A few thoughts - Thursday, April 24, 2014
Posted: Thu Apr 24, 2014 12:00 pm
Today's random thoughts, in no particular order:
1. Two people sent me messages asking me whether I was buying big. The answer is that I never sell my existing bitcoins, but my new money is in stocks right now. I may buy more bitcoins when the price starts to move again as July 24 approaches. Yesterday, I stared at awe on CNN as they flashed the number 16,507, which to anyone five years ago would have seemed insane.
2. On a related note, the stock market should be a lesson to people about how bubbles always repeat themeslves, and how the next bubble occurs more quickly than anyone imagines.
3. If Mt Gox sells its bitcoins in a fire sale, that will be the opportunity of the century. There are few opportunities like that which lower the price of bitcoins without introducing any uncertainty about the future of bitcoins. I feel sorry for creditors, though. They obviously want bitcoins (why would they have had bitcoins instead of dollars in their accounts otherwise), and they will lose even more of their share re-buying after their bitcoins are sold under market price. It would be especially harmful to creditors if the bankruptcy court was ignorant of the bubble cycle and sold now, but didn't distribute the proceeds until next year.
4. Just to make sure everyone who wasn't aware knows now, **Vircurex is a fractional reserve**. They recently froze accounts. Please avoid them if for no other reason than to make a statement that such behavior is unacceptable. We can't demand better exchanges if people are going to give money to Vircurex.
5. If you ever want to get good at public speaking, try to come up with a 2-minute explanation, to give to a friend who has never heard of cryptocurrencies, when he asks you what the business model for an auto-exchanging multiple-currency mining pool is. I haven't been able to do it yet.
6. I don't agree with the comments that the major question this bubble is "is any place secure?" Some people may be thinking that, but not the next phase of bubble buyers who are going to come in soon. They don't know enough about bitcoins to be aware of the need for extreme security with their wallets. Those people are more influenced by the negative headlines of all the clowns who are involved with the scams and poorly run exchanges.
7. Speaking of drug dealing, apparently the owners of the Silk Road are taking responsibility and paying back customers who lost money in their latest hack in February. These are people who are likely risking life or even life without parole to make zero profits for four months, when nobody will ever be able to personally thank them. It is an interesting world where drug lords are more honest than some exchange administrators.
8. I edited this post to add one more point. There has been a recent spate of articles trying to separate the "blockchain technology" from bitcoins. I think it will become clear in the coming year that these two things are inseparable. Consider a common application for a blockchain: voting. If you use a separate chain, you need miners to secure the network, but what reward will the miners get? Votes? It's obviously unworkable. You cannot have a blockchain without money backing it, which is why colored coins will be used instead to represent other things on the bitcoin blockchain. People investing in Ethereum are missing this key point. Unless the first function of the blockchain is a store of value, then the asset people mine or get as proof of stake is not fungible money and it is not valuable.
1. Two people sent me messages asking me whether I was buying big. The answer is that I never sell my existing bitcoins, but my new money is in stocks right now. I may buy more bitcoins when the price starts to move again as July 24 approaches. Yesterday, I stared at awe on CNN as they flashed the number 16,507, which to anyone five years ago would have seemed insane.
2. On a related note, the stock market should be a lesson to people about how bubbles always repeat themeslves, and how the next bubble occurs more quickly than anyone imagines.
3. If Mt Gox sells its bitcoins in a fire sale, that will be the opportunity of the century. There are few opportunities like that which lower the price of bitcoins without introducing any uncertainty about the future of bitcoins. I feel sorry for creditors, though. They obviously want bitcoins (why would they have had bitcoins instead of dollars in their accounts otherwise), and they will lose even more of their share re-buying after their bitcoins are sold under market price. It would be especially harmful to creditors if the bankruptcy court was ignorant of the bubble cycle and sold now, but didn't distribute the proceeds until next year.
4. Just to make sure everyone who wasn't aware knows now, **Vircurex is a fractional reserve**. They recently froze accounts. Please avoid them if for no other reason than to make a statement that such behavior is unacceptable. We can't demand better exchanges if people are going to give money to Vircurex.
5. If you ever want to get good at public speaking, try to come up with a 2-minute explanation, to give to a friend who has never heard of cryptocurrencies, when he asks you what the business model for an auto-exchanging multiple-currency mining pool is. I haven't been able to do it yet.
6. I don't agree with the comments that the major question this bubble is "is any place secure?" Some people may be thinking that, but not the next phase of bubble buyers who are going to come in soon. They don't know enough about bitcoins to be aware of the need for extreme security with their wallets. Those people are more influenced by the negative headlines of all the clowns who are involved with the scams and poorly run exchanges.
7. Speaking of drug dealing, apparently the owners of the Silk Road are taking responsibility and paying back customers who lost money in their latest hack in February. These are people who are likely risking life or even life without parole to make zero profits for four months, when nobody will ever be able to personally thank them. It is an interesting world where drug lords are more honest than some exchange administrators.
8. I edited this post to add one more point. There has been a recent spate of articles trying to separate the "blockchain technology" from bitcoins. I think it will become clear in the coming year that these two things are inseparable. Consider a common application for a blockchain: voting. If you use a separate chain, you need miners to secure the network, but what reward will the miners get? Votes? It's obviously unworkable. You cannot have a blockchain without money backing it, which is why colored coins will be used instead to represent other things on the bitcoin blockchain. People investing in Ethereum are missing this key point. Unless the first function of the blockchain is a store of value, then the asset people mine or get as proof of stake is not fungible money and it is not valuable.