I Bought a Bitcoin

http://nymag.com/daily/intelligencer/2013/04/i-bought-a-bitcoin.html

by benwoody • 13 years ago

110 111 13 years ago

nymag.com

IheartApplesDix• 13 years ago

~or~ how to bring in new investors to your bubble.

lwat2• 13 years ago

The next crash is gonna be painful. My popcorn drawer is well stocked.

michaelochurch2• 13 years ago

I bought BitCoin and I liked it Hope my wallet don't mind it... It felt so wrong, it felt so right, let's transact tonight

reaclmbs• 13 years ago

Hey, I know you hate Bitcoin and think it's a pyramid scheme and everything, but isn't it good for smart people, and wouldn't its success create fricture among the elites (like you are always advocating)?

michaelochurch2• 13 years ago

It's a simplification to say that I hate it. The work is impressive. If there were a Bitcoin course on Coursera on how the thing works, I'd sign up and take it.

I don't like the forced deflation. Deflation encourages hoarding and protects elites.

With Magic: the Gathering (Mt. Gox has me connecting the two) the hoarding behavior is actually good because it keeps unbalanced cards out of play. With BitCoin, it's going to lock a lot of the stuff up with hoarders. That could destroy it, insofar as if no one's using it, the market becomes illiquid, compromising value and possibly causing panic sales. The thing certainly isn't ready for prime time as a currency.

Also, there's a pretty easy (and legal) way one could destroy BitCoin. Right now, there are no reserve requirements, because it's not a real currency. Start a bank. Make sure it's a limited liability corporation, because this is a bit risky (bank runs). Let people deposit BTC and then lend them out. Now you've put a money multiplier on BTC, and without the reserve requirement, that's unbounded. Goodbye, scarcity. Goodbye, $147 BTC.

At that point, it's unclear that BitCoin has any value, until regulations come in regarding reserve requirements.

Mahn2• 13 years ago

I keep wondering whether I should be buying bitcoins now, but I have mixed feelings about it. I'm pretty sure its value will continue going up for a while, but I guess I'm still skeptical.

ihsw2• 13 years ago

Like any investment it requires careful analysis, personally I prefer to pay attention only to the 200-day simple-moving average. Granted in the past 200 days it has changed a lot, however recent interest in it indicates that it may continue going up. Past performance isn't an indicator of future performance but it's a decent gauge of trends.

Most news articles call it speculative because the people using it can afford to lose the USD value of the coins and there simply isn't enough mass adoption behind it to maintain its value (which would be true), so trade cautiously and ignore news about it.

If you must then re-allocate your investment in or out on a monthly basis.

camus• 13 years ago

it's basically a bet,but you have more chance to win than in a casino, or at the lottery.

tudorizer• 13 years ago

wow, seriously? Ignorance is strong in you.

paulhodge2• 13 years ago

If you just want to dip your toes in the water, you could always start mining. Doesn't take any initial investment or bank information or anything like that, just processing power.

mistercow• 13 years ago

Aren't the odds of making a single bitcoin as a lone miner, with an ordinary computer, over any sane period of time pretty microscopic at this point? To make any money that way, you'd need to join a mining pool, and at that point you're not really just dipping your toes in the water anymore.

InclinedPlane• 13 years ago

If you want to buy because you think the value will go up for no other reason than that the value has been going up then you're just participating in a speculative bubble. You might as well be gambling.

zanny4• 13 years ago

If stock markets and currency markets have taught us everything, to some degree, human behavior is slightly less random than a shuffled deck or rolled set of dice.

Just a bit, though. Not much.

baby• 13 years ago

I was having the exact same thoughts when it was at 30$. I'm having a lot of regrets now.

account_taken• 13 years ago

Not sure if Bitcoins are a good investment. All it takes is a western country (say Switzerland) to create an online currency and Bitcoins will sink faster than a Carnival ship.

ihsw2• 13 years ago

The Royal Canadian Mint developed MintChip[1] however there has been little interest.

There's a scathing Forbes blog post[2] too, if you're interested.

[1] http://en.wikipedia.org/wiki/MintChip

[2] http://www.forbes.com/sites/jonmatonis/2012/04/12/mintchip-m...

haakon• 13 years ago

Note, however, that the "scathing Forbes blog post" was written by the Bitcoin Foundation's press secretary.

throwawayG9• 13 years ago

Do you even Bitcoin? One of the main features of Bitcoin is that it can't be manipulated by a central authority like a bank or government (ie: they can't steal from the people by printing money).

rdtsc• 13 years ago

> Do you even Bitcoin?

No but I lift, .... mostly functions, sometimes they have multiple variables ;-)

> One of the main features of Bitcoin is that it can't be manipulated by a central authority

Q: What can a central authority with power to imprison and/or garnish your wage manipulate? A: anything it damn wants.

Yes the Fed Gov. can't print more bitcoin it sure can come after you with a rubber hose expecting to get some sales, or money exchange tax some rather-made-up-new-law-tax. A few high profile case about bitcoin used for terrorism, drug, illegal porn, money laundering and these new laws won't be hard to make.

gbrindisi• 13 years ago

That's also the biggest drawback since there wouldn't be anyone watching over speculations.

31reasons2• 13 years ago

Bitcoins are just a right to participate in a digital crypto economy. They don't have any value in themselves. Its like holding passes to a show in the big theater. If the show doesn't start you passes are worthless. If there is any meaningful possibility of a show in the theater, you might get lucky for holding those passes. The main problem is that people who will participate in the show also need to get the passes to actually act out the show but if everyone just keep holding their passes for no good reason, well then there may not be a show.

From many bitcoins forums, people are hoping that its USD rate climb to $1000 or even $1 million, which is pretty ridiculous. People who have thousands of bitcoins, can probably keep holding on to them after selling 50% of them. But people who gonna buy it for more than $100 , they gonna panic at a first sign of decline. I suspect its not that far off.

vacri• 13 years ago

Isn't that the same as a dollar bill?

31reasons2• 13 years ago

Yes, but dollar bill is running a successful show for the last 2 hundred years without any blackouts, while BitCoin need to START the show in the first place. It needs to sort of start a sustainable chain reaction. EDIT: But the bitcoin deflation has introduced so much resistance to this reaction. Each digital wallet is like an atom, there has to be some force to break the atom and keep the chain reaction going, but due to the deflation, each atom is requiring more and more energy to break (spend bitcoins).

wyager2• 13 years ago

>people are hoping that its USD rate climb to $1000 or even $1 million, which is pretty ridiculous.

Is it really? Not too long ago, a Bitcoin was worth about $.0007.

130/.0007 = 185714

It's only four more orders of magnitude to get to the $1M range.

I don't think it's going to happen, but it's not all that far-fetched.

colwem• 13 years ago

Well right now the entire bitcoin economy is valued at $1.6B so if a bitcoin rises to $1M the bitcoin economy would reach $12.3T . I'm no economist but that seems like it might be an unrealistically huge percentage of the world economy. I really don't think there's enough investable money in the world to get there.

etherael13• 13 years ago

Serious question, why does the price of a single bitcoin matter when they're divisible to 8 decimal places? Beyond a psychological barrier people have thinking about the 1:100 thing, it's really irrelevant if your cup of coffee costs 10 bitcoins or 0.00001 bitcoins, especially if the calculation is made at the time of purchase relative to an underlying stable value like a basket of the largest fiat currencies in circulation or somesuch, or just the boring plain old USD.

1 BTC = 1000000 USD To put it in a less psychologically alarming way is exactly the same as saying 1 Satoshi = 0.01 USD.

zanny4• 13 years ago

People have been measuring the value of a BTC by its whole value until now because it was relative to fiat currencies in whole dollars that way.

If BTC was ever worth a million USD, they would probably be talking in Satoshis.

It isn't any more complicated than thinking of the difference between $1 and 0.01 cent.

T-hawk• 13 years ago

It doesn't matter, mathematically. Psychologically, it absolutely does. Bitcoin running to $150 is way more splashy and headline-grabby than $15. And at Bitcoin's beginning, it looked more respectable in gaining followers when 1 BTC was somewhere near $1 than if it were $0.01 and looking like some penny-stock scam.

Same goes for stock prices. Apple and Google have let the shares run to $400 and $700 instead of splitting to a more industry-standard two-digit number. Of coures the per-share price is meaningless in itself, it'd be the same if ten times as many shares existed at one-tenth the price. But it's a lot easier to grab eyeballs with a stock shooting through $400, $500, $600 benchmarks than a pedestrian $50.

adaml_623• 13 years ago

That is a really good point. Bitcoin "inflation" will stifle the Bitcoin economy. Because if you are holding Bc then prices on everything are dropping.

This effect of deflation is why Japanese economy is so broken. And why Governments and central banks will do almost anything to keep inflation going.

Frozenlock• 13 years ago

Tom Woods on sound money: https://www.youtube.com/watch?v=TnS2OtzSTq0&feature=yout...

nazgulnarsil3• 13 years ago

Bitcoin is a pyramid scheme in that everyone is counting on someone else to want them.

However this is no different from any currency or monetary commodity with no use value. With bitcoin, the "bag holders" at the end of the scheme have something for their trouble: a global, secure, low fee transaction settlement system. Given that such a network would be quite valuable, there's no reason for it to crash to 0, barring threats of violence. Perhaps speculation value will come out over time, but this is fine.

bumbledraven• 13 years ago

[bitcoin] is no different from any currency or monetary commodity with no use value

No, bitcoin is different insofar as there is no powerful entity that taxes people and requires payment in bitcoin. This makes it even less valuable than currencies that DO have that feature.

etherael13• 13 years ago

That's hilarious, do you even realise what you're saying? You consider it a feature of a currency that there is a violent extortionate power engaged in parasitism of the monetary base.

nazgulnarsil3• 13 years ago

that creates a certain expectation that demand will remain strong sure, but it's still the same thing. People still do divest themselves of national currencies in real life. People trying to divest themselves of currencies they aren't supposed to is another use case of bitcoin.

etherael13• 13 years ago

This is actually untrue, bitcoin can be used as many things, and unless the price is zero for all eternity, which at this point appears to be extremely unlikely, it can be used at the very least as a wealth transfer medium. There is nothing in that particular use case that particularly benefits from a rising or falling or stable exchange rate, only a non zero one.

As a store of wealth, bitcoin is probably better off sitting at a single stable price rather than climbing exponentially as it has been, so even in that case it doesn't make sense to class it as a pyramid scheme.

Pretty much the only scenario where it makes sense to class it as a pyramid scheme is as a speculative investment. And frankly, if the most horrendous negative externality of bitcoin is that people are able to engage in speculation on distant value and are exposed to the risk and reward thereof, that really doesn't sound like a huge criticism to me.

mrb2• 13 years ago

"Bitcoin is a pyramid scheme in that everyone is counting on someone else to want them"

Exactly like gold. Yet you don't see people claiming gold is a "pyramid scheme", now do you?

Most of gold's value is dictated purely by speculation and jewelry use (people want it because it is... rare - there is no other underlying reason).

(People say that gold has value because it has industrial uses, but these uses only justify a small fraction of its price, which is in most parts a result of pure speculation and jewelry use).

Guvante• 13 years ago

I don't know, Gold has a well known historical value, but the recent spike in value caused be distaste of Dollars is very similar to what is happening the Bitcoins.

The problem with Bitcoins is that market has already proven it is capable of spiking to zero. Gold could drop, but it is very unlikely to drop too far below its historical levels (since there is demand for it by itself) in contrast, Bitcoins don't have any straight demand.

guard-of-terra• 13 years ago

It's fun how hard it is for a layperson to buy a Bitcoin in USA. CCs do not work, you need bank transfer, your funds can be frozen, you have to wait in line, etc, etc.

I live in Russia and it's amazingly easy. First, everyone here owns a virtual money account. It works like this: you put some money into it and then you can pay your bills (especially internet and mobile phone), small purchases over internet and you can donate it to other users of the system. It is denominated in fiat money and that's what you put in. On every corner there is a device with touchscreen that accepts cash.

And that's where it ends: you can buy bitcoins with virtual money at metabank.ru. It probably talks to mtgox, buys some bitcoin there for you and transfers is. There is no trading involved, you buy for whatever the price is. You can actually buy BTC with CC attached to virtual money account, exactly like PayPal works. The catch is 6% fee.

If you want to trade, you go to btc-e. It supports a plenty of ways to move money into and out of the system. Fees are like 2%.

hackerboos• 13 years ago

>It's fun how hard it is for a layperson to buy a Bitcoin in USA. CCs do not work

Because it's too easy to claim fraud and have your CC provider initialise a charge-back.

I don't know why you can't go to an ATM or a 7-Eleven and use your CC with your PIN to make a purchase. The CC company will know it's probably you because you entered your PIN and the merchant doesn't risk a charge-back.

Jabbles• 13 years ago

In the UK this is called Chip and PIN.

https://en.wikipedia.org/wiki/Chip_and_PIN

InvisibleCities• 13 years ago

>Because it's too easy to claim fraud and have your CC provider initialise a charge-back.

First, you can do this with any CC purchase, and I don't see why bitcoin merchants need any special protection against it. Why would a bitcoin merchant be more likely to get a chargeback than any other merchant? Second, this would definitely be credit card fraud, and easily detectable fraud at that; it's highly likely that anyone who attempted this would wind up in jail.

runn1ng• 13 years ago

In Europe it's not that much simplier.

What I like is localbitcoins.com (disclaimer: I have ads for selling and buying on there). It's simple, you actually meet some people interested in bitcoins, it's pretty safe (because of the escrow) and a little more decentralized than mtgox/btc-e.

I say "a little", because the escrow is centralized anyway.

James_Duval• 13 years ago

These on-topic comments are all well and good, but what we really want to know is what Objectivists think of the government~

AlexDanger2• 13 years ago

Is there any evidence of nation states or three letter agencies dipping their toes into Bitcoin? Its seems like a perfect solution for the CIA when they need to move money quickly and discretely to 'difficult' regions or individuals.

I know that Gavin Andresen (unofficial leader of Bitcoin movement) did a talk for the CIA in 2011. But I dont know if their interest was about catching bad guys, using it for themselves or seeking to control/manipulate bitcoin: http://www.bitcointrading.com/pdf/GavinAndresenCIATalk.pdf

So I think an interesting question is whether these same agencies are generating bitcoins or attempting to manipulate the market. The big news recently for Bitcoin is the introduction of ASIC hardware dedicated to mining. An ASIC miner the size of a PC can generate bitcoin hashes 100x faster than a GPU at approximately the same power usage.

ASIC miners have taken a while to hit the market because making an ASIC is hard and expensive for a small company. You can bet they didnt get funding from a brick and mortar bank. There are only a couple of companies with a shippable product.

But surely making this same hardware is a relatively trivial exercise for a nation state, particularly the NSA who run their own fab and would be experts at making silicon tuned for crypto algorithms.

Thoughts?

hp50g4• 13 years ago

NSA use FPGAs. Even they can't afford ASICs unless its a supercomputer CPU I.e IBM power and they aren't all that quick compared to an FPGA.

cperciva• 13 years ago

Are you sure about that? There have definitely been times in the past when the NSA rented fab capacity from Intel.

mrmekon• 13 years ago

If Motorola and Cisco and other big tech firms have no trouble producing ASICs, why would the NSA? You don't need to fab them yourself, you just need designers and a fab partner.

drawkbox• 13 years ago

I wonder if online gambling and gambling in games would be legal with bitcoins? Or less of a hurdle? This could be a huge boon for bitcoins if so to becoming the web currency/virtual wallet.

Liongadev• 13 years ago

Legal is unclear but a lot easier for sure. Google SatoshiDice

downandout• 13 years ago

I'm surprised that no one has mentioned the issues that the author had with Bitinstant. The API error indicated that the service - allegedly one of the largest and most reputable Bitcoin sellers in the US - had a total of $16.48 in its possession at the time and could not deliver his order. His experience is not unique - https://bitcointalk.org/index.php?topic=128314.2660

My guess is that the next big Bitcoin implosion story will be about Bitinstant. Something is rotten over there.

ErrantX• 13 years ago

I've recently just sold all my BTC, whilst the hype is still there :) A few friends said I was mad and they would be keeping theirs, but frankly I don't have time to keep an eye on the market and wait for the true peak.

Which made me think of a problem; BTC's are really a speculative market at the moment, rather than a currency (i.e. most people are buying them to trade, not to purchase items). I feel like that defeats the object.

But, hey, it was a tidy profit.

I Bought a Bitcoin

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