Tempted to drop like 5k into it...
I truly don't know what to do at this point. I could wait and see a drop that may or may not come, and I'll constantly be in the state of indecision that I feel ultimately will cripple me in the future.
I think I'll buy 1BTC/mo and see where it goes from there.
1. An exploit or bug in bitcoind that either takes down the network or allows theft of coins.
2. Discovery of a weakness in the underlying cryptographic primitives, or their specific implementation in bitcoind.
3. A hack of several mining pools at once that allows a 51% attack.
4. A crippling hack of multiple of the main exchanges or wallets at once: Mt. Gox, BTCChina, Coinbase, and BitStamp.
5. Regulatory action threatening to outlaw or severely restrict bitcoin.
6. Real brute-force 51% attacks may still be possible by an attacker with access to cutting-edge semiconductor fabs and a very large budget.
I think it's clear by now that the general concept of digital currency has a bright future, but betting on bitcoin specifically is still a risky investment.
When you want to buy bitcoin is when it's just experienced a big drop, you're too late to the party, when it hits $50 again, buy.
Pick a price point, make a buy order, as soon as your buy order executes pick another point, make your sell order. Don't time the market, price the market.
I work in finance so I'm very familiar with shorting but I don't know what you mean by "a sane way".
What way's sane or otherwise are you referring to?
Normally for shorting. you do the following: 1) borrow the stock from a broker 2) put in your short order 3) get your order filled 4) continue to pay a borrow each day for the stock you borrowed to short 5) buy back your stock 6) return the borrow and settle with your broker
My recommendation for you is to stay away from trading (whether bitcoin, stocks, FX or anything else).
How many other people are thinking the _exact same thing_ right now?
Bitcoin has not caught on in the general worldwide population.
Simply knowing of its existence and understanding it at this point in time could be the hallowed knowledge you speak of here.
You're comparing your knowledge to the smartest, richest people looking at the same possible investments as you, because the market has already priced in their predictions.
* It's referred to as "speculation".
* You don't "invest" more than you can afford to lose.
"Not do that" includes local price fluctuations that aren't predictable anyway, which is what you are trying to predit--like a stock.
Either invest in it because you want to invest in something that will either be the next HTTP or will be the next Gopher, OR don't invest in it because you don't want to invest in high-risk obsenely-high-return vehicles.
But if that $1k ends up being worth $50k and I didn't buy in...I would be so pissed.
Definitely don't invest anything you're not okay losing.
Basically, it was incredible, incredible bad luck. As I havent really "watched" the price, for about 2 years.
tl;dr; Bad luck can actually happen to you
This is what happens with global phenomena. The soil (global internet) is already there, anything that will grow in that soil (like bitcoin) can spread VERY quickly like a wildfire.
What happens when India discovers it is perfect for remittances? What happens when Africa discovers they can exchange payments with just a mobile phone without even having a bank or credit card or any credit period? What happens when parents the world over realize this is a perfect way to give their kids money to buy stuff online with? Or for online retailers to be able to sell to the unbanked and to those who don't have good credit or a credit card? Anywhere in the world, to anyone with BTC? What happens when new uses for Bitcoin that haven't even been thought of yet, are?
Trivia: The head of the Chinese exchange is a Stanford graduate and his brother invented Litecoin.
Some people have super fat stacks though (10s or 100s of millions of dollars worth) they are trying to use the money by spending it because they are trying to build up the bitcoin merchant community.
But now, with mining being 50+ times harder only serious miners with their multi-TH rigs are earning any significant amount of coins and they are likely holding to them.
You can still trade, but you have to switch your mindset to a trader's one, and regretting a "missed" opportunity and feeling "tempted" to buy while the asset is on the rise is impulsive. Learn how to trade, there are countless resources around, even though this is not only math, learning seriously can protect you from impulsive behavior.
I'd say, if you want to invest in bitcoin, unless you're a serious believer (and that's fine, but in this case you probably already have some), do it like poker players manage their bankroll, use some money you can really afford to lose, so you can sleep at night and not feel too bad then the coin drops 25% over a day.
Anyways, what I think is that we are on HN, where people make money using their skills and by creating value. Investing $10k by creating your company today might not only make more money than the same investment in some cryptocurrency, but also create something of value in the meantime.
Want to join the bitcoin ride the hacker way? Build a service that uses the currency, or help people to use it.
Disclaimer: I have nothing against bitcoin, I just think it's a little sad to regret not making a quick buck on something you have no real control on.
They turned a risky as hell deflationary asset into a low-risk slowly-inflating one :)
Hindsight is 20/20. At any time, Bitcoin could experience... a problem. Which affects its value, badly. By selling, you simply dodged the cost of that risk, which is real.
There will be Senate hearings soon on Bitcoin. The guidance coming out of this alone could boost the value even further... or slam it.
http://www.economicpolicyjournal.com/2013/11/bitcoin-senate-...
And if it slams it, you should buy, as Bitcoin is a global phenomenon and is incapable of being controlled by the US Government no matter how they propose to deal with it. :) Germany and China are already quite positive on it.
Bitcoin Average does a volume-weighted price average across major exchanges.
https://bitcoinaverage.com/#USD
Bitcoin Charts gives you some historical information like the 30-day average for each exchange/currency pair.
http://bitcoincharts.com/markets/
If you want to look at candlesticks to track the latest price action, Bitcoinity tracks multiple exchanges.
CryptoLocker demands 2 bitcoins (10 after initial deadline has passed) and there are only around 12 million BitCoins in circulation. I haven't seem any good estimates of how many people have been infected but it seems like it is quite a few. This additional demand could easily drive the price up although eventually the CyptoLocker extortionists would sell those BitCoins driving the price down.
If you think Bitcoin is genuinely new technology which might find a niche, it pays to throw a little money its way.
If you think the fact that people using a technology for nefarious purposes is a strike against that technology, then you should probably never handle cash, ever.
Market cap is now $5 billion. Wealth can't be created, so where has that money come from? Have other currencies fractionally devalued?
The cost of mining has been negligible until recently.
If John Lennon wrote a poem on a sheet of paper just before he died, that paper would now be worth a vast amount of money. Considerably more than the 1c value of the sheet of paper alone. Nobody had to pay anything to create that poem.
Bitcoins are currently valuable, precisely because (and frankly, only because) people put a value on them. That means that if I'm willing to spend $400 on a Bitcoin, and someone is willing to give one to me at that price, that is how much it's worth.
That single transaction may be zero-sum, in dollar terms, but next week I might sell the same Bitcoin for $500 or $300 in another (dollar-terms) zero-sum transaction. The Bitcoin is the same. The price (value) is all that's changed. Just like the price of the sheet of paper containing John Lennon's last poem after he wrote on it.
Other currencies are proportionally less useful and demanded and bitcoin becomes proportionally more useful and demanded.
Minor nitpick:
> Wealth can't be created
Yes, it can. Since money is just a demand on all other kinds of value, printing money or creating a new currency redistributes the ability to claim those other values. But if you actually create those other values---e.g., if you invent a Cyclotron or Google or are the next Bill Gates or you grow fruit or catch fish or cut hair---wealth is being created.
EDIT: I should be clear that I think that wealth redistribution via creating a new currency is completely just and proper. It is an implicit reward for creating a better way to trade, and it can only be obtained if you actually do create a better way to trade (and this is what Bitcoin speculators are, hopefully, doing). Wealth redistribution by printing money (a la the Fed) is evil.
See http://www.paulgraham.com/wealth.html, especially "Money is Not Wealth."
BTC still appears to be a deflationary currency, which fundamentally favors the early adopter (though they may still screw up and lose that advantage). In a deflationary currency, over time, the cost of goods and services will trend towards smaller increments of the currency. Assume that the BTC economy stabilized, that it has a nearly consistent deflation rate similar to our nearly consistent inflation rates in other currencies.
If you receive a salary of 100BTC this year, at a 10% deflation rate you would expect your salary the next year to be about 90BTC, and about 81BTC the year after. 7 years into the job (barring other pay raises) your pay is cut in half (in absolute terms), but can still purchase the same amount each year. Now, assuming a modest 30% savings rate, after about 15-16 years you'll have saved up more than you will earn over the next 15 years. So now my kid is grown and entering into the economy, in his first 15 years he'll have earned what you saved, but have a fraction of your wealth. 15 years after him another kid has grown and entered the market and faces the same dilemma.
Today, BTC is unstable, the value fluctuates wildly, "early adopter" is a fuzzy term because BTC is still young. But this is the fundamental problem facing deflationary currencies over an extended period. The deflation rate, similar to the inflation rate for other currencies today, has to be tempered. If it's allowed to get out of hand it'll wreck the economy it's meant to facilitate.
Really, I always feel it's a good moment to invest when I look at the last 3 days chart...but then I look at the 2y chart...Big Bubble.
For the optimistics, I would suggest you to read that http://www.forbes.com/sites/timothylee/2013/04/11/an-illustr...
http://blockchain.info/charts/bitcoin-days-destroyed-cumulat...
