Author Topic: Do you think Bitcoin is a safe store of value?  (Read 84996 times)

mikazo

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Do you think Bitcoin is a safe store of value?
« on: March 29, 2013, 07:48:22 PM »
With the total Bitcoin market over $1B USD and news articles about the events in Cyprus lately, Bitcoins are getting more and more attention. Would you ever consider holding/trading Bitcoins?


CONeal

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Re: Do you think Bitcoin is a safe store of value?
« Reply #1 on: March 29, 2013, 08:44:27 PM »
When I saw an article about the returns on these things the other day was surprised people were doing this.  Sounds like a present day tulip mania to me.

ScottHall

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Re: Do you think Bitcoin is a safe store of value?
« Reply #2 on: March 29, 2013, 10:46:25 PM »
When I saw an article about the returns on these things the other day was surprised people were doing this.  Sounds like a present day tulip mania to me.

I don't know that I'd go that far considering I haven't studied them in depth, but I agree with CONeal. I have no interest.
You can follow me on Twitter @ScottMONEYHall

CONeal

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Re: Do you think Bitcoin is a safe store of value?
« Reply #3 on: March 30, 2013, 12:10:55 AM »
When they first came out a couple of years ago they were valued at .05 each.  Now they are valued over $88 each. 

DTEJD1997

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Re: Do you think Bitcoin is a safe store of value?
« Reply #4 on: March 30, 2013, 12:19:20 AM »
I've looked into Bitcoins.

At one point, I was thinking about "mining" them...but that is easier said than done at this point.

One of the VERY BIG problems that I saw, was the very limited number of merchants that would accept them.

Well over 90% of the merchants I saw, I would have little to no interest in buying things from.

If you are looking for an alternate store of value, I would buy USA 90% silver "junk" silver coins.

When you have your fill of that, I would look to be buying 1/10, 1/4, 1/2 oz. gold coins with little to no numismatic value.

I would feel a lot safer in physical gold & silver than bitcoin!  You can easily put a fortune into a small safety deposit box with gold, or so I'm told!

I don't personally have ANY gold or silver coins...

Hielko

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Re: Do you think Bitcoin is a safe store of value?
« Reply #5 on: March 30, 2013, 04:08:43 AM »
I mined a bunch of coins two years ago and basically managed to get a new high-end graphics card for free. Guess I shouldn't have sold my coins at ~$10 back then...

mikazo

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Re: Do you think Bitcoin is a safe store of value?
« Reply #6 on: March 30, 2013, 08:00:33 AM »
Combining the real estate arket with the Bitcoin market...

http://business.financialpost.com/2013/03/21/canadian-bitcoin-house-for-sale/

Mark Jr.

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Re: Do you think Bitcoin is a safe store of value?
« Reply #7 on: March 30, 2013, 08:21:13 AM »
I look at Bitcoin through a similar lense that I viewed e-gold around 10 years ago (quick primer: e-gold was a DGC - digital gold currency, backed by physical gold). I liked e-gold then and I like bitcoin now but I am loathe to part with actual "cash" to accumulate any, so what I did was start accepting e-gold as payment through my business (online web services, domain names, DNS).

The problem with e-gold then was that it was a governance nightmare, while other DGCs had far better governance, e-gold was the easiest to use and thus had a lock on the market of actual payments, while other DGCs (pecunix, goldmoney) were being used as stores of value.

I saw the governance issue as an eventual show stopper, so we made it a habit to out-exchange our e-gold into physical gold as fast as it came in. We amassed several pounds in this manner when gold was $400 - $700/oz and still hold it today (our actual out-of-pocket cost base on it was basically zero, since we were providing web services for payment in e-gold).

In a similar manner, we are gearing up to accept Bitcoin payments on our website within the next month. We learned some lessons from the e-gold days (about the types of customers you attract from doing this:  ranging from early adapters to nutcases and finally, scammers - we have better tools for identifying the latter now)

In my mind, a digital currency is viable so long as there exists fairly liquid out-exchange markets for said currencies. While we saw trouble on the horizon for e-gold well in advance, I knew it was over when my out-exchanger told us "this is the last time we're doing this", so we moved the rest to goldmoney.com and stopped accepting e-gold payments.

The price volatility in Bitcoin is unbelievable and could be a bubble, but the more important thing I am watching is the progression of exchange mechanisms into and out of Bitcoin, and other similar currencies like Litecoin, etc. Those seem to be progressing rapidly and I think the verdict will be that they're here to stay, and they're somewhat of a game-changer since they cannot be "shut down" the way e-gold was. The governance model is completely different here, it'll be the merchants and the exchange providers who have to provide it since there is no central authority to structure it.

The thing I can't grasp is how both e-gold and bitcoin in my mind run Gershwin's Law in reverse. If I believed gold backed digital currencies or bitcoin were intrinsically better than fiat (which I do, so to speak), then I wouldn't be spending any of it on staples, I'd be using my "trash cash" as much as possible and accumulating the DC (so I guess I prove Gershwin's Law while anybody buying in said currencies when they have the choice to use fiat is violating it).

Josh4580

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Re: Do you think Bitcoin is a safe store of value?
« Reply #8 on: March 30, 2013, 09:23:29 AM »
I wouldn't touch these at $90.  I saw the value of bitcoin drop 80% in a few days last year. 

How does anyone feel about the very limited supply of bitcoins?

See chart below:

http://en.wikipedia.org/wiki/File:Total_bitcoins_over_time.png

CONeal

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Re: Do you think Bitcoin is a safe store of value?
« Reply #9 on: March 30, 2013, 09:50:06 AM »
Mark,

Since you seem to be comfortable with the currency I have a couple of questions more for curosity sake.

Are you worried about being able to move bitcoins to hard cash?  Was looking at cash payment conversions and it seems like its difficult to actually get $1 bills in your pocket.  paypal will give you a hassle by freezing your account from my understanding and also there is a problem with chargebacks. 

What are your thoughts if I said it looks like a Ponzi scheme?  Looking at comments in articles I seems like its real easy to get the bitcoins but once someone starts asking how to cash out people get real defensive. 

I think there are 13 million bitcoins outstanding right now.  What is keeping whoever is responsible, from issuing more bitcoins to himself cashing out and crashing the market?

At the end of the day people are assigning value to a packet of data.  I am having a hard time seeing how this is a viable alternative.  Wasn't there somekind of e-currency during the internet bubble day that crashed and burned?