Ask me anything about Bitcoin

[whyinvestinbitcoin]

Hi everyone,

I know there are a great many members on here that support the community and I hope to be able to support that community with my knowledge in bitcoin. I have a website that seeks to guide people in their understanding of bitcoin and why people should be involved, and I want to be able to support businesses here in understanding how bitcoin can be beneficial to their own business.

So please feel free to ask me questions related to bitcoin: concerns, how-tos etc... and I'll answer them as best as I can or point you in the right direction.

As a business owner myself of a marketing agency, I understand how difficult it is to build a business and gain new customers as well as retain existing ones and remain competitive.

I believe it's important for people to keep informed of the latest technologies out there that can help small business or even large business thrive.

Thanks
John

 

[SolutionLab]

Hello John and welcome to the forum,




Now, I'm certain your actions are informed by the best of intentions, that you're a perfectly reasonable and consciousness person and, not least, that you have a better understanding of Bitcoin than I do.


Than said, you need to clarify whether you're offering to help businesses tap into the free spending Bitcoin nouveau rich, which have proven most beneficial, for, say, OpenBSD, or you're suggesting investing. Your website as well as your username suggest that you're focusing on the investment part.


Which needs to be qualified, heavily. For example, on your website, you state : “Your decision today could mean the difference between increased wealth and a secure future or one of wealth deprivation and scarcity. “


What you don't mention is that Bitcoins are unregulated and notices have been issued by the FCA, based on EBA warnings, due to the number of scams that have mushroomed over Bitcoin, promising investors that skyrocketing returns will continue. When someone invests with someone else to purchase bitcoins, it is no different from Carbon Credits, Diamonds, Rare Earth Metals, land overseas, pension liberation schemes and the various unregulated products that ruthless scum sell to older folk. By presenting this “formula to success” image for Bitcoins, you're doing a huge amount of people a disservice and actual lives get destroyed by these Mumbai whizkids.


So, while I'm more than appreciative of you helping people better understand Bitcoins, why not include a more balanced picture of investing in Bitcoin? One where wild market swings are common, one where the regulatory environment is unstable, which might be very poorly suited as an investment but for handful of people. It's just being fair, John, so why not be fair?

 

[vvaannmmaann]

Not a fan of bitcoins then Sol?

 

[SolutionLab]

Not a fan of bitcoins then Sol?

I know I might have come across as a bit over the top and I do apologise but I've seen this happen before, where a product X enjoys some great returns, a narrative forms and people start using it to scam others.


As for Bitcoins, no, it's a fascinating system that has a tremendous potential but investing in it should not be done without explaining to the client what risk exposure he or she is assuming and that it might not fit in with his or her investment needs. People lose their homes, their life savings and some end up in suicide, simply because somebody wanted a commission and, as much as possible, it's crucial that a fair picture is painted with each investment opportunity, especially by those like John who are acting as promoters.

 

[sirearl]

All you want to know about bitcoins and will never understand..

"If it walks like a duck hit it on the head and roast slowly on gas mark 4"

http://en.wikipedia.org/wiki/Bitcoin

 

[Bob]

I'm quite old but not quite old enough to remember the South Sea Bubble of 1720 . Make interesting reading
I'm sure that some people will make money from Bitcoins but unlikely to be me

 

[beasty]

Was just reading about BITCOINS today and how the founder is deep in the brown, using them to do deals for all sorts of stuff that he shouldn't.. the guy was money laundering by all accounts, not maintaining records because he would allow all sorts of illegal stuff to be bought with bitcoins only and he SOLD bitcoins for currency, thereby giving them a value and allowing sales of illegal stuff with no paper..

He is going to prison ...

 

[promdressers]

All you want to know about bitcoins and will never understand..

"If it walks like a duck hit it on the head and roast slowly on gas mark 4"

http://en.wikipedia.org/wiki/Bitcoin

Thanks. I followed the link and started to read.................

The duck has become more interesting.

 

[LeafletsInLincs]

Having looked into bitcoin as an investment a while back I realised that they're too dodgy to bother with. The anonymity is the appeal with bitcoin and that is for a reason.

Plus they vary in price too much & I've read a lot about large amounts getting stolen from websites.

 

[Bob]

Financial Conduct Authority warning about Bitcoins. They are for gamblers only with money they can afford to lose and the US Department of Justice aren't very happy about them either. They should come with a wealth warning

 

[tomo56]

Bitcoins are good for investing look now much they are increased in value over the last year. You might think bitcoins are not a safe investment, no investment is safe, you invest your money for a return which doesn't even cover inflation everyday to banks, how many banks how failed over the last 10 years and needed bailing out.

Yes, some of your money might be insured with a bank, but that's not the point.

Bitcoins could easily give you a return 10 times what you put in, its a risk vs reward and dependent to the person.

If I want a 1% return I want almost certainly that I would get it.
if I want 10 times I understand some investments might not work out.

If you had some "spare money" I would say bitcoins are a wise investment for short term maybe 3mths - 6mths at a time - maybe if hedge against something as insurance would be even better.

I think investing in bitcoins is a specialise area for investing, maybe someone who keeps up to date with technology news.



Anyway just my 2 cents.

 

[Bob]

I'm clearly a Luddite and don't "keep up to date with technology news" but i would still view Bitcoins more as a gamble on the Grand National (and I know nothing about horse-racing either) than as an investment !

 

[tomo56]

I'm clearly a Luddite and don't "keep up to date with technology news" but i would still view Bitcoins more as a gamble on the Grand National (and I know nothing about horse-racing either) than as an investment !

If someone which knows nothing about investing, who gives money to a investor for a say a 5% return with no guarantee not a gambler too

For someone which doesn't understand Bitcoins yes investing is a major mistake probably, but someone which understands them not so.

Why does someone invest in Facebook there friend told them too... gambling right?

Why does someone invest in Apple.. they make good phones, what happens when people get bored of them making the same phone for year on year or when there are better phones around. But the people which understand the phone market would know when to buy and when to sell. I.e. Samsung and Google joining together is bad for apple. Gamblers wouldn't know that, people which understand the market would have a better advantage?

Bitcoins can buy drugs, so can £££ or $$$.
Bitcoins hard to trace, buying something from someone in £££ or $$$ is the same (once its in the till you don't know who give it you!)

Bitcoins are no different to CASH in the sense they can buy anything

Bitcoins cut the middle man out - that's why alot of "big powerful" companies don't like them. People who don't understand them say they are bad, why because they don't understand them.

 

[beasty]

Bitcoins are good for investing look now much they are increased in value over the last year. You might think bitcoins are not a safe investment, no investment is safe, you invest your money for a return which doesn't even cover inflation everyday to banks,

Current accounts are not investments
Savings accounts are saving and do beat inflation
Investments are neither of the above

how many banks how failed over the last 10 years and needed bailing out

Yes, some of your money might be insured with a bank, but that's not the point.

It is exactly the point if you are talking about risk, which you are

Bitcoins could easily give you a return 10 times what you put in, its a risk vs reward and dependent to the person.

COULD

RISK V REWARD..
A TINY proportion of your investments should be on high risk, IF that is the type of investor you are

If I want a 1% return I want almost certainly that I would get it.
if I want 10 times I understand some investments might not work out.

And you have less money when they do not work out

If you had some "spare money" I would say bitcoins are a wise investment for short term maybe 3mths - 6mths at a time - maybe if hedge against something as insurance would be even better.

Gearing investments is usually best for short term, bitcoins are built on a criminal start up and have no real tangable value, I would suggest you want to gamble for quick gains with spare cash, invest in commodities and gear your investments.

I think investing in bitcoins is a specialise area for investing, maybe someone who keeps up to date with technology news.

Thinking you understand how it ALL works, is naive it is what many financial people fail to see, things happen that are not predicated these have no real value and could easily fall to zero value over night.. GOLD will not do that as it is scarce, tangable and there is a growing demand



Anyway just my 2 cents.

Which may go up or down, past performance is no guide to future gains.


I was a financial advisor moons ago and also a successful commodity trader, I made people and myself a lot of money very fast and although I knew more than the investor it is a blatant fact that FINANCIAL professionals operate in a bowl that considers the immediate financial landscape and CANNOT see UNFORSEEN EVENTS.. (i realise this sounds stupid) AND there is the problem, when I say, this fits your risk profile invest in these banks and then 9 11 happens.. well my advice was correct and i would be convincing but the person who took the advice will still lose a stack... if i were less qualified and less convincing they would be better off.

I like the topic but I dislike financial advice that the advisor offers as gospel and the problem is the more qualified and experienced a person is the less likely they are to accept that they CANNOT KNOW what is going to happen in 5 years let alone 20 and they will probably charge more and no doubt wear a tie.

MY view is this.. you want to make fast gains?
Go into business and work hard statistically I would imagine it is the best way.
not to mention you do not have to answer to a boss and if there is an act of god YOU control how you react and are not just watching money disappear on a spreadsheet with nothing to do but sigh.

woops long post

 

[Adam.Vause]

Great first post

 

[SolutionLab]

Hello Tomo,



Look, you've taken the minority view here and you deserve some credit for that, so hats off to you for standing by your beliefs.


That said, the picture you're presenting is slightly simplistic and please don't take it as an offense that I say so because it is as much for your own benefit as for anybody who might be tempted to follow your advice. The first issue was that it might be used to promote scams but I guess anybody that asks you to invest in anything without a correct risk assessment is - to a much lesser degree than the people mentioned but guilty nonetheless – scamming someone to an extent.


Now, the primary concern is the approach to investing. In my humble opinion, it is not so much a matter of “picking winners and losers” but risk management, in the sense that one's investments should be strategically optimised, hedged correctly, adequate to one's timeframe and, not least, suited to one's risk profile.


Say, for example, that you are a financial adviser and Joe, a new client, asks you about some stock tips. The first thing any course on the matter (eg – CFA) will tell you to do – and, incidentally, it's the right thing to do – is to ask Joe about his financial situation, his plans for the future, about tax considerations and, quite literally, about his life. Only then do you have a minimum of information about the sort of risk/return Joe needs and what combination of financial assets would be suited for Joe. For example, if Joe is getting divorced, he might very well be suited for a high risk alternative investment such as Bitcoins, because he stands to lose most of his money anyway. However, that's assuming many things.


The reason behind that being that risk is inherent in any investment and the chances for “free money” are not only very rare but often not available to the average investor to begin with – in fact, they usually involve ripping off the average investor. Which in turn means that the best one can do is try to tailor investment products into synergistic packages whose risk exposure and return fit the client.


By saying that most investors are cretins (true) and that it is mostly gambling (true again), you are missing two important things. First, most investors also lose, so following the herd is hardly a formula for success, and, secondly, that gambling need not imply taking uncalculated risk. In a more or less liquid market, where you can get in and out of trades with minimal costs, that is not as exposed to event risks, such as the Revolutionary Guards flipping and blocking Hormuz, it's not that hard to devise adequate and realistic models for calculating risk, within, obviously, a degree of confidence.


The problems with Bitcoin being that not only is it alternative, meaning less regulatory protection, but also has characteristics from the riskiest markets of all : foreign exchange and commodities, where volatility is not just higher but risk is also much harder to properly calculate because either the patterns are highly irregular or where the event risks infuse a degree of Knightian uncertainty that more or less means you're throwing darts with a blindfold, which works fine 95% of the time but you'll eventually hit somebody in the eye because you just didn't see it coming.


Ultimately, it is that Knightian uncertainty, or unknown unknowns, that makes Bitcoin such a basket case. For example, to massively oversimplify everything, say that you've noticed that bitcoins are positively correlated to gold prices and that the ratio of bitcoins to gold is well below its mean. You're bullish on bitcoin and go long (ie – get positive exposure to a rise by whatever way you see fit) and - assuming you also get value at risk to work even if bitcoins follow anything but a normal distribution - you go short (inverse of long) on gold to hedge it. You watch your screens and see the P/L happily go up and feel great. But then, out of the blue, the Chinese government issue a statement saying it's looking into Bitcoins and 50% of their value gets wiped out. Just like that. All of the ratios go up in smoke and you've hit your stop-loss (basically a way to say if it moves to X while Y and Z are true, sell everything and run for the hills). So yep, not good.


Now, having gone through that, would you go to Joe and tell him he should invest in Bitcoins?

 

[Vectis]

Used to get this on a different forum too, where newcomers would come on and use their first post to tell people what a great investment something was - it tended to be gold or silver markets or, at one time, property in Bulgaria. I guess it's moved onto Bitcoins now?

All had something to gain from the 'advice' they were giving. People soon got wise to those posters.

 

[whyinvestinbitcoin]

Wow! I didn't realise I'd ignite a flame war but great to see that it's definitely in the consciousness of a great many people and opening some great debate.

Here goes:

SolutionsLab- It’s clear you have a great understanding of markets and investment and I can agree that traditionally you would correlate bitcoin with Knightian Uncertainty, but you have to understand the fundamentals of bitcoin to know why people are so enthused about it and see its potential regardless of the early birthing swings in volatility. It’s a new contender to currencies. Never before has something as powerful an idea as bitcoin challenged the existing infrastructure in such a way. You should ask yourself why are some highly intelligent people getting involved and what is it they know that I don’t? The swings are driven by speculators. They’ll die out eventually when they run out of play money. The fundamentals are still there though and regulation will only strengthen bitcoins credibility despite its early growing pains. Lastly, my guide is intended to educate as many people as possible about bitcoin. Everyone wants to get rich quick and that is the positioning to attract that audience and show them why bitcoin isn’t a get rich quick scheme. I genuinely set the record straight but I also understand that the two most powerful driving forces for humans are greed and fear. I have put together my knowledge and understanding in a quick and easy to grasp guide which I’d very much appreciate your comment and feedback on for my first release so please if you can spare some time to accommodate me I shall send you a link to the guide. PM me.

LeafletsInLincs - Bitcoin is the worst form of anonymity when it comes to money as it has a public ledger of all transactions. Traditional cash can be used for all sorts of nefarious purposes without being traced easily other than by tracing serial numbers when it comes into a counting facility. Bitcoin is a underlying financial methodology/protocol. Idiots lose money because they keep it out for grabs. If you told everyone how much cash you had lying around your house to strangers down the pub it wouldn’t be long before you were robbed yourself. This comes down to a lack of understanding and will improve over time as services arise to accommodate the security of bitcoins. Fluctuating price is only relevant if you see bitcoin as an investment which is why I created my site: to attract people who see bitcoin as ‘an investment’ and educate them on its true purpose and appeal. You aren’t buying gold or corn. You’re buying into a payment system that is gaining traction.

prom dressers - I’m pleased that you have decided to look further into bitcoin. My ebook (which I would obviously love people to purchase) gives a quick cap of why bitcoin means so much to so many people. Feel free to contact me if you would like a free copy.

Bob - It’s important to be informed before calling bitcoin a gamblers tool. The biggest detractors are banks and their supporters so you’ll get lots of negative press from Reuters. The infrastructure is tied. I’d suggest watching this video which might give you a better understanding of bitcoin and why it’s not for gamblers: youtube dot com / watch?v=c2CsJ2HMA2I

tomo56 - thanks for being a supporter of bitcoin. What would be great is if you can consider bitcoin as not only an investment but as a means for you to spend and save your cash. Encouraging business to accept bitcoin helps everyone because of its next to zero transaction costs which can be passed onto consumers. Along with its other philosophical benefits.

beasty - you’re right in that I’m no financial expert. What I do have is a clear understanding of bitcoin. I don’t have to understand CFDs, spreads, market depth, and a whole host of other terms to understand bitcoins basic premise and principles. My site is designed to put people in their place. I’m not offering a get rich quick scheme. I hate them as much as the next guy. What I am offering is my perspective and understanding of bitcoin that is quite frankly a little hard to grasp for the majority. It takes a while to sit someone down and explain all the elements as you have to get to the roots of what money is to help them understand it clearly. You cannot know what will happen in the future but at the same time you cannot take bitcoin as a commodity. It just doesn’t function as a commodity. It functions as a counter balance to fiat currency especially as it grows in acceptance and usability through services and applications developed on top of the technology.

Vectis - I’m not offering financial advise, telling people how to get rich or offering some sort of ponzi scheme. I am offering responses to genuine questions about bitcoin and how they can utilise it for their business. It’s clearly a heated debate and has many many detractors. But that just comes from a lack of understanding. Those who delve deeper come to a clearer understanding that is unshakeable.

 

[WillLoxley]

Any comment on the recent arrest?

 

[SolutionLab]

Wow! I didn't realise I'd ignite a flame war but great to see that it's definitely in the consciousness of a great many people and opening some great debate.

Here goes:

SolutionsLab- It’s clear you have a great understanding of markets and investment and I can agree that traditionally you would correlate bitcoin with Knightian Uncertainty, but you have to understand the fundamentals of bitcoin to know why people are so enthused about it and see its potential regardless of the early birthing swings in volatility. It’s a new contender to currencies. Never before has something as powerful an idea as bitcoin challenged the existing infrastructure in such a way. You should ask yourself why are some highly intelligent people getting involved and what is it they know that I don’t? The swings are driven by speculators. They’ll die out eventually when they run out of play money. The fundamentals are still there though and regulation will only strengthen bitcoins credibility despite its early growing pains. Lastly, my guide is intended to educate as many people as possible about bitcoin. Everyone wants to get rich quick and that is the positioning to attract that audience and show them why bitcoin isn’t a get rich quick scheme. I genuinely set the record straight but I also understand that the two most powerful driving forces for humans are greed and fear. I have put together my knowledge and understanding in a quick and easy to grasp guide which I’d very much appreciate your comment and feedback on for my first release so please if you can spare some time to accommodate me I shall send you a link to the guide. PM me.

LeafletsInLincs - Bitcoin is the worst form of anonymity when it comes to money as it has a public ledger of all transactions. Traditional cash can be used for all sorts of nefarious purposes without being traced easily other than by tracing serial numbers when it comes into a counting facility. Bitcoin is a underlying financial methodology/protocol. Idiots lose money because they keep it out for grabs. If you told everyone how much cash you had lying around your house to strangers down the pub it wouldn’t be long before you were robbed yourself. This comes down to a lack of understanding and will improve over time as services arise to accommodate the security of bitcoins. Fluctuating price is only relevant if you see bitcoin as an investment which is why I created my site: to attract people who see bitcoin as ‘an investment’ and educate them on its true purpose and appeal. You aren’t buying gold or corn. You’re buying into a payment system that is gaining traction.

prom dressers - I’m pleased that you have decided to look further into bitcoin. My ebook (which I would obviously love people to purchase) gives a quick cap of why bitcoin means so much to so many people. Feel free to contact me if you would like a free copy.

Bob - It’s important to be informed before calling bitcoin a gamblers tool. The biggest detractors are banks and their supporters so you’ll get lots of negative press from Reuters. The infrastructure is tied. I’d suggest watching this video which might give you a better understanding of bitcoin and why it’s not for gamblers: youtube dot com / watch?v=c2CsJ2HMA2I

tomo56 - thanks for being a supporter of bitcoin. What would be great is if you can consider bitcoin as not only an investment but as a means for you to spend and save your cash. Encouraging business to accept bitcoin helps everyone because of its next to zero transaction costs which can be passed onto consumers. Along with its other philosophical benefits.

beasty - you’re right in that I’m no financial expert. What I do have is a clear understanding of bitcoin. I don’t have to understand CFDs, spreads, market depth, and a whole host of other terms to understand bitcoins basic premise and principles. My site is designed to put people in their place. I’m not offering a get rich quick scheme. I hate them as much as the next guy. What I am offering is my perspective and understanding of bitcoin that is quite frankly a little hard to grasp for the majority. It takes a while to sit someone down and explain all the elements as you have to get to the roots of what money is to help them understand it clearly. You cannot know what will happen in the future but at the same time you cannot take bitcoin as a commodity. It just doesn’t function as a commodity. It functions as a counter balance to fiat currency especially as it grows in acceptance and usability through services and applications developed on top of the technology.

Vectis - I’m not offering financial advise, telling people how to get rich or offering some sort of ponzi scheme. I am offering responses to genuine questions about bitcoin and how they can utilise it for their business. It’s clearly a heated debate and has many many detractors. But that just comes from a lack of understanding. Those who delve deeper come to a clearer understanding that is unshakeable.

Hello again John and welcome back



First off, there was no flame war, everybody was very polite and courteous to each other so don't worry about “igniting a flame war”. Secondly, nobody really argued against bitcoins, it is regarding bitcoin investing which you're advocating.


I can see now where the problem arises with your approach and I'll try to be as straight forward as possible to avoid another two page post. Look, I agreed from that start in my first post that bitcoins are a fascinating system with a huge amount of potential, actually having just read an article from the New York Times by none other than Marc Andreessen, who, needless to say, is very much respected by everybody in the community.


Where the error in judgment is made is going from “bitcoins are great and have huge upside potential” to “investing in bitcoins is great and you should jump on the bandwagon”. There is a huge chasm between the two statements and you seem to treat them as equivalent.


I can definitely see where you're coming from and why the mistake is made but you're offering financial advice to people afterall and saying “The swings are driven by speculators. They’ll die out eventually when they run out of play money” is cold comfort to somebody who just lost 50% of their savings on this cool new investment “where the smart money is” and about which “people are so enthused”.


For example, I'm a big fan of Linux. I think it has a huge potential to make systems worldwide not only more secure but also cheaper, freer from government intervention and just plain better. In other words, the same personal arguments used for Bitcoins. Does that make it a good investment? Nope, if you may recall how this stock crashed and burned.


Lastly, please understand that I think you're a nice guy and who is well intended and, well, has something to sell just like everybody else.


However, your pitch on the website as well as your post, reads like the argument list from Carbon Credit scammers, from the defense lowering “You should ask yourself why are some highly intelligent people getting involved and what is it they know that I don’t?” to the “regulation will only strengthen bitcoins credibility despite its early growing pains” which is almost word for word from carbon credits and “people are so enthused about it and see its potential” for a bit of peer pressure as well as an easy - and false - explanation for why bad news pops-up from time to time in "The biggest detractors are banks and their supporters so you’ll get lots of negative press from Reuters".


Again, I don't think you're doing that on purpose and I think you're a very decent person but please please understand that people will take what you say seriously and will follow your advice, which is heavily biased because, like me, you want this to work and are enthusiastic about it.


If you want to educate people about cryptocurrencies, I'm 100% behind you on that one and would be happy to help but once you put "bitcoin investment" in the mix, given your own bias, you're blindfolding people with their own greed and sending them to the slaughter house. That would be a waste of your talent and intelligence.

Any comment on the recent arrest?

It's just the founder of an exchange, nothing serious. Compared to Liberty Reserve, he was a saint.

 

[WillLoxley]

Yeah, it didn't sound too serious to me. Though haven't the prices dropped a fair amount?

 

[SolutionLab]

Yeah, it didn't sound too serious to me. Though haven't the prices dropped a fair amount?

When something is trading on sentiment, this will be next to this all of the time, with one opinion saying it's heading for USD10 but it is anybody's guess. Anyway, you can get more recent prices from here.

 

[whyinvestinbitcoin]

I'd say the recent arrest seems uncannily timed for the NY financial regulator fact finding mission and direction. If you watched the video yesterday you would have laughed at how they'd rather squash money laundering completely in bitcoin over allowing innovation yet at the same time seem to conveniently forget that the USD is the biggest contributor to money laundering in the world.

A final comment though is that clearly law enforcement are able to track down and apprehend money launderers and bad actors much easier than they have been able to with any other prior currency. Anonymous transactions is a fallacy in bitcoin.

You'll see the media hype this up for all the wrong reasons rather than presenting it for what it is: A demonstration that bitcoin is no hiding place for bad actors.

 

[garyk]

Bitcoins are good for investing look now much they are increased in value over the last year. You might think bitcoins are not a safe investment, no investment is safe, you invest your money for a return which doesn't even cover inflation everyday to banks, how many banks how failed over the last 10 years and needed bailing out.

Yes, some of your money might be insured with a bank, but that's not the point.

You are kidding right? What if you had a ton of money invested in bitcoins with Silk Road who have now gone pop???? You would get back exactly......nothing.

You are missing the point the banks get bailed out as they government have a duty to protect the money held by individual customers. *Some* of your money might be insured? That some is £80,000 probably enough cover for most people and its not *might be* insured it *is* insured under FSCS.

As Sol said, simple fact of the matter is its not under FCA regulation for those in Europe, is not covered by Dodd Frank for the FTC in the US so it's like the wild west. Even new EMIR regulation for EU companies which is about to come into force to cover things like commodities and derivatives doesn't cover things like bitcoin.

 

[WillLoxley]

I'd say the recent arrest seems uncannily timed for the NY financial regulator fact finding mission and direction. If you watched the video yesterday you would have laughed at how they'd rather squash money laundering completely in bitcoin over allowing innovation yet at the same time seem to conveniently forget that the USD is the biggest contributor to money laundering in the world.

A final comment though is that clearly law enforcement are able to track down and apprehend money launderers and bad actors much easier than they have been able to with any other prior currency. Anonymous transactions is a fallacy in bitcoin.

You'll see the media hype this up for all the wrong reasons rather than presenting it for what it is: A demonstration that bitcoin is no hiding place for bad actors.

Well, the USD is widely traded (the most widely traded currency?), so of course it's used for money laundering. It's bound to be true just because of the volumes shifted.

I'm not against or for bitcoin. I might buy a little just for the fun of it, most likely writing any 'investment' off to clamp down on any disappointment should I not recoup anything.

 

[SolutionLab]

Well, the USD is widely traded (the most widely traded currency?), so of course it's used for money laundering. It's bound to be true just because of the volumes shifted.

I'm not against or for bitcoin. I might buy a little just for the fun of it, most likely writing any 'investment' off to clamp down on any disappointment should I not recoup anything.

Well, fair enough, you've seen the risk warnings and your expectations are realistic, so this might be useful. Best of luck Will.

 

[WillLoxley]

Well, fair enough, you've seen the risk warnings and your expectations are realistic, so this might be useful. Best of luck Will.

Eh, it's just something I keep an eye on. A very sceptical eye, but it's there at least! Also it seems these currencies are popping up in various guises now.

 

[Knugs]

My business is in the new cryptocurrency market.

First of all: Think of bitcoin as a commodity, not a currency. Because its not.
However, it has a huge potential. Right now its being poisoned by bad news. Criminals abusing it. Silkroad and money laundering.
It was and still is not interesting to investors because of its volatility. This seemed to be at the beginning when everyone started to hype about it. Similar to an IPO actually. Now, it has become more stable and more businesses adapt to it.
There are a few very attractive features (0%transaction fee) about it and looking in the future I can see a world trading in a single currency. (as unlikely it seems right now). Your business might profit from it a lot.

I would not invest in bitcoin atm. Even when some people believe it will reach 10k, 100k in value. Its value can flunctuate from 950 to 500 in a day. It seems it found its comfortable level just under 1000. In addition, there are too many single individuals/businesses holding the majority of coins.

If you want to invest, I would advise for the next big dip and buy a few but I see this as day or swing trading. Not long term investing.
Even then you should consider the other coins such as litecoin because they would promise you better profits.

Just about safety:
With the bitvault (lloyds insurance), crazy algorithms protecting transactions I think its actually pretty safe now.

 

[sirearl]

I bet they are.

Launched in 2009 as the invention of a mysterious computer guru who goes by the pseudonym Satoshi Nakamoto, bitcoins are created through a complex mathematical formula.

http://www.businessinsider.com/bitcoin-future-criticism-2013-12

 

[qul]

IMHO fiat money that is 100% backed by a "promise" is probably one of the greatest scams in history. In the long term, who knows, bitcoin may outlive today's version of pounds and dollars.

 

[Knugs]

complex mathematical formula.

which is exactly why its so secure!

 

[sirearl]

which is exactly why its so secure!

Do you mean only the Guru knows the formula.

And no one knows who he is.

 

[SolutionLab]

My business is in the new cryptocurrency market.


First of all: Think of bitcoin as a commodity, not a currency. Because its not.

However, it has a huge potential. Right now its being poisoned by bad news. Criminals abusing it. Silkroad and money laundering.

It was and still is not interesting to investors because of its volatility. This seemed to be at the beginning when everyone started to hype about it. Similar to an IPO actually. Now, it has become more stable and more businesses adapt to it.

There are a few very attractive features (0%transaction fee) about it and looking in the future I can see a world trading in a single currency. (as unlikely it seems right now). Your business might profit from it a lot.


I would not invest in bitcoin atm. Even when some people believe it will reach 10k, 100k in value. Its value can flunctuate from 950 to 500 in a day. It seems it found its comfortable level just under 1000. In addition, there are too many single individuals/businesses holding the majority of coins.


If you want to invest, I would advise for the next big dip and buy a few but I see this as day or swing trading. Not long term investing.

Even then you should consider the other coins such as litecoin because they would promise you better profits.


Just about safety:

With the bitvault (lloyds insurance), crazy algorithms protecting transactions I think its actually pretty safe now.

Hello @Knugs ,


Well, The Economist agrees with you, in that others will rise from Bitcoin's ashes, although part of the fascination with crypocurrencies comes from an economist's joy of monetary dynamics suddenly being trendy. It gets an economist's tail to wag, so to speak. A list of other cryptocurrencies can be found here.



Hello @sirearl ,


The system may be somewhat complex but it comes down to a simple statistic, that 930 people, reportedly, have 50% of the supply, which, marked to market, would make them all high-ranking Saudi princes, on paper. For a variety of reasons, I don't think London can support that many pink Lamborghinis.

IMHO fiat money that is 100% backed by a "promise" is probably one of the greatest scams in history. In the long term, who knows, bitcoin may outlive today's version of pounds and dollars.

Hello @qul,


Well, the fact that it's, to an extent, a Ponzi scheme doesn't mean it will fail. Look at the pension system or the higher education bubble. As for the USD, it's in rather rude health. I mean, have you seen US bond yields recently, given the risk-off from BRICs, MINTs and other RCCBTIAW (randomly-chosen-countries-because-their-initials-add-up-to-a-word) ?It could actually get nasty.

 

[GlennDrake]

A few reasons why I think bitcoin (or some variation of) will be big. I have been researching this area for a couple of months now and these are my conclusions.

There's an extremely powerful driver behind Bitcoin and that is "Network Effect". The one single feature of Bitcoin that is hugely important and often lost in the many copy-and-paste explanations branded about by the media is that it's decentralised. There's no central authority, Bitcoin is not a company but a protocol like TCP/IP, this makes it extremely resilient for two reasons. One is that it cannot be easily subverted by a single group with opposing interests, and believe me, Bitcoin has many enemies...banks, money transmitters even entire governments! The other comes down to the fungibility of money itself...money is viral in nature, it's usage spreads quickly through barter and exchange. These kind of network effect properties tend to result in exponential growth patterns.

Something else I have observed over the last month is how larger companies are starting to adopt Bitcoin such as Overstock.com, TigerDirect.com and Zynga...but I'm afraid not so many in the UK. Technology tends to ripple out from Silicon Valley so we're usually 12 months behind in that respect. So Bitcoin is starting to become legitimised and it seems at the moment that US and UK authorities are engaging with the bitcoin community rather than trying to stomp on it. If Bitcoin was a company with a centralised structure it would have been wiped out by conflicting interests by now!

From an investment point of view, I think the old adage applies "Don't invest more than you can afford to lose". Bitcoin is a nascent technology, it is not without risk...I believe that it's foundations are strong but it doesn't mean that it will not be usurped by some other digital currency with a slightly better protocol. It has to be said however the Bitcoin right now has a pretty significant head start!

Finally there is something very wrong with the fiat money system, the US and UK have both engaged in rampant money printing, we call it QE but all the names used by different central banks are merely a way to obfuscate the fact that the money in your pocket is losing it's purchasing power through inflation of the money supply. From an investment point of view it makes sense to allocate a portion of your savings to diversify away from paper currency, this could be gold, silver or even bitcoin!

 

[Moneyman]

Bitcoins are interesting and I have no problems with CFDs etc as I am what they call a sophisticated investor.
You can tell the people who have no idea how investment works
They recommend buying an investment but make no mention of the price of the investment. Investing is buying at a low price and selling at a higher one and it all depends on the relative value to other assets. The good old "opportunity cost" of an asset.
What is a good price to invest at and presents value to the buyer?

 

[SolutionLab]

A few reasons why I think bitcoin (or some variation of) will be big. I have been researching this area for a couple of months now and these are my conclusions.


There's an extremely powerful driver behind Bitcoin and that is "Network Effect". The one single feature of Bitcoin that is hugely important and often lost in the many copy-and-paste explanations branded about by the media is that it's decentralised. There's no central authority, Bitcoin is not a company but a protocol like TCP/IP, this makes it extremely resilient for two reasons. One is that it cannot be easily subverted by a single group with opposing interests, and believe me, Bitcoin has many enemies...banks, money transmitters even entire governments! The other comes down to the fungibility of money itself...money is viral in nature, it's usage spreads quickly through barter and exchange. These kind of network effect properties tend to result in exponential growth patterns.


Something else I have observed over the last month is how larger companies are starting to adopt Bitcoin such as Overstock.com, TigerDirect.com and Zynga...but I'm afraid not so many in the UK. Technology tends to ripple out from Silicon Valley so we're usually 12 months behind in that respect. So Bitcoin is starting to become legitimised and it seems at the moment that US and UK authorities are engaging with the bitcoin community rather than trying to stomp on it. If Bitcoin was a company with a centralised structure it would have been wiped out by conflicting interests by now!


From an investment point of view, I think the old adage applies "Don't invest more than you can afford to lose". Bitcoin is a nascent technology, it is not without risk...I believe that it's foundations are strong but it doesn't mean that it will not be usurped by some other digital currency with a slightly better protocol. It has to be said however the Bitcoin right now has a pretty significant head start!


Finally there is something very wrong with the fiat money system, the US and UK have both engaged in rampant money printing, we call it QE but all the names used by different central banks are merely a way to obfuscate the fact that the money in your pocket is losing it's purchasing power through inflation of the money supply. From an investment point of view it makes sense to allocate a portion of your savings to diversify away from paper currency, this could be gold, silver or even bitcoin!

Hello @GlennDrake and thank you very much for your valuable post. It touches on the business side of bitcoin, which we haven't really discussed, and I think you're right that it could in many cases be quite useful to many retailers to add the bitcoin option, in that if the advice on this thread is followed and they are converted soon after, it allows one to benefit from the, arguably, inflated value of bitcoins and the subsequent higher propensity of holders to exchange them, provided that the retailer understands that some exchange risk exposure is being taken on.


However, I would disagree on the investment part. First of all, fiat money is fine and the currencies mentioned, USD and GBP, are actually doing very well, as per my previous post. Sure, much can be discussed about the Austrian School and QE, but however much the system might seem on the brink on chaos and supported almost solely by a collective delusion, the same holds for civilisation and, concurrently, economics, however much a discipline equally plagued by armchair philosophers and people good with systems but clueless about people, such as myself, the vast majority of research suggests that fiat is, however easy it may be to have a disparaging look on it, the way to go.


Secondly, regrading bitcoin's use in hedging, I did look into it for the very same reason some time ago, but the degree of sentiment built into the price also means that correlations change far too fast to give confidence in it as a hedge. More info on a previous post, here (however rude it may be to reference my own post - but it's 6AM and it's a Saturday so please allow it). The data on bitcoin would, however, be most interesting from a Mandelbrotian perspective, with more info here (a mini-paper down in the post).

Bitcoins are interesting and I have no problems with CFDs etc as I am what they call a sophisticated investor.

You can tell the people who have no idea how investment works

They recommend buying an investment but make no mention of the price of the investment. Investing is buying at a low price and selling at a higher one and it all depends on the relative value to other assets. The good old "opportunity cost" of an asset.

What is a good price to invest at and presents value to the buyer?

Hello @Moneyman and thank you very much for joining the thread. Needless to say, the devil is always in the details and while everyone would aim to "buy low and sell high", the calculation of what is low and what is high as well as the signal processing around it is where everybody differs, each with an entrenched opinion. However, the market has a well established habit of begging to differ, sooner or later, with any hope or emotional flourish around prices.


As a side note, while I would very much wish to specify that I am certain you have much more financial markets experience than I do, I would be somewhat wary of using the word sophisticated in regards to CFDs. I am sure you had something else in mind when writing that but, just in case, it might be worth remembering that many investment managers use it to get clients to sign allowances for higher risk trading or, even, churning, under the guise of telling the client that he or she is above the average folk and should access more "complex algorithms". Simply put, the FCA allows some degree of bad behaviour provided the client has signed-up to it and I distinctly remember one unfortunate gent who signed up to a pointlessly high-risk strategy upon hearing the word sophisticated. I am sure it is not your case, but just for everybody else, if your investment manager starts calling you sophisticated, smile and take everything with a pinch of salt. It's just his or her way of saying that he or she wants a new house.

 

[Moneyman]

[quote="

As a side note, while I would very much wish to specify that I am certain you have much more financial markets experience than I do, I would be somewhat wary of using the word sophisticated in regards to CFDs. I am sure you had something else in mind when writing that but, just in case, it might be worth remembering that many investment managers use it to get clients to sign allowances for higher risk trading or, even, churning, under the guise of telling the client that he or she is above the average folk and should access more "complex algorithms". Simply put, the FCA allows some degree of bad behaviour provided the client has signed-up to it and I distinctly remember one unfortunate gent who signed up to a pointlessly high-risk strategy upon hearing the word sophisticated. I am sure it is not your case, but just for everybody else, if your investment manager starts calling you sophisticated, smile and take everything with a pinch of salt. It's just his or her way of saying that he or she wants a new house. [/quote]

Ok I worked in the city for several years (1980's) as a options and futures specialist in the equity advisory side for a large Canadian bank. So I do know my stuff. I am a "sophisticated investor" when it comes to being able to be marketed all sorts of weird investments not covered by the FSA. It is amazing how many people here think you can just advise somebody to buy a financial product without being registered.

 

[sirearl]

Maybe another reason to stay clear of bitcoins.

http://www.bbc.co.uk/news/technology-26155157