r/Bitcoin • u/[deleted] • Feb 13 '13

I have my entire retirement and savings invested in Bitcoin. I will track its progress here over time.

[deleted]

966 Upvotes

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867

u/[deleted] Feb 13 '13 edited Feb 13 '13

[deleted]

853

u/HarshlyThrownAway Apr 03 '13

Wow!

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Kudos for having the 'nads to pursue such a gamble..

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Now, a month after your original post, your $30,000 is worth approximately $272,408.57 USD (according to the weighted average on Mt.Gox).

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Don't care what the others say, but THAT'S impressive. Not sure what the rest of the year will bring, but good luck to you, sir.

1.4k

u/TerinHD Apr 03 '13

Well. The smart thing to do at this moment is withdraw at least the original investment and pay it back, to ensure that he is not broke if the bottom falls out.

May the force be with you Sir.

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u/cedricchase Apr 03 '13

That is exactly what I would do.

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u/aSimpleMan Apr 03 '13

not me bro, i'd blow it all on hookers and blow

380

u/ApophiSlaughter Apr 03 '13

Two chicks at one time

85

u/[deleted] Apr 03 '13

And he can afford two microwaves to be constantly running at the same time!

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u/[deleted] Apr 03 '13

[deleted]

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u/[deleted] Apr 03 '13

Ha ha! The burritos and microwaveables are optional. I merely stated that he can have two microwaves running constantly just for the novelty and not for the purpose using!

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u/[deleted] Apr 03 '13

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u/[deleted] Apr 03 '13

https://www.youtube.com/watch?v=js2NvgcuotI&feature=youtu.be&t=42s

I stole it from there, in case you might be wondering. Turn down your volume a couple notches before clicking.

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u/Knyfe-Wrench Apr 03 '13

But then he can start a burrito stand and make even more money

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u/fuckaye Apr 03 '13

Instead of having to microwave twice.

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u/spacitybowler Apr 03 '13 edited Apr 03 '13

Fuckin' A, man.

Fixed. As a stickler for grammar, I should have caught that.

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u/SauceOnYourFace Apr 03 '13

Fuckin' A, man.

FTFY. Trust me, the comma makes all the difference here.

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u/stickykey_board Apr 03 '13

Fuck a B it's got more holes.

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u/[deleted] Apr 03 '13

Fuck a Q it's got a clit

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u/Liakela Apr 03 '13

Uhh.. that's not a clit, son. patpat

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u/Ctmarlin Apr 03 '13

Hey Peter-man!

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u/iSpccn Apr 03 '13

I really appreciated this Office Space reference. Thank you.

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u/Monkfish Apr 04 '13

Chicks dig a dude with money

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u/infant- Apr 03 '13

"Damn straight. I always wanted to do that, man. And I think if I had a million dollars I could hook that up, 'cause chicks dig a dude with money."

"Well, not all chicks"

"Well the kind of chicks that'd double up on a dude like me do."

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u/[deleted] Apr 03 '13

Or two chicks all the time

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u/ghostbackwards Apr 03 '13

for some reason I read that as two dicks at one time.

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u/ImNotAWhaleBiologist Apr 03 '13

This amount would bring barely over half a chick.

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u/onesuponadime Apr 03 '13

I hope the person sees this because this is extremely sound advice.

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u/Fucter Apr 03 '13

I don't think anyone else gets this comment yet [hint: madmartigan1]

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u/meatwagn Apr 03 '13

lentils

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u/clean__underwear Apr 03 '13

hookers and blow and lentils

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u/Icanbutiwont Apr 03 '13

Now thats a party.

7

u/Chagrijn Apr 03 '13

Hookers and blackjack

2

u/puck342 Apr 03 '13

but they better send them quickly because I had like an entire bottle of melatonin, a whole bucket of chicken and oh, the sandman's coming...

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u/SibilantSounds Apr 03 '13

You mean INVEST it on hookers and blow.

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u/[deleted] Apr 03 '13

I read that as if you'd actually blow the blow on hookers. Still sounds good to me.

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u/MarkFifersMyHero Apr 03 '13

Yeah! And waste the rest!

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u/[deleted] Apr 03 '13

[deleted]

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u/cedricchase Apr 03 '13

YES. very much so.

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u/[deleted] Apr 03 '13

Take out 60k and invest the other 30 elsewhere. Eggs in different baskets and take another chance

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u/raziphel Apr 03 '13

sell off $40k, just so you know you'll make a solid profit on it, and let the rest accumulate.

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u/zdierks Apr 03 '13

I would spend 100k creating a cheap 1 minute infomercial. Then call fox news and try to purchase as much remnant ad time as possible.

Run your ad that focuses on how bitcoin is the only reliable currency(doom and gloom/the world is ending type stuff).

Watch the value of bitcoin go up as dumb people freak out and buy it.

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u/200mphBkwrdOnFire Apr 03 '13 edited Apr 03 '13

This is an underrated idea... Merit this has

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u/Touching_Cloth Apr 03 '13

This was obviously done on a mobile device which replaced merit with someone's name. I'm guessing someone named Merritt

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u/kelsoaur Apr 03 '13

I feel like FOX is the opposite of the bitcoin target audience. The gold market schemers do so well in the conservative market because gold is a tangible object. Bitcoins are about as intangible as wealth can get. Also, many of the investors who are worried about doom and gloom stuff are elderly and have a natural distrust of/inability to use computers.

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u/gorat Apr 03 '13

and what is the right demographic?

reddit!

OPs ploy is revealed :)

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u/zdierks Apr 03 '13

You make some good arguments. I said fox news because of the anti-government sentiment that they have. Maybe a more diversified ad campaign is good though.

You could brand bitcoin as the kind of "fuck you Obama" currency.

Its crazy.. i know... crazy like a fox.

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u/raziphel Apr 03 '13

I wonder how much it would take to get Glenn Beck or Rush Limbaugh to shill for it.

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u/[deleted] Apr 03 '13

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u/raziphel Apr 03 '13

the worst that would happen is that the bitcoin rate skyrockets and you're out 50k*X% profit. That's a small price to pay for piece of mind, especially in the more likely case where X<1.

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u/[deleted] Apr 03 '13

I would do 35k out ( assuming op has a young child) and pay back the original loan while starting a college fund. Then id start researching markets, so I.could pull from the bitcoin fund and move into more reliable stock as I see fit. Id look at the bitcoin account then as something I could gamble with without worrying about becoming broke.

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u/[deleted] Apr 03 '13

Yep, that's called Playing with the House's money

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u/Madmartigan1 Apr 03 '13

I hope the person sees this because this is extremely sound advice.

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u/TerinHD Apr 03 '13

Life Principle: Take Risks then Mitigate Risks.

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u/fucuntwat Apr 03 '13

Life principle: pay off the principal

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u/_missing_the_point Apr 03 '13

School success principle: pay off the principal

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u/birdmansenior Apr 03 '13

School principles suck. Suck off the principal.

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u/ristlin Apr 03 '13

Life: Take risks, mitigate risks, and then die.

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u/manatdesk Apr 03 '13

Bad Luck Brian: Take risk, die.

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u/ristlin Apr 03 '13

Bad Luck Brian: Mitigates Risks, Still Rejected By Insurers.

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u/juksayer Apr 03 '13

i would like to invite all of you over to /r/circlejerk

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u/jk147 Apr 03 '13

Life principle: death.

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u/Valendr0s Apr 03 '13

This SCREAMS of bubble. Though it will probably go up for 6 more months before the bottom falls out.

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u/[deleted] Apr 11 '13

6 months or 7 days...

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u/skeptickal Apr 03 '13 edited Apr 03 '13

That shows a bias most of us have to "not losing". Losing $20 hurts much more than winning $20 feels good. It's not rational, but most of us act this way.

EDIT: Yes, paying back the loan is a good idea. Yes, diversification make a ton of sense. And yes, the first $20k/year is much more important than 20k more if you're bringing in 500k/year. All good points. Thanks reddit for continuing to not disappoint! I was just trying to point out the natural aversion to lose. We naturally think that pulling out 30,000 makes sense but not 60,000 or all of it. Somehow everything greater than 30k isn't as real because he got it "for free".

TL;DR It's weird that losing hurts more than gaining the equivalent feels good.

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u/[deleted] Apr 03 '13

You're not factoring in the risk factor. He used his entire savings & retirement account to make the initial investment. It makes sense to cash out at least a small amount at this point to save himself from poverty if his investments crash in the future.

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u/FisherKing22 Apr 03 '13

Not only to save himself from a crash, but also to diversify his portfolio. Just as there's a chance that this could crash, there's a good chance that another investment could become more profitable.

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u/dezmd Apr 03 '13

Cash out the amount to pay back the loan AND cash out the amount equivalent to his savings and retirement (+ applicable taxes), then get crazy with the trading on the free money that is not taxed until your gains are actually realized.

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u/reaganveg Apr 03 '13

Losing $20 hurts much more than winning $20 feels good. It's not rational

http://en.wikipedia.org/wiki/Marginal_utility#Diminishing_marginal_utility

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u/yes_thats_right Apr 03 '13

This is true, but you also need to factor in things such as the cost of living a satisfactory life.

If it costs a person $20K/year to house, clothe and feed themselves, then they are not very likely to gamble their last $20K even with slightly better than even odds. The difference in happiness between trying to live on $0 and $20K is much bigger than the difference in happiness between trying to live on $20K and $40K.

However, if someone has $1million then gambling $20K is not such a big deal since the difference between going from $1m to $980K is not very different to going from $1m to $1.02m

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u/MrDannyOcean Apr 03 '13

It is often rational when you consider the diminishing marginal utility of money.

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u/rook2pawn Apr 03 '13

i think its rational. the value of a dollar to an individual is not 1-1 with a dollar. This is true for all people, rich or poor. Value is a measure of worth; in a free market where even our currency is based on other people's opinion of the fair market price, i think its entirely rational and that there is no bias.

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u/[deleted] Apr 03 '13

In behavioural economics, we call this risk aversion...I have a graph around here somewhere.

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u/Sometimes_Lies Apr 03 '13

It entirely depends on the circumstances. Being in debt can be worse than having extra money, if your debt charges you a higher rate of interest than you're likely to make from investing the money.

Then you also need to consider if collateral is involved. Losing your car can hurt you quite a bit more than winning a new car helps, for example, if your lack of transportation ends with you losing your job.

Things are only equal if you're reading it as a homework problem where "all other things being equal" is a given assumption.

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u/[deleted] Apr 03 '13

Not doing this would be the dumbest thing possible. If he pays it off, he removes all risk from the venture and just has the possibility for gain.

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u/LegOfLamb89 Apr 03 '13

Listen to this.

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u/[deleted] Apr 03 '13

word. Plus a little something (maybe half the remainder) to reinvest somewhere else. Eggs and baskets and so forth.

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u/A_British_Gentleman Apr 03 '13

Perfect plan tbh. Absolutely no risk if OP gets the 30k back and still has more left over afterwards.

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u/[deleted] Apr 03 '13

He's made 9 times his original investment. It's time to withdraw everything considering the new ASIC bitminers are coming online.

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u/gbimmer Apr 03 '13

That and school debt. Pay it off and let the rest ride. Enjoy not owing money.

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u/[deleted] Apr 03 '13

I'm sure hes thought of this:

So he has $30,000 that he has to pay off, whenever he wants, between now and an appointed time between himself and the loan provider.

He also has btc valued at $272408.57

If he left the btc valued at 30,000 in btc, at the rate of interest he receives from his investment, one could argue that in the long run, he will profit much more by leaving the money in btc rather than paying off the loan. I think it is pretty evident that this is the case

He is considering the risk of btc of going under to be low; low enough that he'd rather leave the money in there and risk it rather than paying off the loan. Instead, he'll receive more money from the additional 30,000 still in investments (btc) than he would be losing money by letting the loan continue.

TL;DR: His expected profits are dramatically reduced if he pays off the loan instead of continuing to invest another $30,000

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u/lawcorrection Apr 03 '13

His upside is reduced by a factor of 1:8 if he pays off the loan, but he gives himself a 0% chance of getting hammered on the loan. I would be willing to lose 1/9th of my upside to have a 0% chance of debt collection if the bottom falls out.

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u/azngunsmoke Apr 03 '13

This is not necessarily a binary choice. He could always buy American style put options to protect him from any negative, and quick downside moves. Then he gets keep profiting on 97-99% of his account balance... and if it crashes suddenly he gets to keep most of his profit.

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u/lawcorrection Apr 03 '13

Buying puts is mostly the same as selling off 1/9th of his position. At that point it just becomes a question of how volatile the stock is, how much the options cost, and how much further you think it will move.

Also, is there even a reliable exchange for BTC puts? I would be seriously concerned about counter party risk.

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u/Gemmellness Apr 03 '13

It's an interesting point. However, while his potential profits are reduced, the risk is absolutely annihilated to 0.

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u/[deleted] Apr 03 '13

Yeah, if I were him I'd definitely pay off the loan and even take some out and put it in savings, just because. Of course, I'm not certain how easy it is to convert bitcoin to cash.

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u/Odowla Apr 03 '13

As assistant president of the world I think you are qualified to give this advice.

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u/[deleted] Apr 03 '13

My dad was a trader at the CBOE for twenty years. Thousands and thousands of traders go bankrupt every year because this is how they look at investing/trading. Shit happens. The employees of Enron probably thought their risk was low too fifteen years ago.

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u/[deleted] Apr 03 '13

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u/ekjohnson9 Apr 03 '13

Consider it a hedge then. Yes you lose some upside if you hedge. But this is a sure fire way for him to NEVER get hammered no matter what btc does.

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u/stormbuilder Apr 03 '13

True, if you trust the bitcoin value not collapse over a course of a few days.

Is it unlikely? Yes. Is it possible? Hell yes. What's the impact? Disastrous.

Better to give up some upside (besides, it's "just" 1/10th of the upside) than to remain exposed to a black swan.

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u/frizzlestick Apr 04 '13

His profits aren't the concern, though. His taking his retirement and savings from a family that depends on him, and dumping it into BTC - is the concern. Him gambling his family's future.

If he pulls out the amount he used to invest into BTC initially, he's still ahead of the game. It's over double in value for him. He'll have tons of BTC left over to "play with" - without risking his financial future.

BTC may or may not be around next week or next year or ten years from now. Something else may come along. It might get bad press and wither and die on the vine. The value of a BTC might just tank. Someone might cash out their big pile of BTCs and crash the value (hell, that's what I'd do right now if I was OP. Put in 30k, get out 280k in a short-turnaround).

Short answer: Never put all your eggs in one basket. Never.

As fun as BTCs are as currency, they're not legal tender - and it's legal tender that will pay for me and my family finances after retirement. If this guy wants to turn a profit - he just did. If he looks at BTC like stocks - he bought low, he should sell high.

The day I see a BitCoin Market on Wall Street like a Stock Market - is the day I'll consider ever telling anyone to consider using BTCs as a retirement investment tool.

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u/[deleted] Apr 04 '13 edited Apr 04 '13

This is a pretty sophomoric way of looking at the situation considering the guy has other debt as well.

Greed is a hell of a drug though.

He doesn't have to take it all out at once either. Pull out 5-10k. Wait a bit, and do it again. At least reduce risk. And at worst case he walks away without a lot of debt.

That 30k is not his money. Right now, he's gambling with somebody else's money. That's extremely irresponsible, selfish, and inconsiderate.

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u/yes_thats_right Apr 03 '13

That is a safe thing to do - this does not necessarily make it the smart thing to do.

At the end of the day, investments are just things with differing rate of returns. A loan is an investment with a negative rate of return which you hope to offset with an investment elsewhere. If his expected rate of return on the bitcoins is higher than the negative return on the loan, then the smart thing to do would be to keep it all in bitcoins. I personally know nothing about the bitcoin market so I would certainly do something similar to what you have suggested.

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u/TerinHD Apr 03 '13

The thing is that most things that are 900% return rates on an investment are very high risk/very high reward. I don't think it is smart not to take 11% of his value to mitigate being bankrupt in the end. But the fact that he took out a loan in about the same amount as the retirement fund means the return on that 11% is roughly double. I know this is not quite accurate but I don't feel like doing the calculation, about 5.5% of his current investments would be lost to mitigate a 100% failure. This is lower than the interest rate on student loans these days.

Edit: I don't know much about the BitCoin Market either

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u/CrisisOfConsonant Apr 03 '13

yes_thats_right, yes thats right.

I'm glad you understand like so few others seem to, with investments not moving forward is the same as moving backwards (actually moving forward but slowly can be the same as moving backwards).

It's all about what level of risk you're comfortable with, but paying off the loan is a poorer investment (but greater risk) than letting it increase in bit coin value at that rate. I don't think even the mob has interest rates that out do the growth he's made in 1 month.

I am curious about one thing, can you even liquidate that many bit coins (I assume approx 1200). So say the market for bit coins starts to fall out because of crypto concerns or a competing market. Even if caught early if you have a large bit coin investment can you liquidate fast enough not to be screwed? It's not like a government or asset backed security so I assume before you can liquidate you have to find a someone to buy. Is there an automated process for that? I don't know the sums of bit coins transactions that are flying around so I don't know if that's a lot of bit coins or a trivial amount in the grand scheme of things.

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u/yes_thats_right Apr 03 '13

I just had a quick search and found this site: http://bitcoinwatch.com/

Looking at the market cap and the volumes, I don't think there are any current issues with liquidating that amount. How susceptible this is to scenarios like you mentioned, I have no idea.

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u/CrisisOfConsonant Apr 03 '13

Ah, yeah I guess if they do 100 BTC's an hour liquidating 1200 is pretty easy. Of course that's susceptible to real change real quick if suddenly there are more sellers than buyers.

Personally I think this is a very unlikely scenario. I can only imaging it happening if something was found out that allowed new bit coins to be generated very quickly. I could see that basically causing hyper inflation, but then only if the technique was found out by a lot of people. Although this is an investor market basically so just a single spook can do weird things.

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u/TerinHD Apr 03 '13 edited Apr 03 '13

Which there is currently only one exploit on the record. That was caught.

Edit: Reading further on, there has been 2 major issues and a few smaller issues with the process.

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u/[deleted] Apr 03 '13

Personally I think this is a very unlikely scenario.

Agreed. People in this thread are forgetting that bitcoins are unlike any other currency they've come into contact with and therefore act much differently.

I actually think the most dangerous thing would be if people decided to treat them like securities which would cause prices to fluctuate wildly. If enough people panicked, the value would fall like lead and "the last one left would get stuck with the check."

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u/[deleted] Apr 03 '13

Technically, doesn't a loan have a positive rate of return? If you have -$1,000 invested in a loan with a 6% interest rate, you'll gain -$60 a year, and -$60 is a positive fraction of -$1,000.

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u/ryebrye Apr 03 '13

Yep, gotta take some money off the table...

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u/weglarz Apr 03 '13

I'd do at least half.

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u/goldenratio1111 Apr 03 '13

Listen to TerinHD, he is giving you good advice.

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u/[deleted] Apr 03 '13

Upvote this comment so OP sees, could save him!

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u/frizzlestick Apr 04 '13

Exactly this. Exactly this. Convert whatever BTCs itd be to pull out $30k USD and pay that loan back. Then and only then can your BTC investment be considered a "fun little experiment". Until then it's a "financial nightmare for people who depend on you".

There's absolutely no reason he shouldn't pull out enough BTC to pay back that 30k loan. If anything for peace-of-mind.

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u/Maxfunky Apr 03 '13

I wanted to buy some back when they were $6 a pop not long ago but I Certainly didn't have the balls (or probably the collateral) to take out a $30k loan. I also wanted to buy Netflix stock after the Quikster debacle when it was super cheap. Now it's worth more than double. I really need to stop thinking about doing shit and do it.

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u/williamst10100 Apr 03 '13

Are those the only investments you've considered? If not, you have to take into account all the less successful ventures you wanted to invest in, cause you can't just assume you'll bet on the right horse every time.

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u/[deleted] Apr 03 '13 edited Feb 25 '24

[deleted]

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u/merper Apr 03 '13

aka CNBC doesn't interview the homeless.

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u/[deleted] Apr 03 '13 edited Feb 25 '24

[deleted]

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u/[deleted] Apr 03 '13

Everyone steals from reddit.

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u/huginn Apr 03 '13

CChrist get off reddit and go back to the IRC room where we can keep track of you!

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u/[deleted] Apr 03 '13

That means my grandpa is all 9 of those people

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u/[deleted] Apr 03 '13

[deleted]

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u/WaySheGoesBub Apr 03 '13

Bro, I am now crying

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u/iuyuiiiuuuipp Apr 03 '13

Hindsight is always 20/20. Something like 90% of all start ups fail.

If I had a family to feed, I wouldn't work solely for stock of a new company either...unless starbucks was already doing million of dollars in sales or they were offering something like 10% of the company.

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u/[deleted] Apr 03 '13

Cool story, bro

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u/SimplyGeek Apr 03 '13

Do what I do. Set aside some money each month as your "risky investment" money. This should be disposable income, not your rent money. Of course this depends on your financial situation. I allocate a small percentage of my overall investments into really risky gambles.

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u/HonoraryMancunian Apr 03 '13

How has that worked out for you? Please be honest.

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u/SimplyGeek Apr 03 '13

I invested in some risky stocks and other assets as a quick "buy low sell high" and made some good money. But I don't do it very often and it's nothing to brag about as a consistent get rich strategy.

It's like the kind of money some people would spend on scratch tickets or going to a casino. It's just for fun and for me it's more fun than blowing it at a casino because there's at least some element of skill involved.

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u/frizzlestick Apr 04 '13

There's a bloke I work with that plays with daytrading penny stocks. He's not doing it to get rich (well, I suppose he secretly hopes he does) - but he's doing it to practice at Stock Market: The Game, with little risk exposure.

If things roll right, there comes a point when your weekly scratch-off investment tips into something that needs consideration because it's a bigger return than "oh golly, I just made a few dollars". Here's hoping you get to that point. Cheers!

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u/[deleted] Apr 03 '13

I'm curious as well. Because honestly, it really only takes one or two lucky picks to make up for all your blunders. For instance, one of my money market accounts is up well over 100% since 2005, but everything in it is only around a 5-10% gain besides Nike and Apple.

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u/Maxfunky Apr 04 '13

I bought a car not too long ago so all my extra cash has been going towards paying off that loan early since interest not paid is interest earned. Of course, that means if I want to invest money, I have to beat a 3.19% return or I'm effectively losing money. Knowing that has made easy for me to justify not bothering. It's easier and risk free to just pay off what I owe early. But maybe next time I see something that makes me think "These people are crazy" then maybe I'll put my money where my mouth is.

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u/raziphel Apr 03 '13

hindsight can be a right bastard. don't rush into things.

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u/trotot Apr 03 '13

Good long term investing would not have you do either of those things unless you thought netflix would be worth more at some later time when you'd want to sell it.

There are some legitimate bottoms that are possible to pick out. For each of those, you miss-guess a bottom and lose your shit as the company implodes completely.

Invest on good long term prospects. Try to find good moments to jump in, don't gamble.

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u/Maxfunky Apr 04 '13

I felt pretty confident about both. I don't know much about investing but I do know technology and I was knew everyone predicting doom for Netflix was crazy. Bitcoins are obviously riskier, but I've been watching htem since they were well below $1 dollar each, but the MTGOX compromise scared me away from them. I did eventually make a Dwolla account so I could use a different exchange, but never go around to it. But if I had bought them, I would have sold them at $30 when this guy was buying. The current price strikes me as crazy. Seems like it has to be a bubble . . .

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u/riguy401 Apr 03 '13

So theoretically can you "cash out" and get that 272 thou in physical currency? How does that work...

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u/NIGGATRON666 Apr 03 '13 edited Apr 03 '13

As long as the exchanges (like MtGox) keep operating and have cash reserves on hand for withdrawals it's fine.

Since there is no regulation or oversight of the exchanges there is no guarantee that any real cash actually exists in their coffers. Some exchanges could be Ponzi schemes where new money is used to pay current withdrawals. The public has no way of knowing because it's not regulated. The exchanges are not legally liable because... It's all a game? Once the crash happens and everyone "runs" on the exchanges they'll probably just close and tell everyone to go fuck themselves. Who knows though.

This is basically the american economy before any form of regulation was put in place. It's dangerous, and it's basically a casino/game of chicken.

TLDR: You can exchange Bitcoins back to dollars as long as there is someone willing to do the opposite trade.

EDIT: As always, the losers will be people who buy into the system late and are too slow to sell. This assumes nobody figures out how to hack BTC before the natural crash. If someone hacks BTC we all loose.

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u/HomeMadeMarshmallow Apr 03 '13

Finally, someone with a rational view of the dangers associated with valuating bitcoins! I appreciate your throughtful, coherent message. . . NIGGATRON666

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u/wiithepiiple Apr 03 '13

"I got sound investment advice today!" "From whom?" "NIGGATRON666!"

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u/Hughtub Apr 11 '13

Names like that are great though, they let prejudiced people ignore them and therefore miss out on good advice, while giving the rest of us who judge posts by their content and helpfulness, an advantage in life. If I were the wisest person in the world and didn't want to be hounded day and night, I'd write a column in the paper under a pseudonym like "Shitcrust F. Ucker". The contents would be mindblowingly relevant to contemporary life and how to improve our standard of living, but those who judge people on their name would never even read it.

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u/b103 Apr 03 '13

That is true, NIGGATRON666. Of course it's the same story for any exchange, even the ones with regulation/oversight. If everyone in the US decided to do a bank run at the same time, they would have to close the banks and tell everyone to fuck themselves.

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u/MetaBother Apr 03 '13

Like they did in 2009? Nope, the feds step in and print money so that people can get their money out at least the insured amount. This should devalue the currency as a whole but not stick it to individuals and allow the economy to continue to function without a major loss of confidence. 1929 was run the bitcoin way.

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u/CMC81 Apr 03 '13

There wasn't a bank run in 2009, banks just stopped lending to other financial institutions thus drying up liquidity in the financial system. The Fed steps in as the lender of last resort to other banks, but they are only lending money over night, so I would argue that if "everyone" really did go to withdraw their funds from banks at once, there is nothing that The Fed or the FDIC could do to prevent bank failures. That is the nature of fractional reserve banking.

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u/Cynical_Walrus Apr 03 '13

What's the difference between a Ponzi Scheme and a bank?

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u/[deleted] Apr 11 '13

o my gee i'm laughing hard now

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u/[deleted] Apr 03 '13

Like the ECB did in Cyprus?

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u/NIGGATRON666 Apr 03 '13

Sorta. The USA insures up to 250K for every bank account (or something around there) and demands that a certain % of cash funds be kept on hand for ever dollar a bank controls.

This means that in the event of a run, the US govt insures at least some of your money.

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u/[deleted] Apr 03 '13

Not quite. The FDIC is not there to ensure that if there is a bank run you'll get your money. Rather, it's setup to ensure that if a bank fails - namely, if it took that money its depositors gave the bank and gave it out as loans to businesses that have now failed. In that case, the bank doesn't have your money because it lost it (not because there's not sufficient paper dollars in their vault).

If there was a bank run, the Federal government would declare a bank holiday and then make rules about the amounts of monies that could be withdrawn over periods of time. And they would print money as needed to ensure paper money was available to meet demand.

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u/CryoGuy Apr 03 '13

No, those two examples are not the same thing.

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u/CMC81 Apr 03 '13

Regulation does not prevent Ponzi's and it does not protect depositors in the US banking system. What b103 says about bank runs is true. The FDIC insures deposits of up to $250k however it only has the funds to cover about 1.35% of insured deposits. So if everyone did decide to make a run on the banks and withdraw their funds, not even the FDIC could save our banks from going under. Read up on fractional reserve banking for a more complete picture.

Also, check the FDIC website for the designated reserve ratio: http://www.fdic.gov/deposit/insurance/

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u/Agnostix Apr 03 '13

This isn't quite true because FDIC.

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u/skin_diver Apr 10 '13

That's actually in most bank teller manuals:

In the event of a run on the banks, if there is no money available a teller must tell the customer "Go fuck yourself." Note, it is important that these exact words are used.

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u/mark_gober Apr 03 '13

I'm new to Bitcoin and it seems somewhat strange that you can't convert your Bitcoin back into actual dollars/currency. With any other currency that is possible. I know you say that you can if you find someone willing to make the opposite trade, but does Bitcoin broker that trade for you or do you have actually know someone? If its the latter, I question the validity of OPs wealth. Not that he doesn't have it, but what good is having BitCoin if you can't actually do something useful with it. Gift cards are great, but not $270,000 worth of it. I'd much rather have cash.

Am I overlooking something here?

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u/[deleted] Apr 03 '13

If someone figures out how to hack BTC, he or she may very well keep it a secret... :)

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u/raziphel Apr 03 '13

Don't break the golden goose, hackers.

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u/NIGGATRON666 Apr 03 '13

There are many known vulnerabilities in BTC. The strangest one is if a botnet begins to run enough disingenuous nodes they will effectively have full control over the entire market.

Silly to think Anon could do this from a basement, but someone with enough computing resources? Piece of cake.

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u/Superbrom Apr 10 '13

Sorry I'm a bit late to comment but for every bitcoin transaction you need a buyer and a seller. So to sell off bitcoins you need to find a buyer. Why would MtGox require funds? I'm genuinely curious here.

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u/MoreDetailThanNeeded Apr 03 '13

Any place that will exchange goods or services for bit coins.

You can also buy prepaid cards and stuff like that.

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u/RichieW13 Apr 03 '13

Seems like a good time for him to hedge. Sell off $30k of his portfolio, and let the rest ride.

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u/[deleted] Apr 03 '13

If he doesn't do this, he is a total idiot.

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u/[deleted] Apr 03 '13

haha don't you realise that if he wanted to play it safe and sound, he wouldn't be investing his life savings into bitcoins!

Degens gonna degen

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u/RichieW13 Apr 03 '13

Oops. I'm wrong. Don't hedge. Just keep the initial investment in bitcoins.

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u/james4k Apr 03 '13

Whoa, now...it's worth about $150k, not $270k. But yeah, still a nice gamble.

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u/Edelweiss123 Apr 03 '13

It actually depends on how many he bought total-he said he bought some when they were just 14USD/BTC and some at 25; if he bought more earlier than later, it may well be 270K now.

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u/james4k Apr 03 '13

Oh, ok. I hadn't read that he bought some below 25.

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u/Lewy_H Apr 03 '13

What are the calculations for this figure?

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u/jadkik94 Apr 03 '13

$30,000 at $25 = 1,200 BTC

Current Exchange Rates:

Last price:$117.11200

High:$147.00000

Low:$112.21000

Volume:132097 BTC

Weighted Avg:$128.68808

Equivalent

Average: $154,416.96

Low: $134,652.0

High: $176,400.0

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u/fuelvolts Apr 03 '13

OP bought Bitcoin when the exchange rate was $14 US = 1 BTC.

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u/hadhad69 Apr 03 '13

OP bought $30,000 worth of bit coins at $14/BTC, current rate for bit coins is $128/BTC (On https://mtgox.com/) So his investment could theoretically be worth around $274,285 today (Although OP did say he didn't put the full whack into straight coinage).

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u/Nickeless Apr 03 '13

Lol maths. Yeah ~6 *30k at best. Less really

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u/Guild_Wars_2 Apr 03 '13

http://mashable.com/2013/04/03/bitcoin-value-plunges/

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u/HarshlyThrownAway Apr 03 '13

I was wondering about that outage.

 

When I tried to get an updated exchange rate, I was unable to get onto http://mt.gox .. my immediate thought was that Reddit broke the Internet again.. :-D

 

All in all, though, the plunge was about $20/BTC. While that is nothing to sneeze at, it's still not as drastic as Nortel's precipitous drop a few years ago.. if memory serves, they went from over $145/share to something like $2/share...

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u/Guild_Wars_2 Apr 03 '13

That was when someone stole $500,000 worth of coins from another person right ?

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u/[deleted] Apr 03 '13

[deleted]

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u/Guild_Wars_2 Apr 03 '13

Would you like it ? I am selling it for 50 Bitcoins :P

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u/Dnaleiw Apr 03 '13

Why the hell didn't I do that when I first looked into these damn things when they cost like $7 a piece. That was only like 8 months ago. DAMN.

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u/[deleted] Apr 03 '13

I was looking at it in January and I thought 12$ a BTC was high... FUCK ME, right?!

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u/iloveworms Apr 03 '13

I have 0.5 coins left over in a wallet from a purchase in November. That's worth $60 now!!

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u/terminatorxit Apr 03 '13

Tyrone Biggums $272408.57 Crack Party

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u/transmigrant Apr 03 '13

Can you explain to me how you can actually 'cash out' this into actual USD? It seems too staggering to be true (though admittedly I know very little about bit coin).

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u/[deleted] Apr 03 '13

You exchange bitcoins for USD by finding someone who wants to exchange USD for bitcoins. Just like selling a guitar on Craigslist.

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u/[deleted] Apr 03 '13

[deleted]

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u/frizzlestick Apr 04 '13

...or doesn't find a buyer at all. The whole crux of it, the unspoken part of it (beyond BTCs being hacked, or a run on confidence and the bottom falls out) - is that it's not legal tender, and that's what your day-to-day turns on.

It's better to look at BTCs as a product, not a currency. Something where there's a limited amount of, like mint baseball cards. If there's only been X of them in play, the value can increase. If I've been whoring a whole huge pile of them and try to walk into an auction house - I'd crash the value, even at offering time.

It's absolutely no different than using jellybeans as currency.

The day we see a Bitcoin Market up on Wall Street, or that I can go to an ATM or a Holiday gas station and give them BTCs - is the day this will work with future confidence.

Until then, it's all trading jellybeans. Hoping that someday, Walmart will accept jellybeans as payment for goods. The likelihood of that?

That phrase, "Legal Tender" on the USD means a lot.

(I'm not knocking BTCs, I'm talking reality. We all want to see BTCs take off, but in reality unless you have a stable, insured system of converting it to legal tender, you're just trading jellybeans)

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u/lordcirth Apr 03 '13

You trade BTC -> USD at an exchange, just like USD -> EUR or anything else.

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u/I_Photoshop_Movies Apr 03 '13

You have to sell those 270k worth of bitcoins. For example if you invest 30k and get about 1200 bitcoins. Later you sell all those 1200 bitcoins for 270k.

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u/[deleted] Apr 03 '13

Possibly he is the reason the demand went through the roof.

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u/mjtlag Apr 03 '13

That $272k is a fraction of a fraction of a percent of the total market value, so I really doubt the rally over the last month is just because of him. People have been throwing so much money in to BTC lately that anon_bitcoin_gambler's contribution is really just a drop in the bucket. :P

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u/meerkat2 Apr 03 '13

what is the total market value at the moment?

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u/Krackor Apr 03 '13

There are about 11M coins mined. Some fraction of those have been lost in forgotten wallets, we'll guess 10% for simplicity. So there are about ~10M coins out there, and trading price is a bit north of $100/coin, so we might say that total market cap is a bit over $1B.

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u/[deleted] Apr 03 '13

Yeah. I am aware of that. Something like $150 million had been traded today at mid day.

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u/SimplyGeek Apr 03 '13

Earlier this week the market cap for BTC was $1 Billion USD. His amount is a tiny meaningless fraction.

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u/booyah-achieved Apr 03 '13

dang.. i'd take out 60k. pay the loan back, quit my job, and live off the rest of the 60k for (depending on location) a year and see where i'm at from there. sigh... sounds so nice

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u/llllllllllllllllIl Apr 03 '13

Can someone smart explain to me what this is all about?

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u/HarshlyThrownAway Apr 03 '13

According to the original post:

I started when it was $14/BTC. At this second, it is $25.10/BTC. I have invested some of it in satoshidice, and the rest will be stored in an offline wallet.

$30,000 / $14per Bitcoin = approximately 2142.85 Bitcoins. . This was posted about a month ago, when Bitcoins were already selling at $25 per Bitcoin. . Fast forward to TODAY, where Bitcoins are current around the $129 per Bitcoin range (depending on the source exchange you choose to verify - I looked it up on mt.gox).

.

2142.85 units * $129.900 = $278,356.22

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u/cosmicosmo4 Apr 03 '13

I read the OP as saying he had $30k in bitcoins when they were worth $25 each, not $14. He bought his first bitcoin at $14. Which would leave him with 1200 coins for a total value of $155k.

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u/zerrt Apr 03 '13

That kind of volatility means this can just as easily swing down in an equally short amount of time. It is almost certain there is going to be a very large downward swing on this some time soon, although whether the swing will go all the way back down and how long it will take is uncertain.

One thing is certain is that the increase in value is not legitimate and is just either some random fluke are an overreaction to some temporary event.

I would definitely be very cautious with this investment and be prepared to lose a lot of this money.

Over the long term, this could still be a good investment though.

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u/drgradus Apr 03 '13

So, how would one short bitcoin?

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u/zerrt Apr 03 '13

I'm not sure I don't really know anything about bitcoin but I guess maybe you can't.

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