Bitcoin giveaway! :)

[Marc De Mesel]

You know what I just realized? Moda and Gumby have been talking about how the natural "risk-free" rate of interest on a floating fiat currency is zero percent; what's the "risk-free" interest payment you can get on Bitcoin--a floating fiat currency? Zero percent. All of these gains are coming from appreciation vs other currencies, not interest payments. If and when Bitcoin eventually stabilizes vs the dollar or euro or something, I think there's a very strong case to be made that nobody's Bitcoin reserves are going to be accumulating any interest payments without lending them out to borrowers and taking on some real risk. How could it be any other way? Bitcoin is an inherently deflationary currency; "risk-free" interest the way bank reserves work today requires inflation.

These gains come from the greater fool that is paying you more . But someday there will be no greater fool available and then this whole thing breaks up. It looks clearly like euphoria, the last stage of a bubble.
@Marc when i were you, i would transfer most of the gains to the real world and buy real estate or stocks for it, and live from the cashflow of rents and dividends. Currently you look like a lottery winner who gives away his money.

You are being cynical. The greater fool is true for any asset. The gains may be payed by the one buying, but they are made by the one selling.

I think your 'looks clearly like a bubble' will be proven wrong. Here what I think is more likely: https://bitcointalk.org/http://77.104.1 ... msg3464070

I sold enough coins to have a nice profit if bitcoin goes to zero. I am giving away bitcoins as to motivate people more to adopt it as so many have done with bitcoin. A payment network is not easily build. Paypal gave away $30 per new account and spend millions before making billions.

Challenge your thinking, this is still early adopter phase, the institutional investors are getting started but the masses are far from here. A bubble it will indeed likely become, but that would be way down the line at much higher valuations.

[Marc De Mesel]

You're really selling this, Marc!

lol 

People like the danger, it's irresistible.

Very happy about the crowd, free btc is selling like hot cakes here!

Hope there are some rich investors here getting hooked 

You seem to be into it pretty deep too. When did you take the plunge? And why? Were you resistant at first?

[Pointedstick]

You seem to be into it pretty deep too. When did you take the plunge? And why? Were you resistant at first?

I dabbled about a year ago but got in more when I decided on a whim to accept payments for my business in bitcoins. It proved popular since my customers tend to be tech nerds like me, so many of them had bitcoins already. I had one guy who tried to bargain me down on an order because he didn't have enough BTC and I had to remind him about dollars! It's worked very smoothly. Other than the volatility, I think it works very well as a payment method.

[Victorsan]

1ET6amaMJC1QFLyAtGpxK9hYTAEJd5fvuZ

Domo arigato, Marc!

[Marc De Mesel]

1ET6amaMJC1QFLyAtGpxK9hYTAEJd5fvuZ

Domo arigato, Marc!

I don't take new accounts, I'm sorry amigo.

I'll send you a kiss instead

mmmmwwwwwwaaah

[frugal]

Hey Frugal!

Welcome to the bitcoin family! 

Thank you so much for valuing my work and blog the past few years.


Hope you succeed in building it to 1 btc. Only 21 million people in the world will be able to own 1 full btc. And that is if no one else owns more than 1.

Here you can see a cool globe in 3D with all people currently running the bitcoin client:
https://blockchain.info/nodes-globe

My early morning post disapeared !

MARC: Great Man, great blogger, great mind.

Thanks so much Frugal, you made my day 

Ps: What do you mean with the early morning post?

During today's morning I wrote a post with similar message.

Maybe I didn't click Post correctly...


Thank you again and keep us updated with your posts, videos ...

[Mdraf]

You seem to be into it pretty deep too. When did you take the plunge? And why? Were you resistant at first?

I dabbled about a year ago but got in more when I decided on a whim to accept payments for my business in bitcoins. It proved popular since my customers tend to be tech nerds like me, so many of them had bitcoins already. I had one guy who tried to bargain me down on an order because he didn't have enough BTC and I had to remind him about dollars! It's worked very smoothly. Other than the volatility, I think it works very well as a payment method.

If you use it in business how do you account for it? Do you have a separate entry in your balance sheet? What proof of income do you use for IRS purposes?

[Pointedstick]

We're basically in uncharted territory accounting-wise, but I use the blockchain's transaction confirmation pages, and yeah, it's just a separate entry.

[Gumby]

I admit I don't know much about Bitcoins, but this Forbes reporter suggests that there are some long term limitations:

http://www.forbes.com/sites/timothylee/ ... -bitcoins/

Reason #3:

The Bitcoin protocol requires that every node in the network download a copy of every Bitcoin transaction that has ever occurred. As Bitcoin has grown more popular, running the “full”? Bitcoin client has become more and more resource-intensive. The last time I started up my Bitcoin client, it took several hours to download all the transactions that had occurred in the few weeks since the last time I ran it.

To prevent things from becoming completely unwieldy, the Bitcoin protocol limits the size of each “block,”? the basic unit of Bitcoin’s shared transaction register, to one megabyte. Since one block is created every 10 minutes, on average, this places a hard limit on the number of transactions the network can process each hour.

Right now, the network is operating well below the limit. But it’s not that far below the limit. If the Bitcoin economy continues to grow rapidly, we’re likely to hit it in the next few years.

Reaching the limit wouldn’t be catastrophic; the Bitcoin protocol has an elegant system of transaction fees to process the most urgent transactions first. But it does place some limits on Bitcoin’s long-term future. For example, it’s hard to imagine Bitcoin ever becoming a replacement for conventional credit cards. There are far too many credit card transactions for the Bitcoin network to accomodate.

Source: http://www.forbes.com/sites/timothylee/ ... -bitcoins/

[Rien]

Somehow many of the reactions to bitcoins you can see nowadays remember me of the reactions to the rise in silver and gold in 2006/2008.
Which suggests that there is a similar psychology at work here.

How does the saying go?

First they ignore you, then they laugh at you, then they fight you, then you win.

Attributed to Mahatma Gandhi

[Marc De Mesel]

Somehow many of the reactions to bitcoins you can see nowadays remember me of the reactions to the rise in silver and gold in 2006/2008.
Which suggests that there is a similar psychology at work here.

How does the saying go?

First they ignore you, then they laugh at you, then they fight you, then you win.

Attributed to Mahatma Gandhi

Yeah indeed, here a very good video why growth rate in adoption and price will likely increase instead of decrease.

http://www.youtube.com/watch?v=qHUPPYzzZrI

In short this is not to be compared with gold or broad stock index funds where the potential is only to tenfold. This is to be compared with a startup such as facebook where the potential is to 1000 fold with the difference that in bitcoin you can participate early stage, and chances for success are much higher, whereas with fast growing companies only venture capitalists can participate early stage and chances of success are extremely low, hence why they must invest in 10's to 100's of startups to have a chance to strike it big.

[frommi]

I would say this was indeed a 1000 fold. But we are >1000x now.

http://www.theguardian.com/technology/2 ... -oslo-home

I mean its a currency, nothing more. It doesn`t produce anything, nor has the dollar lost so much value in that time. So its clearly only speculation and greed what drives the prices.

[Gumby]

I would say this was indeed a 1000 fold. But we are >1000x now.

http://www.theguardian.com/technology/2 ... -oslo-home

I mean its a currency, nothing more. It doesn`t produce anything, nor has the dollar lost so much value in that time. So its clearly only speculation and greed what drives the prices.

The other problem is that most of the Bitcoin holders are hoarding their Bitcoins for speculative purposes. This is not the hallmark of a usable currency.

See: BI: If You Believe in Bitcoin, You Should Never Buy Anything in Bitcoin

Many Bitcoin believers think that the digital currency will one day become the pre-eminent currency of the internet. They basically see it becoming the internet's version of gold in that it's naturally scarce, independent, virtually impossible to manipulate, and crucially suited for a digital world when money ought to be able to be moved seamlessly and at no cost. Well here's a tip: If you think that this is true, then never use Bitcoin in a transaction.

As more people have gotten into Bitcoin, the price has gone way up.

Virtually everyone who has ever bought anything in Bitcoin has been a huge loser, who would have been better suited just holding onto the Bitcoins instead.

Remember the pizza that was purchased for $25 in Bitcoins years back? Had the person not bought that pizza, it would be worth nearly $3 million. That purchase was a catastrophic decision, as that was probably the most expensive pizza of all time.

Of course this presents a Catch-22. How can Bitcoin become a real currency if it's not used in transactions? And why would anyone use it in transactions if becoming a real currency offers so much more price appreciation? This contradiction is a core problem, and it's a reason why it's probably doomed to fail (real currencies don't have this issue, since central banks prevent rapid price appreciation, and they mandate that the currency be used).

But really, if you're thinking that Bitcoin is going to be huge, it'd be insane and irresponsible to buy anything with it.

Source: BI: If You Believe in Bitcoin, You Should Never Buy Anything in Bitcoin

The article about the $2 million pizza has the following quote:

This episode is a big lesson and a big cautionary tale: Anyone transacting in Bitcoin is liable to feel like an idiot the next day, as the price surges or collapses.

Source: BI: This Is What A $2.3 Million Pizza Looks Like

It's the same reason why I would rather spend my dollars on goods and services than spend my stash of gold.

[HB Reader]

Why not admit what we all know?  None of have a clue what will happen with the btc.  It will all happen in uncharted territory (aka "the future").  The btc could end up like something from the tulip craze or evolve into "digital gold."

I can imagine a number of different outcomes (either bullish or bearish) in both the short or long run.  But then again, I can't even really define what constitutes "short or long run" since it usually means something different to each person.

I certainly wouldn't bet the farm (or even very much of my VP) on it, but it could turn out to be the world's first "deflation by design" currency.  It isn't as outlandish to me as many of the self-serving predictions or claims I see proffered almost daily in advertisements for investment newsletters by many self-described "respected" experts.     

Anything can happen, but nothing has to happen.

[Marc De Mesel]

Thank you again and keep us updated with your posts, videos ...

Thanks for the request

I just made a new video:
Bitcoin Accelerating, Limits of the Permanent Portfolio and The Art of Investing

[Bean]

Hey Marc, do you do any mining or just holding coins?

[Gumby]

Thank you again and keep us updated with your posts, videos ...

Thanks for the request

I just made a new video:
Bitcoin Accelerating, Limits of the Permanent Portfolio and The Art of Investing

Just finished watching.

I'll summarize all 27 minutes... Marc has a lot of money that he can afford to lose, thanks to Bitcoin, and he will speculate with that money in a Variable Portfolio.

[dragoncar]

Still doing this?  If so, much thanks: 1LKRDyKhCweFtjpYLcPnMMiFuZnPtYrvcT

At one point, when BTC was about $0.25, I seriously considered throwing $5-10k into it as a purely speculative play.  What ultimately stopped me was that I just didn't trust mtgox and was daunted by the possibility that a purchase of that size might move the market.  I just kind of forgot about it without doing anything... kicking myself now (I'd theoretically have $16 MM in BTC, but who knows if I could get USD back... I probably would have ended up selling long ago anyways).

[frugal]

Hello fellows,

any good tutorial over internet to learn to :

- buy bitcoins

- sell bitcoins

- buy stuff with bitcoins

Thank you very much!

[Rien]

You can buy and sell bitcoins on any bitcoin exchange.
You will need to open an account with an exchange in order to do that.
After opening the account you can transfer cash into the account after which you will be able to trade them for bitcoins just as you would buy/sell stocks.
Buying stuff with bitcoins is easy, go to your wallet software, select "transfer bitcoins" and type in the amount and copy/paste the address from the merchant. Click "go" and its done.

Which exchange? I'd suggest to google for "bitcoin exchange".
www.mtgox.com was (is?) the biggest.

[edsanville]

Just a thought:

The comparison of bitcoins to the Tulip Craze is intriguing, but I don't think it's valid.  Anybody can easily grow tulips, but you can't easily produce more bitcoins.  So far, we've had about 3 bitcoin manias, followed by lulls in the market.  I think we're just about to enter the third lull now.  After each mania, the price floor seems to increase by a certain amount.  Looks like bitcoins are indeed appreciating in fits and starts.

Also, bitcoins might be a pretty terrible currency at the moment, (due to the insane volatility), but it's possible that increased volume will settle the market down.  The increased volume would be caused by an increase in bitcoin usage for currency purposes.  So, it's kind of a chicken-and-egg situation, IMO.

The question, if you ask me, is:  can bitcoin bootstrap itself into genuine currency-hood?  The next few years should be a fascinating time.

[Marc De Mesel]

Thank you again and keep us updated with your posts, videos ...

Thanks for the request

I just made a new video:
Bitcoin Accelerating, Limits of the Permanent Portfolio and The Art of Investing

Just finished watching.

I'll summarize all 27 minutes... Marc has a lot of money that he can afford to lose, thanks to Bitcoin, and he will speculate with that money in a Variable Portfolio.

I feel irritated when reading your comment. I also remember feeling irritated when reading your comments in the other big discussion.

I'm going to ignore you from now on. I'm sorry.

[Marc De Mesel]

Hey Marc, do you do any mining or just holding coins?

Hey Bean,

Personally I'm not a fan of mining. The returns have been, and will very likely continue to be, much lower than bitcoins, but you are more certain of making returns since you already have them even if bitcoin price does not go up.

My estimate is that on average mining doubles/triples your fiat in 1 year.  That means the most successful miners (the first to market with new technology such as ASICMINER) ten to hunderdfold their fiat, but there are also those that lose fiat on the venture (those that invest in old technology right before someone else launches it's new technology).

Most miners end up regretting not simply having bought bitcoins with the money. So I would advise that if you do want to start a mining business to buy enough coins also at the same time.

[Marc De Mesel]

Still doing this?  If so, much thanks: 1LKRDyKhCweFtjpYLcPnMMiFuZnPtYrvcT

At one point, when BTC was about $0.25, I seriously considered throwing $5-10k into it as a purely speculative play.  What ultimately stopped me was that I just didn't trust mtgox and was daunted by the possibility that a purchase of that size might move the market.  I just kind of forgot about it without doing anything... kicking myself now (I'd theoretically have $16 MM in BTC, but who knows if I could get USD back... I probably would have ended up selling long ago anyways).

There you go dragoncar.


I'm so sorry you missed out on it, yet were so close.

My sympathies for your loss in opportunity. I know that can feel bad


I find it admirable part of you did see the opportunity so early.

I hope you succeed in negotiating better with your part that kept you from doing it.

That's how I succeeded in embracing the opportunity, by having an internal conversation and negotiation between my different parts. (I do it every day! )


If you want to, I think you still have an opportunity here. The tenfolding every year will likely continue for another 2/3 years but after that it will either stagnate or become bubbly and later lost again.

This bitcointalk thread is very informative. Especially this post, and this post.

[Gumby]

Thanks for the request

I just made a new video:
Bitcoin Accelerating, Limits of the Permanent Portfolio and The Art of Investing

Just finished watching.

I'll summarize all 27 minutes... Marc has a lot of money that he can afford to lose, thanks to Bitcoin, and he will speculate with that money in a Variable Portfolio.

I feel irritated when reading your comment.

Likewise, I was irritated when you used a misleading headline in your post to suggest that the PP is somehow "limiting". You rambled on for nearly half an hour telling us what we already knew. Forming a VP is nothing new. Harry Browne purposefully designed the PP to work in conjunction with a speculatory VP, for those who have money that they can afford to lose. We are all very much aware of what a VP is. And the PP has not let you down, in any way, in terms of creating wealth because that was never its intention. HB was quite clear that your wealth is supposed to come from your career and not your investments.

I'm sorry if that irritates you, but I think you are doing people a disservice by suggesting that the PP is limiting them when everyone is already aware of their ability to create a VP.