OT: Ray, how's your Bitcoin investment going?

[Scuzzer]

Hey thanks for reminding me. I bought $500 of bitcoins 8 months ago to fund a nefarious online purpose (poker) and decided I didn't want to deal with it. I should go look at what it's worth now, probably better than I could have made from playing with the cash.

[MattTuck]

Originally Posted by fuzzalow

I am admittedly speaking purely out of ignorance. But I'm gonna say it anyway....

Something intended and designed as a synthetic currency which means its purpose among many things, is that it is designed as a storer of value as well as a medium of exchange.

This synthetic currency has built into it a fixed float @ 21M units. Therefore the individual bitcoin unit value is total assets received in the form of the pool assets plus net additional incoming deposits divided by the fixed float of 21M units. There is a clear benefit from buying in early before the runup in the unit price when the total asset pool was smaller. The investors late to the game are paying the (much) higher current unit price. There is incentive to keep interest & participation zealous in order to sustain the inflow of deposits which further drives appreciation to the unit price.

Have I got the basic part of this right?

This is not crypto currency or whatever made up term to sound sexy & cool. This is a pyramid scheme.

While there will only ever be 21 million bitcoins, each bitcoin is divisible into much smaller parts. Something like 0.0000001 bitcoins.

There are clearly speculators currently chasing a hot asset. There is no question about that. However, the value of the coins and network is much more than just a pyramid scheme. Unlike a bubble like the tulips in Holland, this technology has some real advantages over current money. You can transfer money around the world in a matter of 10 or so minutes, at relatively low cost. Consider an ACH transfer that takes multiple days. Or, consider the billions of people on this planet that have a phone but don't have a bank account. This technology gives them a way to send, receive and store money. These are real use cases that exist today.

Now, don't get me wrong. A lot of the value is predicated upon assumptions about the cryptography, and thus computing power. Major technological changes could undermine the actual system. Certainly, you look at gold which has been used as a store of value for many thousands of years. It is based on certain physical properties of an element that cannot be changed, and is durable over millions of years.

[fuzzalow]

Originally Posted by MattTuck

While there will only ever be 21 million bitcoins, each bitcoin is divisible into much smaller parts. Something like 0.0000001 bitcoins.

There are clearly speculators currently chasing a hot asset. There is no question about that. However, the value of the coins and network is much more than just a pyramid scheme. Unlike a bubble like the tulips in Holland, this technology has some real advantages over current money. You can transfer money around the world in a matter of 10 or so minutes, at relatively low cost. Consider an ACH transfer that takes multiple days. Or, consider the billions of people on this planet that have a phone but don't have a bank account. This technology gives them a way to send, receive and store money. These are real use cases that exist today.

Hey Matt. I get where you're comin' from even if I don't get where it's at as far as bitcoin is concerned.

Looking at it from the outside as I do, it is easy to understand why a certain investment bank that shall not be named would look into bitcoin as a way-outta-left-field segment of their speculative book: Variables are a exploitable attribute. Anything you can figure out better and faster than the competition or the market means you can take something outta it while the getting is good. Or even better, become a part of the infrastructure and maintain the vig advantage inherent to making yourself part of the framework.

Now, don't get me wrong. A lot of the value is predicated upon assumptions about the cryptography, and thus computing power. Major technological changes could undermine the actual system. Certainly, you look at gold which has been used as a store of value for many thousands of years. It is based on certain physical properties of an element that cannot be changed, and is durable over millions of years.

Sure. But between dynamic pricing of the synthetic currency coupled with the variable curves associated to technology progression, cryptology and all the other variables I don't even know about there is just way too many variables, These variables crucially left not to the market but to implementation and rollout schedules of the bitcoin infrastructure that downstream effect the pricing and volatility of the bitcoin and hence any potential investment.

Bottom line: I know not to mess with stuff I can't get my head around. You know more than I do about this so I'd be delighted if you made a killing in this market.

[MattTuck]

Originally Posted by fuzzalow

Bottom line: I know not to mess with stuff I can't get my head around. You know more than I do about this so I'd be delighted if you made a killing in this market.

To be clear, my entire bitcoin holdings are at about $300. I'm not a huge believer in the current valuation, but I am curious enough to experiment and learn a little about it. Don't expect to get rich from it, my main goal is gaining experience and assessing whether it could go mainstream.

But, I do think this is a global phenomenon. Japan is now the biggest exchange market, following by US and Japan. In 5 years, I suspect it will be trading MUCH lower than today, or MUCH higher.

[Scuzzer]

Originally Posted by MattTuck

In 5 years, I suspect it will be trading MUCH lower than today, or MUCH higher.

Hey wait. Should I hold onto my $500 or spend it on a bike?

[Louis]

Originally Posted by Scuzzer

Hey wait. Should I hold onto my $500 or spend it on a bike?

I thought Bitcoin could only be spent on illegal stuff on the Dark Web?

Edit: Just to clarify, I am kidding - I do realize that it can be spent in places as innocuous as Newegg and Subway.

[Scuzzer]

Nope. It works really well for ridiculously unlawful stuff like the subversive act of playing poker online outside of the US. It's technically not against the law for us to play poker, it is against the law for a site to allow Americans to play.

I could legally bet the cash on any number of sporting events. Totally silly social moral laws that profit a few large gaming companies.

[MattTuck]

Originally Posted by Scuzzer

Hey wait. Should I hold onto my $500 or spend it on a bike?

Unlike conventional investments where I can atleast fall back on some fundamental precepts around risk, return and diversification, I really can't give you any advice on virtual currencies. If my math is right, your original $500 is worth probably $2,000+, right now. If it were me (this is different than advising based on best practices), I'd decide if I believe in idea of bitcoin, and if so, perhaps hold on to it. If I'm uncertain, sell $1,500 and keep the original $500.

Originally Posted by Louis

I thought Bitcoin could only be spent on illegal stuff on the Dark Web?

Edit: Just to clarify, I am kidding - I do realize that it can be spent in places as innocuous as Newegg and Subway.

Interestingly, Overstock.com was one of the first big companies to accept bitcoin. The CEO, Patrick Byrne, is quite an eccentric guy and is pretty bullish on this technology. Originally, they were converting 90% of their bitcoin purchases to cash immediately and holding 10% as investment. Now, they are saving 50%. They get about $50,000 in bitcoin purchases per week.

[Tony T]

Originally Posted by Scuzzer

Hey wait. Should I hold onto my $500 or spend it on a bike?

If you put that $500 in bitcoin 8 months ago, its more than $500 now — I say buy a bike (can't ride a bitcoin)

[Tony T]

Over $4,000 (up 17%) this morning.
I see that Bitcoin has promise as a real currency, but it is just a currency
(and one without anything backing it up — yes, we can debate what backs up the $)

I can't help thinking of "Tulips"

[Tony T]

For anyone using digital currency:
NYT: Identity Thieves Hijack Cellphone Accounts to Go After Virtual Currency

In a growing number of online attacks, hackers have been calling up Verizon, T-Mobile U.S., Sprint and AT&T and asking them to transfer control of a victim’s phone number to a device under the control of the hackers.

The attackers appear to be focusing on anyone who talks on social media about owning virtual currencies or anyone who is known to invest in virtual currency companies, such as venture capitalists. And virtual currency transactions are designed to be irreversible.

The vulnerability of phone numbers is the unintended consequence of a broad push in the security industry to institute a practice, known as two-factor authentication, that is supposed to help make accounts more secure.
Many email providers and financial firms require customers to tie their online accounts to phone numbers, to verify their identity.
But this system also generally allows someone with the phone number to reset the passwords on these accounts without knowing the original passwords. A hacker just hits “forgot password?” and has a new code sent to the commandeered phone.

Mr. Perklin and other people who have investigated recent hacks said the assailants generally succeeded by delivering sob stories about an emergency that required the phone number to be moved to a new device — and by trying multiple times until a gullible agent was found.

Coinbase, one of the most widely used Bitcoin wallets, has encouraged customers to disconnect their mobile phones from their Coinbase accounts.

“Coinbase looks like a bank, stores millions of dollars like a bank, but you don’t realize how weak its default protections are until you are robbed of thousands of dollars in minutes,” said Cody Brown, a virtual reality developer who was hacked in May.

The irreversibility of Bitcoin transactions has often been lauded as one of the most important qualities of virtual currency because it makes it harder for banks and governments to intervene in transactions.

.

[Tony T]

$5,100

[cat6]

$10k

[likebikes]

wow

[54ny77]

modern day tulip bulb mania.

great quote here:

https://www.bloomberg.com/features/bitcoin-bulls-bears/

“Bitcoin just shows you how much demand for money laundering there is in the world.”