Who here is using Bitcoin?
 

I got involved with it about two weeks ago when it was $800/coin, bought half a coin then. I now have about .65 worth, and the value of a coin is about $1200.

I'm doing it more as an interest in the system then just straight investment, it is a very cool concept I think that has the potential to make worldwide money transfer really simple.

I'll also be accepting it for payment if I put anything for sale here in the near future.

Anyone else here into it? For it? Think it's all going to come crashing down? :2cents:

Ponzi scheme - Wikipedia, the free encyclopedia :giggle:

I wouldn't be dumb enough to publically announce that I was if I were.

I am not.

I have an acquaintance who just pulled 15k out, and has around 200 more that is going into property overseas in countries where it's doable.

Dann

Like any extremely high risk investment, you have to be ready to lose it all. I don't think it gets more volatile than bitcoin.

If you are buying into it because you see it as some form of investment, then you are doing it wrong and will most likely loose money. If you are buying some because you want to actually use them to purchase goods or services then I say good job. I personally have a few bit coins spread around a few wallets. I use them to purchase things online that I have no desire to be traced back to me. For instance my Seedbox and VPN connections are both paid in bitcoins and have been for a few years now.

Bitcoin is the epitome of a fiat currency. It has no basis for its worth. There is no intrinsic value in it. That being said, I wish I set up a farm when I first learned about it years ago.

"fiat" means "by gov't fiat" or law. "fiat" does not mean "unbacked".

Bitcoin doesn't fit the definition. There are no fraudulent claims of the money being invested somewhere.

This just came up on our local board. One guy got 272 bitcoin along with a website that he bought several years ago. It was worth about $1000 total back then. He had basically forgotten about it. He's been researching it for the last few months to see when to sell. Sitting on a smooth $300K today. Not bad. Not bad at all.

That depends on which economist you ask.



I also rather appreciate an observation made by Martin Shubik in "The Theory of Money," part of the Yale University Cowles Foundation Discussion Papers series. In it, he writes:

It is usual to contrast fiat money with a commodity money in terms of the former having the store of value property purely through the bootstrap of the dynamics of expectations, whereas the latter has an intrinsic store of value in its use in consumption or production. This dichotomy is by no means clean. In fact, in spite of the ideal condition that a trade utilizing an ideal commodity money should be intrinsic value for value, historically gold has usually carried a transactions value premium; i.e., there are individuals around who have no consumption desire for gold but who value it for its services as a means of payment.

In other words, the use of gold as a currency is in many ways functionally indistinguishable from the use of fiat money, since the transactional value of gold is artificially inflated greatly above its commodity value.

I really kick myself for not taking that early adopter spot that was offered to me. I thought it was going to fizzle into nothing. Damn that was stupid. The amount I would have had would made me 5%er on net worth.

Like I said I don't really consider it an investment, I count the money I spent on it as actually spent/gone. I would like to use it to buy stuff as it gets more popular, we will have to see where it goes. It had an interesting little crash this morning from a press release from China, it seems on it's way back up now through.

Also what Joe said.

If you actually want a REAL commodity money, you'd have to forget about gold and instead convince people to accept payment in something like wheat futures contracts.

Fiat money - Mises Wiki, the global repository of classical-liberal thought

The important point is it's better to call it "unbacked", to distinguish it from unbacked debt-based government-monopolized legal tender, wherein said gov't enjoys seignorage privilege. There is no such central authority with Bitcoin. Its value is dependent on market forces. (and some manipulation, like any other traded good)

Semantics aside, the growing competition among and from virtual currencies will be very interesting.

In Neal Stephenson's novel "The Diamond Age", the futuristic society's governments had withered away due to the rise of crypto-currencies, which meant governments slowly lost their ability to tax all economic activity.

Agreed, and it's the size of the economy behind a currency that gives it short-term stability. It's predicted (I forgot by whom) that new currencies will greatly increase in value and be volatile in the beginning as their acceptance spreads.

However there is one important difference between gold and gov't fiat-money. Gold can't be inflated willy nilly by any central authority.

Except for Auric Goldfinger. :noob:

I think that's what makes it even worse than a Ponzi scheme (at least as an investment medium). It's just like one, except they aren't even lying to you about investing the money. It's just "bitcoins go in, money comes out, can't explain that."

Not that the situation is bitcoin's fault.

Nor can it be stabilized by the same central authority.

That's the ugly little secret which goes un-acknowledged by proponents of either commodity-based or "independant" monetary systems. You might as well use shares in a DJIA-tracking index fund for all the Full Faith and Credit that any reasonable person would have in such a system. Now, not only can your retirement savings be wiped out by a speculatory bubble, so can the contents of your checking account and the money you have in your wallet and under your mattress.

You use the word "inflation" as though it is inherently evil, and yet nothing in life is as black-and-white as your newsletter would have us believe. While central banks are certainly guilty of of mildly inflationary behavior from time to time, Alan Greenspan and Ben Bernanke might as well be an Amish deacons as compared to the behavior of the collective insanity which we refer to as the "free market."

I trust an appointed federal officer to benevolently manage the value of my currency a lot more than I'd trust Gordon Gekko to do the same.