5 ms·

> you will make a sizable fraction of the maximum, no matter how far or near it will go That won't be true if the price goes high enough. By realistic counter

> you will make a sizable fraction of the maximum, no matter how far or near it will go That won't be true if the price goes high enough. By realistic counter example: So you start when BTC is at about 10c. You mine around 2000 bitcoins (not bad, $200 for using your old 5870 that was collecting dust). Your card burns out so you quit mining, but implement the above strategy. You sell 500 at 20c, 375 at 40c, 280 at 80c, etc. Once bitcoin hits $13k, you have about 10btc left and have made $32k out of your possible gains of $20M. I would say that less than 1 percent is not a sizeable fraction. Of course, you would make a sizeable fraction if the price weren't able to double so many times, but the above example is actually quite realistic for some.

DenisM 8y ago
Fair. Proposed amendment: once you start fearing that bitcoin will crash and wipe out your crypto wealth, begin to implement the "2x 1/4" algorithm. This rule will prevent excessive bleeding at the tail. I posit in your scenario I would start worrying at $50/btc ($100k), so that's 8 doublings till 13k and by that time I am still holding 10% [(3/4)^8] of my coins (worth $2.6m) plus I have 1.9M in cash [1] I took off the table for a total of $4.5m. Worst case (btc drops instead of going up) I still made $25k. [1] https://www.wolframalpha.com/input/?i=sum+(2000%2A(3%2F4)%5Ej%2F4%2A50%2A2%5Ej),+j+%3D+0..8
- TheDong 8y ago
  The problem is picking those points. At about 30c, I was pretty sure bitcoin would crash, wiping out several hundred dollars which would recover the sunk cost of the GPU. At $7 was another point I was pretty sure it would crash (and hey, getting $10k out to pay down a car seems like a heck of a lot of money for an internet peculiarity I did no work for). After $30 when it dropped and Mt. Gox was dying, I was pretty sure it would be dead for good, as were many others. I don't think your amendment really helps because of two facts: 1. "Fearing it will crash" is something that is difficult to gauge, and I felt since day 1 of bitcoin it was likely to crash and wipe out enough money to pay for a few months of rent or more. 2. Your assumption about that working still fails if it simply doubles more, e.g. if bitcoin goes to $1M/btc, we now have a similar "less than a percent" of possible profit, so you still don't get a significant fraction... And in fact if BTC takes off like that, it likely means the USD will have crashed and thus your previous gains are even less useful. It's easy to look in hindsight and say "selling fractions from the 10s or 100s would have been a good strategy if we knew bitcoin would stabilize in the 1000s", but such hindsight didn't exist back then, and we still can't be sure it's fully stabilized. I'm not saying it's a bad strategy; it does seem pretty reasonable. I'm just claiming that it won't guarantee that you end up with a significant fraction of the maximum possible gains, and in fact I don't think any such strategy exists.
  - DenisM 8y ago
    When I say "upset" and "fear" I mean something significant - you ought to be upset about it enough to be still upset a year later. "Could have paid for the video card" is not sufficiently upset. "Could have bought a car" would be if you couldn't afford a car to start with. Whatever it is that makes a difference in your life is where you start. And on the upper end I am restricting myself with "diminishing marginal utility of money" (aka FU money). The range between "too little" and "FU money" is quite narrow, logarithmically speaking. Let's say that the lower boundary is $100k and FU money is $20m, and same starting conditions as before. 12 iterations would give me $9.7m in cash plus $13m in BTC [2000(3/4)^1250*2^12]. I admit I have deviated from my original "sizable fraction" statement, and I no longer believe in it. But having shifted the goal posts I proclaim these new ones are better - just as satisfying, but a lot more achievable.

DenisM 8y ago

Fair. Proposed amendment: once you start fearing that bitcoin will crash and wipe out your crypto wealth, begin to implement the "2x 1/4" algorithm. This rule will prevent excessive bleeding at the tail. I posit in your scenario I would start worrying at $50/btc ($100k), so that's 8 doublings till 13k and by that time I am still holding 10% [(3/4)^8] of my coins (worth $2.6m) plus I have 1.9M in cash [1] I took off the table for a total of $4.5m. Worst case (btc drops instead of going up) I still made $25k. [1] https://www.wolframalpha.com/input/?i=sum+(2000%2A(3%2F4)%5Ej%2F4%2A50%2A2%5Ej),+j+%3D+0..8

TheDong 8y ago
The problem is picking those points. At about 30c, I was pretty sure bitcoin would crash, wiping out several hundred dollars which would recover the sunk cost of the GPU. At $7 was another point I was pretty sure it would crash (and hey, getting $10k out to pay down a car seems like a heck of a lot of money for an internet peculiarity I did no work for). After $30 when it dropped and Mt. Gox was dying, I was pretty sure it would be dead for good, as were many others. I don't think your amendment really helps because of two facts: 1. "Fearing it will crash" is something that is difficult to gauge, and I felt since day 1 of bitcoin it was likely to crash and wipe out enough money to pay for a few months of rent or more. 2. Your assumption about that working still fails if it simply doubles more, e.g. if bitcoin goes to $1M/btc, we now have a similar "less than a percent" of possible profit, so you still don't get a significant fraction... And in fact if BTC takes off like that, it likely means the USD will have crashed and thus your previous gains are even less useful. It's easy to look in hindsight and say "selling fractions from the 10s or 100s would have been a good strategy if we knew bitcoin would stabilize in the 1000s", but such hindsight didn't exist back then, and we still can't be sure it's fully stabilized. I'm not saying it's a bad strategy; it does seem pretty reasonable. I'm just claiming that it won't guarantee that you end up with a significant fraction of the maximum possible gains, and in fact I don't think any such strategy exists.
- DenisM 8y ago
  When I say "upset" and "fear" I mean something significant - you ought to be upset about it enough to be still upset a year later. "Could have paid for the video card" is not sufficiently upset. "Could have bought a car" would be if you couldn't afford a car to start with. Whatever it is that makes a difference in your life is where you start. And on the upper end I am restricting myself with "diminishing marginal utility of money" (aka FU money). The range between "too little" and "FU money" is quite narrow, logarithmically speaking. Let's say that the lower boundary is $100k and FU money is $20m, and same starting conditions as before. 12 iterations would give me $9.7m in cash plus $13m in BTC [2000(3/4)^1250*2^12]. I admit I have deviated from my original "sizable fraction" statement, and I no longer believe in it. But having shifted the goal posts I proclaim these new ones are better - just as satisfying, but a lot more achievable.