Silk Road forums
Discussion => Security => Topic started by: DrDeepWood on November 26, 2012, 07:47 am
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Looks like there is around 2 days left until the difficulty of producing bitcoins doubles. BTC has been on a slow steady rise and is poised to explode in all the excitement about the halving date as well as the new butterfly labs mining chips. Last time BTC was this high (12.5) and increased just a little more, it exploded up to 30. I think the estimate is that if bitcoin is around 14-15 dollars right around the halving date, it will explode in the aftermath.
What do you guys think? Do we have any bitcoin economists here?
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God damn i wish i could GET SOME. Is investing in bitcoins literally a short term easy money making investment? It seems like it! But I could have it all wrong.
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The lack of liquidity can be a problem indeed.
I often buy BTC using the bitstamp.net exchange since that is very convenient with EU bank accounts.
The volume on there sometimes is very thin though. Usually i can buy at rates a bit below mtgox (13.22 vs ~13.50 yesterday), but only in small amounts.
Trading volumes of $100 isn't a problem, though you can get much better rates with a day of patience most of the time. Trading $10.000 becomes tricky there though (you'd be driving prices) and $100k in a day would severely affect the rate on that exchange.
On the other hand its not that uncommon to have a fairly large split between sell and buy prices in real world currencies either. The difference between buy and sale prices for a currency like indonsian rupiah vs the dollar or euro are often a few percent, despite over 200 million people using that currency for their daily life.
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The difficulty has already been raised and the rewards already cut in half. This happened on the 210 000th Block a few weeks ago, As for butterfly labs, They were supposed to start delivering products weeks ago. They came out and stated that there would likely be a few more months before the rigs are ready, to add to that, they aren't even selling the old machines anymore. Also the 3 others have all made similar statements regarding their new machines and shipping time. If you ask me I think there is one company behind the 4, that offer mining rigs and all are working together. One has no chips, the other has no boards, the other has no whatever. Its fishy whats going on there and if you are on the bitcoin forums you will see I am not the only one who thinks like this.
We see the bitcoin climbing for the next few years, and then, there will be an explosion. I'm not sure if you're aware of this but in the last few weeks the company Wordpress announced that they now take payment in the form of Bitcoin. Wordpress powers many websites, such as Forbes, The New York Times, Volkswagen and about 57 million more sites.
BTC is the future. Dont be surprised if in 10 years its worth 500-600$ each.
Magic
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What I worry about the Wordpress announcement is they explicitly said that it would allow them to accept payments from people in countries like Iran, but they are an American company and it is illegal to do business with people in Iran, Cuba and some other countries. It could end up getting them in a lot of trouble.
Still, it's a great way to get an anonymous clearnet web site. Since Wordpress will register a domain for you, you can pay them in bitcoins to get your own domain, remove the advertising, and add other features. With static front pages, it's more like a CMS than a blog, and you can create a normal looking web site. Of course, you'll have to access it over Tor.
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What I worry about the Wordpress announcement is they explicitly said that it would allow them to accept payments from people in countries like Iran, but they are an American company and it is illegal to do business with people in Iran, Cuba and some other countries. It could end up getting them in a lot of trouble.
Still, it's a great way to get an anonymous clearnet web site. Since Wordpress will register a domain for you, you can pay them in bitcoins to get your own domain, remove the advertising, and add other features. With static front pages, it's more like a CMS than a blog, and you can create a normal looking web site. Of course, you'll have to access it over Tor.
WordPress knows what there doing, They are going to help us show the world that freedom of speech should extend to how we spend our money and who we decide to do business with, We are all part of a metamorphosis that will undoubtedly affect Bitcoin, Tor, and uncle Sam. The question is, how long will the fight take? by fight I mean the battle between the US government and themselves. When will they just give up and realize that the world is not the same place as it was 50 years ago, and they CAN NOT control the money anymore. Money will have no borders and wont be susceptible to loss of value due to regretful decisions made by the state.
+1 million to WordPress
MM
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Believe me, I want all that to be true. When governments no longer control money, that is a game changer. I'm just not as optimistic as you. A plausible alternative outcome is that bitcoin gets banned because (governments say) it is used by terrorists and major criminals for money laundering. How do you ban a decentralized currency? Easy, you ban the exchanges, the weak point in the whole system. No more direct bank transfers, no more cash despots at banks and pharmacies.
Sure, not every country would ban exchanges. Maybe they will move to banana republics, but it would create a significant barrier to bitcoin adoption. People have enough trouble acquiring bitcoins. :)
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Believe me, I want all that to be true. When governments no longer control money, that is a game changer. I'm just not as optimistic as you. A plausible alternative outcome is that bitcoin gets banned because (governments say) it is used by terrorists and major criminals for money laundering. How do you ban a decentralized currency? Easy, you ban the exchanges, the weak point in the whole system. No more direct bank transfers, no more cash despots at banks and pharmacies.
Sure, not every country would ban exchanges. Maybe they will move to banana republics, but it would create a significant barrier to bitcoin adoption. People have enough trouble acquiring bitcoins. :)
At this point the Bitcoin network is to big to allow that to happen. I'm not sure if your aware of this or not but the Bitcoin network is the single largest "computer processing network" known to man. that means they have more computer processing power then microsoft, IBM or apple has at any one time. This is huge and is only going to get bigger. You can attack the exchanges, but it wont stop the movement and exchanges will just pop up in countries that have weak laws and wont help the states out regarding an issues like this or any other for that matter. the cartels move millions a day in cold hard cash, are we supposed to close down all banks because they use this method, Osama Bin Ladden was caught through one of his loyal couriers and it came to light that the courier was selling gold for Osama to live off of, Should we ban gold?
Bitcoin is the new gold, but its better, The greatness of bitcoin has not been realized fully yet but it will be, just give it some time.
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Believe me, I want all that to be true. When governments no longer control money, that is a game changer. I'm just not as optimistic as you. A plausible alternative outcome is that bitcoin gets banned because (governments say) it is used by terrorists and major criminals for money laundering. How do you ban a decentralized currency? Easy, you ban the exchanges, the weak point in the whole system. No more direct bank transfers, no more cash despots at banks and pharmacies.
Sure, not every country would ban exchanges. Maybe they will move to banana republics, but it would create a significant barrier to bitcoin adoption. People have enough trouble acquiring bitcoins. :)
At this point the Bitcoin network is to big to allow that to happen. I'm not sure if your aware of this or not but the Bitcoin network is the single largest "computer processing network" known to man. that means they have more computer processing power then microsoft, IBM or apple has at any one time. This is huge and is only going to get bigger. You can attack the exchanges, but it wont stop the movement and exchanges will just pop up in countries that have weak laws and wont help the states out regarding an issues like this or any other for that matter. the cartels move millions a day in cold hard cash, are we supposed to close down all banks because they use this method, Osama Bin Ladden was caught through one of his loyal couriers and it came to light that the courier was selling gold for Osama to live off of, Should we ban gold?
Bitcoin is the new gold, but its better, The greatness of bitcoin has not been realized fully yet but it will be, just give it some time.
undermining the currency of any country or system will result in the affected parties using force imo it's different than allowing cartels etc to operate. If you take away currency you take away power. also if youre position was true or highly probable, I think the present price/activity would likely/potentially reflect it. The uncertainty is what keeps it relatively 'low'. I do however think that global currency is potentially inevitable in the future. I'm not saying I am not long on it for now, but I don't think you're spot on with your assessment. not to say it couldnt happen maybe, anythings possible. I def just learned some new info from you, thanks!
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Believe me, I want all that to be true. When governments no longer control money, that is a game changer. I'm just not as optimistic as you. A plausible alternative outcome is that bitcoin gets banned because (governments say) it is used by terrorists and major criminals for money laundering. How do you ban a decentralized currency? Easy, you ban the exchanges, the weak point in the whole system. No more direct bank transfers, no more cash despots at banks and pharmacies.
Sure, not every country would ban exchanges. Maybe they will move to banana republics, but it would create a significant barrier to bitcoin adoption. People have enough trouble acquiring bitcoins. :)
At this point the Bitcoin network is to big to allow that to happen. I'm not sure if your aware of this or not but the Bitcoin network is the single largest "computer processing network" known to man. that means they have more computer processing power then microsoft, IBM or apple has at any one time. This is huge and is only going to get bigger. You can attack the exchanges, but it wont stop the movement and exchanges will just pop up in countries that have weak laws and wont help the states out regarding an issues like this or any other for that matter. the cartels move millions a day in cold hard cash, are we supposed to close down all banks because they use this method, Osama Bin Ladden was caught through one of his loyal couriers and it came to light that the courier was selling gold for Osama to live off of, Should we ban gold?
Bitcoin is the new gold, but its better, The greatness of bitcoin has not been realized fully yet but it will be, just give it some time.
undermining the currency of any country or system will result in the affected parties using force imo it's different than allowing cartels etc to operate. If you take away currency you take away power. also if you're position was true or highly probable, I think the present price/activity would likely reflect it and there would be drastically more liquidity. The uncertainty is what keeps it relatively 'low'. I do however think that global currency is potentially inevitable in the future.
Of course the deep pockets are still skeptical, there's only 125 million USD in Bitcoin currently, this will change, BTC have gone up in value almost 40 % in the last 6 months. While the bank investment manager is not looking at this now, they will be in a few years. A global currency is already here, its called bitcoin and it wont be replaced or shut down. Its only going to get bigger!
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I wish I had bought $1000 worth of BTC in 2010 when I first heard of it and it was trading at 25 cents. I'd have $54,000 today. :)
I still think it's a good idea to buy BTC, though, even at $13.50. I'd be surprised if it wasn't worth $20 by the end of 2013. A 30% annual ROI is fantastic.
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Believe me, I want all that to be true. When governments no longer control money, that is a game changer. I'm just not as optimistic as you. A plausible alternative outcome is that bitcoin gets banned because (governments say) it is used by terrorists and major criminals for money laundering. How do you ban a decentralized currency? Easy, you ban the exchanges, the weak point in the whole system. No more direct bank transfers, no more cash despots at banks and pharmacies.
Sure, not every country would ban exchanges. Maybe they will move to banana republics, but it would create a significant barrier to bitcoin adoption. People have enough trouble acquiring bitcoins. :)
At this point the Bitcoin network is to big to allow that to happen. I'm not sure if your aware of this or not but the Bitcoin network is the single largest "computer processing network" known to man. that means they have more computer processing power then microsoft, IBM or apple has at any one time. This is huge and is only going to get bigger. You can attack the exchanges, but it wont stop the movement and exchanges will just pop up in countries that have weak laws and wont help the states out regarding an issues like this or any other for that matter. the cartels move millions a day in cold hard cash, are we supposed to close down all banks because they use this method, Osama Bin Ladden was caught through one of his loyal couriers and it came to light that the courier was selling gold for Osama to live off of, Should we ban gold?
Bitcoin is the new gold, but its better, The greatness of bitcoin has not been realized fully yet but it will be, just give it some time.
undermining the currency of any country or system will result in the affected parties using force imo it's different than allowing cartels etc to operate. If you take away currency you take away power. also if you're position was true or highly probable, I think the present price/activity would likely reflect it and there would be drastically more liquidity. The uncertainty is what keeps it relatively 'low'. I do however think that global currency is potentially inevitable in the future.
Of course the deep pockets are still skeptical, there's only 125 million USD in Bitcoin currently, this will change, BTC have gone up in value almost 40 % in the last 6 months. While the bank investment manager is not looking at this now, they will be in a few years. A global currency is already here, its called bitcoin and it wont be replaced or shut down. Its only going to get bigger!
it undermines govts, they're not going to allow it to overtake currency systems unless theyre in on it.
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Doubling difficulty and payout reduction seems to be driving prices up (10/11-13 USD) in the last month or so.
The new mining machines, IF the new ASIC chips perform like the vendors say they will (30-70Gh/s). bitcoins very well may fall in price. At least for a short time...
People are saying the ASIC processors and new mining rigs will make a lot of money for the first few that get them... The bitcon difficulty will probably go up, reward lowered again so the market of new coins levels again...
If those money makers dump their coins on the market, prices will fall. Jump on them then and stock up.
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Forget bitcoins. Buy GOLD and SILVER.
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Forget bitcoins. Buy GOLD and SILVER.
The good investor will have BTC in their portfolio next to gold and silver.
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Doubling difficulty and payout reduction seems to be driving prices up (10/11-13 USD) in the last month or so.
The new mining machines, IF the new ASIC chips perform like the vendors say they will (30-70Gh/s). bitcoins very well may fall in price. At least for a short time...
People are saying the ASIC processors and new mining rigs will make a lot of money for the first few that get them... The bitcon difficulty will probably go up, reward lowered again so the market of new coins levels again...
If those money makers dump their coins on the market, prices will fall. Jump on them then and stock up.
The difficulty and reward will not split for another 4 years, If the new rigs were indeed out in December prior to the split then those first machines would have mined more then any other machine ever did. Now that the reward was split and the difficulty cut in half even once the first few machines get running they will not be making any more then the guy who bought the 200th machine.
MM
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Forget bitcoins. Buy GOLD and SILVER.
Gold, Silver and platinum are not good buys at this point. All are already really high and there is not much room for it to go any higher, Bitcoin, if you have the faith has more "wiggle" room then precious metals at this point.
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Forget bitcoins. Buy GOLD and SILVER.
The good investor will have BTC in their portfolio next to gold and silver.
This is good advice +1
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T
Forget bitcoins. Buy GOLD and SILVER.
The good investor will have BTC in their portfolio next to gold and silver.
This is good advice +1
What most ignore is that unless there is a total worldwide internet destruction, BTC is a safer investment. Gold and silver can easily be taken by force, bitcoins, not so much.
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TForget bitcoins. Buy GOLD and SILVER.
The good investor will have BTC in their portfolio next to gold and silver.
This is good advice +1
What most ignore is that unless there is a total worldwide internet destruction, BTC is a safer investment. Gold and silver can easily be taken by force, bitcoins, not so much.
At this point in time saying "btc is safer then gold" would be like saying "that new invention that parents put in the car to make sure the kids dont drive without a seat belt is safer then airbags"
Gold has been around FOREVER, its tried,tested, and true. BTC are not. If you think it's safer to invest your money in btc you're mistaken. There is greater risk in Bitcoin and therefor the potential reward is grater. Dont be misinformed, Gold wont lose half its value in any short period of time, while btc just may. Gold is a safer investment, even if the value drops and you loose a little money its still a safer bet then btc, btc is a gamble,while we believe it will survive and take over at some point in our lives we still realize the value in gold, as gold it wont be going anywhere ever and is here to stay.
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I just need my $30.95 in btc's to jump in value to $31.90 today so I can place an order for .2 grams cocaine for NYE. I'm not that hopeful. :-\
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TForget bitcoins. Buy GOLD and SILVER.
The good investor will have BTC in their portfolio next to gold and silver.
This is good advice +1
What most ignore is that unless there is a total worldwide internet destruction, BTC is a safer investment. Gold and silver can easily be taken by force, bitcoins, not so much.
At this point in time saying "btc is safer then gold" would be like saying "that new invention that parents put in the car to make sure the kids dont drive without a seat belt is safer then airbags"
Gold has been around FOREVER, its tried,tested, and true. BTC are not. If you think it's safer to invest your money in btc you're mistaken. There is greater risk in Bitcoin and therefor the potential reward is grater. Dont be misinformed, Gold wont lose half its value in any short period of time, while btc just may. Gold is a safer investment, even if the value drops and you loose a little money its still a safer bet then btc, btc is a gamble,while we believe it will survive and take over at some point in our lives we still realize the value in gold, as gold it wont be going anywhere ever and is here to stay.
I would never advocate replacing anything with BTC, I am saying discounting BTC because it's new is a mistake. It has its place, and it's probably not going to get cheaper during 2013.
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Forget bitcoins. Buy GOLD and SILVER.
Gold, Silver and platinum are not good buys at this point. All are already really high and there is not much room for it to go any higher, Bitcoin, if you have the faith has more "wiggle" room then precious metals at this point.
At this point in time saying "btc is safer then gold" would be like saying "that new invention that parents put in the car to make sure the kids dont drive without a seat belt is safer then airbags"
Gold has been around FOREVER, its tried,tested, and true. BTC are not. If you think it's safer to invest your money in btc you're mistaken. There is greater risk in Bitcoin and therefor the potential reward is grater. Dont be misinformed, Gold wont lose half its value in any short period of time, while btc just may. Gold is a safer investment, even if the value drops and you loose a little money its still a safer bet then btc, btc is a gamble,while we believe it will survive and take over at some point in our lives we still realize the value in gold, as gold it wont be going anywhere ever and is here to stay.
There is a very real possibility of the bond market truly crashing big time in the coming months/maybe a year or so. This includes munis, corporate bonds and even (gasp) US treasuries. This will open a new and revolutionary era in world finance, for the better in the long run, with the real possibility of the dollar losing, even partially, its reserve status. The economic pain among people living in the US will be unprecedented. But it may initiate at long last a beginning to the recuperation of freedom from oppressive government, as it will be less powerful to lord it over us "peasants".
Gold and silver, in this scenario, will see rises that will be nothing short of breathtaking, no matter how much they've risen over the last seven or so years. After all, gold is still far lower in inflation-adjusted terms than its peak in 1981. But beyond investment purposes, we may just be able to use them as true units of barter; either that or the dollar will stop being a fiat currency, and go back to being real money, that is, backed by precious metals which it shouldn't have stopped being thanks to Nixon in 1971.
BTW, Magic Moments, don't mean to step all over you, but did you mean to write such contradictory satements earlier?
goblin
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Forget bitcoins. Buy GOLD and SILVER.
Gold, Silver and platinum are not good buys at this point. All are already really high and there is not much room for it to go any higher, Bitcoin, if you have the faith has more "wiggle" room then precious metals at this point.
At this point in time saying "btc is safer then gold" would be like saying "that new invention that parents put in the car to make sure the kids dont drive without a seat belt is safer then airbags"
Gold has been around FOREVER, its tried,tested, and true. BTC are not. If you think it's safer to invest your money in btc you're mistaken. There is greater risk in Bitcoin and therefor the potential reward is grater. Dont be misinformed, Gold wont lose half its value in any short period of time, while btc just may. Gold is a safer investment, even if the value drops and you loose a little money its still a safer bet then btc, btc is a gamble,while we believe it will survive and take over at some point in our lives we still realize the value in gold, as gold it wont be going anywhere ever and is here to stay.
There is a very real possibility of the bond market truly crashing big time in the coming months/maybe a year or so. This includes munis, corporate bonds and even (gasp) US treasuries. This will open a new and revolutionary era in world finance, for the better in the long run, with the real possibility of the dollar losing, even partially, its reserve status. The economic pain among people living in the US will be unprecedented. But it may initiate at long last a beginning to the recuperation of freedom from oppressive government, as it will be less powerful to lord it over us "peasants".
Gold and silver, in this scenario, will see rises that will be nothing short of breathtaking, no matter how much they've risen over the last seven or so years. After all, gold is still far lower in inflation-adjusted terms than its peak in 1981. But beyond investment purposes, we may just be able to use them as true units of barter; either that or the dollar will stop being a fiat currency, and go back to being real money, that is, backed by precious metals which it shouldn't have stopped being thanks to Nixon in 1971.
BTW, Magic Moments, don't mean to step all over you, but did you mean to write such contradictory satements earlier?
goblin
Hey, sorry to confuse you, We don't believe we were contradicting ourselves so were going to try and clear some things up. In the first post of ours that you quoted, we were simply pointing out that precious metals are already at a all time high and unless your scenario plays out we don't see the value going up a large % over the next few years. We do however see this POSSIBILITY with btc, although the risk is much grater. In the second quote of ours we were explaining that gold has been around forever and wont be going anywhere anytime soon, and, for a conservative investor the buck stops at gold and never even looks at btc. If you go out and buy 10 oz of gold at $18000 or you go buy 18000$ worth of btc, the safer investment would be the gold because even if it drops its going to be a small drop, unlike the btc which could go to 4$ overnight for all we know. Its still to early to advise people to invest their life savings in btc over gold but there are better investments then both out there. Savings Bonds, physical land, ect.
While we condone btc as an investment for a gambler we would not suggest it to a conservative investor as the risks are still unknown and can break the bank in minutes, unlike gold which will hold a value till this world ends. So to recap, We like btc as a short term investment for people who have money to lose, we also think gold is high now and there are better options then both. Gold will always be worth money and as for btc, we cant say the same at this moment in time. Were sorry if we confused you but we think we cleared it up, if you have any questions feel free to ask.
Magic
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Doubling difficulty and payout reduction seems to be driving prices up (10/11-13 USD) in the last month or so.
The new mining machines, IF the new ASIC chips perform like the vendors say they will (30-70Gh/s). bitcoins very well may fall in price. At least for a short time...
People are saying the ASIC processors and new mining rigs will make a lot of money for the first few that get them... The bitcon difficulty will probably go up, reward lowered again so the market of new coins levels again...
If those money makers dump their coins on the market, prices will fall. Jump on them then and stock up.
Maybe I don't know what I'm talking about, but what does the mining difficulty have to do with the price of bitcoins? That is determined by the supply-demand ratio, and since the supply is fixed (well, it increases over time but at a steady, known rate), the price is basically determined by demand. If more fiat currency is converted to BTC, the price goes up, and if more BTC is sold for fiat currency, the price goes down. You can watch the bitcoin charts and see the fluctuations sometimes after large movements of currency.
The ASIC processors will change mining difficulty (if they ever come out), but that will only affect the miner profit margin, which is negative right now. After the reward halved, they started losing money, because they spend more on equipment and electricity then they get back through the reward. If it isn't profitable, then some people should leave the game and mining difficulty will go down, costing less, until it's profitable again. That hasn't happened yet.
https://blockchain.info/charts/miners-operating-profit-margin
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I hope this isn't too far off topic, would anyone care to say how or where BTC should be parked for long term storage or holding onto? Are online wallets okay for that purpose? I have mine on a thumb drive and the URLs written down and stowed safely. Thank you very much, happy holidays!
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Online wallets probably aren't the best idea if you want to store them for the long term or as a safeguard in case of economic breakdown. You essentially rely on the existence of the wallet service to be able to get your bitcoins. Storing them locally with good encryption would be preferable. Note that you can make regular backups of your locally stored BTC - as long as you don't spend them, a backup is just as good as the original harddisk that held them.
As for investment for the long term, its hard to compare bitcoin to gold.
Gold has intrinsic value - both for making things like jewelry as for industrial application. It is unlikely this demand would suddenly disappear completely, though not totally impossible if gold is replaced with something else in industry and falls out of fashion for jewelry.
The upward potential of gold is somewhat limited: at high prices more of it can be mined economically, and at even higher prices it can be synthesized from mercury in nuclear reactors. The latter isn't all that feasible right now, but by the time you hit a million dollars an ounce it becomes very viable capping the gold price at that.
BTC are very different: They have no intrinsic value, no industrial application, no appeal to possess. However, the total number of bitcoin that can ever be created is limited, making the upward potential unlimited if it were to replace other currency. Even if some technological breakthrough came around that allowed someone to mine all possible bitcoins overnight, their value would not go near zero since there is just so many that can be mined, no matter how efficiently that is done.
A threat to bitcoin value could be replacement by another similar system. As it is bitcoin has some drawbacks, mainly rather slow transfer times making it impossible to make on the go purchases. I think its feasible that another cryptocurrency can replace btc allowing quick payment. If that new currency gains popularity bitcoins would decrease in value since people would switch to the new cryptocurrency.
So, as investment advise, i would not suggest keeping a large portion of your assets in bitcoin. Given the large upward potential and the downward risk i'd consider it a speculative investment. Not something to rely on, but given the upward potential it could be very attractive to keep 0.1 to 1% of your assets in bitcoin. If it were to truly skyrocket you'd stand to double your total assets over a short period of time, but when it fails you only lose a single percent.
Gold is at this moment a very tricky thing too though - there still is upward potential, but on the long term its probably downward, provided we ever get out of the current crisis. Personally i'm not inclined to buy gold at current market rates, other commodities seem more interesting.
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Online wallets probably aren't the best idea if you want to store them for the long term or as a safeguard in case of economic breakdown. You essentially rely on the existence of the wallet service to be able to get your bitcoins. Storing them locally with good encryption would be preferable. Note that you can make regular backups of your locally stored BTC - as long as you don't spend them, a backup is just as good as the original harddisk that held them.
As for investment for the long term, its hard to compare bitcoin to gold.
Gold has intrinsic value - both for making things like jewelry as for industrial application. It is unlikely this demand would suddenly disappear completely, though not totally impossible if gold is replaced with something else in industry and falls out of fashion for jewelry.
The upward potential of gold is somewhat limited: at high prices more of it can be mined economically, and at even higher prices it can be synthesized from mercury in nuclear reactors. The latter isn't all that feasible right now, but by the time you hit a million dollars an ounce it becomes very viable capping the gold price at that.
BTC are very different: They have no intrinsic value, no industrial application, no appeal to possess. However, the total number of bitcoin that can ever be created is limited, making the upward potential unlimited if it were to replace other currency. Even if some technological breakthrough came around that allowed someone to mine all possible bitcoins overnight, their value would not go near zero since there is just so many that can be mined, no matter how efficiently that is done.
A threat to bitcoin value could be replacement by another similar system. As it is bitcoin has some drawbacks, mainly rather slow transfer times making it impossible to make on the go purchases. I think its feasible that another cryptocurrency can replace btc allowing quick payment. If that new currency gains popularity bitcoins would decrease in value since people would switch to the new cryptocurrency.
So, as investment advise, i would not suggest keeping a large portion of your assets in bitcoin. Given the large upward potential and the downward risk i'd consider it a speculative investment. Not something to rely on, but given the upward potential it could be very attractive to keep 0.1 to 1% of your assets in bitcoin. If it were to truly skyrocket you'd stand to double your total assets over a short period of time, but when it fails you only lose a single percent.
Gold is at this moment a very tricky thing too though - there still is upward potential, but on the long term its probably downward, provided we ever get out of the current crisis. Personally i'm not inclined to buy gold at current market rates, other commodities seem more interesting.
well thought.
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Online wallets probably aren't the best idea if you want to store them for the long term or as a safeguard in case of economic breakdown. You essentially rely on the existence of the wallet service to be able to get your bitcoins. Storing them locally with good encryption would be preferable. Note that you can make regular backups of your locally stored BTC - as long as you don't spend them, a backup is just as good as the original harddisk that held them.
As for investment for the long term, its hard to compare bitcoin to gold.
Gold has intrinsic value - both for making things like jewelry as for industrial application. It is unlikely this demand would suddenly disappear completely, though not totally impossible if gold is replaced with something else in industry and falls out of fashion for jewelry.
The upward potential of gold is somewhat limited: at high prices more of it can be mined economically, and at even higher prices it can be synthesized from mercury in nuclear reactors. The latter isn't all that feasible right now, but by the time you hit a million dollars an ounce it becomes very viable capping the gold price at that.
BTC are very different: They have no intrinsic value, no industrial application, no appeal to possess. However, the total number of bitcoin that can ever be created is limited, making the upward potential unlimited if it were to replace other currency. Even if some technological breakthrough came around that allowed someone to mine all possible bitcoins overnight, their value would not go near zero since there is just so many that can be mined, no matter how efficiently that is done.
A threat to bitcoin value could be replacement by another similar system. As it is bitcoin has some drawbacks, mainly rather slow transfer times making it impossible to make on the go purchases. I think its feasible that another cryptocurrency can replace btc allowing quick payment. If that new currency gains popularity bitcoins would decrease in value since people would switch to the new cryptocurrency.
So, as investment advise, i would not suggest keeping a large portion of your assets in bitcoin. Given the large upward potential and the downward risk i'd consider it a speculative investment. Not something to rely on, but given the upward potential it could be very attractive to keep 0.1 to 1% of your assets in bitcoin. If it were to truly skyrocket you'd stand to double your total assets over a short period of time, but when it fails you only lose a single percent.
Gold is at this moment a very tricky thing too though - there still is upward potential, but on the long term its probably downward, provided we ever get out of the current crisis. Personally i'm not inclined to buy gold at current market rates, other commodities seem more interesting.
well thought.
Agreed. All around good advice, I have a background in trading, probably shouldn't say trading what tho. Thank you Ben!