You are running like God in terms of finding blocks.

Going from memory, 1GH/sec in mid-June was expected to find 1 block every 90 days running 24/7.  And obviously, with every difficulty increase the expected number of days should increase. 

There's really no compelling argument not to join a zero-fee pool, aside from not wanting to participate in a pool that is nearing the 50% mark.

 Just make sure you have a backup pool to deal with the annoying DDoS attacks.

I have complete DOM information, taken every 5 minutes, stored in XML files if anyone is interested.  It's currently running 24/7 but just started about a week ago.

PM me and we can hash out a fee.

If you look at the last 2-3 weeks of charts it would heavily indicate that a good portion do sell off their earnings immediately.  While certainly not all, it doesn't take much to drive price down, and until today, it's only been a slow slide.

Miners account for the slow systematic decline we've seen over the last few weeks.  Money supply grows daily, plus a large amount of people are guaranteed to be sellers on a daily basis.  That downwards pressure has to be met by new buyers, and that just hasn't been happening.

Also, the large orders at prices like 8,9, 10 have all been removed from the 5 exchanges I track.  There was a wall of like 3k+ bitcoin bid at MtGox that poofed, which caused this drop.  10 had an absurdly large amount of bid volume as well that canceled shortly after 11 was breached.

It's not trust or distrust, it's the complete absence of any attempt to find out more about how these exchanges/banks/wallets, operate.

For fuck's sake, there should be a fucking mob of people with lit torches hounding the exchanges about whether or not they speculate on their own exchanges, the real state of darkpools, a written roll back policy, written policies on how YOUR bitcoins are being held (can they be invested etc, who is overseeing it?, if they are being used for business expenses, how much?  If they are being invested, how so?).  But no, no one asks anything, and anyone who suggests that they shouldn't be trusted gets labeled a troll.

I wrote this post a few weeks ago about what us former poker players learned about money + limited regulation + interwebs.  It spells trouble way more than not.  The first poster was Tradehill's owner agreeing that we should be putting the screws to Exchanges, demanding transparency whenever possible.

You should be VERY concerned about a "bank run" on various BTC exchanges.  I would bet an appendage of your choosing that some of these exchanges are not keeping 100% of bitcoin deposits in earnest.  That they are liquidating them to pay for business related costs, optimistically, and less optimistically, they are cashing them out for hookers and blow.

You should be VERY concerned about having money on an exchange where the amount of bitcoins being held far exceeds their profit (a lot of exchanges have sub 100 btc volume per day).  The only exchange that would have a problem walking away with all of their bitcoin deposits would be MtGox simply because they are the largest.  If I'm sitting on $500k USD of bitcoins, and my site is only making $100/day profit, you can't fucking tell me that there is no temptation to walk off.  Given the steady volume decline of the last few weeks we are in this situation for many exchanges, and if not, we'll be there soon.

Stop being fucking naive and drop the rose tinted glasses.  Just because you're asking hard questions and are skeptical, doesn't mean you are anti-bitcoin.

I would disagree with that statement.  Bitcoin is what the community has made it.  The idea of bitcoin may be impossible to fully implement as intended in the real world, and how it is perceived will be how it's defined.

But in any case, you and I both agree that the problems are worth solving, or at least for me, there's profit in solving them.

My Googles were not as powerful as the FAQs.  Thank you!

The problem is there's rampant fanboyism to the point that legit issues with bitcoin are not being addressed.

For example, you all think bitcoin is decentralized, it's not.  The last few days should be proof of that in that price slowly declined as a result of Euros not being able to deposit.

While it's not centralized, if you removed a few key pieces, the system would fail (MtGox or Dwolla for example).  And if you're at all familiar with online poker, the US government has no problem doing this.  Please don't remind me that MtGox is in Japan, PokerStars is located on the Isle of Man, and Full Tilt is in Ireland.  The US DOJ has long arms.

Secondly, everyone who participates in bitcoin are forced to be speculators.  In the traditional currency world you have many instruments for hedging.  You buy your stock in your currency, buy a futures contract for the currency you wish to sell your product in, sit back and relax, you will not gain or lose on currency price fluctuations.

Thirdly, the same corrupt systems that bitcoin is the solution to, are starting to sprout up in the exchanges.  Fucking darkpools.  They are not necessary for bitcoin.  Absolute power corrupts absolutely, and now we've taken a significant portion of bitcoin trading off the grid.  

Fourth, do any of you realize how much power Magic Tux has on the price of bitcoin?  I'm not suggesting anything, I'm simply stating the fact that if this *ONE PERSON* (aka NOT DECENTRALIZED) wanted to use underhanded tactics to move price, he could, and all the other exchanges would follow suit because MtGox has 90% of the volume.


Use and enjoy bitcoin, but don't be blind to it's massive problems.

What's the incentive to keep supplying processing power to validate transactions?

As for darkpools, they say they eliminated them but I've seen weird behavior suggesting that they haven't.

It was the 8th or whatever (after hackcrash re-opening) when they were supposively down.

My bot is designed to not duplicate trades because it can launch trades quickly, and will often double orders etc.  If I'm at the computer I can manually delete a trade out of the database so that the particular price is again "available".

My algorithm was telling me to buy from MtGox at the Ask.  The price isn't important, but the volume was 0.1 at price, let's just say 14.5.  I sat at my computer and noticed it had traded by buying at 14.5 for volume 0.1.  I opened up my DOM and it showed that there was still an order stuck in the DOM for 14.5 and volume 0.1.  I go ahead and see if the trade will execute again by deleting the record of it in my database.  It fills immediately, but the 0.1 is still there.  I do this 10 more times until I get bored, it filled every time immediately, and every time there was still an order of 14.5 at volume 0.1 in the DOM suggesting that there was some mysterious volume filling my order that wasn't reflected in the DOM, or some mysterious player able to read that a trade occurred and replace their previous order (super unlikely as my program is fast).

I know how MtGox acts as an exchange probably better than 99% of this forum.  It does lag out and the DOM locks up from time to time.  However, when this happens your trades are not executed, they are "Active" or "In Queue", and they are filled 10-15 minutes later.

So in my case there are only a handful of possibilities:

1.  There are still Darkpools
2. MtGox is playing in the markets as well, as they are the only people who could possibly get orders into the DOM faster than my program can read the DOM.
3.  There was an error but MtGox decided to keep honoring the trades.
4.

I'd say the distribution of each being the cause of what I saw is 1: 70%, 2: 15%, 3: 0.01% 4: 14.99%

I woudn't say they're shit, it just depends on your perspective.  I think there's enough profit potential in the exchanges that I created my bot.  That would imply I don't think they are shit.  I have to hold inventory of bitcoin and USD, so I'm unfortunately forced to be a speculator when I don't want to, but I've accepted that risk for now.

The TL;DR version would be that I'm astounded at the level of trust this forum has with the major exchanges.  They just assume they'll do the right thing in the face of tremendous temptation.  I mentioned frontrunning in my last post, but MtGox could fix price at it suits them and the rest of the exchanges would follow.  That makes frontrunning look mild.  They could also come up with clever ways to have market-mulligans by rolling back trades  .

If anything is shit, it's the mentality of this forum.  That you're a hater if you question the exchanges or point out obvious flaws.  I want bitcoin to work as much as the next guy, but that doesn't mean I'm just going to ignore obvious hurdles and opportunities for unethical behavior.  As they say, absolute power corrupts absolutely, and right now MtGox has that type of power until some other exchange can draw a large share of the market.

Re-reading my post it's a little incoherent as it was written late last night.

The main point is this:

1.  In traditional markets there are countermeasures for darkpools (FOK), we don't have that with bitcoin.  Also, most darkpool transactions are reported at some point in time in traditional markets (although, this depends on the exchange/instrument... spot Forex has major issues with this).   We don't even have this with bitcoin.

2. Bots are just an extension of regular traders, they can't do anything more than a normal trader can unless the environment is designed for them specifically.  A terrible trader will make a terrible bot.  A good trader has a chance at making a good bot (but not necessarily).  Winning trading algorithms are a subset of winning traders.  I wish I had a link, but I was reading that there's an office building in Chicago right next to the CME, that sold for north of $1B due to its close proximity to a major server in the exchange network.  HFTs require very little latency, so whoever has the lowest ping to that server, controls the HFT market.  But the moral of the story is, don't fear bitcoin bots (yet), they are never going to be as efficient as their authors, and the environment is not yet to the point where being a bot has any inherent advantage that a normal trader can't do, other than it doesn't sleep and can stay 100% focused.

3.  Fear the exchanges and darkpools.  Jered from Tradehill even chimed in on this topic and said we have every right to question what the exchange owners are doing.  DO NOT ASSUME they have your best interest in mind.  DO NOT ASSUME they know what they're doing.  To be frank, MtGox's choices with regards to how they handled the hackcrash and subsequent rewards to traders (0 commissions) demonstrates a major short-sitedness.  Zero commission for everyone creates 0 spread, but to selectively give it to some people and not others will create an unfair advantage.  Finally, DO NOT ASSUME that exchange owners don't participate in their own markets.  I believe they do, and I strongly believe they shouldn't, or at the very least need to disclose that they do.  Their participation can range from legit and honest, to downright fraud.  An example of fraud is frontrunning , which where they can place their own orders before a large order is processed and capitalize on the price movement.  When you place a trade in a market you need traders to come in AFTER you, in order to profit.  Frontrunning artificially creates that.  The owners of MtGox are the only people who see both darkpools and non darkpools, so the temptation is there.

First and foremost, a bot is almost always going to perform worse than a human when it comes to discretionary Technical Analysis.  The only exception would be from HFTs (which as I explained earlier, do not exist with bitcoin due to lack of FOK).  Even then, if it were possible to slow time down to where a human could trade at the same speed as an HFT, I'd imagine the human would outperform the algorithm.  We are simply better suited to dabble in fuzzy logic.

But any strategy, be it support/resistance based, EMA based, MACD based, arbitrage based, market making based, is going to generally underperform when you automate it, compared to a human.  The most important part of using indicators in TA is to know when they are invalid and when to ignore them.  They are not perfect, they are not magic, they do not tell you anything that price isn't already saying.  To write a winning bot you have to either have a ridiculously easy opportunity, or years of trading experience FIRST.  Writing a long-run winning bot (that is 1000+ trades at a minimum) is nearly impossible with no prior knowledge of trading, with only a few exceptions.

The positives are that they increase liquidity.  If you want to sell, you can sell.  If you want to buy, you can buy.  There are also scores of losing bots, people testing bots etc.  My bot had a bug where it accidently sold for $3 less than the current Bid for a handful of coins.  I made someone's day!

The negatives only happen when they are in an environment suited for them, like we see now on most major exchanges for the "mainstream" currencies.  There have been lots and lots of power plays on real estate near very important servers for exchanges.  Basically they've created an environment where they can claim they are only using data available to the public, but there's zero chance that the public could ever compete on the same playing field.  HFTs, by definition, are finding information about supply and demand that no one else can find.

But this isn't the case with bitcoin, but I fear it might someday be.  I really don't understand why the exchanges decided to follow in the footsteps of the traditional markets and include features like dark pools.  It is unfortunate that they are actually how modern markets work, but we had/have a chance to start over again, why are we just following in the same footsteps?  You're buying access to private information.  There was a thread a few days ago where a guy was admitting that trading via the darkpool on MtGox was cheat codes, and he had manipulated the public's inability to see the correct supply and demand, to make a profit, many times.  I don't ever blame someone for taking an edge that is legally and ethically available, but I can criticize the choice for MtGox to provide such an instrument, without any counter measures that normal Dark Pool markets have like FOK orders, or some method of reporting them.  In effect, MtGox has a much much worse system than traditional markets.

But anyway, bots aren't really going to have any net impact on price that speculators don't already have.  Price goes where the market decides, and bots are controlled by market participants.  So long as you understand that just being a bot gives you no inherent advantage, other than in doesn't need to sleep, you would have to conclude that their impact on price is non-existent, the market participants want price to go there, so it does!

OP,

That is partially correct, but the difficulty is adjusted based on the total hash rate every 10-12 days or whatever it is (it's actually per number of blocks, I'm sure someone remembers it, I don't).  Presumably you will get more people participating in mining the easier the difficulty.

I think we're getting somewhat close to the point where we stop seeing new miners and thus the difficulty will stop increasing, and your assumptions are correct.

The second bot is a joke (the link to this forum)

The pokerbotter guy nailed it.  If someone is trying to sell an algorithm it's because it isn't profitable anymore.

If you spend any real money on a system where he shows you the results from a whopping 13 trades, you deserve what's coming to you.


Don't fear the bots, I'm going to bed soon, but I'll come clean here and say that I do have a working bot that makes real money (not a ton).  I barely beat out a miner and am currently assuming nearly the same risk, although difficulty doesn't effect me.  Ask me anything you want, but I won't give any details about how my bot makes money, or how it trades... but if you want to know the logistics of making one, my opinion on how it impacts the market, who else is playing around the in the markets, I'd be happy to share.  Just not willing to give up the secret sauce.

You guys really overestimate the impact of bots on bitcoin, it's minimal, and most of the impact is positive, not negative.

I read through that entire thread on reddit yesterday.  It's a Genetic Algorithm.  Basically you create a pool of "genes", which are in this case, trading methods, and you let them exist in different populations under different conditions, with given starting parameters.  From there you see which are the strongest (biggest winners) and you let them merge with other genes to hopefully create a powerful winning strategy.

The guy really doesn't give a fuck about profit, and I actually believe him when he says it, he's just a dude with an interest in cutting edge algorithms.  His sample size was 5 trades as of yesterday, and his winrate was 80%.  This isn't definitive at all.

Also, I'm not sure I subscribe to the whole genetic algorithm being something that can be applied to markets, as it seems to me you'd have a massive hurdle in that the algorithm would want to choose the best winners on a curve-fitting basis.  Perhaps he's taken measures to avoid this, but the main point is that what worked yesterday, has to work today, in order for an algorithm based on past experience to work.  Clearly the fact that there are winning traders who trade purely Technical Analysis suggests that this exists, but they definitely don't curve fit.

EDIT: Oh yeah, it threw me way off that he called it "High Frequency Trading" because it's not even close.  In fact, this was the first time I noticed.  You cannot run HFTs unless you have Fill-Or-Kill (FOK) orders.  The only exchange that has that is CampBX, and market depth is shit right now on that exchange.  An HFT probes for information on incredibly short term supply and demand, and gobbles up the spread, basically assuring that all market orders fill at horrible prices.  You need leverage, micro-second trading ability, and FOK orders to accomplish this.  Bitcoin provides none, and as I said earlier, he posted that he had 5 trades.

Regardless of whether or not you think some of us in this thread wear tin foil hats or not, this forum, and the bitcoin community as a whole, would be better off assuming MtGox DOES compete with its customers.  I personally think it's almost a certainty they participate in the markets, which means that there's a reasonable chance they do something underhanded (simply because they can).  To address your actual point, there would be huge money to be made in front-running the Darkpool orders who think they are safe from the eyes of the public.

I'm not accusing anyone here, I'm simlpy stating that I've seen some weirdness on MtGox as well, and I'm NOT going to give them the benefit of the doubt.  Other exchange owners seem to agree with me as well, like Jered from Tradehill.

I think a site should absolutely disclose if they are dipping into the markets as well, and I think everyone on this forum should get on board.

Value/Worth is what the market decides it is, nothing more, nothing less.

Watch a show like Pawn Stars and see how delusional people are even in the face of compete honesty from the pawn broker's side.

People don't like speculators because they spend too much time watching the news and drinking the Kool-Aid than thinking about things for themselves.  Some say speculators are "Un-American" because they "drive up prices".  First off, it's Un-American to tell someone what they can and can't do with their money when they adhere to ethical and legal guidelines, secondly, speculators don't "drive up the price", they are part of the market and help decide value.

You have to understand that most people think that shorting an equity or commodity is wrong, and they'd rather voice their uneducated opinion loudly instead of quietly educating themselves on the matter.

You need Fill-Or-Kill (FOK) orders for HFTs, only one exchange allows for that, and it's CampBX.

I'm still not sure why the exchanges decided to follow the current model of the markets, it just means we will end up with the same semi-corrupt system where the big players make price and everyone else can only rarely override that decision on price (Darkpools etc).  To boot, as I just said, in the real world you can find Darkpools via FOK orders, but we have a situation where you aren't able to do this on every exchange that offers them save for CampBX.  I've only been able to spot one once, and it was a complete fluke.

It absolutely CAN happen.  No exchange is being upfront with their own trading in the markets, and I have pretty strong reasons to believe that they are involved in trading in their own markets.