Quote from: kisa on November 01, 2014, 06:46:20 pm

Quote from: mira on November 01, 2014, 06:21:57 pm

"Here Taleb draws upon one of the fundamental assumptions of economics and finance — humans are risk adverse in that they fear losses more than they like gains. On  a short time scale, investors observe the variance of the portfolio, not the returns. This variance contains little information of value, and in fact, observing a portfolio at any time scale always contains a combination of returns and variance. Furthermore, human emotions are unable or unwilling to understand the difference between the returns and variance of a portfolio. Undue reliance on short term fluctuations in a portfolio can be very damaging to an investors mental health:"

http://www.curatedalpha.com/2011/nassim-taleb-on-the-difference-between-noise-and-information/

extending on mira's comment, according to nobel prize winning work of kahneman and tversky in behavioral economics, risk aversion is observed whenever a trade or investment is in the winning territory, leading the most people to realise profits too soon. On the contrary, whenever a trade or investment is in the negative territory, most people tend to risk-seeking behaviour in order to avoid the pain of realised losses and thus not cutting the losses quickly enough for a winning trading strategy.

http://pages.uoregon.edu/harbaugh/Readings/GBE/Risk/Kahneman%201979%20E,%20Prospect%20Theory.pdf

Paul Krugman won a Nobel prize too     And according to the paragraph you just quoted those of us holding BitShares are making a mistake and should cut our losses 

For the record I'm holding and may be a buyer again if it gets to $25 million.

Also regards you original analysis, don't forget though it's a merger, and all pieces lost a lot if value not just BTSX. Also look at BTSX pre serious dilution discussions, we were on a steady BTC uptrend, so it's not just a fall from where we were but where we would of been. Once the merger goes through BTS is bound to recover anyway & grow, hence why I'm a hodler and maybe a buyer soon but I would like to peak into an alternate reality where BTSX didn't consider dilution or changing developer focus for another 12 months...

Well, Paul Krugman has a very strong and divisive political agenda, which is not true of Kahneman. Indeed, there have been several economics prize winners with theories which proved to be bonkers in the real world, e.g. Sharpe for efficient markets...

The merger resolves imho one of the major limitations of initial BTSX business model:
https://bitsharestalk.org/index.php?topic=10833.msg142678#msg142678

I don't think that those holding are making a mistake... This is just observation of how most people tend to act. E.g. those who bought BTSX at in retrospect speculative $90m market cap are unlikely to have sold at $70m, but will probably be waiting for it to get to $150m to sell there... Nobody knows for sure where trends turn, but knowing how most people tend to make decisions might help one to avoid systematically losing strategies, assuming lots of trades in various assets.

Oh, you are waiting to invest $25m? Thats a great news - everyone should then buy now!!! *lol*

"Here Taleb draws upon one of the fundamental assumptions of economics and finance — humans are risk adverse in that they fear losses more than they like gains. On  a short time scale, investors observe the variance of the portfolio, not the returns. This variance contains little information of value, and in fact, observing a portfolio at any time scale always contains a combination of returns and variance. Furthermore, human emotions are unable or unwilling to understand the difference between the returns and variance of a portfolio. Undue reliance on short term fluctuations in a portfolio can be very damaging to an investors mental health:"

http://www.curatedalpha.com/2011/nassim-taleb-on-the-difference-between-noise-and-information/

extending on mira's comment, according to nobel prize winning work of kahneman and tversky in behavioral economics, risk aversion is observed whenever a trade or investment is in the winning territory, leading the most people to realise profits too soon. On the contrary, whenever a trade or investment is in the negative territory, most people tend to risk-seeking behaviour in order to avoid the pain of realised losses and thus not cutting the losses quickly enough for a winning trading strategy.

http://pages.uoregon.edu/harbaugh/Readings/GBE/Risk/Kahneman%201979%20E,%20Prospect%20Theory.pdf

Among famous cryptos, week-to-date, BTC has fallen by 6%, DOGE by 7%, NXT by 13%, Stellar by 16%, Mastercoin by 25%, and BTSX by 35%...  Thus please don't forget the whole space is currently in a rather bearish environment, and given the recent uncertaintly and upcoming changes for BitShares one should expect BTSX to underperform.

The % loss might resemble a bubble/bust one observes in a broad stock market. Having said that, losing 2/3 of $ value from the top (less so in market cap terms) is way too small compare to crashes in individual technology stocks/sectors. Even BTC lost 4/5 from the respective tops during two recent downturns, not to mention pump-and-dumps previously observed in cryptos.

Given the amount of uncertainty/perceived risk for the whole crypto space and crack-downs by regulators, there was little new institutional or mass retail money inflows coming into the sector following the liquidation of rather speculative positions in Dec 2013... The whole crypto economy is currently struggling with the negation of super optimistic price and adoption predictions by BTC evangelists last year.

So for BitShares community, it is a good time to stay patient in terms of price expectations and concentrate on productive work, consolidating internal strength and planting the seeds of future success.

Most of the POW-altcoins medium-term survival depends on speedy adoption, on a successfully launched rocket (like DOGE). Otherwise there is no reason to stay invested, because there is no substance for the "secondary rocket" to take off when such coin's very functionality is compromised or descending into insignificance among 500 competitors... In such projects the slogan "HODL" is spread by pumpers into the believers in order to enable them to offload maximum worthless coins at elevated prices.

BitShares as a project is in a very different position with committed developers and marketers, superior tech, strong business ideas, bright community, and secured startup funding. So, however difficult it might be watching negative "mark-to-market", there is neither reason to panic, nor to follow frequent price movements too closely and emotionally (every down move usually creates 3 x negative emotional energy compared with positive from a correspondent upmove, unless you are waiting to buy cheap). Even if sales by weak hands and good traders caused the market cap to fall further in the region of $10m, apart from emotional reactions by HODLers this doesn't provide new reasons to doubt the medium-term push and long-term perspective. Therefore, I suggest that the main reasons for HODLing BitShares are both committment to the project and the uncertainty of when / at what level exactly the price bottom is completed and turn-around occurs (usually at time of widespread pessimism and following bad news). Dedicated investors can at any time follow their own educated guess with regards to the probability of complete failure, thus adjusting the size of their BTS stake whenever they see significant chance of failure.

On that note, I wish everyone sincerely involved into BitShares patience and strong moral, leading to amazing success in the (even maybe if not immediate) future!

Quote from: Ander on October 31, 2014, 10:10:04 pm

Quote from: bytemaster on October 31, 2014, 09:42:39 pm

This will have the final announcement that we promised this week.... additional processes we have implemented have delayed release a tad, but I wanted to let everyone know it has been written and looks very good.

Do you mean a new announcement? 

Or just a final summary of everything that has changed over the past couple weeks?

No new information... just all condensed and explained better than before.

not sure this belongs into the newsletter, but i wanted to share one perspective with regards to the merger which I didn't notice in previous discussions (or apologies if i missed that perhaps on mumble)

The merged DAC will have earnings streams from multiple businesses it supports. The enhanced profits should ensure BTS market cap becomes multiples of what BTSX stand alone would otherwise be. This means that collateral behind bitAssets issuance is not restricted by BTSX market cap (which is in turn depends on bitAssets transaction fees from a return perspective). So from Nov. 5th, any limits on issuance of bitAssets can be removed without easing 2xcollateralization requirement, by increasing united BitShares market cap. In a virtual circle, because bitUSD will now be used between various businesses of the united BTS, this enables for more bitUSD turnover inside the DAC, thus increasing transaction fees for any given money supply.

The effective decoupling of bitAssets issuance limits from tx fees generated by these very bitAssets constitutes imho a strong conceptual break-through and opens up great profitability potential for BTS compared with BTSX and separated DACs economics!

BitShares: Where Freedom meets Security!

BitShares - Your Lifestyle Finance

Finally arrived - a proper bank without bankers: BitShares!

For storing value proposition in bitAssets BTS needs to be established, not a startup phase. For now we can expect either speculative invest into BTS or idealistic holding/transacting in bitUSD as a sign of decentralised movement support (or whenever people think BTS is overvalued). Alternatively at current stage, we would have to offer incentives for holders of bitAssets out of BTS beneficiaries.

For remittances though, the bitUSD holding period is short and the amounts involved are regular and not large, thus acceptable systemic risk for each individual transfer - this would keep certain bitUSD volume in useful circulation. So if BTS offered or joined some infrastructure for on/off ramps, then bitUSD utility in terms of value stability, speed, and low fees would become a winning proposition. No local currency needed to start with, people in those countries are happy to hold USD value, and those countries where cash USD circulation is legal should be targeted first, in terms of remittances.

Countries where people aren't allowed / restricted to hold USD is another case alltogether. This is indeed about store of value / access to stable currency. This might also become valuable proposition, but bitUSD would be in competition against BTS itself here. bitUSD is rather stable value, and offers yield, but it should be compared to longer-term investment BTS risk/return characteristics. The marketing focus for bitUSD then should be people looking to hold stable value over time periods over short/medium time periods of a few weeks or months... For those who want a chance to participate in potentially huge BTS appreciation we shouldn't try to sell bitUSD but offer BTS.

Okay let's not advertise certain yield if this increases wrong perception. Let's pay out transaction fees and state what has been achieved in the past for bitAsset holders. In fact what some of us are concerned about is that at initial stage where BTS is not yet established reputation/high market cap there should be enough incentives to hold bitAssets longs.

There are different ideas on this forum how to motivate people via marketing. Some are targeting to get liberty idealists, decentralization activists  and anti-bank population on board, others focus their attempts at utilitarian users a.s.o. Almost any business with network effects has certain ponzi characteristics (FB, Microsoft, Google?) and we are prepared to defend against such wrongful accusations or just ignore them.

BTS business model ist not going to collapse at later stage, depending on ever new money inflows, this is nonsense. But BTS needs CRITICAL MASS to take off, as almost any mass business. However incentives can be used to achieve the critical mass and paid out of marketing or other company funds. So I hope most of us can agree on that.

The question remains what incentives to offer. And the secret sauce might help also so cheer up folks - I don't see fundamental differences here, rather the emotional argument about how to frame the incentives. Let's cool down, stop being personal and get back to constructive tone and work.

Quote from: toast on October 28, 2014, 08:39:00 pm

So where did it go? "Low velocity of money" is not a place money flows

You know how "burning bitshares is like distributing the shares proportionally to everyone else"?

It it a specific instance of the equation of exchange (http://en.wikipedia.org/wiki/Equation_of_exchange) M*V = P*Q. When you remove money from circulation permanently, it is like reducing either Monetary base (M) or  velocity of money (V) permanently, resulting in lower prices (P) and thus deflation which is a benefit for coin/share holders.

What we have seen with QE is that while monetary base M has increased (due to printing of fresh money), velocity of money V has proportionally decreased (because banks park that fresh money directly with the central bank), causing P to remain constant. Once V increases back to its natural level (when the now bank-owned QE money is actually used in the economy), P will shoot up exactly by the proportion M was originally increased.

edit: judging by this chart, the dollar could be currently overvalued by more than 10%. I'm not sure if there's a plausible scenario where this all comes at once, though.

Another explanation would be that FED is printing money to offset the decreased velocity. E.g. if credit starts flowing into the economy and prices start feeling upward pressure, FED would withdrow stimulus by reducing the balance sheet (selling government and mortgage bonds which it has been buying since 2009).

Dollar 10% overvalued versus what?