Bitcoin

[ProfHawking]

There's been a bit of a flurry of articles in the news recently about Bitcoin. I wondered if any of you guys have also been keeping an eye on it?
(If you havent heard of bitcoin, its a currency of sorts, but not linked to any country or government. About as close as you can get to cash that you can email.)
I quite like the idea of it, even if in practice it may have a few flaws or teething troubles, I think in general it could work. It certainly makes buying and selling on-line easy as pie and cheap, and arguably safer. Also I would dearly love to see it kill of PayPal etc as the defacto online payment method.

I never paid much attention to it though until recently (which i regret, but hey). It's value has been steadily climbing, until the other day when there was a spike in buyers & price, then a market panic induced low. The reason for the panic was down to a lack of capacity at the main trading exchange, mtgox, which froze up due to the spike. They are back now though, and the market seems to be mostly back to normal now, albeit at a price back down now to something like the price it was before the spike at the end of last week.

At this point, I'm tempted to invest a bit of money in. I can visualise the price doing something like this:



Although bitcoin has the potential to replace cash, i dont see that happening for quite some time. I see it as a market similar to the gold market, where the currency is worth basically what people will pay you for it rather than its actual usefulness. The main difference I see is that the gold market is tried and tested - established and stable. There may be more opportunities for making money playing the (wildly) fluctuating market price of bitcoin.

Playing the markets aside though, my thinking is that (apart from some unforseen disaster like the US government sticking a legal oar in), bitcoin may be a decent longer term investment.
In my opinion, the cause of the recent spike seems to mainly be down to interest in the fledgling currency, and things like cyprus happening. The reason for the crash seems to be mainly due to a technical issue at the main exchange, which I think if had not happened the price would have stayed high.
I don't see that the initial interest that caused the spike has peaked. I think as more people see the possibilities of bitcoin (even if as just an investment/gambling opportunity rather than for physical purchases) the price will continue to rise, and as more exchanges become established the stability (one exchange crapping out would not affect the entire market so much) will only improve. Certainly in the short term, there are probably quite a few people like me who are considering investing just to see what happens and pushing more capital into the market.

It could be that I am mistaken, and the effect of the spike/crash has not been fully dealt with yet and the price does something like this:



In this case, it would obviously be a less than ideal time to buy, it would take longer to reach the same point, but I still think it would eventually.

Anywhoo, I'm not talking putting my mortgage on this, I'm not stupid enough to gamble more than I can afford to loose should the worst happen and it all bottoms out like the Zimbabwean dollar. But if the price does just continue to rise for the next year or two, I would be kicking myself for not taking a punt.

Ok... I now open the floor for discussion!

[Dog Pants]

I don't know a great deal about it either, but the idea of a digital currency is far more reliant on the mechanisms of men than gold, which is based on a limited, rare, resource. And that makes it fallible, which isn't something I'd be happy to invest money in, especially with conventional currency struggling at the moment.

[Mr. Johnson]

That's a very interesting read, thanks for pointing that out. Pants also makes a good point about the current currency failing, so I'm very interested in seeing how this turns out.

[deject]

Bitcoin is a complete bubble and if you do put your money in, I strongly suggest being very cautious. It's such a small market and there are literally no protections outside of the individual traders (e.g.: MtGox, etc.) suspending trading for massive price swings that the risk is insane.

I'm just shocked that Bitcoins are still even a thing at this point. I doubt that it will be relevant even to the extent that it is now in a couple years.

[ProfHawking]

I think the comparison between the gold market and bitcoin is similar, its based on confidence.
Gold has limited usefulness and its value is basically backed by mankind's long-term fascination with the shiny metal.
Bitcoin is much the same, but with a much less established history of demand, mainly backed by internet geeks (at the moment). As such any slight shock to the confidence of the market can greatly affect its value.

There is a rather limited amount of usable gold in the world, there is also a fixed limit of the number of bitcoins that there will ever be (21 million).
I have to say, this fixed limit is my biggest concern for the long term future of bitcoin as an actual currency people use to buy and borrow - that it effectively will never have any inflation, moreover it will be endless deflation where each coin is worth more and more as people loose them. (yes you can loose bitcoins permanently).

In the mean time though, it seems to me like an investment opportunity that offers some reasonable chance of a decent return in the next few years, even if I never use my invested money to buy the shopping at tesco.
The Cyprus fiasco quite rightly has shaken to the core the euro market. The idea that governments can very suddenly just decide that the money you have earned is no longer yours is a scary proposition. No wonder people are looking for alternatives. I think it is this combined with the media & general interest that will drive an overall increase in value over the next few months, maybe a year or two.

Deej, yes I agree it is a risky venture. Hence I'm looking at it as a gamble and only putting in a little chunk of change.
On the subject of the price swings, yes it is incredibly volatile at the moment with no real checks & balances. I see this however is only a problem (or possibly an advantage if you want to actively try and play the market) if you are actively trading. If you view it instead as a longer term investment, its the overall price that will matter surely.

[buzzmong]

The thing I'd be worried about is what my new colleagues were on about this week at work, I only caught the tail end of their conversation, but essentially there's some new hardware that's come out which is a fucking god at doing the calculations needed to earn bitcoins.

One of the figures they were bouncing around was that the hardware was about £5k as an inital outlay, but it would let you earn that value back in Bitcoins within a week.
Now, I don't know how accurate that is, but if even half true about some newish hardware that's speedy at it, expect an even bigger price crash.

[HereComesPete]

I think it's being driven by media right now, so if you can stay on that wave you'll make good money. Fickle as they are, it might be that it takes a few months and some botnet coin miner destroys the market and it'll be back in the news with loads of investment types going, 'I told you so'.

If you put money in I would say you've got to move fast and invest heavy which isn't what you want looking at what you've written. I don't think the bubble will last long and the inevitable liquidity trap will close its jaws fast. If I had spare money, truly spare, then I would throw it in, let the investment double or triple and then pull it out, whether that took a few days or a few months. Beyond that point I would expect the crash to arrive hard and see you lose everything. But I'm cautious with things like this and would much rather drop money into an isa or sharesave.

[ProfHawking]

The thing I'd be worried about is what my new colleagues were on about this week at work, I only caught the tail end of their conversation, but essentially there's some new hardware that's come out which is a fucking god at doing the calculations needed to earn bitcoins.

One of the figures they were bouncing around was that the hardware was about £5k as an inital outlay, but it would let you earn that value back in Bitcoins within a week.
Now, I don't know how accurate that is, but if even half true about some newish hardware that's speedy at it, expect an even bigger price crash.

Yeah, its probably the butterfly labs kit they are talking about. It looks to be the first chip specifically designed for mining bitcoins, and is therefore far more efficient than general purpose CPUs, GPUs or FPGA setups.
The thing is, the system has been designed around that. If you had one of those 'god boxes' now, you'd be nicely making a big profit in no time. But as more people buy them and the overall speed of mining goes up, there is a difficulty level that is increased to match. This is built into the system to prevent exactly what you are suggesting which is a sudden influx of new currency into the market pushing a crash. No doubt this kit will cause ripples though, perhaps even a crash, who knows!
There is more detail from the manufacturer here:
https://forums.butterflylabs.com/showwi ... ot+so+fast

I think it's being driven by media right now, so if you can stay on that wave you'll make good money. Fickle as they are, it might be that it takes a few months and some botnet coin miner destroys the market and it'll be back in the news with loads of investment types going, 'I told you so'.

If you put money in I would say you've got to move fast and invest heavy which isn't what you want looking at what you've written. I don't think the bubble will last long and the inevitable liquidity trap will close its jaws fast. If I had spare money, truly spare, then I would throw it in, let the investment double or triple and then pull it out, whether that took a few days or a few months. Beyond that point I would expect the crash to arrive hard and see you lose everything. But I'm cautious with things like this and would much rather drop money into an isa or sharesave.

Hmm, interesting take. Yeah I was thinking more of a long term investment (while obviously keeping an eye on it) than a short term high stake flutter.
Truely spare money... that would be nice! But who has that really? I think for now i'll play it safer (not as safe as an isa i'll grant you) and only gamble a few hundred quids worth, that way it it does all go up in smoke its not the end of the world. I could put more in but then i'd feel like a right chump if it does crash unexpectedly. But if it does go up, at least I'll have something for it.
My (perhaps wishful thinking) plan is to leave the money in to double, then take the orig amount out and play with the profits guilt free.

[spoodie]

Personally my interest in Bitcoins is making purchases more anonymous and as an alternative to the plainly fucked traditional finance system. More of an ideological thing for me, I've no interest in investing for the purposes of making money.

[HereComesPete]

Personally my interest in Bitcoins is making purchases more anonymous and as an alternative to the plainly fucked traditional finance system. More of an ideological thing for me, I've no interest in investing for the purposes of making money.

I would love for a truly stable and independent currency that protects itself from misspending countries by being global and virtual but I see bitcoin as commodity because of it's finite amount, yes that finite amount is currently years away from being 'dug up' but the volatility of it as it stands means it's fluctuating far more than any first world fiat currency.

If I'm honest I might have a dabble myself by putting some overtime in to get some spare cash and see if I can play it like a commodity right now, but also go for a long term investment and see if it pays out. So aim for both scenarios and try not to give a shit if the bubble bursts.

[spoodie]

Does anyone actually have any? I looked into this a few months ago and it confused me, got bored and forgot about it.

[ProfHawking]

Well, today I bought my first bitcoins!
I later did what I didn't really plan to do, and sold them.
But, in the mean time I had netted about 16% profit on my initial deposit. Not bad for an afternoon I think.

There is definitely money to be made here, there are definitely risks though. The price swings around quite a bit.
I am as of yet still unsure how best to play this, short term punts like I just did, or long term investments... hmmm

[buzzmong]

I'd say you should get mining if you've got spare hardware.

I think it's the type of thing the RasbPi is ideal for, just leave it running 24/7, if you're feeling casual about it.

[ProfHawking]

I'd say you should get mining if you've got spare hardware.

I think it's the type of thing the RasbPi is ideal for, just leave it running 24/7, if you're feeling casual about it.

I also had a quick stab at mining just for the hell of it on my office pc, and got it doing 45Mh/s on its gpu. I cant see it earning any money though, the amount of money you can earn in a pool is really quite minimal unless you have access to a botnet or FPGA kit etc. Even with something as low power and efficient as a Pi, i'm not sure it would pay for its own power consumption.

[deject]

I'd say you should get mining if you've got spare hardware.

I think it's the type of thing the RasbPi is ideal for, just leave it running 24/7, if you're feeling casual about it.

That's going to take FOREVER to mine anything, it has such tiny amounts of compute power. Unless you're going to invest in GPU hardware for mining, it's not going to be worthwhile.

[ProfHawking]

I'd say dont think about investing in GPU tech at the moment (unless you are anyway for games etc).
The butterfly labs kit that should* be out any time now will blow it away. To counteract this, the difficulty will go up and render GPU farms unprofitable.

*lots of rumour going around that their new kit is one big scam and they are going to run away with all the pre-order money. Haha fun times

[spoodie]

Some bitcoin rigs:

http://buttcoin.org/mining-rigs-2-electric-boogaloo

[Thompy]

I'd never heard of this before this thread but now I'm seeing it everywhere In fact the very first website I went to had a comment about it. And now RPS. Is it entering a new age of popularity or something?


I still don't understand how it works.

[ProfHawking]

There is certainly more buzz around, since the big spike in early April the mainstream media have been onto it and gradually its becoming more well known.

I still think that increasing interest & demand will gradually push the average price up and up (ignoring the inevitable spikes and slumps along the way).
That is until something serious comes along and pops the bubble of course.

I'm trying to play the spikes and slumps at the moment. I'm still up overall but not doing as well as I could have been - I should in hindsight have stuck with my original plan to buy them at the beginning and just sit on them. Ah well, hindsight and all that.

[buzzmong]

There is certainly more buzz around

You callin' me fat?