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While I'm rather ambivalent on Bitcoin, I feel the article should show transaction volume as well, in order for us to make an informed assessment on its future

by wamatt 14y ago

While I'm rather ambivalent on Bitcoin, I feel the article should show transaction volume as well, in order for us to make an informed assessment on its future prospects. Displaying a prominent graph of only BTC/USD as proof of recovery, without an indication of liquidity and total market size, seems insufficient.

wcoenen 14y ago
Chart of transaction volume: http://blockchain.info/charts/n-transactions http://blockchain.info/charts/n-transactions A lot of the recent increase can be attributed to gambling at http://www.satoshidice.com http://www.satoshidice.com
- hollerith 14y ago
  >http://www.satoshidice.com http://www.satoshidice.com Now that is clever.
mrb 14y ago
You can see the volume (and exchange rate) on the largest USD/BTC exchange (MtGox) here combined on one graph: http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-01-01zeg2012-10-04ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-01-01zeg20... But a better indicator that Bitcoin activity is increasing is the number of Bitcoin transactions on the network itself. Bunch of interesting charts here: http://blockchain.info/charts http://blockchain.info/charts Especially: http://blockchain.info/charts/n-transactions-excluding-popular http://blockchain.info/charts/n-transactions-excluding-popul... showing the # of transactions has tripled in the last 4 months.
- wamatt 14y ago
  Thanks (and @wcoenen), that's interesting. Thinking further on the risks of bitcoin, is it possible that the algorithm itself could have a yet to be discovered weakness, allowing for a trivial solution? (similar to what happens when some forms of crypto are broken)
  - Cederfjard 14y ago
    I was thinking the same (but my understanding of all of this is still very weak). Isn't it a major assumption that these "extremely difficult mathematical problems" remain extremely difficult until all Bitcoins have been mined, 120-130 years in the future?
    - TimJRobinson 14y ago
      The algorithm can be changed as long as 50%+ of the computers in the network agree to it. So if flaws are found it isn't the end of the currency.
  - mrb 14y ago
    Crypto weaknesses are always possible. But generally speaking, widely-deployed algorithm like SHA256, ECDSA, etc (which Bitcoin relies on) don't become suddenly broken one morning. Research progresses slowly (eg. weaknesses found in round-reduced versions of these algorithms), giving ample time to the community to plan for an upgrade when it becomes clear that one of the algorithms will become broken soon. Bitcoin is also very conservatively designed. For example an address is computed with a RIPEMD160 hash of a SHA256 hash, so one would have to break both algorithms with preimage attacks to be able to generate address collisions allowing an attacker to steal coins from an arbitrary address. Because of this conservative design, it gives it a "safety cushion" to have time to anticipate cryptographic changes if they are needed.
- michaelt 14y ago
  But a better indicator that Bitcoin activity is increasing is the number of Bitcoin transactions on the network itself. Is it better? If I shifted some bitcoins around between several of my own wallets, that would create transactions - but would that be a meaningful indication of anything?
  - narcissus 14y ago
    I wonder how we determine similar 'activity' as far as normal currencies are concerned? Either it's related to money moving between accounts, or it's related to volumes on an exchange, or something else entirely, but surely those values are just as easily 'manipulated' as any of BTC. Admittedly the volumes themselves dictate that me moving money from one bank account to another will have less of an impact on the final number, but then again, I'm always moving money between my different bank accounts, but never between my Bitcoin addresses. I obviously can't say for certain, but I don't think there's a meaningful number of users moving BTC between their wallets for no reason.
  - mrb 14y ago
    If someone day-trades (constantly buys and sells) on a Bitcoin exchange, it would also increase volume without meaning that Bitcoin activity is increasing. In fact, there are plenty of day-traders on Bitcoin exchanges. So, yes, I argue that Bitcoin transactions are a better indicator of its activity. Sure, someone could be moving coins between his wallets, but every other indicator also confirms that Bitcoin activity is increasing (nr. of merchants, Bitpay users, etc).

by wamatt 14y ago

wcoenen 14y ago

Chart of transaction volume: http://blockchain.info/charts/n-transactions http://blockchain.info/charts/n-transactions A lot of the recent increase can be attributed to gambling at http://www.satoshidice.com http://www.satoshidice.com

hollerith 14y ago
>http://www.satoshidice.com http://www.satoshidice.com Now that is clever.

mrb 14y ago

You can see the volume (and exchange rate) on the largest USD/BTC exchange (MtGox) here combined on one graph: http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-01-01zeg2012-10-04ztgSzm1g10zm2g25zv http://bitcoincharts.com/charts/mtgoxUSD#czsg2011-01-01zeg20... But a better indicator that Bitcoin activity is increasing is the number of Bitcoin transactions on the network itself. Bunch of interesting charts here: http://blockchain.info/charts http://blockchain.info/charts Especially: http://blockchain.info/charts/n-transactions-excluding-popular http://blockchain.info/charts/n-transactions-excluding-popul... showing the # of transactions has tripled in the last 4 months.

wamatt 14y ago
Thanks (and @wcoenen), that's interesting. Thinking further on the risks of bitcoin, is it possible that the algorithm itself could have a yet to be discovered weakness, allowing for a trivial solution? (similar to what happens when some forms of crypto are broken)
- Cederfjard 14y ago
  I was thinking the same (but my understanding of all of this is still very weak). Isn't it a major assumption that these "extremely difficult mathematical problems" remain extremely difficult until all Bitcoins have been mined, 120-130 years in the future?
  - TimJRobinson 14y ago
    The algorithm can be changed as long as 50%+ of the computers in the network agree to it. So if flaws are found it isn't the end of the currency.
- mrb 14y ago
  Crypto weaknesses are always possible. But generally speaking, widely-deployed algorithm like SHA256, ECDSA, etc (which Bitcoin relies on) don't become suddenly broken one morning. Research progresses slowly (eg. weaknesses found in round-reduced versions of these algorithms), giving ample time to the community to plan for an upgrade when it becomes clear that one of the algorithms will become broken soon. Bitcoin is also very conservatively designed. For example an address is computed with a RIPEMD160 hash of a SHA256 hash, so one would have to break both algorithms with preimage attacks to be able to generate address collisions allowing an attacker to steal coins from an arbitrary address. Because of this conservative design, it gives it a "safety cushion" to have time to anticipate cryptographic changes if they are needed.
michaelt 14y ago
But a better indicator that Bitcoin activity is increasing is the number of Bitcoin transactions on the network itself. Is it better? If I shifted some bitcoins around between several of my own wallets, that would create transactions - but would that be a meaningful indication of anything?
- narcissus 14y ago
  I wonder how we determine similar 'activity' as far as normal currencies are concerned? Either it's related to money moving between accounts, or it's related to volumes on an exchange, or something else entirely, but surely those values are just as easily 'manipulated' as any of BTC. Admittedly the volumes themselves dictate that me moving money from one bank account to another will have less of an impact on the final number, but then again, I'm always moving money between my different bank accounts, but never between my Bitcoin addresses. I obviously can't say for certain, but I don't think there's a meaningful number of users moving BTC between their wallets for no reason.
- mrb 14y ago
  If someone day-trades (constantly buys and sells) on a Bitcoin exchange, it would also increase volume without meaning that Bitcoin activity is increasing. In fact, there are plenty of day-traders on Bitcoin exchanges. So, yes, I argue that Bitcoin transactions are a better indicator of its activity. Sure, someone could be moving coins between his wallets, but every other indicator also confirms that Bitcoin activity is increasing (nr. of merchants, Bitpay users, etc).