You Asked When To Buy Bitcoin...Well Now's Your Chance

http://cryptojunky.com/blog/2013/12/18/you-asked-when-to-buy-bitcoin-well-nows-your-chance/

by CryptoJunky • 13 years ago

31 77 13 years ago

arbuge• 13 years ago

Who can say whether this is a good price for Bitcoin, even after the recent drop? The author says this is the time to buy but goes on to say:

"I have no crystal ball, and can’t say that Bitcoin is at the lowest price it will be at over the next several days/weeks/months. It may very well be that Bitcoin goes lower"

If you want to speculate, try the stock market. It's been around since forever, and you might actually have a bit of an understanding of the fundamentals driving some of the stocks there.

moocowduckquack• 13 years ago

Given the difficulties in buying and selling quickly, at least with bitcoin the game is not currently dominated by HFT algorithms. I'd say that understanding the fundamentals driving the pricing of the modern stock market is at least as difficult as making good bets on bitcoin.

vkou4• 13 years ago

HFT competition is only relevant for day traders. If the author is that financially insightful, he should be stock-picking, and ignore the HFT noise.

salient2• 13 years ago

If you buy it right this minute - yes, it should grow a little more, and you can make a nice profit on it. But is $600+ the price it will stay at from now on? I'm not so sure. I think it will drop to $350 soon, because there's still a lot of uncertainty in the market right now, and there could be some more European countries coming out with bad news for Bitcoin in the next few weeks.

poopsintub• 13 years ago

Hahaha.

DannoHung• 13 years ago

When can I actually use Bitcoin as a currency rather than a speculative investment asset?

That's when I want to buy Bitcoin.

CryptoJunky5• 13 years ago

I can and do for many things. Just loaded my namecheap account last night with some more funds, for instance.

salient2• 13 years ago

When it's 30+ percent of the world's transactions? Its market cap needs to be worth trillions before a highly stable price is established. When Bitcoin is truly mainstream and your grandma and grandpa will be having Bitcoin, and don't "panic sell" at every Bitcoin news, it's when Bitcoin's price will be stable.

Right now the market is full of people who buy and sell Bitcoin based on the latest news. Those people need to represent a tiny percentage of Bitcoin's market cap before volatility decreases drastically. Of course, when that happens, you shouldn't have major news like "China bans Bitcoin" anymore, since if so many people are using it, then you can assume the legal stuff has already been settled long ago, and most countries are using it, and won't ban it overnight anymore.

robinhoode• 13 years ago

Bitcoin will be stable as soon as everyone considers it too boring to write about.

guard-of-terra5• 13 years ago

What is "currency" for you? People refer to "currency" all the time as if it was one thing.

Cash is one kind of currency, plastic is another, bank account - yet another, savings - yet another. Converting between those is not instant and not free.

Bitcoin works OK as a bank account. That is "currency".

collyw3• 13 years ago

I always thought that Dollars / Euros / Pounds were currencies. The card / cash /bank account are mediums tro represent those currencies.

(Now that I have tried putting this into words, I see the whole concept of money / currency is more ambiguous than I originally thought. )

vkou4• 13 years ago

Something meaningful assets are priced in.

I can go to Europe, and buy things that have fixed Euro prices, with Euros. It's possible because the entire Eurozone economy backs the Euro. No such thing exists for BTC.

And no, buying something priced in USD, but having the option to pay for it in BTC doesn't count. At that point, I'm just speculating.

bushido3• 13 years ago

Converting between Cash, Bank and Plastic(Credit Cards) IS near instantaneous. It may not be free but the speediness hasn't really been in question. Also these are all instruments that store value, but are all different instruments.

Though Bitcoin is NOT yet a currency. It cannot store value, the volatility ensures that.

An example to illustrate: Part I: Cash - Bank etc. If I have $2000 in Cash, Credit Card has a balance of $1000 (maxed out) and $0 in my Checking/Chequing/Savings account (bank).

I can visit a branch that's 10 mins away, and deposit the all the money, total wait time would be < 5 mins. (transaction cost free)

I can immediately go to an ATM and withdraw $500. (transaction cost free - $0.30)

After that I can walk back to my home and access all the $1500, this can be:

a) $500 transferred from account to high yield savings account. (transaction cost free)

b) $500 transferred to grand parents using interac (transaction cost free - $1.00)

c) $500 transferred to credit card (transaction cost free) - Note: (i) Credit cards can take up to 3 days to reflect the payment (ii) Credit Cards will consider the original transaction date as the payment date thus not incurring interest for the delay in reflecting the payment and (iii) some credit card issuers will let you make a transaction before the payment is reflected thus reducing the unfortunate "Check kiting"[1] nature of the delay in reflecting the transaction.

Part II: Cash - Bitcoin - Cash Will not go into explaining this in detail, but just answer this 1) Can you take cash and transfer it to bitcoin without using the bank? 2) Will it be nearly as quick converting between instruments as traditional stores of value? 3) In a day or two when you want to make a purchase can you guarantee or even confidently assume that the value will be the same as when you deposited it? Hell can you assure yourself that the value will be the same < 1 hour from when the transaction occurs?

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

onebaddude• 13 years ago

History is littered with the corpses of "investors" in various assets who bought all the way down because "this is a great opportunity!"

The exponential rise is price is always accepted as "rational", but the equally exponential fall is always explained as temporary or manipulation, or something.

A lot of people made money in 2009 when the stock market was incredibly cheap. But it was cheap because there was tangible value that could be calculated based on revenues, earnings, profit margins, etc. If you can't tell me what a Bitcoin should be worth, how do I know it's now cheap? That's speculation.

pyalot2• 13 years ago

There's been no "investor" in the history of investment that made money by buying high and selling low.

collyw3• 13 years ago

From my limited understanding of finance, is that not what short selling is? (Followed by buying back at a reduced price).

dobbsbob2• 13 years ago

I needed 0.5 coins last week to test something so I loaned and sold them to test an auto exchange bot @$980. Just bought back 0.5 to repay the small IRC loan @$460. Sweet thanks China

jusben13693• 13 years ago

Puts and calls. Nice.

glomph• 13 years ago

How did you have the trust for someone to lend you $500 without knowing them?

dobbsbob2• 13 years ago

IRC web of trust rating from #bitcoin-otc

pron8• 13 years ago

I have a question that may sound stupid to Bitcoin aficionados, and yet is the first question that comes to my mind whenever I read something like this, and I'm asking it in all seriousness: why would I want to buy Bitcoin (given that I don't wish to profit from Bitcoin speculation)?

I get that there is some novelty to using an online crypto-currency. But other than the possible fun factor (which I don't expect to experience) what other reason would there be? Now, I'm not asking about Bitcoin's general merit as a currency. Personally, I believe currencies are better when regulated. But that's not what we're talking about. The question of using an unregulated, deflationary crypto-currency instead of "regular money" for most uses by a large population is a theoretical one at the moment, and will remain so for years to come. My question is about using Bitcoin casually now as a supplement to money. A vanishingly small number of vendors accept it. It is not more secure than money: I keep hearing about Bitcoins stolen from online "banks", and I wouldn't trust myself to keep it securely on my own machine. I don't intend to perform an illegal online transaction. So, why would I want to buy Bitcoin?

CryptoJunky5• 13 years ago

I can think of a few reasons... A new approach some merchants have taken is to accept only Bitcoin and thus eliminate payment processing fees. This leads to prices lower than their competitors can reach (stores such as Bitcoinstore.com and Bitcoinin.com). While the 2-3% may not matter much on small purchases, larger orders certainly will.

Another aspect is the peer to peer nature of Bitcoin. With Bitcoin you have the ability to send money to any other Bitcoiner, anywhere, instantly. That simply isn't present with traditional currencies. Now there are some inherent difficulties there. For instance, if I need to send money to my family on the other side of the country I can do it instantly, but they still need to be able to translate Bitcoin to whatever good/service they need. Currently that may require translating it into their local currency by some means, as not all that many local/physical merchants accept Bitcoin yet.

macspoofing3• 13 years ago

A new approach some merchants have taken is to accept only Bitcoin and thus eliminate payment processing fees.

Don't count on it. Processing services will rise up to automate various aspects of bitcoin transactions, and you'll still pay those fees.

anoncowherd5• 13 years ago

> Personally, I believe currencies are better when they're regulated by governments.

Stop believing that. The exact opposite is true. If we could all use a currency that no one could manipulate at the press of a button somewhere behind the scenes, we would. But as long as governments control money, we're shit out of luck there - they're printing and borrowing money as they please, debasing their currencies and causing all kinds of grief to the little folks, ie. us.

You're right to be skeptical about Bitcoin though. It's basically a "speculative investment vehicle", as someone mentioned. Until that changes, you should be cautious about buying them. The gold rush is probably over.

( Or not. But no one knows. )

pron8• 13 years ago

I think that kind of manipulation is good, but you know what? Let's agree to disagree on that one. In any case, this is still a theoretical question at this point.

rthomas62• 13 years ago

It's easier to transfer online than dollars. You can send your bitcoins directly to another person for free or close to free. IF the use becomes widespread, I think the utility of this is obvious... it replaces Dwolla entirely and most of the function of online payment systems.

The problem is the volatility. I'm not sure how that could be fixed.

louthy• 13 years ago

The problem is the volatility. I'm not sure how that could be fixed.

Liquidity.

belorn2• 13 years ago

The biggest I can think of is having the ability to give anonymous support.

Maybe one day you want to send support a movement for government transparency, but do not want to take the risk of being labeled as a terrorist?

Maybe one day you want to send support to a friend in need without having it on the permanent record?

Maybe you want to donate money to a security tool like tor, but do not want to risk being put on a no-fly lists.

Basically, if the thought "how might this look" ever pops up when doing an transaction, anonymous currency is useful. Its also the only option we got until all the spying all the time ends.

pron8• 13 years ago

This is actually a good answer, although sending cash (through Western Union) is also an option in those circumstances - very expensive, but less volatile.

josefwasinski• 13 years ago

1. A hidden asset that can't be taxed, a digital swiss bank account

2. Total control of movement with no fees, instant free wire transfers.

3. Purchasing of goods anonymously

4. Secure from external sources - avoiding bank of cyprus events

In my opinion its all about its widespread acceptance. It's like a telephone the more people who use bitcoin the more value there is.

pron8• 13 years ago

1. Yeah, well, that's illegal. Besides, I don't have a swiss bank account either, and not because of the fees... Also, the chances of me converting a large portion of my small wealth to Bitcoin are slim to none.

2. I'm not sure about the "no fees" bit. The volatility could hurt much more than the fees. But this could be a valid reason, though not today, at least for me.

3. How? They would still need to send me the goods. The only way to buy something anonymously is with a cash transfer wearing a mask and making sure you're not followed.

4. I think it's quite the opposite. A larger percentage of Bitcoin users are hurt by Bitcoin bank robberies than that of people hurt by "bank of Cyprus" events.

corford2• 13 years ago

Buying domains (namecheap.com), vpn services (privateinternetaccess.com), hosting (bitvps.com), donating to the EFF, buying a ticket on Virgin Galactic, sending money to someone else where doing an international bank transfer would be too expensive for the amount involved, receiving micro donations from other people (maybe you run a popular blog or forum).

Admittedly, that's not an enormous list of things but it's a start.

pron8• 13 years ago

But other than the international money transfer (which I don't do very often), you can do all of these with money, and it would be much easier, plus you have the option of chargebacks etc.

emirozer• 13 years ago

Please don't fall into these cheap speculations..Cryptocurrency itself proved that its pure speculation bubble and nothing else.Everybody saw that a few weeks ago when china central bank issued bans / warnings and the markets reaction to it.I believed in crypto currency until a month ago, but now i believe that it is literally impossible for it to take place of a daily currency.Just pump/dump games richer people getting rich, poorer people getting poor.Oh and don't expect it to be adopted by merchants/vendors as anyone who did lost money because of bitcoin's fluctuation..oh by the way out of my head i can assume that %80 of people that has bitcoin only cares about gaining fiat..

jusben13693• 13 years ago

The only problem here is that part of the run up was based on the sense that China was allowing Bitcoin to flourish. That's pretty powerful in the world's second largest economy with a suspect currency of it's own (highly manipulated for political purposes) If that market opportunity is now closing then that makes Bitcoin much less valuable (at least over the short term) Less demand = smaller price.

CryptoJunky5• 13 years ago

You make a good point. If China shuts off entirely then the potential size of Bitcoin's network could decrease significantly. That's not to say however that Bitcoin doesn't still have a significant and increasing network of users. There have been significant gains outside of China as well recently. A large contributor to the high was resultant from the US Senate Hearings which seemed to somewhat validate Bitcoin's legality in the U.S., the world's largest economy.

jusben13693• 13 years ago

Agreed. I added "Short term" to reflect this is more of a (significant) set back than a downward march. I worry that some might deduce from the article that this is a short term buying opportunity and it'll return to it's previous highs soon. If China is in fact closed it could take a very long time to return to those levels.

aw3c2• 13 years ago

aka "I just 'lost' a 'fortune' because Bitcoin's exchange rate dropped, please buy Bitcoin for USD so I am 'rich' again!".

gexla2• 13 years ago

I'm not convinced. Like gold, Bitcoin isn't an investment. Warren Buffet will tell you that investing is putting your money into something which creates real value, like a business. He would also tell you that you should stick to what you know, otherwise its just gambling. For me, that's investing my time and money into building my own income streams.

I don't really care that I could possibly get a return of 10x or more on my money in Bitcoin (or I could lose that much.) I could do the same with my businesses if I do them right, and having everything in Bitcoin would keep me from being able to allocate those resources elsewhere. While the rise in Bitcoin could be a one time thing before it stabilizes (or tanks,) my efforts elsewhere will provide me an income for a lifetime.

I'm more interested in using Bitcoin as a currency. A temporary hold for my most liquid assets which I can use to pay bills and other expenses. If I really believe in Bitcoin and want it to succeed, then I know I should try to run some of that activity on what's possible with Bitcoin now. The more mainstream and the larger the Bitcoin market, the more stable it should become. But I'm not interested in risking a large amount of assets to be a revolutionary or financial martyr.

ETA: To me, a currency is a place I can park my cash and know that it will hold approximately the same purchasing power as when I put it in there in the first place. I don't care to see it go up (as I said, I have other schemes for making it grow) and I really don't want it to go down. I just want it to be relatively stable. Living in the Philippines for a number of years and working with people around the world, there is 6 different currencies that regularly affect me or the people paying me. Since I have been here, the Peso has gained as much as 20% on the dollar. This sucks and it's not something I want to deal with. Bitcoin would drive me crazy.

ronaldx• 13 years ago

Strictly speaking, you would only lose 1x your money on Bitcoin ;) Otherwise, I agree with what you said.

I would prefer to invest in something where their assets will be used to make the world a better place. Not only do I (hopefully) gain long-term value, but also moral satisfaction. If you happen to believe that there will be human value in Bitcoin-as-a-currency, consider investing in the infrastructure rather than the coins.

JumpCrisscross• 13 years ago

Warren Buffet will tell you that investing is putting your money into something which creates real value, like a business.

Warren Buffet is an investor, i.e. someone seeking returns from interest, dividends, or capital gains from the reasonable expectation of future interest or dividends. Healthy markets have three other fundamental actors: hedgers, who trade to offset a preëxisting risk, arbitrageurs, who trade to profit from establishing the Law of One Price, and speculators, who absorb excess risk and illiquidity other participants do not want.

Speculators absorb the error term. Healthy markets don't function without a proper amount of speculation. So if you believe Bitcoin has fundamental value as an asset and think the upside at least fairly compensates you for the risk, go ahead and absorb that risk. By boosting the asset's value you make it more attractive to others to hold and possibly transact with, thereby giving you a return on your risk.

Point is, you may want to speculate or not. I do not. But that doesn't mean we need to moralise investing over speculating any more than an arbitrageur need find himself intellectually superior to investors.

gexla2• 13 years ago

Thanks for taking the time to make such a well written reply to my comment. This further backs up one of my main points. I'm not a sophisticated trader (nor do I wish to become one) so I probably shouldn't be speculating.

rglullis• 13 years ago

The more mainstream and the larger the Bitcoin market, the more stable it should become. But I'm not interested in risking a large amount of assets to be a revolutionary or financial martyr.

So don't risk a large amount of assets. Risk a small amount. I too want to see BTC succeed as a currency and global payment system, so I've been buying $25 every month worth of BTC and just putting aside. It can go to zero tomorrow and I wouldn't care. It can go to $10000 and I wouldn't sell. But every new opportunity that I get to use BTC as a currency, I use them - namecheap domains come to mind.

I think in this way you are not risking much, but you are contributing to reduce the volatility and turn this into an actual currency, without ruining yourself if this experiment fails.

macspoofing3• 13 years ago

You can't have 20-40% weekly swings in an asset and still expect to use it as currency. Neither merchants, nor consumer can trust it, and speculators just sit on it and distort the entire market. I hate that Bitcoin as a currency is almost worthless.

oznathan• 13 years ago

Give it some time. A child crawls before it starts walking.

macspoofing3• 13 years ago

I'd buy that, but bitcoin is inherently deflationary. That's a problem for a currency. The more popular it gets, the worst it gets.

danoprey• 13 years ago

Every new currency has to go through that. That's unavoidable for a small, relatively new currency. With every boom and smaller bust it grows larger and more stable.

vkou4• 13 years ago

New currencies aren't born in a vaccum. When the US switched off the gold standard, the price of a bag of rice at the grocery wasn't changing by 10% every other day.

Thiz• 13 years ago

Tulips are withering.

kclay• 13 years ago

I knew I should of withdrew one of my coins when the price reached 1k wouldn't covered my buy in price for 3 coins plus some, o well.

belluchan• 13 years ago

What a terrible post. It doesn't justify buying bitcoins at all, it's basically squiggly lines go up and down, it just went down, so buy it before it goes back up again because that's what squiggly lines do.

At some point he equates the price of bitcoin with bitcoin's long term viability which is also not a convincing argument. bitcoin may have a viable future, but there's no convincing reason why that viable future can't be at $1 per bitcoin.

n00b101• 13 years ago

Now may be a good time to revisit an old adage of investing: never catch a falling knife.

You Asked When To Buy Bitcoin...Well Now's Your Chance

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