As an observer of the Bitcoin market as long as this original cryptocurrency has existed, it never made much sense to me from an investment perspective. Bitcoin prices were too volatile and the volatility seemed too random. Volatility can be a good thing for traders, mind you, but only if you think you have an idea why the price goes up and down the way it does. Otherwise it is just a good way to lose all your money. But a couple of recent events have changed my view of Bitcoin. I now think I can explain its volatility and predict it well enough for profitable trading. And the best part is that it takes no rocket science at all. Your mother (and mine) can make a living trading Bitcoins.
For those who don’t know, Bitcoin is a stateless currency based on blockchain calculations. There will only ever be 21 million Bitcoins and only 16-odd million of those have so far been “mined.” The present value of all mined Bitcoins is around $18 billion, which is amazing if you realize they came from nowhere and have no intrinsic value.
My first realization about Bitcoins this year came among the annual predictions I publish every January. Here’s what I wrote then:
Prediction #7 — Not the demise of Bitcoin, but finally an acceptance of what the crypto currency is (and isn’t). My son Cole, who is 12 (and now taller than me), was for awhile a Bitcoin miner. We bought a used Ant Miner last year on eBay, equipped it with a proper power supply and set it going 24/7 in the Man Cave, where most boyish things happen around here. The rig was incredibly loud and — after the first electric bill arrived — totally uneconomic. We were paying twice as much for electrons as Cole was receiving in Bitcoins for his labor. Anyone with a robust solar installation want to buy an Ant Miner?
Then a few weeks ago Bitcoin prices started to rise again and I saw Bitcoin stories with headlines like “Too Big to Fail.” Yet what goes up seems to inevitably come down because Bitcoin prices crashed yet again a few days ago. This led me to a realization that I think is going to become popular: Bitcoin is an excellent transfer currency but as a longer term store of value it sucks and that isn’t likely to change.
Bitcoin is a great idea, blockchain is an even better idea, but since neither is backed by the full faith and credit of, well, anyone, a Bitcoin will always be a sorry substitute for a dollar or a yen. The price of Bitcoins will rise as folks in China find the need to use them to get money out of that country. But when their money finally is out of the China it is inevitably converted straight into dollars and the Bitcoin crashes as a result. So there may be some cyclical arbitrage opportunity in Bitcoins, timing the market to take advantage of the suckers, but as a true currency, Bitcoin will probably never cut it.
This says nothing about technical merit, mind you. What matters here is psychology and behavior. It’s the “full faith and credit” thing. Without it Bitcoin can’t be trusted to be any more than a short-term monetary value mule.
My second Bitcoin realization came last month when the SEC denied two separate proposals to create Bitcoin-based Exchange Traded Funds (ETFs). The SEC’s reason for the denials doesn’t matter here but it’s likely to stick even under President Trump, so don’t expect that situation to change. Bitcoin ETFs would have ballooned the currency’s capitalization as little investors piled-in like timeshare condo buyers. It would have been an easy win for those with large existing Bitcoin holdings like the Winklevoss twins, who were behind the first ETF proposal to go down in flames.
Upon the news, Bitcoin dropped in price by 25 percent then recovered completely within two days! When the second ETF application was denied the drop was much smaller and the recovery even quicker. Some will say the market had already priced-in the SEC decision, but that begs the question of not why Bitcoin didn’t go down by much, but why it quickly continued to rise? This is what I think I’ve figured out.
I’m starting to believe Bitcoin can’t go down in value. I mean, it will be volatile of course and there will be many bumps in the road. But over time, it’s a good bet that it will continue to rise in value as the most popular cryptocurrency. If it loses that status then fine, it can go down, but something is going to win here and Bitcoin is the prime contender.
The first reason I say this is because there are two kinds of Bitcoin owners.
First are those poor sods who think it’s a store of value and the price will go up for unknown reasons. These folks are much like stockholders. There are only a finite number of shares of a given stock. When I buy one I slightly make the price go up. If I hold that share, I also ever so slightly put upward pressure on the stock price because my one share is not available for sale. Obviously, I’m (slightly) limiting supply.
Unlike stocks, however, there’s another kind of Bitcoin owner — one who owns the currency only for a few seconds. You can spend Bitcoin at Dell (and lots of other places) to buy computers. Now what really happens is that I can convert Fiat currency to Bitcoin, send it to Dell (For the nice minimal transaction costs) and Dell instantaneously turns it back into Fiat. Dell and I hardly cared about Bitcoin: it was (as I explained in my annual predictions) a transfer mechanism, not a store of value.
Dell and I were Bitcoin owners for only a fraction of a second, but we were owners. We did indeed “limit supply” of Bitcoin for a very short time.
Amazingly, Dell and I were utterly insensitive to Bitcoin’s price. All we want is non-volatility for the few seconds we owned it. I don’t care if a Bitcoin is worth a dollar, a thousand dollars or a million dollars. I’ll buy the exact number of Bitcoins (or fractional bitcoins), send them to Dell, and they’ll turn them back into Fiat. As long as the USD to Bitcoin exchange rate remains relatively stable in that tiny timeframe, we accomplished our value transfer.
Realization number three — Bitcoin transactions are increasing.
That is, more and more Bitcoins are being owned for fractional seconds. At some point enough transactions (especially big ones) mean a lot of Bitcoin is out of the supply pool tied up in transactions. Bitcoin gets harder to find if even for a few seconds. Hence you have to convince more people from the first type of owners (the stored value holders) to sell their Bitcoins back into the supply, driving prices up.
Bitcoin is having some high-transaction issues which might cause an technical downfall from what I describe, but in general, whichever cryptocurrency wins will end up ever-increasing in value because of a finite money supply and the scarcity of money itself!
That’s the micro view, now let’s look at the macro view of the same market. As I wrote in my prediction, a large part of the Bitcoin market — the really big transactions — are rich people in countries with capital transfer controls using Bitcoins to get parts of their fortunes out of Dodge and into some safer economy. There are lots of such countries and — this is the important part — there will always be lots of such countries. So whether it’s a Chinese cabinet minister or a Russian oligarch or someone from behind Door Number Three, there will always be some rich person trying to move a shiftload of money to safer ground.
This suggests my new Bitcoin trading strategy, which I admit I have only tried so far on paper. Here’s how it works. Bitcoins go down in value when the demand for them as transaction instruments decreases. When that Russian oligarch sells his shiftload of Bitcoins for US dollars, Bitcoin value goes down. When that happens — when Bitcoin prices drop by 20 percent or more — BUY! The price will inevitably come back up, I assure you.
When Bitcoin prices rise by 20 percent or more — SELL! You just made 40 percent on your money.
Rinse, repeat, automate, get rich.
Nothing short of some other cryptocurrency taking the business from Bitcoin is going to change this trend. Say Goldman Sachs throws billions into doing exactly as I propose but as an institution. That will drive Bitcoin values generally higher and decrease price volatility a little, but the general trend will continue. So lower your threshold to +/- 10 percent (instead of 20) and do twice as many transactions.
The success of this strategy comes, I think, from the limited supply of Bitcoins. With only 16 million in circulation and only 21 million EVER, there will always be price changes with larger transactions, which is to say there will always be profit opportunities. I wonder if this was part of the Bitcoin plan from the beginning?
Another growing cryptocurrency is called Ripple and it was designed, frankly, to avoid these very profit opportunities. There are 100 BILLION Ripples, for example, compared to 16 MILLION Bitcoins. But then Ripple is aimed straight at inter-bank transfers while Bitcoin has to be aimed, I’m guessing, straight at those who prefer to avoid banks altogether, at least for transactions like these. Bitcoin is the Wild West cryptocurrency.
Now for the paper test of my trading strategy. Using the interactive Bitcoin historical daily price chart at 99bitcoins.com, I started my paper test by converting $100 to Bitcoins on July 17, 2010 — the first day Bitcoins were ever traded — when the price was $0.05. I then scrubbed through the data looking for selling and buying opportunities that more or less met my +/- 20 percent guideline. This is neither an optimal nor a perfect trading strategy and it misses a lot of profit opportunities, but is easy to automate. For example there are times when the sell signal is just a hiccough and the price keeps going right on up (or down) but I’ve already sold (or bought). In some instances there are almost daily trades while in two cases I went more than a year without doing anything because my criteria weren’t met. In all there were 31 total transactions, with my last SELL order on February 2, 2017 at $990.65 for a total value of $21,638.88. A BUY order followed on March 26, 2017 and prices are generally higher since, but I’ll stand on growing $100 to $21,638.88 (almost a 220X profit) in about 6.5 years.
In contrast the S&P 500 grew by 2X (from 1100 to 2300) in the same period.
But maybe my huge Bitcoin paper trading success had to do with starting at the very beginning when a Bitcoin was worth only a nickel, which will never happen again. This is a mid- to long-range trading strategy I’m proposing, but if it has any real value that should be visible in a couple years, so I went back to the 99bitcoins chart and did the same analysis starting a year later, then two years, three years and four years later. I also did the analysis beginning when Bitcoin first hit $10, $100 and $1000.
Starting with $100 in July 2011 my paper trades grew to 1,056.26 in 5.5 years for a 10X return.
Starting with $100 in July 2012 my paper trades grew to 2,020.99 in 4.5 years for a 20X return.
Starting with $100 in July 2013 my paper trades grew to 289.81 in 3.5 years for just under a 3X return.
Starting with $100 in July 2014 my paper trades grew to 183.41 in 2.5 years for a 1.8X return.
Starting with $100 when Bitcoin first reached $10 in June, 2011 my paper trades grew to $1532.01 in 5.5 years for a 15X return.
Starting with $100 when Bitcoin first reached $100 in April, 2013 my paper trades grew to $505.82 in 3.75 years for a 5X return.
Starting with $100 when Bitcoin first reached $1000 in December, 2013 ( a true moment of irrational market exuberance) my paper trades didn’t really grow at all in four years but at current prices I’d get my money back.
So in all scenarios except one, my paper returns clobbered the S&P500 and in that one exception, though I didn’t make any money, I didn’t lose any, either, other than opportunity cost.
Since I’m known as an economics blogger of sorts (the Kauffman Foundation has declared me several times to be one of the top U.S. economics bloggers) but I’ve never before proposed a trading strategy, I thought I’d reach out for some adult supervision. So I showed a draft of this column to Darrell Duffie, Dean Witter Professor of Finance at the Stanford Graduate School of Business and a friend of mine for 30+ years. Here’s what Darrell had to say more succinctly than I ever could:
“On the substance, you are proposing that there is mean reversion in the price of Bitcoin through the effect of price impacts caused by big transactions. This happens a lot in other financial instruments. I don’t know whether this is a correct diagnosis in the case of Bitcoin price behavior, but I would not rule it out. It seems reasonable.”
Nice column. You probably should include the same disclaimer one see’s on advertisements for new investments.
It appears to me that there is a lot of similarity between Bitcoin and program trading in stocks.
What period did you use for the 20% fall/rise to occur in? I imagine tweaking that could affect the profitability, too.
I am intrigued. I wonder if this would really work out if I tried to set it up.
Where are the really trustworthy solid bitcoin stores/banks right now?
Coinbase is probably the most convenient in the US and appears to allow you to trade via your checking account.
Thank you, it’s an interesting article!
Why 20% and not 4-5% but with a higher frequency? Moreover what is the max drawback when you are waiting for a +20%?
Do you see any opportunity to sell stock as well?
If you just held your hypothetical $100 dollars worth of bitcoins @ $0.05 each (2000 BTC) instead of constantly trading them, you would have made $2,260,000.
So maybe this article should be titled “How to lose two orders of magnitude of your potential investment value”.
Assuming you’re measuring your profits in dollars, if you just held the bitcoins you wouldn’t have made anything! It’s the *selling* them that realises the profit.
Actually it’s spending them. You can’t eat, drink, drive, or live in, either dollars or bitcoin.
You are a crook, plain and simple. You took my money and you have no backbone to face me or come clean about it. Screw you, Bob! Stop hiding behind the internet/your children and fess up!
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My money is gone, I accept that. There is no product, I accept that. But you taking no responsibility or admitting anything happened – THAT is unacceptable!
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You cannot walk away with our money unscathed. I will not go away and you have no one but yourself to blame. You have sold my children fake promises to better the lives of your own. I hope they follow this and realize daddy is the villain in this story. If not, congrats, you’ve in turn created a second generation of heartless monsters.
Or you could make an easy $35,000 via a Kickstarter scam and then ignore any requests for updates.
“when Bitcoin prices drop by 20 percent or more — BUY! The price will inevitably come back up, I assure you.
When Bitcoin prices rise by 20 percent or more — SELL! You just made 40 percent on your money.”
Sorry, but no. You didn’t make 40%, only 20%.
Fictional example: Something drops in value 20% from $125.00 to $100.00, then you buy it at $100.00. If that Something goes up 20%, then you sell it at $120.00. You only made $20.00 or 20%. Assuming NO transaction costs involved. There was no profit on the way down.
For you to make 40% you have other choices:
1.- When Something is priced at $120.00 you sell it short (borrow it from someone and sell it). IF Something goes down to $100.00 you buy back your short sale and buy another Something. IF Something goes back to $120.00, then you sell it. Now you have made $40.00 or 40% on your $100.00 investment, again assuming NO transaction costs involved or margin requirements/fees on the short sale. You get 20% profit on the way down and another 20% on the way up.
2.- Something drops in value 20% from $125.00 to $100.00, then you buy it at $100.00. If that Something goes up 40%, then you sell it at $140.00. Now you made $40.00 or 40%. Again assuming NO transaction costs. There was no profit on the way down and you had to wait for the full 40% profit on the way up.
3.- More ways to get that 40% would require options and/or futures, but then it gets a little more complicated.
Cheers
Back in 2013 I made $25,000 when the price of Bitcoin spiked. Then, the next time I was in London, I was arrested by the NCA for money laundering. Their basis was that I had wires going to and from the Bitcoin exchanges. My legal fees to deal with this were about $30,000.
If it’s such a good return, the smart thing is to not tell people about it. Now that you have done so, more people will do it, and the value disappears. I will sell early knowing there will be a group of Cringely readers ready to sell at 20% gain.
This is how the gold standard works. If Treasury is selling gold at $505 and buying gold at $495 to maintain $500 gold price, then they are making $10 every time.
Aren’t you going to comment on the H1B order? Some people are saying that Trump zeroed out the program with a memo, but that seems like such huge news it would get more attention. The memo is a little unclear.
@MikeN Haven’t you heard? Cringely stopped responding to people and only generates articles to keep traffic to his website up and try to stay relevant. He has given up caring about his user base because of the Mineserver fiasco, despite 10+ years of loyalty. Class act, that one.
Watching a guy destroy his public reputation and brand he spent 30 years building is astonishing. Watching it happen in real time, even more so. That it happened over $35,000 is baffling. That I’m sitting here commenting on his blog about it is surreal.
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I’m pretty sure that I can read through either Accidental Empires or his PBS archives and find cautionary tales about companies burying their heads and hoping problems or failures will go away. I can myself think up four or five different ways he could still salvage this without the use of magic or fraud, but I’m sure he can think up a dozen more than I can. But here we still are, watching.
Couldn’t have said it better!
I totally agree, especially on the “over $35,000” part. From what I’ve seen, Cringely is better off financially than I am, but yet, he’s willing to toss it all away over a relatively paltry sum. I’m not in a position [1] where I could easily refund $35k, especially if I’d spent a bunch of it already, but if I were in his situation, I’d get a second mortgage or something to make things right. $35k just isn’t enough to destroy my professional reputation. ($35mil, however, and I’d likely be on a beach somewhere where there was no extradition.)
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It baffles me that Cringely has done this, especially when he could have avoided it by doing what he does — writing. smh.
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[1] It’s been a tough couple of years, financially and otherwise, but we’re all good.
I don’t know the whole story behind the mineserver issue. I too have followed Mr. Cringely for 30 years. I know he has at times taken on more work than he can handle. I also know he is very persistent and doesn’t give up on a problem, no matter how long it takes him. I agree he should provide an update.
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We all have faults and Mr. Cringely is no exception. I do know he works very hard to make others successful. To be honest I’d like to see if some of us could help him resurrect and finish the project.
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I too have lost money in kickstarter. I knew it was a gamble when I contributed my money. One project vanished. One was wiped out by an overseas competitor/thief. Another is 2 years late and counting. My personal kickstarter score is 1-3. Mr. Cringely is not alone in having problems with his project.
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We each have a choice. We can go through life being mad at something, or we can move on and try to help others whenever we can. I choose the latter.
Roger, I agree with you but I don’t think it has to be nearly that expensive. I only can estimate Bob’s readers from the commentariat over the years but:
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1. Ship the product as it exists. Some meaningful percentage of Bob’s readers come from the era when things didn’t work right out of the box. They’re tinkerers and (in Bob’s own words) nerds who like things that are hard to use because they’re hard to use. You’ve seen this in the comments on the Kickstarter — some say they’d be satisfied just getting what they paid for, even if it’s broken.
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2. Bob’s a writer. Write a book portraying his second favorite persona (the harried, in-over-his-head inventor/entrepreneur – the guy whose made computers that “almost worked”) as the overindulgent dad who let his kids talk him into a f’ing quagmire. How being on the hook to angry bolt-throwing venture capitalist is preferable to having hundreds of investors in it for a relatively small amount. Free copies to contributors as the autopsy/obituary he now refuses to provide them.
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Promotional hook: Proceeds from sales of the book are dedicated to pulling him out of this hole.
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3. The f’ing tshirts omg already. Offer one that instead of the logo reads “I Paid $99 for a Mineserver And All I Got…” You get the idea.
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There are a billion ideas, Bob has almost definitely thought of them. Unfortunately he’s been thinking of doing them while doing the exact wrong things:
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1. Making pointless promises (his last was that he’d be emailing people to verify mailing addresses for t-shirts. Why do this and not follow through? It’s literally free and shows even the least amount of concern. You had to send an EMAIL! This cost you nothing, and you know well, Bob, that failing to do things like this is what is costing you everything.)
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2. Discussing buying the same kids a bitcoin miner for the hell of it, for a project running parallel with this one. Really dude?
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And finally — this is free, Bob, while supplies last — here’s the first steps to take:
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1. Stop ignoring people.
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2. Written promises won’t work anymore because you’ve broken the smallest ones for no apparent reason other than you felt like it.
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3. Set aside 10 minutes of “valuable family time,” point a camera at you and the kids and use that as a medium from this point forward, whether it’s simply to explain how it failed or you got in over your head or to say what you’re doing now. Anything. Closure if it’s over. Progress if it’s not.
I’m kind of surprised that people are surprised about this Mineserver debacle. It’s pretty consistent with what I have read over the years from Cringely. I remember that he was going to create a child monitor after his son died. That never happened. Then, wasn’t he getting together that space shot project? That evaporated, too. I’m only a casual reader of this site, and of his PBS site before it, but I can’t remember Bob ever finishing anything he said he was starting.
My mind set is that Bob Cringely should be read for entertainment, and nothing more.
Good article, but this sounds like the slow and tedious way of making money with bitcoin. There is lots of programs out there that will give you way more profit. I joined Gladiacoin a couple weeks ago, they promise to double your investment withing 90 days. They do this by using an automated system to leverage the difference in pricing between the different bitcoin exchanges. I know, it all sounds like a scam, and you need to have some nerves to step in, but so far (it has been up for 4 months now) it is working and they are making daily deposits to my wallet (they pay 2.2% a day streight back into your wallet), so the real risk here is about 45 days, after that you’ll have your initial seed money back. So, if you have some bitcoin collecting dust somewhere and would like to give it a try, feel free to try it out. Of course, as always, don’t invest anything that you can’t afford to lose. You can join at https://www.gladiacoin.com/signup-now
@Jasper:
https://en.wikipedia.org/wiki/High-yield_investment_program
“I joined Gladiacoin a couple weeks ago, they promise to double your investment withing 90 days.”
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lol gtfo
“Unlike stocks, however, there’s another kind of Bitcoin owner — one who owns the currency only for a few seconds. You can spend Bitcoin at Dell (and lots of other places) to buy computers. Now what really happens is that I can convert Fiat currency to Bitcoin, send it to Dell (For the nice minimal transaction costs) and Dell instantaneously turns it back into Fiat. Dell and I hardly cared about Bitcoin: it was (as I explained in my annual predictions) a transfer mechanism, not a store of value.”
The thing I don’t understand is why anyone would want to do this. Why would you buy Bitcoins — only to immediately use them as a form of payment — if you already have the dollars to complete the transaction? You’re not saving money. In fact, you’re spending more because you’ll need to pay a transaction fee to convert your dollars to Bitcoins.
why, indeed? hiding or laundering money is all I can come up with. perhaps that Nigerian Prince situation, the new “refugees trousseau,” shovelling drug money out of sight, or slipping political paybacks under the radar. Indians buying gold, sneaking around government currency controls. I can’t for the life of me think of a single sane reason somebody should change currency with a sorta-guarantee to a method of trade with none whatsoever for use in buying legit stuff.
Well, I could see maybe doing it if your native currency was something other than USD or the vendor you wanted to buy from was in some other currency, if the cost of doing the bitcoin thing were cheaper than the foreign currency fees charged by your bank/credit card/etc.
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You know, like if you only had Euros or Yen or something, and wanted to send money to Cringely for a Mineserver that you’d never get (because he’s basically a crook) and didn’t want to pay exchange fees…
Dell sells because they have to pay their suppliers (and pay taxes) in USD.
The main problem with Bitcoin is ownership concentration. Somewhere between 500 to 1000 people own over 50% of the Bitcoins ever produced. This is one of the big reasons the SEC denied setting up a ETF for Bitcoin. Too few people own too much of the Bitcoin market in order to allow a fair exchange.
It’s also why the price of Bitcoin keeps going up and up. The price of Bitcoin is affected by a very small number of trades. And, in all of these trades, the owner and buyer is hidden from view. Imagine you are sitting on 10% of all Bitcoins ever produced — 1.6 million to be exact. At the current price, about 1.8 BILLION dollars in Bitcoins. What would you do if 90% of your fortune is in bitcoins and the price started to drop?
The answer is that you’d probably buy some of those bitcoins and attempt to prop up the price. After all, you lose or gain $16,000 for every penny the price of Bitcoins goes up or down. Normally, this can be difficult. If I wanted to support the value of the dollar and it’s falling, I personally have limited affect on the market. Too many dollars are trading for me to really make a dent. Even the richest company in the world can’t affect the price of the dollar.
However, Bitcoin is more like penny stocks than dollars. The amount being traded is minuscule compared to the amount that’s being held off line. There are about 500 individuals who can greatly affect the price of Bitcoin by merely buying or selling their own stash. Even better than penny stocks, the buyer and seller are only known through their wallets. I could easily sell Bitcoins to myself. Take 10,000 bitcoins out of one wallet with a high Ask, and then buy them back — one wallet to another. The amount of real money you need to layout is minuscule, and the end results is that you’ve protected the value of your fortune.
Currently, there are many systemic problems that should be causing a panic in the Bitcoin market. One is the amount of transaction delays. If I spend a bitcoin, it takes an average of 43 minutes to confirm a bitcoin transaction. Imagine going into a store, and the store owner can’t be sure whether or not you own those bitcoins you’re using have already been spent or not. That store owner can’t tell until the next block in the blockchain is written. This is why there are many Bitcoin ATMs that will convert your dollars into bitcoins, but few that will convert your bitcoins into dollars. (https://www.ibtimes.com/bitcoins-big-problem-transaction-delays-renew-blockchain-debate-2330143)
Another is the brewing civil war in the bitcoin community. In order to be able to handle transactions faster, about 1/2 of the Bitcoin community wants to modify the blockchain. They want to make Bitcoin easier to use. The other 1/2 balk at the change believing it’s a conspiracy that will allow big banks to take over Bitcoins. (There is truth in this. Right now, the major banks want nothing to do with Bitcoin until the blockchain issues are resolved. Then, if they move in, it’s likely the banks will increase their influence over Bitcoin at the expense of the pioneers.)
So, Bitcoin is having major issues and is threatening to be split into two separate bitcoin currencies. Meanwhile, the ability to actually use bitcoins as a transfer mechanism is becoming more difficult as transaction times start to climb to one hour. And despite these issues that should have investors fleeing, the price of Bitcoin is actually going up.
Bitcoin is a opaque market where few people have absolute control over the entire market. Trading Bitcoins in these conditions is like playing the tables at Monte Carlo. The house has all of the advantages. The only difference between the two is that Monte Carlo is a much more transparent place with rules everyone can see.
Step 1: Get a bunch of people on Kickstarter to pay for a whole mess of little computers.
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Step 2: Set up those computers to mine bitcoins.
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Step 3: Profit!
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Sweet! Wish I’d thought of it! (And was dishonest enough to do it.)
Yawn…
cmon man, be cool.
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if it wasn’t for Roger losing his 99 bucks this blog would be as dead as the mineserver kickstarter.
I hear ya, brother. I’m tired too, after staying up nights wondering if the Mineservers will ever ship, where did the project go wrong, and what ever happened to Bob’s integrity.
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Hopefully, Cringely will address all this so that we can finally sleep at night.
Well, the way it went wrong is that Bob probably has a lot more than the 35K he raised sunk into the project.
Maybe he should offer partial refunds or a choice offer to ship the units in their current state anyway for those that still want them. Worst case you can wipe them and install your own Linux image and run Minecraft on them. Or a bit coin miner 🙂
Roger said “I’m tired too, after staying up nights wondering if the Mineservers will ever ship…”
Dude, if 99 bucks is keeping you up at nights, you might want to try a part time job…
If Cringely took just $99, I would agree with you. The reality is that he embezzled $35,452 from 388 individuals. This is more the difference between “he stole some groceries” vs. “he robbed the whole damned store.”
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I guarantee one is more likely to make the news than the other, but by all means, you feel free to continue to support Cringely’s crime since you have no vested interest in it. History is full of people who watched injustice unfold before them and stood idly by because it didn’t affect them or would be inconvenient to get involved. I, however, stand for justice whether I invested in the campaign or not because that just seems like the right thing to do.
This is the dumbest thing I’ve read all year that did not come out of the White House.
I hate to be a drama llama but I have to stop following your blog now. You’ve left me no choice. From now on every time I read something you write, no matter how intelligent it seems, I’ll be thinking, “Ah, he’s that numbskull who thought that a martingale trade on Bitcoin was a brilliant new idea,” and I’ll get a dull throbbing headache like the one I have now.
@syskill – but his process must be good! Bob actually quoted an expert by name. When was the last time that happened?
I thought the same when he said the Microsoft deal for Nokia was about money laundering. I asked some questions, he responded at first then went quiet. He was way out of his league.
That said, this doesn’t look like a martingale strategy as he is not adjusting on losses. He doesn’t even describe losses.
I’ve been reading this blog for several years now, and it suddenly seems that commentary has shifted to off topic conspiracy and denegration of the author, likely the cause of our current political climate.
…call it the Trump effect for now.
Lets please enjoy Bob’s writing for it’s unique and thought provoking content, and quit bashing!
Why is it that most comments are meant to bring the author down? I had always been taught that only those below you try to bring you down. For heavens sake, take the high road and comment on the topic, and you will find the rest of us considering you as intellectual equals.
Because they see him as a crook who stole their money.
Because he is a crook ! He’s a charlatan who’s taken $35K of other peoples money !
It’s not the lack of product that’s at issue, (which clearly isn’t even going to be delivered), it’s the fact this scumbag wont face up & acknowledge it !
He’s a a con artist, hypocritical piece of excrement !
@Dave:
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I’ve been reading Cringely for over 30 years. I used to be a big fan. The sudden shift has nothing to do with Trump (why must everything be about Trump these days?) and everything to do with the deliberate self-destruction of his own reputation as an honest and reliable tech journalist over the Miner-Server project.
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It’s not so much conspiracy and denigration meant to take the author down as it is acknowledgement of the messages he’s repeatedly sent to his previously loyal readers about his (apparent lack of) honesty and integrity.
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Unique and thought-provoking as it might be, Bob’s writing is worthless to me if it’s all bullshit, and every day that goes by while he avoids taking responsibility for his broken promises to his backers compounds the impression in my mind that his word is nothing more than useless bullshit.
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If we’re “off-topic” then so was Cringely the last time he promised in comments “More on that in a few days” (85 days ago, still unfulfilled). And I really don’t care what some stranger on the internet thinks of my intellect for expressing an opinion on the controversy. Assuming you do care, I couldn’t possibly consider you an intellectual equal until you demonstrate a fuller understanding of the issue you’re complaining about. After all, there’s nothing complicated about it.
I’m continually amazed at the posters who are okay with Cringely not giving a refund. Wouldn’t want to do business with any of you. Just wow…
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I’m totally fine with it.
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Could be because I never paid any money
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or given kickstarters dodgy history wouldn’t have invested in a child’s hardware offering.
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either way it’ll sort itself out in time and we can get back to prognosticating without distraction…
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“I’m totally fine with it.” . . . “Could be because I never paid any money”
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Translation: “I have no empathy and only care about myself.”
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“or given kickstarters dodgy history wouldn’t have invested in a child’s hardware offering.”
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While there have indeed been problems, I wouldn’t call Kickstarter “dodgy”. I’ve backed over 120 projects that were funded and, of those, only a handful failed to deliver at all (5). The project I ran was successful although some of the rewards went out a bit later (about a month) than originally planned (my life kinda fell apart at the time).
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As for a child’s hardware offering — well, you might have a point there. However, since you have to be 18 to start a project, I knew there had to be an adult involved (I would have said “responsible adult” but…) and, the fact that the adult involved was Cringely added credibility. I thought that, because it was backed by a well-known, even respected public figure with a very positive reputation, it would be a safe bet. After all, there was no way someone like Cringely would destroy his reputation over a matter of $35k, right? Little did I know…
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“either way it’ll sort itself out in time and we can get back to prognosticating without distraction…”
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See, here’s the thing. I thought that Cringely was a respectable person with credibility and a reputation on the line. I was wrong. Okay, so fool me once, shame on me, but fool me twice shame on you — I’m hoping that what reputation and credibility Cringely might have had previously is exposed as worthless so that the next time he tries something like this, others won’t make the same mistake.
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So to revist your initial comments, you see, even if I hadn’t lost any money to this crook, I would still care because I wouldn’t anyone else to get burned.
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Re: “so fool me once, shame on me, but fool me twice shame on you” should be “so fool me once, shame on you, but fool me twice shame on me.” BTW, thanks for the bonus entertainment!
@bobruub:
Like you, I never paid any money, and given kickstarters dodgy history wouldn’t have invested in a child’s hardware offering there either.
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But that doesn’t mean that I’m unsympathetic to those who rightly (imho) feel they’ve been scammed by someone they should have been able to trust, and does nothing to alleviate my appallment about the disgusting public behavior of someone I’ve admired for decades. So no, I’m definitely NOT totally fine with it.
Have you guys explored a class action lawsuit? Or is that not possible in the fine print when sending money to a Kickstarter?
@W Smith – Kickstarter requires that any legal actions be filed in New York state. Kickstarter has been notified numerous times by several of us and their only response has been that we should file a police report. As far as Kickstarter is concerned they have collected their fees and they don’t want anything else to do with this issue. Kickstarter isn’t even willing to place any indication on this project that there are problems with this creator.
You are mistaken about the venue. Re-read the legalese. Kickstarter requires that any legal actions against Kickstarter be filed in NY. They have no legal standing to choose a venue for conflicts between creators and backers or other third parties that don’t directly involve them as a named defendant.
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You’re absolutely right about Kickstarter’s attitude. It seems they’re perfectly content hosting a scammer’s paradise as long as they get their cut up front. If that attitude hasn’t killed ebay yet then what do they have to worry about?
Any trading strategy in an asset that rockets higher will tend to look good, but you should compare against buy and hold which would have bought 2000 bitcoin for $100 at $0.05 and sold them at $990.65 or $1.98M. Also there is a transaction cost of around 1% per trade which your strategy paid 31 times so your $21638.88 would be closer to $16000. So the +- 20% strategy makes less than 1% what buy and hold.would have made.
My strategy is to buy as much bitcoin as I can, and withdraw/spend 4% of it each year.
Please keep this idea just between us, since it may become less effective if everyone does it: Find a volatile commodity, that you can buy on margin or, if not then borrow as much as possible, place a buy order when it’s at a low, sell when it’s high enough that you feel you’ve made enough money. Don’t be too greedy, leave some for others.
Ronc,
The only problem with “Buy low and sell high” is that sometimes the thing that went low never recovers to a higher price . The business might fail, the thing might go out of favor or no longer be available, or the government might mess things up.
If it never recovers, it’s no longer volatile, one of the secret ingredients.
Nicely done.
Cringely U. ….let’s not stop at 35k …. I see millions… Have your girl call my girl !!!!!
Bitcoin currency trading gives me the same uneasy feeling as Linden Labs currency. I’m still waiting to see IBM’s windfall from investing millions in Second Life islands.
Well it created many videos of furries and Goreans roleplaying. I’m not sure how IBM intends to profit from them, though!
What if you dollar cost average, or save your money and just buy everytime it dips 20%? If it is not going to stay down, why sell at all?
Kiralık kaftan ile en özel gününüzü ışıl ışıl aydınlatabilirsiniz.
Very Good
http://bagdatkaftan.com/
Asshole
Yüzlerce çeşit kaftan modelleri ile sizlere hizmet vermekten mutluluk duymaktayız.
Kadıköy kaftan modelleri ile tüm İstanbul başta olmak üzere Türkiyenin dört bir yanından sipariş almaktayız.
• Kiralama yapacak müşteriler için beklentiye göre kaftan dikim hizmetimiz bulunmamaktadır. Diktirdiği kaftanı satın alacak müşterilerimiz için özel dikim yapmaktayız.
• Özel dikimlerde kumaş ve renk seçimi mümkün olmakla birlikte taş işlemeler, ithal olması nedeniyle portföydeki ürünler arasından seçilmelidir.
• Özel dikimlerde, yaklaşık bir aylık bir dikim süresine ihtiyaç duyulmaktadır.
http://bagdatkaftan.com/kaftanlar/
Interesting read about Bitcoin. It’s hard to put trust into anything “virtual” especially your financial well being.
Hello, surfing the internet I found this site that predicts the value of bitcoin in the short term, the successes in the predictions are amazing and it’s free.
http://ai21btc.blogspot.com.es/