It shocked everyone when it went to $2000, and now, not even a year later, bitcoin is around $14,000. Now the entire world has taken notice of something I knew about two years ago… that bitcoin is a viable option for future handling of money, and its very likely going to take off in value as more nations and communities start adopting its use. For the first time ever, bitcoin is making “normal” national news, and normal, everyday people are asking about it and getting interested.

Needless to say, my own investment portfolio this year has done very well because of this bitcoin stuff. Not only bitcoin, but ethereum, which I also own, has almost doubled in value since I invested in it as a hedge to bitcoin (in case bitcoin failed and ethereum became the “new” bitcoin, which may still eventually happen).

I’ve made so much money with bitcoin that I’ve already taken 100% of my initial capital out of it, plus a very healthy profit, so all the money I have left in bitcoin and all these gains are literally “free,” and if I lose it all, I will have already made money. (I hope to do the same with ethereum very soon.)

There are two general sides to this bitcoin thing, and I agree with both.

One side are my fellow libertarians who are very excited and think bitcoin will eventually go to $50,000, $100,000, or more. I agree with them.

The other position is that all this bitcoin stuff is just another exuberant, insane bubble, like so many others in the past, and that a bunch of idiots are going to artificially jack up the price of bitcoin before it finally pops and crashes, causing everyone lose their entire investment. I agree with them too.

Yes, digital / cryptocurrencies are the future, and there’s no stopping them. Governments have no more ability to prevent people owning cryptos any more than they do preventing people from owning drugs or guns. They’re here to stay. Primary players like bitcoin, ethereum, litecoin and others will experience dramatic increases in adoption and interest, which will indeed increase their real value in the marketplace. I think an eventual $50,000 bitcoin value is quite likely.

At the same time, this is also a bubble. I see many libertarian-minded people who I really like and respect, like Max Kaiser and John McAfee, absolutely lose their minds about how excited they are and how bitcoin is the absolute greatest thing in the history of the universe with zero problems or downsides. I like bitcoin too, but as I’ve said many times, when you experience extreme emotions, you lose objectivity and rationality. This is true when you get angry, and it’s also true when you get really excited.

Again, I believe in bitcoin. I’ve even started a small bitcoin mining company with my son. But, I also think many bitcoin supporters are indeed losing objectivity and are hyping up this stuff. I also think a lot of idiots are going to start flooding the bitcoin market, turning it into a bubble if it isn’t one already. This will indeed artificially increase its value, so some big corrections are probably coming down the pike. A lot of people are going to lose a lot of money, at least eventually.

I Have Some Questions For You In The Audience

Now that more of us are owning bitcoin, and those of us who own bitcoin own a lot more bitcoin (in terms of value in US dollars) because of its recent skyrocketing increase in value, I have a few questions for you about bitcoin that you more bitcoin savvy guys can answer in the comments. If I get some good answers, I’ll use them as a basis for a future article or two here.

I have my own answers to these questions, but I’m really curious as to what other guys are doing. Here we go:

1. What is the easiest way to buy bitcoin by not using an exchange, if any? Or, if you must use an exchange, are there any exchanges easier to use than the big ones like Coinbase?

2. What is the safest and most secure way to store bitcoin long-term? If a guy has $20,000 or more in bitcoin, where / how would he store it so it doesn’t get lost or hacked? Paper wallet? Hardware wallet? Offline computer?

3. If bitcoin is skyrocketing in value like it’s currently doing, why would anyone bother to use it as a means of purchasing things right now?

4. What cryptocurrencies do you think will really take off and/or overcome bitcoin eventually? And why do you feel that way?

Answer away. I’m here to learn.

39 Comments on “Bitcoin Rampage Continues, and Some Questions

  1. Warding, really interested in the answers!

    When I saw it skyrocketing to 17,000 USD I facepalmed for having never bought a single Bitcoin.

  2. I’ve been in Crypto for many years and started out by building a couple GPU mining rigs. However, I’ve sold most of my coins over the last month or so for a couple of reasons:

    1) The current prices are a reflection of speculation as opposed to increased BTC usage. Estimates I’ve seen peg the percentage of commercial transactions at ~1% which may even by high. BTC will continue not be used for currency because it is too volatile. You can’t price goods or contracts in  BTC because the price is constantly changing. Thus almost every commercial transaction that takes place in BTC is priced and transferred to the seller in fiat through bitpay or a similar service. In order for BTC to be usable it has to have less volatility, but if it is less volatile the speculators will dump it for a different coin or other speculative asset thus reducing the volatility.

    2) Thus I’ve concluded that in order for a coin to be used as money it must be backed by something (including fiat), but ideally gold, reward points, or some kind of physical or digital commodity. Such coins would have much less volatility and would allow for contracts to be priced and conducted soley in crypto. Countries such as Russia, Venezuela, China, and others have talked about or are working on making coins of their own that may be interesting. The Russian proposal of a 13% tax to convert it to fiat rubbles sounds partially interesting.

    3) Crypto is actually pretty easy to shut down/ban and the bigger it gets the stronger the incentive that it will be to ban, especially since states are making an alternative. If the US shut down all exchanges and instant fiat conversion services like bitpay the average BTC user would have no way to sell or use their coins and the price would crash. Likewise governments could easily manipulate the price if they wanted to, especially with the introduction of futures contracts. Or the government could use some of its computing power/money to do a 51% attack.

    I think cryptocurrencies are the future, but I don’t think many of the ones today will survive. The ones with the most hope are ones that are backed by something somewhat tangible like etheruem, storj, ect. However, I think the future is a statebacked coin created by a country that doesn’t like the current Western control financial order.

  3. The current prices are a reflection of speculation as opposed to increased BTC usage. Estimates I’ve seen peg the percentage of commercial transactions at ~1% which may even by high. BTC will continue not be used for currency because it is too volatile.

    Makes sense. This is exactly my concern as well.

    I’ve concluded that in order for a coin to be used as money it must be backed by something (including fiat), but ideally gold, reward points, or some kind of physical or digital commodity.

    I’ve heard this argument as well, and I’m not sure if I agree or disagree. If you back bitcoin or some other crypto with gold (or for example), then it’s no longer bitcoin, but something completely different. I’m not sure if that’s a good thing or a bad  thing, but I lean in the direction of bad. (And this is coming from a guy who has a lot of money in gold.)

    If the US shut down all exchanges and instant fiat conversion services like bitpay the average BTC user would have no way to sell or use their coins and the price would crash.

    Yes, the price would crash, but only temporarily. It would not stop its usage nor its growth. The US government can’t stop bitcoin; it can only stop people from buying bitcoin from an American exchange. The internet is not centralized and anyone can buy bitcoin from any country who offers it. (Though I realize the typical person won’t do this.)

    Likewise governments could easily manipulate the price if they wanted to, especially with the introduction of futures contracts.

    That’s true, yes. That’s going to be a problem, I agree. That’s the problem with gold and silver right now.

    I think cryptocurrencies are the future, but I don’t think many of the ones today will survive.

    I agree.

    I think the future is a statebacked coin created by a country that doesn’t like the current Western control financial order.

    I think that may be the mid-term future. In the farther future, I think we will adopt a stateless currency as the standard.

  4. Glad to chime in.
    First, I appreciate your staying rational, Mr Jones. In my 3 years as professional trader (inspired to it by my investment into Bitcoin) I have learned a lot about bubbles, especially the dot-com and housing ones, and my view of the current bitcoin scene is that it is shaped by a lot of 20-somethings who think they are very clever because they bought their first bitcoin at $1500. This is mania at its most exuberant, irrational and short-lived. I feel truly sorry for all the stoners and high-school dropouts who finally decided to open an account at Coinbase this very week.

    Now, about your questions:

    1) LocalBitcoins.com, but I stopped using it 1 year ago, so I’m not very sure. When buying, either through transfer or face-to-face meeting, there is very little risk, but fees are hefty. The exchange I can wholeheartedly recommend is Bitstamp (or Kraken, but it is unusable due to traffic until they roll out their upgrade, supposedly next week). If you want exposure to the price without never actually buying it, in 2 hours from now the first Bitcoin futures in an American “regular” exchange start trading. Now everyone will have them available at their bank/broker account the same as any commodity futures (oil, gold, etc). Notice the contracts will be cash-settled, so you can’t ask for delivery in Bitcoins.

    2) No opinion on this. I’m just a trader!

    3) For what it’s worth, I like to donate to Bitcoin sites I love when bitcoin goes up. Bitcoin has not been useful for purchases for a year because of saturation. Fees are easily 10$ if you want confirmation within an hour (you can always pay cents and it will probably go through within a couple of days, see https://bitcoinfees.earn.com/#delay for real-time info on that). I never thought Bitcoin should be useful for everyday payments anyway.

    4) I like Monero as the greatest, best-rounded of the privacy-oriented coins. I always liked it since its inception but only this year I noticed how important it is that there are coins like that. When the deep-web market Alphabay was shut down last summer, authorities reported that it was 10 times bigger than Silk Road when it was shut down in 2013. Now that’s a growing sector of the economy!

  5. I’ve even started a small bitcoin mining company with my son. 

    How can you as an individual be profitable mining bitcoin in 2017? You need lots of mining power that would cost you a shitload of money to buy and to run (electricity).
    Or have you invested in a mining pool?

    4. My personal opinion is that Iota has a chance of becoming bigger than Bitcoin eventually.
    AFAIK it is the only crypto-currency right now that doesn’t rely on a blockchain. A blockchain has its limitations since only a certain amount of transactions can be mined in a certain amount of time. And this is way less than Visa or even PayPal. Another problem of mining is that the miners will focus on transactions with higher priority and higher transaction fees. The low priority transactions will take very long to be approved. And the fees increase. You can’t do micro-transactions because the fees are way too high. Buying a coffee with bitcoin becomes really unlikely. And the more people use bitcoin the slower the system will become.

    Iota uses a different protocol called Tangle. No miners are required anymore since each transaction has to approve two prior transactions. The transactions approve each other. There are zero fees and always will be. And the more transactions are made the faster the system becomes. Iota is marketed as a third gen cryptocurrency for the Internet of Things. It’s a cryptocurrency for machines to pay each other. E.g. your self-driving car will pay the parking fees on its own. Or your smart fridge will buy the groceries for you. Big companies are already investing in Iota, like Bosch, Amazon, Microsoft, Fujitsu, Deutsche Telekom.

    I can already see the problems with bitcoin right now. Like you said in your third question: who will even buy stuff with bitcoin right now? Or even in the long term, if the transaction fees become so damn high?

     

  6. Re: 4)

    Do you mean just cyptocurrencies – blockhain tokens meant for payments, or blockchain tokens as a whole? (people often erroneously interchange the two)

    – My guess is that, since there’s a big trend of populations moving from the third world in “the West”, the next big cyptocurrencies will be what these people adopt to send remittance back to their countries of origin. Heck, just look at how much money Mexicans and Filipinos send back home as we speak.
    thoughts?

    @MoChnk
    – IOTA – What I like about it is that their whitepaper reads like a graduate level math thesis; there’s intellectual backbone to it. But, it is too centralized. Plus, they’ve been kinda shady:
    https://www.youtube.com/user/LiljeqvistIvan/videos
    (then again, shadiness never prevented Microsoft from becoming a major player)

     

    A general comment on Bitcoin: Most the discussions are about speculating prices, government regulation and mass adoption, but there’s not too much on how energy intensive mining Bitcoin is:
    http://blog.zorinaq.com/bitcoin-electricity-consumption/

    And if and when the Bitcoin bubble pops, would the price bottom out at the electricity cost to mine it?

  7. My 2¢ worth on the cryptocurrency space:

    1. Distributed Acrylic Graph (DAG) technology is the wave of the future for currencies. Satoshi-style blockchain systems are a subset of DAG, DAG is going to obsolete many of the applications using blockchain.
    2. Iota is the first-stage entrant into the DAG technospace. Just like Bitcoin went live in 2009, and was the first in, gaining significant mindshare and momentum, and in spite of technologically superior later entrants, it still dominates,. Watch Iota. You’ve just seen the thin edge of the wedge of a superior technology disrupting the incumbent (that itself is only 8 years old, LOL)
    3. As Shura has mentioned, watch Monero. It is the only fungible (fungibility is impossible without privacy, think about that) cryptocoin with a significant user base, although Zcash may come up from behind. There always has to be a privacy-maintaining currency, whatever distributed ledger technology is in vogue.

    Every sophisticated cryptocurrency player I know fully expects governments and their central banks to clamp down on cryptocoions. Whether banning use of coins and tokens that are not issued by the central bank, requiring users to use digital wallets that tattle to the FINCENs of the world, or confiscating digital assets and only returning a fraction (after taxes have been grabbed.) You will value having a stash of untraceable coins once that starts to happen.

    And, libertarians everywhere will be intrigued by the fact that there is a serious effort underway to do an end run around the governments/ICANN-controlled internet infrastructure to allow cyrptos to continue to trade despite internet disruptions and government meddling

    https://www.coindesk.com/blockstream-using-satellites-beam-bitcoin-earth/

  8. Can someone please chime in with their experience converting bitcoin back to cash?  Everyone talks about the buying, but is it just as easy to sell and get credit in a bank account?

    What would happen if governments prevented banks from taking fund transfers from bitcoin?  My thinking is that could be where governments focus their crackdown.  What are some ways to get around that and not be stuck?

    Estimates I’ve seen peg the percentage of commercial transactions at ~1% which may even by high.

    What if a major bank (or visa/mastercard) created their own crypto and backed it with their extensive payment network?  I think that might just be what makes the others become worthless, because nobody else has an advantage like that.

  9. 4.)

    Veritaseum. —-  Reggie Middleton can do a better job than me explaining why.

    But essentially it’s a one stop shop for big money to get exposure to cryptocurrency.

    Investment research. Automated trading .  Ability to tokenize real world assets, and equities..

     

    Vibe hub… VR, its cheap and it appears to have a good project.

  10. For me convenience is important.

    Kraken is an exchange which does not require ID (though you are sending from your bank account so it kind a is an ID in away) unless you are trading huge amounts and their fees are low but often they are down, but I hear that about other exchanges too.

    I guess paper wallet is safest but has many downsides. For smaller amounts I would use a application wallet where I control my own private keys and and for bigger amounts like into 10s of thoudsands and more I would either use paper or spread it over several wallets.

    Its also important to be able to trade it quickly and easily. There are some wallets that integrate an exchange into the wallet such as Coinimi, Exodus or Jaxx.

    I am not looking into some websites that offer to sell you physical gold and silver in exchange for cryptos. The ones I found so far were overpriced but the idea is very interesting.

     

    I think nearest future ETH can dominate. There is a lot of other cryptos  and start up companies based on its technology and it has huge backing including some mainstream entities. For the rest and the long term I dont know I would have to do more research.

    It seems to do a lot with availability on exchanges and wallet support also for how quickly it can take off.

     

    I think indeed cryptos are the future and for sure some cryptos will dominate and its just a question of which ones. For bitcoin I think it will continue rising for a time and then decline and be replaced by something else.

  11. 1) The easiest way  to buy bitcoins is buy it straight from the source. If you know personally any that is. There are many easy ways to own bitcoins. Revolut is another easy way to buy bitcoins and I highly recommend it as it makes it also easier to change that bitcoin of yours to money. Also offering to get paid by Bitcoin for your services is another way.

    2) It can’t be hacked easily. They need to know your private key or your passphrase. Just save your wallet.dat somewhere offline once in a while and replace it each time you want to make a transfer. To hack you they need to accidentally(or you give it directly) stumble upon your passphrase and decrypt your private key with that. Protect your wallet periodically with a different private key/passphrase.

    3) Bitcoin as you know is a speculation and is very volatile. It can go either way. I will try to use Bitcoins to purchase things right now that make me money(i.e put them in my work instead of using money). As long as we make profit we win. If it goes 100,000 I will just have some saved for that scenario, but it can go low so why keep large amounts in the hope of another spike? You can spend some now to have the feeling of a huge win and you can keep some in case it goes higher. You can also accept Bitcoin for your services and because only few will pay you with Bitcoins is like investing a small amount of your earnings for the other potential spike.

    If you could buy a house TODAY with Bitcoins(almost 0 money out of your pocket) wouldn’t you have bought it? Is it better to keep them in the hope it will go higher? I mean it surpassed many expectations, I would just take my winnings, keep some and let the others play the big game with it.

    4) That’s just my opinion but Bitcoin and Litecoin are the only ones you should be looking for the long term. The others are just altcoins for making small profits in the short term. I owned some Ethereum, made some profit then put it all to Bitcoin. The Bitcoin/Litecoin market will never be surpassed by other coins in the long run. Too many people are invested in those two. Too much circulation, exchange of goods/services unlike alt coins. For short term play I would go with Ethereum and Neo Coin(because it is a China market). But you can’t give straight answer to this question because it depends on many factors. I wouldn’t play with other coins though in the long run just like Bitcoin/Litecoin. I would just make small profits and run. But with Bitcoin/Litecoin I waited years. I mined Litecoins when they were $4 and left them there. Think of it like this: When we were playing with Bitcoins/Litecoins everyone was laughing at us. Now if you play with Ethereum or any other alt coin people think is normal to do it. Crypto went into the mainstream already and in my opinion anyone who enters now is too late in the game and is just gambling.

    Can someone please chime in with their experience converting bitcoin back to cash?  Everyone talks about the buying, but is it just as easy to sell and get credit in a bank account?

    Yes Revolut. With Revolut account you get a card. Then you can go to a bank atm and get money with the Revolut card.

  12. Glad to chime in.

    I could be wrong, but weren’t you the same guy who said speculating isn’t speculating, and that you were shorting bitcoin because you said it would never go past $3000 in this cycle? If that was you, how much money have you lost?

    How can you as an individual be profitable mining bitcoin in 2017? You need lots of mining power that would cost you a shitload of money to buy and to run (electricity).
    Or have you invested in a mining pool?

    Not giving any details, sorry.

    A blockchain has its limitations since only a certain amount of transactions can be mined in a certain amount of time. And this is way less than Visa or even PayPal. Another problem of mining is that the miners will focus on transactions with higher priority and higher transaction fees. The low priority transactions will take very long to be approved. And the fees increase. You can’t do micro-transactions because the fees are way too high. Buying a coffee with bitcoin becomes really unlikely. And the more people use bitcoin the slower the system will become.

    Interesting. This data is new to me. I’m going to do some more research.

    Do you mean just cyptocurrencies – blockhain tokens meant for payments, or blockchain tokens as a whole? (people often erroneously interchange the two)

    Please describe the difference.

    A general comment on Bitcoin: Most the discussions are about speculating prices, government regulation and mass adoption, but there’s not too much on how energy intensive mining Bitcoin is

    I agree completely. I only recently learned about this. Theoretically, soon it will be very hard to mine new bitcoins because the energy levels needed will be exorbitant.

    And if and when the Bitcoin bubble pops, would the price bottom out at the electricity cost to mine it?

    I think so. The numbers I’ve heard is that it costs around $1100 in energy costs to mine a new bitcoin, making that the “bottom.” Not sure if that’s accurate but it makes sense.

    libertarians everywhere will be intrigued by the fact that there is a serious effort underway to do an end run around the governments/ICANN-controlled internet infrastructure to allow cyrptos to continue to trade despite internet disruptions and government meddling

    Yes, and I will repeat again that I do not see any way the governments of the world can “ban” or “confiscate” cryptos on any large scale. They can make it more difficult to use them, but they can’t stop them. All they can do is to keep the uninformed or non-tech-savvy people away from them, but that isn’t enough to stop them, or even halt their growth.

    Can someone please chime in with their experience converting bitcoin back to cash?  Everyone talks about the buying, but is it just as easy to sell and get credit in a bank account?

    Yep. I’ve done it several times. You just press a few buttons and wait a few days (at most) and it’s done.

    What would happen if governments prevented banks from taking fund transfers from bitcoin?  My thinking is that could be where governments focus their crackdown.  What are some ways to get around that and not be stuck?

    Read what hey hey said about Revolut. Even if that wasn’t an option, my answer would be to use a foreign bank, or convert your bitcoin into foreign currency before getting your home currency, or just keep the bitcoin and use it as currency once the volatility settles down, but I’m sure there are better/easier ways around it I’m not thinking of.

    I guess paper wallet is safest but has many downsides.

    What are the downsides besides its destructibility?

    I think indeed cryptos are the future and for sure some cryptos will dominate and its just a question of which ones. For bitcoin I think it will continue rising for a time and then decline and be replaced by something else.

    That is exactly what I think.

    If you could buy a house TODAY with Bitcoins(almost 0 money out of your pocket) wouldn’t you have bought it?

    That’s a very good question. I had to think really hard on that. Let’s say I had $400,000 in bitcoin and was looking to buy a $400K house using the bitcoin right this minute. Would I do it? My answer is, “I don’t know, but probably not.” It would depend on other factors, especially the growth value potential of that house, but I would likely wait a while for bitcoin to grow some more before doing it.

  13. I could be wrong, but weren’t you the same guy who said speculating isn’t speculating, and that you were shorting bitcoin because you said it would never go past $3000 in this cycle? If that was you, how much money have you lost?

    Oh, my God, you think a position in Bitcoin is something a trader would hold for months?

    As I already commented on that thread, that cycle concluded at $1800 more than a month later. I have been long most of the time since then, sometimes even leveraged, have correctly called the bottoms at $3000 on September, $5500 on November and $9000 (the last 2 very accurately) 2 weeks ago, and have almost equalled the return from Buy&hold with half the average drawdown (and am now reducing position size, and consequently returns, since I’m no longer interested in growing my capital fast, but in preserving it). I can give you access to my private Twitter account with real-time trades for proof.

    Trading isn’t about being right. You know, outcome independence. 🙂

  14. Hey Caleb, … earlier today I met this guy, who’s actually a Wal-Mart employee, he was sharing with me how just 17 months ago he bought 3 1/2 bitcoins for $2,100 and today they are worth $73,000… that’s just boggles my mind….  amateur question.. is it too late for guys like me, who really know nothing about bitcoins, to get in?

  15. Oh, my God, you think a position in Bitcoin is something a trader would hold for months?

    Of course not, but bitcoin didn’t surpass $3000 just now; it happened many months ago.

    earlier today I met this guy, who’s actually a Wal-Mart employee, he was sharing with me how just 17 months ago he bought 3 1/2 bitcoins for $2,100 and today they are worth $73,000

    Yep. Most of my bitcoin I bought in at $1800 – $2300; same thing happened to me. Very nice.

    is it too late for guys like me, who really know nothing about bitcoins, to get in?

    Is it too late to buy bitcoin? No. That’s easy. Just sign up to Revolut or Coinbase or any other exchange, set up an account, and by some. No software or tech knowledge needed.

    If you’re asking if it’s too late to make money with bitcoin as an investment, that’s a more tricky question. Bitcoin is at $17,000 right now, which is high. I personally think it will go much higher than this, but that’s purely a speculation on my part and I could be wrong. Be very, very sure you understand the difference between speculating and investing. Read this. Also, it’s usually not a good idea to buy something when it’s skyrocketing in value and everyone is excited about it. It’s better to invest in things that are at historic lows that no one wants right now. That’s what I’m doing. Read this.

  16. 1) I have actually exchanged my labor for Bitcoin several time, not recently though. Basically I do freelance web development and whenever I send someone an invoice I give the offer of a 20% discount if they pay in Bitcoin; and since that is a decent discount for some of my clients they’ll go out of their way to get bitcoin and send it to me. It’s not a particularly convenient way to get bitcoin but it is something different than using a traditional exchange. Not to mention those bitcoins are worth significantly more now that the initial 20% loss in USD is a pittance compared to the gains.

    2) I use a Trezor hardware wallet and take extra precaution to keep my 24 seed words safe, like locked in a waterproof/fireproof safe.

    3) Everyone has their price, and while they may not use bitcoin directly to pay for stuff, they are eventually selling some to either diversify their risk or to simply finally take care of some big life expense like pay off the mortgage, student loans, medical expenses, buy a house, or simply go on a several months long trip through Europe in a few months like me 🙂 If you read some Bitcoin forums like /r/bitcoin on Reddit you will see stories of people doing exactly this. It could just be it’s a store of value like gold, and when you need it, you sell it for cash rather than trade it directly.

    4) I actually think there is a very good chance that Bitcoin remains the king of crypto, if not the reserve crypto. Ethereum has a lot of issues and problems that it’s running into with a much larger attack surface, SEC going after ICOs, and much more difficult scaling issues than bitcoin – heck just one DAPP (CryptoKitties) managed to shut down the network for the last few weeks, how are they supposed to be a world computer when they can’t handle one simple game.
    Monero I like and is the one coin that offers anonymity/fungibility at the protocol level unlike other privacy focused coins like Dash or Zcash. In addition, Monero (in my opinion) has the second best dev team working on it behind Bitcoin. Also, if you read the darknet communities lately, they are making a big push towards using Monero over Bitcoin. Of course Monero has it’s own scaling issues it’ll need to deal with and it’s a bit more difficult to use, less wallet support, at the moment.

    Directed Acrylic Graph (DAG) coins like IOTA or Byteball are really interesting since they don’t require a blockchain. There’s a lot of potential there but it’s still very new and not well tested technology and they suffer from one major problem in that they require a central coordinator to work, soooo if you care about decentralization then this is a HUGE problem for DAG based coins, but if they can figure out how to make it work without the central coordinator then they will basically blow any blockchain based coin out of the water in terms of scaling.

    What I think will actually happen is that we’ll see Bitcoin remain as the main settlement crypto and then we’ll see Litecoin or may Iota as sidechains that will use atomic swaps across networks so you could use the sidechains for high volume transaction activity and then settle on the main Bitcoin chain.

  17. Thanks for your honest reply… I think at some point I just need to get into your coaching program.

    Which level covers money, business and investing?

  18. 1) cex.io, cheapest way to buy btc I have found about 5% per transaction (is an exchange)

    2) paper wallet in safe for long term (or a nemonic key which is 20 words you memorize or write down), you can even split your private keys in two and store two halves in separate safes/locations.

    USB drives still dodgy.

    3) don’t buy btc atm for an investment it is WAY WAY WAY above cost of production

    4) bitcoin cash – lightning network – youtube jameson lopp. Still 10-20 years before it goes fully mainstream, or youtube Andreas Andrianopolis

    Love your stuff, thanks Caleb

    I also have some really interesting developments in gold you may want to get in early on, just send me an email about it and I can let you know about it.

  19. 2. I researched paper wallets but they seem too flimsy for something that could potentially be so valuable. I ended up using a hardware wallet (KeepKey) to store mine. Simple to use interface and only needs to be online to send or receive cryptocurrency.

    There is a passphrase (12 random words) that can be used to rebuild the wallet from scratch in case of damage. Mine is in a fireproof safe. However, I had the 12 words engraved on rustproof stainless steel plates. 6 words on 2 plates that were made by 2 different companies and I store them in two different locations outside of the safe. Seems extreme but if bitcoin, ethereum, etc goes to $100K+ that’s serious wealth depending on a piece of electronics no matter how simple.

  20. I guess paper wallet is safest but has many downsides.

    What are the downsides besides its destructibility?

    That downside is mitigated by having multiple copies. No, the main downside is low easy of use and quick access to consult portfolio and make transfers. It really depends on the amount and how much long term we are talking about.

  21. is it too late for guys like me, who really know nothing about bitcoins, to get in?

    Also depends on what you wanna do with it. As a trader you can enter at any value and be making money regardless of if its going up or down if you put the work on it and know what you are doing.

    For investment I’d probably wait for it to go a bit down, but dont be so stuck up on BTC.

    For example if you bought lite coin a few days ago you could have trippled your money now. I bought some ETH a few days ago and now its about 25 % up since then. These things go up and down. Just decide on what you want to put money and split it up between different things. Also need to decide on your strategy: will you buy now and hold for a long time in a hope it will go up a lot eventually regardless of whether its going up or down? will you do short term trading? Or something in between?

    There are wallets where you can hold multiple cryptos and trade between them inside the wallet. Good idea I think is to buy some stuff that is supported by the wallet and is now at a low and then when it goes up and something else goes low you change. I have been experimenting with this a bit, takes a while to learn to do it correctly because there are also transaction fees so I have been losing some money like this, but overall I have still made money.

  22. Remember that bitcoin mining / transactions currently cost the Electric sum of a small western country, and by 2019 is estimated to consume as much power as all of the US combined.

    Thus, if bitcoin doesn’t drop and another more energy-efficient technology is implemented, the world will spin into an energy crisis (or an environmental catastrophe, since most of the data centers are placed in China and fueled by brown coal).

    This probably doesn’t abstain anyone from trading it, but it does limit the practical use of BTC and will force the market to die down in the end.

  23. Remember that bitcoin mining / transactions currently cost the Electric sum of a small western country, and by 2019 is estimated to consume as much power as all of the US combined.

    Thus, if bitcoin doesn’t drop and another more energy-efficient technology is implemented, the world will spin into an energy crisis (or an environmental catastrophe, since most of the data centers are placed in China and fueled by brown coal).

    This probably doesn’t abstain anyone from trading it, but it does limit the practical use of BTC and will force the market to die down in the end.

    I personally think these kinds of news and arguments are a fraud that are being spread by the people who dont like cryptos. Some simple thought excercises and qurstions to ask in this regard:
    – How can you know an actual energy consuption? Likely an estimate based on a typical cpu power consumption, except almost no one mines with a typical cpu but with expensive super energy efficient rigs.
    – Maybe it does consume a lot, but compared to what? What is the energy consumption of banks and payment networks like Visa or Mastercard? This is never mentioned in these articles.
    – What is the energy cost of printing money? I recently read an article that said its actually more than the global crypto network at the moment.
    – Keep in mind computers keep getting more energy efficient. Now you can do the kind of processing on your smartphone powered by a small battery that you had to some years back do on a big energy intensive super computer. So a prediction how much energy it will consume is based on prediction how efficient computers will get (likely hard to do) or just based on current efficiency (which makes the prediction completely meaningless).

    Again most of the times these things are never mentioned in these discussion about crypto energy consumption, that is why it looks to me like the energy issue is just a fraud.

  24. a bunch of idiots are going to artificially jack up the price of bitcoin before it finally pops and crashes, causing everyone lose their entire investment. I agree with them too.

    That is exactly what is going to happen with BTC, as well as ETH and other cryptos. Anyone who wants to get into the crypto game will have to wait a bit, as right now is not the right time to invest. I should have bought some five or so years ago. Oh well. I’ll just wait another few years when it crashes.

  25. I have actually exchanged my labor for Bitcoin several time, not recently though.

    I get why it’s a good idea to receive bitcoin for services. The question was about why one would spend bitcoin for services.

    (My answer: People in the Western world probably wouldn’t / shouldn’t, but for people in fucked up countries like Brazil or Venezuela where currency is very problematic, it’s a good option.)

    I also have some really interesting developments in gold you may want to get in early on, just send me an email about it and I can let you know about it.

    I’m good. I already own a shitload of gold, in several different forms, far more than I own in any other investment other than cash.

    I had the 12 words engraved on rustproof stainless steel plates. 6 words on 2 plates that were made by 2 different companies and I store them in two different locations outside of the safe.

    This is almost exactly what I was thinking about doing. I will probably end up doing this.

  26. I get why it’s a good idea to receive bitcoin for services. The question was about why one would spend bitcoin for services.

    (My answer: People in the Western world probably wouldn’t / shouldn’t, but for people in fucked up countries like Brazil or Venezuela where currency is very problematic, it’s a good option.)

    But why do you believe that?

    I see it like this: I believe Bitcoin will drop hard in the near future and then it will go back up again. Let’s say I own 1 Bitcoin and I really have to buy a car right now. Why should I spend my $ instead of the Bitcoin? And save that $ when Bitcoin drops to buy some more?

  27. I had the 12 words engraved on rustproof stainless steel plates. 6 words on 2 plates that were made by 2 different companies and I store them in two different locations outside of the safe.

    This is almost exactly what I was thinking about doing. I will probably end up doing this.

    If you have some basic tech/it skills you can go to some laser engraving place that is open to publick like fablab and after some basic training (if neccessary) they will let you oparate the machine yourself. Then you can engrave whatever you want while alone in the room and you just pay for the laser time metal sheet.

    My answer: People in the Western world probably wouldn’t / shouldn’t, but for people in fucked up countries like Brazil or Venezuela where currency is very problematic, it’s a good option.)

    In some of these countries bitcoin sells for nearly double because of exactly this. If you can find a way to trade with the customers from there directly in a way that works for them you are in a big business.

    I’m good. I already own a shitload of gold, in several different forms, far more than I own in any other investment other than cash.

    Was that on purpose? Or did it just happen. You talk often about gold and silver and especially gold, but what do you think about platinum and palladium? There are some interesting projection because of the shortage and the industrial applications, plus they are precious metals.

    I see it like this: I believe Bitcoin will drop hard in the near future and then it will go back up again.

    Yes there will be some localised crash and that will be a good time to buy more after that I think it will go back up and even higher. Once it hits its max its going to be a slow gradual decline to an eventual irrelevance as it gets gradually replaced by other better cryptos. In the last few weeks and months we have seen some small mini declines several times. Each time it was an opportunity to buy some more and many people did that which drove the price even higher than before eventually.

    as right now is not the right time to invest.

    Ironically if you had invested few weeks, or even days ago in a few of the major cryptos you could have easily made 50-300% returns. I am sure you could have said the same at that time. Point is its so crazy right now its not really possible to say. In fact its easy to lose ones sanity when looking at the price changes. Probably best is to make some decision about how much to invest, in what and for how long and then stick to that regardless of the prices and what happens.

  28. The numbers I’ve heard is that it costs around $1100 in energy costs to mine a new bitcoin…

    Does anyone have any experience mining bitcoins.  I’m wondering if it takes hours, days or months with a typical desktop computer.

    My monthly electricity cost is about $50/month.  So that would be almost 2 years worth of power at the rate that I currently use it.  If I figure a typical computer uses 200 watts at 12 cents per KwH, it would take over 5 years for that computer alone to consume $1100 worth of power.

    Maybe you need a server farm to mine bitcoins in a reasonable amount of time.

  29. Some people might find this device interesting…

    Most people I know would never follow some guy’s hyperlink without a short description of what it’s about and why it’s interesting.  Plus it could be malware.

  30. Some people might find this device interesting

    Holy shit, that demo video they have is exactly why so many people are reluctant to adopt bitcoin. It’s a perfect example of uber-nerds selling to other uber-nerds and no one else. Listening to the guy is like listening to someone speak in a different language, and I have an I.T. background.

    Technicians make such terrible entrepreneurs… funny.

  31. My monthly electricity cost is about $50/month.  So that would be almost 2 years worth of power at the rate that I currently use it.  If I figure a typical computer uses 200 watts at 12 cents per KwH, it would take over 5 years for that computer alone to consume $1100 worth of power.

    Maybe you need a server farm to mine bitcoins in a reasonable amount of time.

    I did a small amount of research on this and it seems it is not profitable these days on a normal laptop and and with specialized rigs it takes a long time to break even unless you invest in it a lot. There are some website what have a calculator where you put your electricity price, energy efficiency of your computer, the processing power and also how much you paid for the computer and then it tells you an estimate based on current prices of bitcoin and trafic how much you can gain and when, but as these things keep changing its not a very meaningful estimate.

  32. And for the truly uber-paranoid:

    https://qz.com/email/quartz-obsession/1130471/

    . . but of course our friend @Macro Investor would never click on that link . . would he?

    Ya never know what you’re missing.  Maybe there are photos of some hot, martial arts-trained, Gaddafi-style physical bitcoin security chicks.

    C’mon, MI, you know you want to . . .

    Meanwhile if any readers who understand things like cross-scripting and antivirus controls in their browser would like to check out just how much processing (and electrical) power has been deployed in the Bitcoin mining industry, here’s an article on how the descendants of the Mongolians are racking up a $39k/day electricity bill generating coins.

    https://qz.com/1055126/photos-china-has-one-of-worlds-largest-bitcoin-mines/

     

  33. What about mining bitcoins during winter and use the extra heat to warm your house? Obviously this depends a lot on how you set it up etc but in principle it could be a win win.

  34. Why Iota can be purchased with either BTC or ETH? Can you envisage that in the near future Iota will be purchased with cash or there is something in the way it is set up that will not allow it, in principle?

  35. Here’s an interesting article by the left (Washington Post).  They seem to be saying “See, this Bitcoin stuff is bad because the alt-right extremists like it.  We’d better stick to Government-controlled money”.

    https://www.washingtonpost.com/business/technology/bitcoins-boom-is-a-boon-for-extremist-groups/2017/12/26/9ca9c124-e59b-11e7-833f-155031558ff4_story.html?hpid=hp_rhp-top-table-main_bitcoinaltright-730pm%3Ahomepage%2Fstory&utm_term=.0989669488c7

     

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