This image is already outdated, $81.75 is the current high and last trade was for $81.  Just another milestone on the way to $100, which itself is just a milestone on the way to much higher values.

I'd like to start posting here more often, maybe this short post will inspire me to post more in the following weeks.

WordPress Accepting Bitcoins

http://en.blog.wordpress.com/2012/11/15/pay-another-way-bitcoin/


WordPress is now accepting bitcoins, this is a huge step forward.

Absent

I've been absent a long time, but I've recently gained a renewed interest in bitcoins- and writing about them.  Expect more posts soon.

Deflation, not so much.

My "Deflation" post predicted certain numbers which are not even close to what actually occurred.  I am not too concerned- those numbers were sort of a dream best-case scenario.  I do still believe that BTC value will increase in time on a longer scale, but I have come to realize an error in my previous assumptions.

Currently, bitcoins are not truly deflationary.  The simple fact that 50 new bitcoins are generated every 10 minutes or so causes some inflationary pressure.  The influx of new blood into the BTC market provides deflationary pressure.  For a time, the new blood overwhelmed the mining of coins and we had deflation, but in the last few weeks things have been mostly in equilibrium- value has hovered around $14-$15 for the last week.

I still hold my opinion that BTC are deflationary, but that aspect depends on future production reduction of BTC.  For now, there may be no deflation.

Withdrawn

I originally planned to leave all my BTC as BTC until at least the end of the year, however I decided to limit my risk by making a purchase with them.  Approximately 34 BTC later, I have a $540 newegg.com gift card.

Since I am unsure about mining long-term, I purchased a 990FX motherboard which will serve a second purpose later, as host to an AMD bulldozer CPU :)  I also bought a high-end power supply, some RAM, and a cheap CPU for mining.  Along with some 5830s I previously rescued from a newegg.com sale, I will make a triple 5830 based mining rig.

In other news, mtgox.com suffered from a bit of an incident yesterday.  A hacker dumped over 250k BTC on the market, tanking the price down to $0.01 per BTC briefly, and attempted to steal as much as he could given the $1000/day limit.  Mtgox has since shut down to clean up the mess and revert all trades from the big sale on.  Mtgox is reportedly still working on fixing things, so tradehill.com has become the exchange of choice.  However, tradehill has been nearly unusable due to lag, it seems that they were not completely ready for the load of the entire bitcoin community.

Corrections

"It could reverse, the market could crash, or it could increase at exactly the rate I previously predicted- it's beyond my powers to predict fully."


Amazingly, it seems as though my post from 1 week ago might be right on the money.  After hitting a high at the $30+ mark, the BTC seemingly crashed Thursday night through Friday, and is now at $22.00.  Incredibly, this is right around my predicted value:


On May 27th, 1 week ago, 1 BTC was worth $8.65. Today 1 BTC is worth $13.80. With inflation, your money buys less now than it did in the past. With the BTC economy, we see the opposite- BTC today will buy more than it did in the past. This is deflation.

62% growth in one week leads to some absurd numbers in a relatively short time frame:

6/10- $22.35 (1 week)


The day isn't over yet, but wouldn't it be interesting if it did end with 1 BTC = $22.35?

An Estimate Too Conservative

My estimate:
6/10- $22.35 (1 week)


Today:
6/7- $24.4


Apparently my estimate for the rate of increase was too low.  I've noticed something else too.  The BTC value seemed to be "stuck" around $18.5 - $19.5 for a day before breaking through $20 and almost instantly reaching $24.  Now it seems to be stuck again at $23.5-$24.5.  I predict that it will remain stuck here for a bit, maybe a day or two, and then jump up to $29~.


Why?


The early speculators are human.  I imagine they are looking at the rising value and thinking "if the value reaches X, I will sell half of my bitcoins".  As humans, we tend to pick nice round numbers when we can.  I suspect a lot of these people saw $20 as a big milestone, and now see $25 the same way.  So when the value gets close to these numbers, they sell.  These sales (briefly) halt the upward trend of BTC value, until the speculators have spent their reserves.


How high can it go?  And how fast can it get there?  I have no idea.  My last estimate was too conservative, but there is no guarantee that the rate of increase will remain as it is.  It could reverse, the market could crash, or it could increase at exactly the rate I previously predicted- it's beyond my powers to predict fully.


My current strategy is to stick with hardware investment and mining.  The returns are lower than directly buying BTC, but the risks are smaller as well.  I figure if BTC really go insane and reach 4 digit values I'll make plenty of money, and if they do not my losses will be minimal.


On an unrelated note, parts arrived for my first real dedicated mining rig.  However, my desk area lacks the power to run the new rig and my existing computer without tripping the circuit breaker.  My plan is to run headless in another room after setup, but I'm going to delay the setup and do it tomorrow at work where I have adequate power.


BTC mined as of tonight: 18.28 BTC, total value: $444.20