 25: All-time Bitcoin client downloads hit 1,000,000.

Day 27: At least three people in the United States go out to Halloween parties dressed as Satoshi Nakamoto. Satoshi Nakamoto dresses up as Lady Gaga.

Day 29: The BitLotto jackpot hits 500 BTC, the largest ever.

Day 31: Bitcoin.com comes out of Beta. No one really notices, though Tradehill sign-ups begin to climb quickly as new users search for Bitcoin.

Day 39: On a Bitcoin poker site, the first 100-player non-freeroll tournament begins. The Bitcoin poker segment begins to pick up steam.

Day 41: The French courts declare Bitcoin a "virtual currency," subject to the same laws that govern fiat currencies. Bitcoin's value nearly doubles in less than a day.

Day 46: Greece officially defaults on its debt, starting a cascade of bank credit rating downgrades.

Day 59: In the freezing cold streets of Manhattan, the protest continues to grow; the protesters increasingly fed by food paid for with Bitcoins.

Day 61: Open-Transactions goes live, changing the way wallets are stored and traded, forever. Confirmation wait-times will eventually become a thing of the past.

Day 67: Bank runs begin in Europe. The Euro continues its downward spiral towards parity with the US dollar.

Day 71: The first Bitcoin point-of-sale devices go into operation in New York City.

Day 89: The Occupy Wall Street protests are now a nation-wide phenomenon. As the protesters increasingly shun the banks, Bitcoin becomes their predominant way of exchanging money amongst each other.

Day 91: Bitcoin Realty sells its first piece of property.

Day 92: A kid in Germany receives five Bitcoins for Christmas. He quickly blows them all on Dragon's Tale.

Day 94: The US Federal Reserve conjures over a trillion dollars out of thin air to help weaken the US dollar, as American exporters are getting hit hard by the increased strength of the currency.

Day 101: Gold continues to hit record highs in all currencies.

Day 106: Bitcoin has convincingly returned to its three-year up-trend, threatening to break the all-time high set in June, 2011.

Day 117: A major exchange is hacked. No Bitcoins are stolen, but the community is shaken.

Day 122: The Wall Street Journal publishes an article on Bitcoin, asking the question, "is it time for Bitcoin?"

Day 126: Bitcoin's value doubles over the course of three days.

Day 135: Ruxum finally comes out of beta. Backed by former banking executives, it gains significant marketshare among wealthy investors.

Day 141: Anderson Cooper spends Bitcoins, live on CNN; he buys lunch.

Day 156: As the global economic collapse crushes banks worldwide, bank runs begin in the United States.

Day 161: A new crypto-currency is unveiled. No one cares.

Day 166: Someone buys a burger at a national chain restaurant, using Bitcoin.

Day 176: Version 1.0 of the Bitcoin Client is released. After more than three years, Bitcoin is no longer in beta. The client is robust, feature-rich, and grandma-friendly.

Day 184: Bit-Pay holds a "Miss Bitcoin" beauty pageant.

Day 192: A Bitcoin Conference is held with over 500 attendees. There is major media coverage - for real.

Day 201: Over 1000 people, world-wide, now earn their primary take-home pay in Bitcoins.

Day 212: Satoshi Nakamoto reveals himself to the world, declaring Bitcoin to be his Magna Carta. The FBI picks him up for questioning. He will not be seen again for 22 days.

Day 219: The first Fortune-500 company starts accepting Bitcoin as a form of payment.

Day 234: Satoshi Nakamoto is released by the FBI and goes into hiding.

Day 266: An arrest is made - the first time the identity of a drug dealer, conducting business on Silk Road, has been determined. Bitcoin's value drops 10% in a matter of minutes.

Day 291: 90% of Bitcoin transactions are now completed with zero confirmations. The double-spend is almost unheard of.

Day 301: The Bitcoin network hits one peta-hash.

Day 310: An Eastern-European country officially recognizes Bitcoin as a legal currency to supplement its own.

Day 322: While gold's value is consistently increasing, Bitcoin has decisively out-performed gold for the year, making Roger Ver look like a pretty smart guy.

Day 330: The first major online retailer begins accepting Bitcoin.

Day 336: Chinese Bitcoin users out-number American Bitcoin users, for the first time ever.

Day 347: Bitcoin's value begins to rise quicker as the 210,000th block is approached.

Day 365: Someone's actual grandmother downloads Bitcoin. She is the 24,235,920th downloader. Gavin Andresen is pleased.

To be continued...

Sunday, October 2, 2011

Convince Them

Question: "How do I introduce someone to Bitcoin?"

Answer: In the past week, three good answers to that question have come about, which is timely, because it no longer takes a rocket scientist to secure a wallet. If you send someone to these three sites, they will definitely come away convinced that Bitcoin is something special (I recommend they be read in the order shown):

An Introduction to Bitcoin - From ExchangeBitcoins.com

Bitcoinintro.com - a site specifically built to explain Bitcoin.

Bitcoin by the Numbers - from stuffexists.com.

A Survey of the Bitcoin Gambling Economy

To date, no method of analyzing Bitcoin transaction data has been found sufficient to gauge the state of the Bitcoin economy. In order to finally acquire such data, a survey, the first of its kind, was created to canvas all existing Bitcoin gambling site-owners, covering a range of high-level questions to determine the size and nature of this particular segment of the Bitcoin economy.

The survey asked the following questions:

- In terms of betting volume, which gambling game is played most frequently on your site?
- How large is your user base?
- How many of your users have deposited Bitcoins to your site?
- Where do your users come from (broken down into most, second most, and third most frequent country of origin)?
- What was the total amount of Bitcoins deposited to your site in August, 2011?
- What was the total amount of Bitcoins deposited to your site in September, 2011?

Of the 35 sites known to exist, 26 had contact info and were asked to complete the survey. Nine site-owners responded, covering nearly the entire range of Bitcoin gambling options, giving us enough data to create a useful snapshot of the fledgling Bitcoin gambling economy.

Most Frequently Played Game Type


There was almost no overlap in the types of sites that responded, except in the Lottery segment, where two sites responded to the survey. As a result, we have a well-rounded dataset.

Total Users - Registrants vs. Depositors

The survey did not ask for specific numbers, but a range. It looked like this:



To generate the graph, I used the high end of the range in the response, therefore the numbers are slightly skewed to the high side. More important, however, is the ratio between the two, which varied widely. Some types of gambling sites make registration and depositing one-in-the-same; those sites are clearly visible in the graph.

Ignoring sites where users and depositors are equal, conversion ratios are anywhere between 10% to 80%, depending on the site.

Demographics




Not surprisingly, and in line with host connection statistics, Americans make up the largest user-base for most gambling sites. Canadians, Germans, and users from the UK cover off the vast majority of the remainder.

Deposits


Again, the survey asked for a range value in response to the question of how many Bitcoins are being deposited to each site. The high-end value was used to generate the graph, so the numbers are skewed to the high side.

For Site 5, the responses were 1001-2000 BTC for August and 501-1000 for September. The graph gives the impression of a 50% drop in deposits, though that is most likely not the case. In retrospect, I should have provided a set of answers with smaller range options above 500 BTC. Nevertheless, the overall trend is a constant or increasing rate of deposits. Given that the value of a Bitcoin has dropped considerably from August to September, the overall revenue for Bitcoin gambling sites is likely steady or down slightly, though business appears to be healthy at this early stage in Bitcoin's evolution.

Taking the average of the ranges, total deposits across these nine sites is in the vicinity of 3000 BTC per month for each August and September, or 15,000 USD at today's Bitcoin market value, demonstrating how much room there is left to grow in this multi-billion dollar segment of the online economy.

---

For further discussion, please head over to the Bet with Bitcoin Forums, or leave your comments below.

Latest Bitcoin Services and Software

New to Bitcoin this week:

Bitcoin 0.4 - Now with encryption!
CoinConnect - A Bitcoin Social Network
Bitcoin Email Notifications
Bitcoin Realty
Bitcoinintro.com - An Introduction to Bitcoin
Bitcoin Stats - Transaction Timer
Bet with Bitcoins - A Bitcoin Gambling Directory (disclosure: this is my site)
bit-pay Mobile Checkout