A few thoughts - Monday, April 21, 2014

[Steve Sokolowski]

Some thoughts for today:

1. With the volatility of bitcoins, you can almost always make money as long as you don't have a timeframe. The algorithm, which I've used successfully on paper, is to buy right after a huge panic, catching the falling knife. Then you simply wait and be very patient, selling when the price rises enough so that you make a 5% profit after taxes. If the price falls further, just hold and wait until it rises again to the 5%, because it always has. There has yet to be a case where this is a losing strategy because bitcoins have always regained losses after these panics. It takes patience, however, because it could be hours, or weeks, until you actually sell. If you follow this strategy, get impatient, and sell out because you think you can buy back in lower, you'll lose money.

2. I'm going to hold off on altcoin updates for the next few days. I discovered on Saturday that, while mining is profitable now, designed hard forks also occur frequently in altcoins, making it very time-consuming to stay up to date with the latest versions of the daemons. Good thing I figured it out now.

3. The best thing about the pool is that we have, at one-minute granularity: difficulties, prices, block rewards, expected payouts per 1Mh, number of miners, and several other metrics for 40 altcoins of scrypt, SHA-256, and others, with a greater number of coins to come. The data is collected for the algorithm that assigns the proportion of pool miners to each coin. However, this data is useful for more than just assigning proportions of the hashrate to coins. It must be useful for trading decisions and even for development activities. I'm interested in people's thoughts as to what sort of charts showing correlations between all this data would be useful to people here. For example, there are some interesting correlations I don't think people have tried, like litecoin difficulty vs bitcoin price, expected payouts of scrypt coins vs bitcoin price, or number of altcoins listed on Cryptsy vs. bitcoin price. I'll choose some ideas and create graphs of the most useful data that are live-updated on the charts pages.

4. As I predicted on Friday, nothing changed until Sunday night. As such, I didn't make a post yesterday because there was nothing to talk about. This place is a ghost town on weekends, which is strange because it's when you would think people have more time to post.

5. I think people should be cautious about these stories about bitcoin "entrepreneurs" entering the industry. There are always people who want to call themselves entrepreneurs and never actually finish a product. What convinced me that this idea of a flood of entrepreneurs is misleading is when I found out that Andreas Antonopolous, perhaps the most recognized face in bitcoins, was unable to make any money on bitcoins for two years and only recently has been paid full-time. If he couldn't find contracts, then few people are going to work full-time on bitcoins and leave a well-paying job in some other field.