The Glade 4.0

Alright, so these are my reasons for converting dollars to Bitcoins. These are my own reasons, not copied from any website, but gained from a few months of observation.

I am pretty sure that Bitcoins are currently undervalued.

The user interfaces, guides on how to use Bitcoins, and such are terrible. People should never see a hash or know what it is. This can all be fixed in the future with trusted web interfaces. (key is trusted). Bitcoins can eventually be stored securely online without ever downloading a client, without risk of accidentally deleting your Bitcoins, and without a need to back them up. Bitcoins currently are ANTI user friendly. You nearly have to be a software engineer to understand wtf is going on.

It's hard to buy Bitcoins. You have to know what to do, or figure it out, which isn't easy. This will be made easier. It takes a while to even transfer money to do it. This makes the price lag behind demand some, probably.

There is a max exchange amount per day per account on the main trading site where 95-98% of trading occurs (max rate is $1000 per day, $10000 max per month I believe). So I think from this the price different than actual demand, since the two can't reach an equilibrium as quickly.

Bitcoins used to look like some geeky programming project just because they're cool, and people like to code for no pay, and then trade essentially monopoly money with eachother and rave about how cool their Bitcoins are. However, now Bitcoins are just starting to break into mainstream. There have been dozens of News articles about them in the last week. These news articles have been primarily negative about Bitcoins, because people are stupid in my opinion, but nonetheless they are being discussed.

People are overly paranoid about the government shutting down Bitcoins. I agree it is possible, but I rate it on a far less likely scale than most people. Also even if they are banned here, they could be adopted in other countries. Internet traffic isn't solely contained within the U.S. The price would drop but it could increase again.

Bitcoins, now that they are entering the mainstream, are possibly on the cusp of becoming a global currency. It's possible that the value could soar even higher. I think people are starting to see this and it's why the price rose 3x within the last month ($9 per Bitcoin to $31).

The dollar itself is kind of risky, and buying Bitcoins is a form of diversification, although they are much more volatile than the dollar of course.

Nobody has found a flaw in the Bitcoin protocol or network yet, out of thousands of hacker types of people who love cryptocurrency and are closely following Bitcoin. Furthermore, the network has never come close to being shut down or not enduring the strain. I don't think the network will ever fail for this reason. I think it is very scalable.

Bitcoins have risen so far by 2^8.5 from the value in September and October, on a relatively consistent basis (by my own calculations which might be wrong). The max possible they can rise is an additional 2^20, roughly, which is if they completely take over the world economy. Even if it increases just by 2^3 from where it is now I will make plenty of money.

Most people don't understand much about Bitcoins and think it is just about drug money since this is what they read on all these news articles. The website selling drugs has already been closed to the public.

Paradigm shifts are becoming increasingly more common (notable technological changes follow a logarithmic scale. Think of how years progress in the game Civilization). For example phones to smart phones, wireless connectivity, 3g now, Pads, 3D, 64GB microSD cards, streaming HQ online video, etc. within the last few years. Worldwide internet traffic is still increasing exponentially and is expected to continue.

So these are my reasons for converting a small minority (5-10%) of my savings to Bitcoins. You can disagree, but so far I have been right, since they've increase 2x-3x since I originally planned on converting. Obviously I can't see into the future, so maybe I am wrong and it's a bubble that will imminently collapse. That is why it is 5-10%. They are incredibly volatile so it is a risky thing to do.

I am not posting this as a debate, and although criticism is ok I am not looking to validate any of these points. I'm not trying to proselytize .

Congratations Lex, I thought you were lured into another meaningless, value deficient fad. I was wrong, they do seem to have better legs than I would have thought.

However, read up on the tulip mania of the 1630s, and understand why I'm still not convinced that the investment is a long period hold. My advice is to turn some of that new found value into other solid and conservative investments. The "one basket" problem explains why we have a boatloads of investors who will never be able to retire

I hope you are able to turn yout bitcoins into something useful before something bad happens...

Like they just disappear...
http://www.networkworld.com/news/2013/1 ... 76352.html

http://dealbook.nytimes.com/2013/11/27/ ... fail/?_r=0

The fate of your coins (like many many things) may be in China's hands...

http://www.cnbc.com/id/101233864

The virtual currency Bitcoin crashed in China on Wednesday, falling nearly 50 percent after the country's biggest trading platform BTC China banned deposits in yuan following new restrictions reportedly imposed by the central bank.

Chinese speculators have driven Bitcoin prices into the financial stratosphere this year, peaking at 7,588.88 yuan (now $1,250) on November 30.

By late Wednesday they stood at 2,245 yuan, more than 70 percent lower, and down 42.7 percent from their 24-hour high after skidding as much as 48.7 percent earlier.

I love it when I'm correct.

I find it unlikely for China to ban them though, especially since Bitcoins were effectively legalized by the Senate committee in the U.S.

The virtual currency Bitcoin crashed in China on Wednesday, falling nearly 50 percent after the country's biggest trading platform BTC China banned deposits in yuan following new restrictions reportedly imposed by the central bank.

So how're you feeling now?

Schadenfreude

Nobody made Lex appear to gloat. No, this is more like "nemesis", as in the appreciation of the result from an apparent example of hubris, if indeed it exists in reality.

I don't believe that he's in any way vested in bitcoin, nor do I believe he's not vested in them. This is the kid that claimed he'd never heard of the character "Lex Luthor" before picking his nom de plume. His posts are random collections of ... at best ... possibilities, ones I'm not (at this point) inclined to believe or disbelieve. I just read the words.

If you just put $100 into Bitcoin in 2011, when I told everyone to, it would be worth $5000 now. Seems like you are incredibly bad at risk management and predicting the future. You're the one who should be made fun of, not me.

Silk Road 2.0 'Hack' Blamed On Bitcoin Bug, All Funds Stolen

The same bug that has plagued several of the biggest players in the Bitcoin economy may have just bitten the Silk Road.

On Thursday, one of the recently-reincarnated drug-selling black market site’s administrators posted a long announcement to the Silk Road 2.0 forums admitting that the site had been hacked by one of its sellers, and its reserve of Bitcoins belonging to both the users and the site itself stolen. The admin, who goes by the name “Defcon,” blamed the same “transaction malleability” bug in the Bitcoin protocol that led to several of the cryptocurrency’s exchanges halting withdrawals in the previous week.

“I am sweating as I write this… I must utter words all too familiar to this scarred community: We have been hacked,” Defcon wrote. “Our initial investigations indicate that a vendor exploited a recently discovered vulnerability in the Bitcoin protocol known as “transaction malleability” to repeatedly withdraw coins from our system until it was completely empty.



Just how many bitcoins were stolen wasn’t said in the post, although it listed a series of Bitcoin addresses that the Silk Road administrators believe to have been involved in the heist. Those transactions seem to point to a single Bitcoin address that contains 58,800 coins, worth more than $36.1 million at current exchange rates. But tracing Bitcoin’s pseudonymous transactions is always tricky–other estimates range from 41,200 by a Silk Road user and 88,000 by the Bitcoin news site.

Update: Nicholas Weaver, a researcher at the International Computer Science Institute, estimates the total theft of Silk Road’s bitcoins at a much lower number: just 4,400 or so coins, worth around $2.6 million.

Based on the Silk Road’s data about the attack, the site’s staff point to three possible attackers, two in Australia and one in France. “Stop at nothing to bring this person to your own definition of justice,” Defcon writes.

Silk Road’s users, predictably, didn’t take the announcement at face value, and many instead suspect that the site’s staff have used the “transaction malleability” bug as a scapegoat to cover their own incompetence–the site has been plagued with more pedestrian bugs since launching in November–or even that they’ve run off with the users’ bitcoins themselves. “Transaction malleability,” after all, has been a known issue with Bitcoin for two years, and is described by most Bitcoin security experts as more of a major nuisance than a real threat that would allow funds to be stolen.

“Something’s not correct: The bug…can’t be made responsable if bitcoins are missing now!” writes a user named pathfinder.

“Oh, this is rich. How many users called for the shutdown of SR2 to fix the problems? They were ignored,” writes a user named aqualung on the site’s forums. “Admins did this. Not some vendor.”

Defcon denied those accusations, but took full responsibility for allowing the theft. “I didn’t run with the gold,” he writes. “I have failed you as a leader, and am completely devastated by today’s discoveries…It is a crushing blow. I cannot find the words to express how deeply I want this movement to be safe from the very threats I just watched materialize during my watch.”

The hack is just latest in a series of mishaps, crackdowns and scams that have roiled the “dark web” drug market since the shutdown of the original Silk Road anonymous drug site in October by the FBI. Among the more than half dozen sites that have sprouted to pick up Silk Road’s lucrative stream of Bitcoin-based drug transactions, at least three have run off with the users’ funds and two have shut down after being hacked. Several drug site administrators have also been arrested, including three former Silk Road staffers and five men in the Netherlands and Germany who launched their Silk Road copycat, Utopia, earlier this month.

Amidst that chaos, the relaunched Silk Road has been perhaps the most stable and popular marketplace for drugs and other contraband, with over 13,000 product listings at last count. And its hacking and sudden bankruptcy shakes the anonymous ecommerce community more than any of those other dark web eruptions.

While some Silk Road users wrote on the site’s forums that they planned to take their business to other marketplaces like Pandora and Agora, others declared the Silk Road model altogether dead. All the sites currently keep users’ bitcoins in “escrow” before a transaction is complete to prevent fraud, a model that often allows the funds to be stolen, seized.

Defcon ended his message to the site’s users by announcing that the Silk Road will no longer use an escrow, and will instead ask users to send money directly between buyers and sellers, a model that will no doubt lead to many more scams on the site. But he said that the site will move to so-called “multi-signature” transactions, a largely experimental use of Bitcoin that would require multiple users to “sign off” on a transaction before it’s made. That means a third party could serve as a trusted escrow with no way to steal a user’s funds. He promised a “generous bounty” to anyone who could help Silk Road to implement the change.

“Silk Road will never again be a centralized escrow storage,” Defcon writes. “Hindsight is already suggesting dozens of ways this could have been prevented, but we must march onward.”

Apparent Theft at Mt. Gox Shakes Bitcoin World
The most prominent Bitcoin exchange appeared to be on the verge of collapse late Monday, raising questions about the future of a volatile marketplace.

On Monday night, a number of leading Bitcoin companies jointly announced that Mt. Gox, the largest exchange for most of Bitcoin’s existence, was planning to file for bankruptcy after months of technological problems and what appeared to have been a major theft. A document circulating widely in the Bitcoin world said the company had lost 744,000 Bitcoins in a theft that had gone unnoticed for years. That would be about 6 percent of the 12.4 million Bitcoins in circulation.

While Mt. Gox did not respond to numerous requests for comments, and the companies issuing the statement scrambled to determine the exact situation at Mt. Gox, which is based in Japan, the news helped push the price of a single Bitcoin below $500 for the first time since November, when it began a spike that took it above $1,200.

But at the same time that the news about Mt. Gox was emerging, a New York firm announced plans to create an exchange that could draw the world’s largest banks into the virtual currency market for the first time.

The new exchange is being put together by SecondMarket, which rose to fame a few years ago after creating a platform for buying and selling shares of companies like Twitter and Facebook before they went public.

Without the trouble at Mt. Gox, the SecondMarket plans would have been seen as a major boon for virtual currencies, providing a potential entry point into the Bitcoin market for large banks, which have so far avoided virtual currencies as their price has skyrocketed.

Barry Silbert, SecondMarket’s chief executive, said that he had already talked with several banks and financial companies about joining the new exchange, along with financial regulators, and that he hoped to have it in operation this summer.

But plans for any new venture will be tested by the collapse of Mt. Gox, which could shake the faith of early Bitcoin adopters. Ryan Galt, a blogger who writes frequently about Bitcoin and was one of the first to circulate the news about Mt. Gox, wrote on Monday: “I do believe that this is one of the existential threats to Bitcoin that many have feared and have personally sold all of my Bitcoin holdings.”

On Monday, Mt. Gox took down all of its previous posts on Twitter, one day after its chief executive, Mark Karpeles, resigned from the board of the Bitcoin Foundation, a nonprofit that advocates for virtual currencies.

A statement from the chief executives of Bitcoin companies like Coinbase, Circle, Blockchain.info and Payward, said that the “tragic violation of the trust of users of Mt. Gox was the result of one company’s abhorrent actions and does not reflect the resilience or value of Bitcoin and the digital currency industry.”

The events are in keeping with the stark ups and downs of Bitcoin’s short existence.

Released in 2009 by an anonymous creator known as Satoshi Nakamoto, the Bitcoin program runs on the computers of anyone who joins in, and it is set to release only 21 million coins in regular increments. The coins can be moved between digital wallets using secret passwords.

While Bitcoin fans have said the technology could provide a revolutionary new way of moving money around the world, skeptics have viewed it variously as a Ponzi scheme or an investment susceptible to fraud and theft.

Many leading names in the Bitcoin community were still trying to determine the scope and potential consequences of the troubles at Mt. Gox. A document detailing the purported theft, labeled “Crisis Strategy Draft,” appeared to come from Mt. Gox.

While officials at the Bitcoin Foundation could not verify the origins of the document, they were preparing for the closure of Mt. Gox.

Patrick Murck, the foundation’s general counsel, said that “this incident just demonstrates the need for initiatives by responsible individuals and responsible members of the Bitcoin community like what’s being described” in SecondMarket’s initiative.

Mt. Gox’s difficulties this week are only the latest in a long line of problems at the Tokyo-based exchange. Created in 2010, Mt. Gox quickly became the most popular place to buy and sell Bitcoins. But the firm has suffered several intrusions and technological mishaps, which have led to steep declines in the currency’s price. A few weeks ago the company stopped allowing its customers to withdraw Bitcoins after it said it had discovered a flaw in some of the basic Bitcoin computer code.

While other exchanges were briefly hit by problems, they came back online. Mt. Gox never opened up again, prompting speculation about its future.

Until now, the major Bitcoin exchanges have all allowed anyone from the public to buy and sell virtual currency. SecondMarket’s plan is to create a platform more like the New York Stock Exchange, where only large institutions can join and trade.

Mr. Silbert says he will only open the exchange once they have several regulated financial institutions signed on as members. His hope, he says, is to give them partial ownership so that they have an incentive to trade there.

For much of Bitcoin’s life, banks have viewed the virtual currency with either derision or dismissiveness.

Recently, though, a number of banks have released research reports that have been less negative. A December report from Bank of America said that virtual currencies could become an important new part of the payment system, allowing money to move more cheaply than it does with credit cards and money transmitters like Western Union.

The statement from the Bitcoin companies on Monday night, which was not signed by Mr. Silbert, said that “in order to re-establish the trust squandered by the failings of Mt. Gox, responsible Bitcoin exchanges are working together and are committed to the future of Bitcoin and the security of all customer funds.”

And now Mt. Gox

If you were (are still) considering investing in Bitcoin, now might be a good time, they are going for less than $500.

At this point, it's just too much wild wild west for me. Bitcoin is at the extreme far end of the risky investment scale. Even if the value goes up, apparently there is significant risk that your assets can be stolen.

those non-investments in vegas and lottery tickets have a huge potential for return.. the odds are just very low.

Bitcoin is very likely to have large swings in both directions, and if 1) you get lucky and buy and sell at the right time, and 2), no one steals them from you, there is some probability that you could make a lot of money.