Holy Cow...

And on Christmas day 2013...  Litecoin eclipsed Bitcoin in trade volume.

Here is a visualization of all cryptocurrencies in play and how their trade volume compares (as of a few minutes ago):

If this is a sign of things to come, 2014 might be the year of Litecoin and derivatives.  A move away from SHA based coins and towards Scrypt based coins.

Oh, and in other news, I'm assembling a Pearltree of cryptocurrency tools and information located here:

http://pear.ly/cB_Vn

Check it out, its got a few goodies in there already.

Lottocoin, and weird stuff...

Alright, good to my word, on Saturday night I switched my mining operation over to LottoCoin.  It had a catchy gimmick (the coin that is also a game), so I thought I'd give it a go.  For the time being, its mostly a game for miners.  The payout for a block is quasi-randomized and the difficulty is non-linear - so anyone mining might get lucky and see a big payday.

No idea how that's going to pan out yet... but I'll keep you informed.

And now on to the weird stuff.

Its interesting, as I've gotten into mining and trading bitcoins, I am frequently witnessing real world applications of hacking that have some value beyond just attacking something.

For example - when Lottocoin first launched, it became clear that to insure a regular pay off, was to join a mining pool.  You can certainly mine solo, but since the payouts are all over the place its pure gamble as to the pay off.

With that said, there were some that wanted more time solo mining before the pools really started chewing away at both the profits and the difficulty.  So what did they do?  A massive DDOS (distributed denial of service) attack.  Why would they do such a thing?  Because if the mining pool servers could be kept offline, they would have a much better shot at mining new blocks (before the pool beat them to it, and their block was orphaned).

Anyway, it seems like some new piece of news about applied hacking almost every day in the cryptoscene.  It sure makes for interesting reading....  and highly volatile markets.  LOL

That's it for now.

Upside down and shut out...

Last night taught me a valuable lesson.

Since I don't have a lot of resources in the game, I've been playing the smaller coins (litecoin and namecoin in particular). I was focusing only on making my bitcoins grow and kind of ignoring the cash out value of bitcoin.

So when the rally on bitcoin began last night, I wasn't paying attention and I had my resources tied up in light coin.  Anyway, everyone tried to liquidate their litecoins as quickly as possible to get bitcoin to capitalize on the rise.  Anyway, it fell so far, I couldn't liquidate without eating a loss larger than I wanted.  (Though had I acted immediately, I probably could have come out ahead).  So I waited, adhering to the wisdom, "buy low, sell high."  But what if the high you need to turn a profit never comes?  And still I wait.

The irony is - I'd only be losing a couple of hundredths of a bitcoin, but still it chafes to have been caught upside down and locked out of benefiting from the bitcoin rally.

So what are the take away lessons here?  No matter what coin you're trading in, pay attention to bitcoin, if it starts to rally everyone is going to liquidate to get back to bitcoin.  And if you see it happening, you liquidate too before the value drops and you get caught upside down.  Patience may win out in the end, but there would have been much more profit in acting.

Ah well, I'm new at all this.  Lesson learned.  :)  If it ever looks like I'm going to be caught upside down again, I'll get out as close as I can to my buy in as possible and then set a high buyout price on the bitcoin side.  Because, as it turns out, he who hesitates really is lost.

The saddest part is...  the margin in trades had become so stretched out and taught, I knew something was about to happen.  I could feel it...  but instead of parking my coins as instinct warned me...  oh no no, I had to ignore my gut.  Same mistake I've been making my whole life.

Playing the market...

Alright - a quick catch up.

So I started this whole thing by applying for a coinbase account, falling into the ideology, I'll buy some coins mentality.  So this set off the long, slow process of getting a coinbase account.  This has taken so long, that the bubble burst before I could even get started.

Son, I am disappoint.

However, when I started researching mining and landed on the Doge coin as a low difficulty coin that I could realistically mine using my hardware.  Of course from then to now, the difficulty has been mounting at the same time that the mining pools have increased fees, and tightened up their reward schedules.  So day by day I produce less and less.  When I started I was getting about 10000 doge coins a day, that has dropped to about 1000 inside of 2 weeks.  For those who like the math speak, I've lost an order of magnitude of production power in a week.  Ouch.

So one of the things I'm going to do this weekend (and through the holidays) is pick a new coin.  I haven't quite decided what I will try (it will depend on the ability to liquidate) but I need something back in bounds with my hardware.  And while I thought my radeon card was relatively decent, it turns out that its actually pretty weak.  Funny, it pushes 3D games like a bastard maniac but when it comes to hash rates - it ain't all that.

Back to the point - buying bitcoins isn't the only way in.  In mining coins and selling them for bitcoins, I've scraped up enough to start playing the market.  It's a tiny little amount, about $15 dollars worth.  (Funny to consider that the amount I have now WAS worth nearly $40 before the bubble burst).  Here's the kicker - the fall off rate vs. the decline in bitcoin value has lowered my production rate to $1 worth bitcoin per $1 worth electricity.  Funny how that works, huh?  (Understand, I quantify this based on the production of Doge coins...  $1 worth of bitcoins = $1 worth of electricity mining doge coins.  For now, if the trend continues, I'll be losing money on mining inside a week.  The rate was obviously better when I was producing 10000 dpge coins a day and the price of bitcoins was higher.  But for the time being, I'm breaking even on the mining side.

But that is production...  on the trading side I've increased my original amount of bitcoins, 0.00833, up to 0.02339.  And that sounds like little tiny amounts.  But lets sick the math on it...  that's about a 36% growth rate.  So the amount I have in play is growing faster than I'm mining.  That's the right direction!

I know, I know - a measly 36%?  Compare that to you average savings account at 0.21%.  So - suck it.  LOL

Anyway, one of the things working in my favor is that I'm a spreadsheet badass from years at my job.  And I could probably push it harder - but I'm still cautious since I'm just learning the ropes.  But it is nice to be able to calculate my values and targets and graph out my growth rate,   I was aiming for 35%, and the 1% variance comes from continued mining.  Honestly though - to get much past 40% I'd have to have more time to babysit my trades and track charts, and since I'm a working class schmo, that's not realistic.  But the upside is - as the amount I have in play continues to grow - that 35% will become increasingly meaningful.

But since there are no guarantees in the trading game, I'm sure not going all in with my own money.  So that's the reason why I'm mining and flipping.  The only overhead is $1.25 a day in electricity.  (One of the advantages of having a kind of crappy video card...  it doesn't suck a lot of juice.  LOL).  And the metric I'm working in is bitcoins (not dollars) because I have no desire to cash out because that accomplishes 2 things.  1)  It takes me out of the trading game.  And 2) The second your coins turn into cash - you have to mind your taxes.

Anyway, tomorrow I'll be picking my new coin (criteria: relatively new, lower difficulty and a fledgling market) and redirecting my mining effort.  I'm sorry to see the Doge go, but it has been both fun and educational.  Playing with them has taught me to mine, and having coins has allowed me to learn the basics of trading.  And since I can get back to bitcoins and cash out through coinbase.com, I have an exit method.  So all is well, and the game is working.

That's it for now.

PS.  I'd like to welcome my new readers from Switzerland, Poland, Austria, Estonia, Albania, Canada, and the UK.  :)

Nevermind....

Looks like all the cryptocurrencies were sucked dry overnight.  And it all revolves around China.

If these things are decentralized...   how is it a single country is wrecking it for the entire planet?  Sure they're 1.3 billion people strong....  but the rest of the planet is 5.7 billion. What the Hell?

How I roll...

So in one of my earlier blogs, I extolled the value of namecoin (that it had infrastructure value, and not just speculation value).  So when all the bitcoin chaos began, I slid my little fraction of a bitcoin over into namecoin and parked it.  Just left it alone since I know Mondays are the absolute worst day for trading cryptocurrency.  (Run back the charts and have a look...  you'll see.  So if you move on a Monday, you get what you get).

Anyway, while the bitcoin charts look like this:

The namecoin chart looks like this:

There are differences between these 2 charts.  The first one is BTC/USD while the second is NMC/BTC.

So, my namecoins are gaining against the bitcoin, as bitcoin loses against the dollar (and I figured it would play out that way because worse case scenario, the people snatching up Namecoins are buying namespace in a cryptologically secured .bit domain).  But if you'll recall, I believe that bitcoin will rebound on Friday.  So the more bitcoins I can get with my namecoins before it flipflops is more for me.  :D

Of course I've only been moving things around between cryptocurrencies.  See, I got the "money" to buy my bitcoins by mining Doge coins.  So until I cash out, I've neither spent nor earned any money. Which means...  no taxes.  It's all virtual crap until it turns into dollars.  And its only when it becomes cash that its taxable income.  So as long as I keep working it and flipping it, it just fluff.  Funny money.

Anyway, I've spent about $5 in electricity mining Doge coins.  And my little portfolio of nonsense would have a cash out value of about $30. LOL  How hard do I work at it.  My computer mines while I sleep and while I work.  ANd I move my coins around through various currencies and back and forth between exchanges (doing a little arbitrage).  But in the end, just like I said at the very beginning - its all a game to me.

It really hasn't cost me much of anything, but it sure has been fun and educational.  Edutainment.

Oh, and since I brought up my old pal the Doge coin, how is it doing against the bitcoin?  Hmmm...

Also gaining against the bitcoin.  :D  Ah, good times.  Bitcoin gets all the news, makes people go ooo and ah...  or god damn it.  While the little piddly coins keep on keeping on.  But its like Public Enemy said way back in the '80s.  Don't believe the hype.

Free falling: Bitcoin takes a pounding.

Wow, watch that bitcoin drop!  LOL    Express elevator to Hell...  going down.

I'm free...  free falling...

As to why, I've seen so many conjectures coming from mainstream news mostly based on information that is 10 days old.  If you know anything about the rate at which cryptocurrency responds and rebounds from news...  10 day old news is ancient history.

As for why its happening, there are (I think) 2 major factors.

The first is the heist on the Sheep Market.  I really liked this article on the topic - well written, and exciting.

Another factor is that coinbase.com lost liquidity on Friday and was unable to do provide their usual corn purchase function.  Their website states they will resume buying this Friday.  The reason I think this is important is that coinbase brings over $160 million dollars to market.  Their activity has served to stabilize and keep prices fixed.  Without them in the market to offset the chaos...  this fall has been larger than usual.  But I suspect that bitcoin will be back above $800 by Friday.

I guess time will tell.

So robbed....

For those who haven't been following this blog - I've been mining dogecoin this weekend.

Anyway, the pool I was mining with is (was?) called luckyminer.  Anyway, they were hacked last night and someone from Spain made off with over 54 million dogecoins.

So what does that amount to in real money?

Dogecoin has been going on average for 0.00000055 coins.  So

54271654.44546228 DOGE * 0.00000055 Bitcoin = 29.849409945 Bitcoin

And

29.849409945 Bitcoin * $876.83 = $26172.86

So someone made over $26,000 overnight hacking.  I have to say - that's quite a haul for 1 night's work.

The pool operator described it like this:

At 21:06:03 (09:06:03pm) someone from IP 147.83.175.33 broke into the system, used the problems the server had with its own database.
He came through the Servers ISP Config and transferred all of the Doge, the system had stored for its miners (who had not enabled auto-payout + waiting for transfer) to his Wallet

DHqLa4Z9iQyBZgtPP2oR9tMVPDVzzBBJST

http://dogechain.info/address/DHqLa4Z9iQyBZgtPP2oR9tMVPDVzzBBJST

I think it was nice of him to take the heat, and to provide the IP address, wallet and chain information on the coins. I think it will win him a lot of foregiveness because it shares the trail of bread crumbs and people can verify that something shitty happened.

Anyway.  Myself, I lost about $3000 dogecoin in the attack.  But if you're supposed to tithe 10%, well then, I guess god just took what was his.  LOL  Since I'm doing all of this for a lark anyway, I just find the whole thing interesting.  Or in doge:

Wow.  Such hacking.  Much theft.  Many doges. Wow.

OF course, I wonder what impact all of this will have on namecoin?  If this pool's domain had been secured via namecoin instead of the typical ICANN method...  would it have been hacked?  Hell if I know.  :)

NEWSFLASH:

The reddit thread was homing in on the hacker so fast - I can only guess he went into panic mode, since he gifted the entire amount back to the pool operator.  So if you have coins with luckyminer, sign in and cash them out.

The Dodgey Dogey

Watching the whole dogecoin thing go down, I have to say - cryptocurrencies are a dog eat dog thing.  LOL

Since this silly little coin took off, bouyed by meme power, I've seen some thing.  For example the coinedup.com exchange keeps getting hammered.  I don't know if this is due to sheer volume or cyber attacks.  (After all the crypto crowd would be very capable).  I've also watched ridiculous exchanges like 0.00000001 dogecoin sold for 5 bitcoin.  And I don't know what that was all about.  As I see it, it could be one of 3 things.

1)  Someone is using this fledgling currency to launder bitcoin.  Receiving them through an exchange as the purchase price for dogecoin.  So instead of directly receiving the bitcoins for the service or goods - they're instead having the person on the other end by a ridiculously priced dogecoin.

2)  Since coined charges nothing for trades, they could also have been trying to give the other markets the end around - bypassing the fees they would have been charged on other exchanges.

or

3)  There are people posting sky high prices, then buying them themselves - this cost them nothing, but wrecks the grandularity of the charts, making it difficult to access real time value.

Very dodgey on the dogey.  Bad shibes!

In other news - the dodgecoin mining pool I joined (luckyminers) seems to be having some problems this morning.  Either something has gone amiss, or we're currently mining the worst block ever.  On the other hand, I'm new to mining and maybe bad blocks are a result of increasing difficulty.  After all, when I started the difficulty was 17 and now its up to 32.  But the block I mine keep getting rejected on divide by 0 errors.  Just not sure what's up.  Hopefully it stabilizes or I may need to find a new pool.  I'll give it a while.

Anyway, I guess many of the outages and problems revolve around the sheer volume of work generates by such a silly meme.  It's been a fun ride though.  :)  What I can say is - I'm glad it retained its value over night.  Such staying power.  Many value.

PS.  Word on the ground is that dogecoin is being implemented on chinese exchange site (for direct purchase with the yuan).  If that turns out to be true and sees the usual impact of the asian market... this thing might actually take off.  Time will tell though - all I have seen is a picture of chinese site that someone poked at and found this...

Dogecoin: So pow. Such to the moon. Wow. Many Profits.

Such profits...

So to the moon...

Wow.

much dogecoin, wow

So a friend of mine was asking me about mining bitcoin.  While I was looking at cloud mining, his enquiry made me take a look at solo and farm mining.

Anyway, I ran a miner for a bit trying it on bitcoin.  Suffice it to say (as is already known) that the difficulty is so high, its highly unlikely you'll find a block.  And with the sheer amount of processing power some people and groups are throwing at it, even if you join a farm its hard to get shares.

So I remembered, diversity is good.  And as irony would have it, about the same time I was applying the doge meme to namecoin in my last entry - someone was had released a new currency called dogecoin less than 48 hours before.  I find this interesting.  When you consider fiat currencies, its their nation that backs them - but beyond that, it is belief that it has value.  So if you look at the US dollar, it's obviously emblazoned with, "In God We Trust."

So that got me thinking - that's a meme.  And dogecoin is backed by the power of a meme.  Sure, the God meme is long enduring with a large chunk of the world population who follow.  Since the doge meme is going viral and will easily hit millions - I figured, what the Hell.  I'll mine that shit.  Though, my machine is weak - so I'm relying on the mining pool and shares approach to get smaller slices of the pie at a faster pace.

If you want to follow me, I joined the luckyminers doge pool.  Bring much hash.  So crunchy,  Many block.  Such profit.  Wow.

While the coin itself has little traction, the community is so silly an entertaining I've lost so much time to it  LOL  But little doesn't mean none.  There is obviously the coinedup exchange I already mentioned.  There are also forums where exchanges are occuring.  Also, places where you can buy real goods.  And someone out there is selling real Shiba inus (dogs) for dogecoin.  I kid you not.  Heck, you can even buy dogecoins on ebay.

Meanwhile - things to consider.  Is dogecoin decentralized?  Yes.  Does it have any utility value beyond being an exchange veseel?  No (as opposed to namecoin for example).  Can you cash it out?  In a round about arbitrage kind of way - yes you can.  You can use coinedup.com to convert to bitcoin or litecoin.  And you can send either of those coins to another exchange to liquidate them.

So you can go:  Dogecoin -> Bitcoin -> Exhange-> Cash.
Or:  Dogecoin -> Litecoin -> Exchange -> Cash.

And when you're fiddling with these cryptocurrencies you always want to know how they're trading - so here's much chart.

Anyway, I thought I'd catch you up on my current cryptocurrency hijinks.

And since dogecoin is still relatively easy to come by...  feel free to send me a donation for turning you on to the dogecoin shuffle and it memetic goodness.

Send dogecoins here:  DJMjXchP7bfQxH9ykqRCYnEXw6qTZSu8sY

Milestones and exploration...

I obviously took a day off from blogging yesterday.  Yay me!   :)

So to bring you up to speed.  If you've been reading along, you know that I've been working on getting an cloud based wallet and setting up a means to purchase coins.  As of yesterday my account finally reached the point where I can "instabuy" up to 10 coins.  And the instabuy/sell functionality keeps with that whole real time motif I started with.  To be able to flip back and forth between coins and cash quickly.  To perform the old in out as it were. LOL

With regards to Mt.Gox, as I've read more and came up to speed on the exchanges.  I think I chose poorly and plan to start the application process with BTC-E (and chime in if you have an opinion - I'm still evaluating).  And the reason for this is that the BTC-E exchange is both here on American soil and allows the buying and selling of a range of crytocurrencies (instead of just bitcoin).  My concern about Mt.Gox is that it has been plagued with issued sending money to America in the last year (as well as being attacked, having accounts seized and being robbed).  That worries me.

The importance of the alternate coins came to light as I looked into cloud mining (costly) and ways to use my hardware and join a mining pool.  I wouldn't be able to earn squat solo mining.  And am highly dubious that I produce enough processing power to do very well at pool mining either.  BUT, as I explored the topic of mining, I discovered that namecoin derives its algorithm from bitcoin, and can be performed concurrently with bitcoin.  (So 1 mining ring can mine 2 types of coin.  Some are likening bitcoins to cybergold, and namecoins to cyber-silver.)  Since mining started at different times, the difficulty for solving (mining) namecoins is much lower than bitcoins.  So if you join a pool that is dual mining bitcoin and namecoin to get the most out of the available hardware...  you're going to earn more namecoins than bitcoins.  And you want to be able to cash those out too... right?  So... an exchange that supports multiple cryptocurrencies becomes a must.  So that's the next prong of my attack.  To finish up my research on the current exchanges and pick one that keeps my fiat transactions on american soil - so that when currency is going in or coming out, it remains within the laws of my native country.  (I think this is wise).

With regards to mining - ultimately, I don't know if that will be worth it.  But it did open my eyes to namecoin and I have to say...  what they are and what they're used for is pretty interesting.

And along with the namecoins, there's a whole assortment of new types.  And in mainstream news, even J. P. Morgan is currently patenting what they're calling the bitcoin killer - that mirrors its operation but never mentions it.  So American bank is planning to roll out their own currency.  And of course Amazon has launched their own (called simply Coins).

This lead to a greater realization.  While some are heralding these coins as "the next big thing in currency," what is actually happening is that it is opening the door for corporations to create their own currencies.  And if an avalanche of new cryptocurrencies emerge, it won't lead to earnings.  It will lead to the fragmentation of fiat currencies into separate corporate silos.  (As you buy in).  And they will make it so that you can shop nowhere else...  all your buying power held hostage within their store.  So beware of centralized cryptocurrencies.  They may be a trap - and there will be no way out with your money.  Of course, I also may just be paranoid.  But in the age of hypergreed...  I think you can agree, this concern isn't wholly unrealistic.  Not mention, the world simply can't support the number of emerging coins.  There is no infrastructure for it - and if multiple coins compete, support/development is going to go sideways all over the place.  There is a tolerance that if exceeded will destroy the whole thing.  And if that leads to cybercrime that get people robbed...  the immediate collapse of trust will end it.

So when evaluating coins (like you were building a diversified portfolio), you should ask yourself 2 things.  What is the purpose of the coin, and if I buy in...  can I get out?

And I bring up purpose to get back briefly to namecoin.  Is it centralized?  No.  What is its purpose?  It can be used as an alternate form of DNS that is outside of ICANN control.  And in this age of the TOR network and the deep web, I think its safe to say that encrypted domain names that can't be shut down will have value.  If someone manages to trace through the TOR network to reveal a host's domain name, they hit an unregistered wall of encryption instead.

And can you sell them off (if you don't want to use them for their designed purpose yourself)?  Yes you can.  So beyond cryptology, there is also utility and sellability.

So if I ever successfully mine a namecoin, you'll know I minted it if you check the embedded text. It will say:

Rule of Acquisition 9:  Opportunity plus instinct equals profit.

or maybe

Rule of Acquisition 10:  Greed is Eternal

I haven't quite decided.

Note:  I oversold namecoin a bit.  It isn't unregistered, but it is registered in a decentralized way.  So no individual source holds the registry data.

Curioser and curioser...

I watched a Youtube video bashing bitcoin, it spoke of how things that actually have real value are either indestructible (like precious metals) or barterable (like food stuff or crafted items).  And while I do not deny that those things have more intrinsic value than either fiat currencies or bitcoin, I have to say that bitcoin is more durable than fiat currencies.  [And yes, I realize the video is dubious at best, but it did give me food for thought.]

Follow me here.  A national fiat currency (like the American dollar, the Euro, the Yuan, etc), has value only so long as the nation that backs it exists.  So, for example, when the North beat the South in the American civil war - the Confederate states collapsed, and the Confederate dollar became worthless.  And if you dig back through history you'll see it over and over...  when a national fails, its fiat currency fails.  It has no existence independent of its backing nation.

Bitcoin on the other hand, is decentralized and non-national.  No individual nation backs it.  And if a nation collapses and its native currency becomes worthless - bitcoin will go right on about its business.  So in the range from matter that can be subdivided to the atom (hence "indestructable") to nationally backed fiat currencies...  I think bitcoin is more durable than fiat currencies.

Here's an example:

A guy knows his country is going to collapse and buys all the bitcoins he can before his fiat currency becomes worthless.  If he can escape his collapsed country and make it to a stable one...  he can cash in his bitcoins for their currency and be back in business.  The buying power of the bitcoin would outlive his country and continue to have value, even if the currency he used to buy it ceased to exist. And why?  It's decentralized and non-national.  No nation owns it, and no single nation backs it.  Its independent of them.

So as long as it is used and exists in cyberspace - it has worth, and can conjure your money back from the ether even past the end of your nation.  Sounds pretty durable to me.   (I won't say indestructible - all the software and infrastructure must be in place.  But since the internet was designed to survive and route around a nuclear attack...  I can say nigh indestructible and feel pretty secure about it.)

What it is...

I've been pondering the basic question, what is bitcoin?  And the conclusion I've come to is that its not what people think it is.

From a programming perspective, a bitcoin is an object (a data object) that represents a unit of buying power.  And its real value (conversion rate) depends on the goods it can purchase.  People buy X number of coins with Y conversion rate to buy goods of Z value at the other end.  And as long as the conversion rate is relatively stable the seller gets their money (more or less based on conversion).  Its an objectification of currency - a vessel of buying power.

So everyone is attributing the current decline in bitcoin value with the Chinese banks pulling out (when that was part of it, sure) I think its was Baidu (which sells real world goods for bitcoin) could no longer accept bitcoins that did the most to vaporize their value.  If you can't buy things with it - how valuable is it?  And so that closing access to what was the premiere bitcoin store ripped that value out from under it.

As irony would have it, bitcoin has been the currency of the deep web for questionable goods and services for years now.  So this move has basically forced it back underground.  With that said - because there are still things you can buy with it that have value...  it will not completely crash.  In essence they have just crashed the fledgling white market, while the black market goes on.

That doesn't sound very wise, does it?

In retrospect...

While yesterday I was lamenting my inability to buy bitcoins as the market fell.  Today, I'm kind of glad of it since there were many false bottoms, and I don't think we're seen the real bottom yet.

So why did (is) the market falling?  The Chinese government came out against allowing their banks to speculate on bitcoin, and it was the Chinese banks (in large part, since they invested so heavily) that caused and persistently inflated the bubble.  So, now that they're pulling out and liquidating their coins, the bubble is bursting.  And of course the slide, has urged other speculating banks out too.  After all, banks aren't in the business of losing money by betting on a currency that is losing value - are they?

If bitcoins resumes its original trend before pump and dump mania hit from the speculative market...  it may well wind up at about $400 USD per coin.  I arrive at that estimate by inserting a regression line while ignoring the bubble.  About $400 a coin is where it would have been without the speculation bubble.

With that said - I think it has further to fall and we won't see how things shake out until about 5-6 days after the slide started.  So I guess we'll see the shape of things to come by next Wednesday. (12/11/13  or if you're in Europe, 11/12/13.  LOL).

In truth I suspect it'll wind up a bit higher than $400 since a lot of coins will go into "cold storage" and won't be in circulation.  So that will decrease the supply as the demand returns to a more stable and realistic state.  There's a conversion point between supply and demand - and hoarding will drive that up a bit.  If were to guess where it will stop...  my gut (and some calculations) suggest $535ish.

Oh!  And never forget...  this is all thought exercise for me.  So I could be wrong, wrong, wrong!

Resource Denial...

Seeing how low bitcoin fell today, I'm feeling frustrated since I can't buy.  My coinbase account on stop until my 1st purchase clears (days to go).  And my mt.gox application is still pending 5 days later.

So if I continue comparing buying bitcoins to Starcraft, right now...  the zerg are in my base killing my SCVs and I can't collect any resources.

Oh well, as I've said in my first 2 entries, getting going is time consuming.  Though right now, I'm envying those who snatched up coins when they fell to $801 earlier. That will probably yield some serious profit.

Side note:  I find it interesting that banks are banning bitcoin, which is driving down the price.  Why?  Because if people cash out to fiat currency, where do they put it?  In the bank.  Ie., they want your money. They want it to be static and in their clutches.  So in scaring you off bitcoin, they're scaring you into their clutches.

Building the base...

Since I liked the idea of comparing the whole process of being able to buy and sell bitcoins at real time to a real time strategy game (RTS), I'm going to continue with that analogy.

If you are familiar with RTS games (and even if you're not), one of the first concept you will learn is the build order.  The order in which you build structures to establish your economy and build your army.  And as I mentioned at the last entry - building our economy is what we're about in The House of Bitjamins.

So, Build order.  What comes first?  Well, you have to be able to store bitcoins to have bitcoins right?  And how does one store bitcoins?  In a bitcoin wallet.  So many articles have been written on this, I'm not going to whip that particular dead horse.  There are multiple ways to accomplish this - but since I want real time access to the market I needed a wallet that went with me anywhere.  This lead me to research cloud based wallets, and I landed on coinbase.com.  (Its located here in the good ol US of A.  I thought that important as part of my exit strategy...  when pulling out, you want your currency to land on American soil (if you're American) right?  Why?  A legal change in another country can affect you since the bitcoin market is global - so you need a way to get your currency onto home turf and the laws of your land.

This decision is part of what is making the process slower.  But what good is money if you can't take it with you?  And if the market you play is high risk, what kind of fool are you if you can't act when you need to?  So real time and mobile.  In my opinion, those are musts.  And since coinbase provides a buy and sell service - then you have a place to move your coins and an alternate means to liquidate if something goes sideways with mt.gox (the premiere bitcoin market).

So yes, that is my first "building" in my real time strategy.  A wallet and a means to buy and sell the coins that is independent of the primary market (in real time).  Before you enter risky terrain, you should always have an exit strategy.  Right?  Since you're playing with real money - you want a way out if things go sideways don't you?  So the first thing you build is your exit strategy.

Having a local wallet is all well and good - but the way I'm going, my wallet comes with me and I have access to an alternate market.  2 birds with 1 stone.  Mmmm...  can't you sense the efficiency already?  It has a longer build time, but more diverse functionality.  Worth the wait.

With regards to security - I recommend a 2 step authentication method.  Whether you use a physical key like yubikeys or a software authenticator like google's OTP - I think its wise to put a 2nd layer of autentication that requires action from you is wise.  Hell, maybe beyond wise.  This stuff adds complexity sure - but it would prevent something ridiculous from happening like losing your phone and getting your coins robbed.  And requires 2nd tier authentification if anyone tries to log in to your account from an untrusted machine.  Part of a good exit strategy is to cover your ass, right?  To liken it to starcraft again - this is walling off the entrance to your base.  You don't want zerglings (malware, spyware and trojans) rushing in and fucking up your shit, do you?

On the other prong of the attack, I'm working on setting up my mt.gox account. A process that can take 10 days (possibly longer depending on identify validation).

So everything is slow in opening game.  Its base construction and pumping out those first units.  And here - at the end of my opening game - I should have a wallet, a backup means to buy and sell and access to the primary market and be able to interact with them in real time.

And yes I'm intentionally vague on some of this because remember what I said in my very first entry?  *YOU* have to want it.  Me describing it all in fine detail is tedious - and why would you want to read something tedious about doing something tedious?  Better to roll up your sleeves and dive in.  The sooner you start, the sooner you finish and then its behind you.  And you can get on to the mid game.  Hmm - maybe I should be comparing this to chess?  But no - chess is turn based, not real time.  So the analogy would begin to break down after the opening.

What is the moral of the story so far?  Don't assume you can see an bitcoin opportunity and just jump in - it won't work.  You'll miss the opportunity trying to enable the ability to buy.    And what you hoped would be instant will take days.  And that brings us full circle about the emphasis I've continually put on real time doesn't it?

Speaking of opportunities - I picked up a whopping .05 bitcoins this morning @ $920/coin.  Alas, since this is part of gaining 2nd tier access to coinbase, the coins won't be deposited into my wallet until next wednesday and I have to hold them 30 days to finish the process.  So who knows if this will have been a good deal in 30 days - but no matter how you slice it, I've made progress (and $.05 bitcoins at that time was a whopping $46).  And in a weird slo mo escrow kind of way - I'm in the game.  A 1 week delayed, 30 day til liquid kind of way.

Tomorrow will make day 7 since I started the mt.gox application process.  With a little luck, that'll be available to me by Monday.  I'll keep you apprised.  Slowly but surely, things will start heating up.  Mark my words.  So bear with me in the "slow and steady wins the race" part of my build.

Don't hate the player...

Alright, new topic new blog.

So, I've decided to play with bitcoins.  I know, I know...  *gasp* he wants bitcoins, he must have something dubious in mind.  But no, that's not the case, I want to work it like a day trader.  And the thing that makes actual day trading unrealistic is that I work during the day.  So bitcoin, the market is open 24/7 and you can play it any time.  So even a person with a "day job" can play.

The reality is - I'm an aging man who doesn't like the speed with which his personal worth is growing following the procedure.  What is the procedure?  Oh, you know it.  Wake up, go work, earn a wage, watch as inflation slowly erodes away at it until your buying power is so low and cost of living increases nonexistent that both sides are crushing the middle (me).  I'm so very tired of that.  And so, I'm going to war.

So what have I found out so far as I've tried to get into the game?  There are a lot of hurdles to jump, just to get your foot in the door.  So you REALLY have to want to it.  It may take days or even more than a week to get all your details sorted.  Though you could start faster-ish.  But on the buy method I've come closest to working so far - doing it that way leaves you with a 30 day wait.  And bitcoin changes value at such a pace, 30 days is WAY too long.

So I'm playing the the opening of my game carefully - working out all the details to make my buys and sells as close to real time as possible.  And why is real time is important?  In a word, volatility.  Bitcoin is highly volatile and you must be fast and nimble when it comes to reaction time.  Beating around the bush can either gain you, or lose you a small fortune.

This notion of fast and nimble lead me to do some investigating and I've learned some interesting things.  Like, not all banks are real time.  I fear I'm going to find that mine isn't real time - but I'll cross that bridge when I come to it.  But if you hope to make money and get it back home so that everything is fast and smooth...  you have to have all the right ducks in a row.

And that's what I mean by, you have to want it.  To be a player and get up to something resembling real time, you have to jump through those hoops.  The authentications, the identification, the payment info and allow for validation time.  As I mentioned, I've been at it for days (5 days at the moment) but I'm not there yet.  So yeah - expect a few more days at least (10 is probably a realistic estimate of how long it will all take.  Possibly more if anything goes wrong).

So if you've ever played real time strategy games (RTS) - this is like building your base.  You have to lay it out correctly for optimal production.  So don't skimp on your build.  Like Starcraft for example - you start with your command center, and then construct the right buildings in sequence to assemble the army you want to build.  Doing it right makes you fast and efficient and improves your economy.  And that's what we're all about here in the House of Bitjamins - improving our economy.

Anyway, until I have more to report....