Pay attention to later this week
The price did not begin to rise yesterday, as I suggested earlier. I'm not sure that is significant, however. Since yesterday was a weekend, there was no change in status by the companies bidding on this auction. Most probably haven't decided on a price yet.
By Wednesday, we'll know what the outcome is going to be. At that point, the auction companies will have an idea of what they are going to bid. If they feel they have to bid high, then short-term fluctuations aren't going to affect their decision, and they'll have told key employees what the price is so that they can draw up the paperwork. If, on the other hand, companies feel they can bid low, then there is no reason to come up with a price by Wednesday because their low bids will be heavily influenced by the current price.
If a high bid is in the works, then insiders will know about it and they will start buying up bitcoins on the markets before the auction day. For a low bid, of course, that won't happen. We should be able to know what is going to happen in the auction before it even begins. Therefore, if there is no significant movement by Thursday morning, then it might be a good idea to, at the very least, close your long positions if you are playing that game.
Remember, if things aren't following the expected pattern, then there is something that you don't know that the guys with the big money do know, and that should cause you to worry. The worst case is a huge drop with no news to explain it.
Nations buying up ASICs
One possibility that could come to pass in the future is that nations will buy ASICs simply to ensure that no other nation will be able to execute a 51% attack on bitcoins. While I would imagine banks running the majority of mining operations, the Chinese might decide to invest funds in obtaining ASICs simply to prevent American companies from having a majority of the hashpower outside of their borders.
Democracies would be unlikely to directly purchase ASICs, not only because it would be difficult to obtain agreement on such a purchase, but also because investment banks in those countries will already have control of a lot of mining power and that will be sufficient.
NXT: another casualty of altcoins
NXT is an altcoin that is a ground-up rewrite of the bitcoin protocol, with no code being retained between the two projects. That is in comparison with most altcoins, which take the bitcoin code and change a few parameters like the proof of work algorithm and the block time. If you have dealt with altcoin daemons, you'll know that there is an unbelievable amount of standardization in the market, from the RPC calls that can be made to the daemons down to the coin abbreviations (like FTC), which appear to be standardized across all exchanges.
Like many of the other projects around the community, NXT appears to be a dream that will likely never come to see wide success. The NXT forum is overrun with spam and nobody is replying to the legitimate posts. In December, a lot of excitement was generated by a post detailing how NXT would be distributed in January, but I never heard anything after that. The developers made the common mistake of issuing a huge press release before there was any product available. As we've seen with repeated posts in /r/bitcoin over Circle, such releases generate ill-will towards the company even before launch.
Development is generally an easy task
Speaking of NXT, one of the things I've learned recently is that development is a very easy task. This is important to know when one looks at trends in bitcoins.
Developers don't do things that are groundbreaking; the people around them do. For example, suppose that you were going to create a new altcoin with a different proof of work algorithm. Once the mathematician decides the algorithm is, implementing and debugging it is simple. Another example might be creating an exchange. Anyone can write an exchange; there is no risk of "failure" due to it being impossible to develop. Or, if you are developing a mining pool like I am, there is nothing that ever has had any risk of not finishing; it's just doing things that haven't been done in that way before. This is the case because computers are deterministic. You can predict with 100% certainty how the computer will act. The only question about spending enough time making it do that.
Once you understand this, you need to look at what the actual risks are to bitcoin projects, and that helps explain why there are so many failures. I don't know if there has ever been a project that was cancelled because the programmers discovered that it was impossible to program it. On the other hand, you do see projects that fail for reasons unrelated to development. Some altcoins fail because the developers argue with each other and steal the github keys (this happened recently to CryptCoin.) Projects like Circle might fail because it is impossible to comply with the law. The most common reason for failure is simply that nobody is interested in using the product. What all of these have in common is that they are people problems, and people are impossible to predict. And the reason they fail is because the developers focus too much on the technical aspects, without hiring anyone to deal with the factors that will actually make or break the project.
I was asked this weekend what the odds are that I can get the mining pool working, and I didn't know how to respond, because of course the pool will work given enough time. The correct questions the person should have asked are how many weekends it will take to get it to work, whether the profit potential is great enough, whether people would be interested in using it, whether we will be able to find a competent manager to deal with external issues so that we can develop, and so on.
If you evaluate software projects based upon whether they will "work," then you are not understanding the field correctly. When something like Circle appears, you need to judge not based on technical indicators, but upon difficult-to-predict human factors. A project's success is determined more by marketing, timing, and being able to figure out if someone wants to use it, not because it is impossible to get working.
Other
- Days until the auction: 4
- Days until July 24: 31