Posts Tagged‘speculation’

Dogecoin Gets It, Everyone Else Doesn’t.

Cryptocurrencies and I have a sordid history. It began with me comparing BitCoin to a pyramid scheme, pointing out the issues that were obvious to many casual observers and receiving some good feedback in the process. Over time I became more comfortable with the idea, although still lamenting the volatility and obvious market speculation, and would go as far to say I was an advocate for it, wanting it to succeed in its endeavours. Then I met the community, filled with outright hostile individuals who couldn’t tolerate any criticism and acted like they were the victim of the oppressive government regime. I decided then that I wouldn’t bother blogging about BitCoin as much as I had done previously as I was just sick of the community that had grown around it.

Then came Dogecoin.
Dogecoin Thanks BTC LTCDogecoin, for the uninitiated, is a scrypt based cryptocurrency (meaning that it’s a memory-hard based currency, so the ASICs and other mining hardware that BitCoiners have invested in is useless for mining it) which bears the mark of the Internet meme Doge. The community that sprung up around it is the antithesis of what the BitCoin community has become, with every toxic behaviour lampooned and everyone encouraged to have fun with the idea. Indeed getting into Dogecoin is incredibly simple with tons of guides and dozens of users ready and willing to help you out should you need it. Even if you don’t have the hardware to mine at a decent rate you can still find yourself in possession of hundreds, if not thousands, of Dogecoins in a matter of minutes from any number of the facet services. This has led to a community of people who aren’t the technically elite or those looking to profit, something which I believe led to the other cryptocurrency communities to become so toxic.

I myself hold about 20,000 Doge after spending about a week’s worth of nights mining on my now 3 year old system. Whilst I haven’t done much more than that it was far, far more than I had ever thought about doing with any other cryptocurrency. My friends are also much more willing to talk to me about Dogecoin than Bitcoin with a few even going as far to mine a few to fool around with on Reddit. Whether they will ever be worth anything doesn’t really factor into the equation but even with their fraction of a penny value at the moment there’s still been some incredible stories of people making things happen using them.

For most of its life though the structural issues that plagued BitCoin where also inherent in Dogecoin, albeit in a much less severe manner. The initial disparity between early adopters and the unwashed masses is quite a lot smaller due to Dogecoins initial virility but there was still a supposed limit of 100 billion coins which still made it deflationary. However the limit wasn’t actually enforced and thus, in its initial incarnation, Dogecoin was inflationary and a debate erupted as to what was going to be done. Today Dogecoin’s creator made a decision and he elected to keep it that way.

One of my biggest arguments against BitCoin was its deflationary nature, not because it’s not inflationary or whatever argument people think I have against it, more that the deflationary nature of BitCoin encouraged speculation and hoarding rather than spending. Whilst the inflation at this point is probably a little too high (I.E. the price instability is mostly due to new coin creation than much else) it does prevent people attempting to use Dogecoin as a speculative investment vehicle. Indeed the reaction from a lot of those who don’t “get” Dogecoin have been lamenting this change but in all honesty this is the best decision that could be made and shows the Dogecoin creators understand the larger (non-technical) issues that plague BitCoin.

Will this mean that Dogecoin will become the cryptocurrency of choice? Likely not as with most of these nascent technologies they’ll likely be superseded by something better that addresses all the issues whilst bringing new features that the old systems simply cannot support. Still the fact that there has been an explosion in altcoins shows that there’s a market out there for cryptocurrencies with feature sets outside of what BitCoin provides. Whether they win out all depends on where the market wants to head.

Why You Shouldn’t Invest In BitCoins.

Much like my stance on Instagram I’ve seemingly been at odds with the BitCoin community ever since I penned my first post on it almost 2 years ago. The angst seems to stem primarily from the fact that I lumped it in with Ponzi schemes thanks to its early adopter favouritism and reliance on outside wealth injection. After the first crash however BitCoins started to show some stability and their intended function started to be their primary use. Indeed the amount of investment in the BitCoin ecosystem has sky-rocketed in the past year or so and this had led to a period of much more mild growth that was far more sustainable than its previous spikes were.

It was for that reason that I held my tongue on the latest round of price volatility as I assumed it was just the market recovering from the shock of the Pirateat40 scheme unravelling. That particular incident had all the makings of another price crash but it was obvious that whilst there was a great deal of value lost it wasn’t enough to make a lasting impression on the economy and it soon recovered back to a healthy percentage of its previous value. The last month however has started to show some worrying trends that hark back to the speculative bubble.

BitCoin Price Chart

If you zoom in on either of those 2 ramps the gradients are frighteningly similar although the price jump is from $15 to $25 rather than $3 to $10. Whilst the value jump might not be as severe as it was before (~66% rather than 300%) it’s still cause for some concern due to the time frame that it has happened in. When the value jumps up this fast it encourages people to keep their BitCoins rather than using them and attracts those who are looking to make a return. This puts even more upward pressure on the price which eventually leads to the kind of value crash that happened back in 2011.

Others would disagree with me however, saying that its actually a great time to invest in BitCoins. The reasons Anzaldi gives for wanting you to invest in BitCoins however don’t make a whole lot of sense as he doesn’t believe this round of growth is unsustainable (and even admits that the only other thing that gives this kind of ROI are all scams) and that the reward halving coupled with the deployment of ASIC chips are what are behind this stratospheric, real growth. The fact of the matter is that neither of these really has any influence over the current market rate for BitCoins, it all comes down to what people are willing to pay for them.

Prior to the lead up of the previous crash BitCoins had already experienced some pretty crazy growth, going from prices measured in cents to dollars in the space of a couple months. This immediately led to a flood of people entering the market who were seeking fast returns and had no intention of using BitCoins for their intended purpose. This current round of growth feels eerily familiar to back then and with people seeing rapid growth its highly likely that those same speculators will come back. It’s those speculators that are driving the price of BitCoins up not the factors that Anzaldi claims. If they were the price would have begun this current upward trend back in November (it did go up, but not like this and stablized shortly after) and the introduction of ASICs is far more likely to flood the market with more coins as hardware investors look to recoup some of their investments, rather than holding onto them for the long haul.

This kind of wild volatility isn’t helping BitCoins intended use as an universal currency that was free of any central agency. If this growth spurt leads to a new stable equilibrium then no harm, no foul but it really does look like history repeating itself. I’m hopeful that the market is smart enough to realise this and not get caught up in a buy and hold spree however as they’ve managed to do that in the past. As long as we remember that it’s BitCoin’s worth is derived from its liquidity and not its  value then these kinds of knife edge situations can be avoided.

Consoles Aren’t Going Away and Mobiles Won’t Take Over.

You wouldn’t have to be a reader for long to know that my preferred gaming platform is the PC but I’m pretty sure it comes as no surprise that I have all of the current generation consoles (apart from the WiiU, but I do have a Wii). I grew up with both platforms and arguably I was more of a console gamer when I was younger but as time went on I found that PC gaming just sat better with me. What I’m getting at here is that whilst I might be a PC gamer I’m certainly not one to call for the demise of the consoles and indeed believe that the platform will be around for quite a long time to come.

Current Gen Consoles Playstation 3 Xbox360 Wii

Others don’t share that view, in particular Ben Cousins who wrote this article on Kotaku outlining the reasons why consoles are going away:

Many people (me included) have been saying publicly that they think the ‘console’—dedicated hardware designed primarily for gaming—is on its way out.

I used to keep a list of famous developers and executives who shared my view, but it got too big to maintain!

Anyway, here’s just two whom you might care about: David Jaffe and Hideo Kojima.

He then goes on to list 5 data points and 2 assumptions that back up his claim and on the surface they appear plausible. Indeed many of the supporting points are based at least partially on ideas that everyone involved in the games industry knew about but I feel the conclusions drawn from them are a little over-reaching, enough so that his idea that consoles are going away is at the least premature and at the worst grossly misinformed.

Take for example the first data point about consoles being sold at a loss. This is no revelation as console makers have been doing this for decades prior and have still managed to turn a profitable business from them. Indeed while Nintendo might be breaking its usual rule of not selling consoles at a loss it doesn’t take much for them to become profitable with the sale of a single title enough to push it over the line. In fact if you look at the past 5 years things look pretty good for the major consoles, especially for Microsoft and Nintendo. I believe Cousins is being slightly unfair by going back further than that because those years were right at the beginning of the current generation console’s life and that’s arguably the point at which the greatest losses will be incurred.

 

I’m also not sure how 40% of the sales occurring after the price drops supports his idea that these people are somehow the mainstream gamers. Taken literally that means that the majority, I.E. >50% of current gen console owners, bought their console before these price drops/product revisions occurred. I’d also argue that a portion of those new sales were also current owners upgrading older consoles as in the case of the Xbox the original was something of a jet engine when used and the subsequent iterations vastly improved that experience. I’ve heard similar tales from PS3 Slim owners as well so I don’t feel the “mainstream gamer” argument holds up with console sale figures alone.

It’s not a secret that mobile devices are pervasive but it’s also quite known what they’re capable of and what their primary use is. Indeed console makers are aware of this and have been working to expand their console experience onto the mobile platform. Microsoft has long been working towards achieving their Three Screens idea which would see the experience between Xbox360, Windows Phone 8 and Windows 8 unified together enabling developers to provide the same experience regardless of the platform. We’re still a long way from achieving that and whilst smartphones do a good job of getting close to the console experience they’re still not in the same league, something which console owners are acutely aware of.

The rest is speculation based off those points which I won’t bother digging into but suffice to say I don’t get the feeling that consoles are going to go anywhere in a hurry and I’m willing to say that there’ll definitely be several more generations to come. The mobile market might be growing but I believe it’s an additive market, one that’s bringing more gamers in not one that’s cannibalizing gamers away. There’s also the fact that consoles are increasingly becoming the media centre of the house, something that smartphones are going to have a hard time replacing. Still we’re both deep in speculation territory here so the only way to settle this will be to wait it out and hope that both our opinion pieces are still online in a decades time.

The Last Thing BitCoin Needs: Rising Exchange Rates.

In regular financial markets the value of a country’s currency is a great marker for how well it’s doing in economic terms. The surge in value of the Australian currency over the past 2 years demonstrates how strong our economy was in comparison to the rest of the world, mostly thanks to our strong capitalization of our banks couple with some pocket change from the mining and resources boom. However there’s one particular exchange rate where the value of the currency is actually irrelevant to the strength of the underlying economy and a high trading price actually signals that there’s something going horribly wrong. The economy I’m referring to is the one of the online cryptocurrency BitCoin.

Long time readers will know that I was very skeptical about the idea at first as it harked back to the days of other online currencies that were ripe for exploitation and all of which inevitably fell down, sometimes with catastrophic consequences. My concerns were mainly centred around the immense amount of wealth that that was concentrated in the hands of the early adopters but over time it shifted to the crazy exchange rates that BitCoins were attracting which inevitably lead to the price crash that happened in the middle of last year. Since then I’ve been more bullish on the idea of BitCoins because the price has remained steady whilst transaction volumes have started to rise, showing that BitCoins can actually function as a proper currency and not a speculative investment vehicle.

However over the last month or so BitCoin’s exchange rate has been creeping up steadily and the last week alone has seen massive gains in the current trading price:

As you can see for the past 6 months or so the price of BitCoins has been relatively steady, trading at around $5 for a good length of time. However just over a month ago the value started to slowly tick upwards and the last two weeks have seen that value explode in some rapid gains, culminating in a massive jump of almost 20% in under a week. Whilst it’s nothing like the speculative bubble of last year it does raise concerns that the stability of the BitCoin currency was short lived and the speculators have come back to the market looking to derive some more short term gains from the market they successfully pillaged last year.

Increases like this remind us of the unfortunate fact that at its current size the BitCoin market is still volatile as there are strong correlations between large transaction volumes and huge swings in the exchange rate. This is not a desirable attribute for a currency and is much more amenable to speculative trading, something which has burned BitCoin users in the past. Indeed a rising BitCoin value should cause a rational actor to hold off using is as a currency as they would instead want to hold onto them for as long as possible in order to extract the maximum amount of gain out of them. Such thinking is what lead to the BitCoin price to reach such dizzying heights last year and this last bump in the price has the potential to do it all over again.

For BitCoin’s sake I hope this isn’t the case as there are many innovative companies betting their core business on the BitCoin idea and a volatile market could easily spell the end for them. It’s quite possible that these latest bumps are just blips on the radar but the steady rise over the last month or so really has me worried about a repeat of the speculative bubble that happened last year. Can the BitCoin market correct for this kind of behaviour? Will passionate BitCoiners get roped back into the idea that their BitCoins are investment and not a wealth transfer vehicle? I don’t have straight answers to these questions but the next couple months will show if the BitCoin market can learn from the mistakes of its past and hopefully overcome them to become the real virtual currency it has always strived to be.

Durango, Orbis and What’s Influencing the Next Generation of Consoles.

The current generation of consoles is the longest lived of any generation of the past 2 decades. There are many reasons for this but primarily it came from the fact that the consoles of this generation, bar the Nintendo Wii, where light years ahead of their time at release. In a theoretical sense both the Xbox360 and the PlayStation 3 had 10 times the computing power of their PC contemporaries at release and they took several years to catch up. Of course now the amount of computing power available, especially that of graphics cards, far surpasses that which is available in console form and the gaming community is starting to look towards the next generation of consoles.

The last couple weeks have seen quite a lot of rumour and speculation going around as to what the next generation of consoles might bring us. Just last week some very detailed specifications on the PlayStation4, codenamed Orbis, were made public and the month before revealed that the new Xbox is codenamed Durango. As far as solid information goes however there’s been little to come by and neither Sony or Microsoft have been keen to comment on any of the speculation. Humour me then as I dive into some of the rumours and try to make sense of everything that’s flying around.

I’ll focus on Durango for the moment as I believe that it will play a critical part in Microsoft’s current platform unification crusade. Long time readers will know how much I’ve harped on about Microsoft’s Three Screens idea in the past and how Windows 8 is poised to make that a reality. What I haven’t mentioned up until now is that Microsoft didn’t appear to have a solution for the TV screen as the Xbox didn’t appear to be compatible with the WindowsRT framework that would underpin their platform unification. Rumours then began swirling that the next Xbox could be sporting a x86 compatible CPU, something which would make Metro apps possible. However SemiAccurate reports that it’s highly unlikely that the Durango CPU will be anything other than another PowerPC chip, effectively putting the kibosh on a Three Screens idea that involves the Xbox.

Now I don’t believe Microsoft is completely unaware of the foot hold they have in the living room when it comes to the Xbox so it follows that either Durango will have a x86/ARM architecture (the 2 currently confirmed WinRT compatible architectures) or WinRT will in fact work on the new Xbox. The latter is the interesting point to consider and there’s definitely some meat in that idea. Recall in the middle of last year that there was strong evidence to suggest that Windows 8 would be able to play Xbox360 games suggesting that there was some level of interoperability between the two platforms (and by virtue the Windows Phone 7 platform as well). Funnily enough if this is the case then it’s possible that Metro apps could run on the Wii U but I doubt we’ll ever see that happen.

Coincidentally Orbis, the PlayStation3 successor, is said to be sporting a x64 CPU in essence eliminating most of the differences between it and conventional PCs. Whilst the advantages to doing this are obvious (cross platform releases with only slight UI and controller modifications, for starters) the interesting point was that it almost guarantees that there will be no backwards compatibility for PlayStation3 games. Whilst the original PlayStation3s contained an actual PS2 inside them the vast majority of them simply emulated the PS2 in software, something that it was quite capable of doing thanks to the immense power under of the PlayStation3. Using a more traditional x64 CPU makes this kind of software emulation nigh on impossible and so backwards compatibility can only be achieved with either high end components or an actual Cell processor. As Ars Technica points out it’s very likely that the next generation of consoles will be more in line with current hardware than being the computational beasts of their predecessors, mostly because neither Microsoft or Sony wants to sell consoles at a loss again.

The aversion to this way of doing business, which both Microsoft and Sony did for all their past console releases, is an interesting one. Undoubtedly they’ve seen the success of Nintendo and Apple who never sell hardware at a loss and wish to emulate that success but I think it’s far more to do with the evolution of how a console gets used. Indeed on the Xbox360 more people use it for entertainment purposes than they do for gaming and there are similar numbers for the PlayStation3. Sony and Microsoft both recognise this and will want to capitalize on this with the  next generation. This also means that they can’t support their traditional business model of selling at a loss and making it up on the games since a lot of consoles won’t see that many games purchased for them. There are other ways to make up this revenue short fall, but that doesn’t necessarily mean they can keep using the console as a loss leader for their other products.

All this speculation also makes the idea of the SteamBox that much more interesting as it no longer seems like so much of an outlier when lumped in with the next generation of consoles. There’s also strong potential that should a console have a x86/x64 architecture that the Steam catalogue could come to the platform. Indeed the ground work has already been done with titles like Portal 2 offering a rudimentary level of Steam integration on the PlayStation3, so it’s not much of a stretch to think that it will make a reappearance on the next generation.

It will be interesting to see how these rumours develop over the next year or so as we get closer to the speculated announcement. Suffice to say that the next generation of consoles will be very different beasts to their predecessors with a much more heavy focus on traditional entertainment. Whether this is a positive thing for the gaming world at large will have to remain to be seen but there’s no mistaking that some radical change is on the horizon.

Zero Value Blogging: News From Non-News.

I’ve found that no matter how hard you try to keep the quality of your blog high you’ll eventually end up posting something that’s utter crap, even more so if you go for the silly idea of blogging on a regular basis. This particular blog is a good example of that as whilst I’m overall satisfied with the level of quality stuff I’ve written over the years there’s more than a few examples of me trying to shit when I didn’t have to go and ending up posting something that does little more than keep this blog alive in Google’s search algorithms. Still this won’t stop me from pointing out when others crap out posts that add nothing of any value to anyone, especially when the articles are pulled directly out of their asses.

One of my favorite blogs who I regularly use as a punching bag here is Techcrunch. Don’t get me wrong there’s a reason that I keep coming back to them everyday for my fix on up and coming companies (I’m mostly watching for competitors) but they do have a habit of making news out of innocuous crap in order to generate some page views. From creating recursive posts with 0 content to wild speculation on new products without little to no research they’re no strangers to peddling out shit to their readers and seemingly act surprised when a vocal bunch of them begin trolling them. With the volume they put out though its inevitable that a percentage of their content will end up like this, but that doesn’t make up for the fact that it adds nothing to the value of their site or the wider Internet.

And rightly meta-blogging like this is similarly of low to zero value as all I’m really doing here is belly-aching about a much more successful tech blog. I try to avoid posts like these wanting instead to give my readers the information behind the news so that my posts can stand by themselves (and as a result age well) but a combination of lack of inspiration, seeing one of these 0 value posts and having this thing in draft for a couple weeks finally pushed me over the edge. You’d think the irony would be getting to me, but I’m just happy that I can satisfy my OCD for the day by getting this thing written.

I think the biggest issue I have with this kind of blogging is that when big sites do it the smaller ones follow suit turning the non-news story into a story in itself. I pride myself on not laying on the bullshit too strongly here and if I can’t verify something I just don’t write about it (or flag it as opinion). Unfortunately in the rapidly paced world of online news there’s really little time to allocate to fact checking a story when it hits, leaving you with the undesirable option of either reporting it verbatim or missing the boat by attempting to verify the story. My rule of posting once a day negates this problem (and also helps keep me sane) but also negates any benefits of posting on hot news as I’m often behind the times. I’m not a news reporting site however, so the impact on me is quite minimal.

When you’re making a living from the number of page views that come to your site it is understandable that you’ll do anything to keep that number high. Hell even just having a higher page view count can make you feel pretty good (like it did back when I first started this site) but in the end being proud of your work feels a lot better. I might change my tune when I finally think about monetizing this site, which could be coming soon since I moved this to a proper server, but that won’t change the fact that I’ll hate on those who aren’t providing any real value and I encourage anyone to point back to this post should I start playing fast and loose with the quality content just to keep the page views up.

The Federal Budget.

It’s that time of the year again and with less than a week until the official announcement the budget buzz has begun. Let’s take a look at what has managed to slip out from the cracks in parliament and see what that means for Australia at large:

These are interesting points, mostly for the fact that many of them mirror what the United States did with their budget. Most notable are the almost direct copies of an increase in tax for the wealthy as well as a large increase in defence spending. I can’t help but think that this is a little bit of me-too-ism from the Rudd government as the decision has been well received by the working class and not so much from the corporations. Saying all this though Rudd and Swan are making the best of a bad situation and will continue to look to score political brownie points throughout the economic crisis.

The other issue here is that Swan has stood his ground firmly when it comes to delivering the tax cuts they promised a while ago. I can admire their dedication to delivering on an election promise but when they’ve stated that the budget deficit will last for such a long time it seems like a terrible move economically which won’t push their ratings that much higher in the polls. Again this mirrors the United States position of cutting taxes to increase revenue but when you’re in such a large hole of debt cutting taxes only serves to draw out the time the country stays in debt. It may soften the blow, but you’ll suffer for much longer because of it.

Personally the bits of the budget that I’ve seen so far seem to lack a cohesive strategy that I’d expect from the people running the country. Many of the ideas seem to reek of robbing Peter to pay Paul, with revenue generation coming from all the wrong places (people’s superannuation is really the wrong place) and then spending it by giving it back to the people they took it from. A strange bit of circular logic there.

I’ll still take all of this with a grain of salt as the strategy the government is planning to take will become all the more clear next week when the full budget is announced. It’s easy to get riled up over small bits of information like this and what we have is really only a small part of a larger picture. Still the parts I’m seeing right now don’t give me the best feeling about the rest of the picture.