Show Posts
I left for work at about midnight Finnish time (UTC+3), in anticipation of the Mt.Gox opening 5 hours later. I live in downtown Helsinki with my wife and Hilla the Beautiful (9 months soon). We have an apartment facing a park, in about 1 kilometer distance from most places of interest. My office is about 500 meters away, it is furnished in the style of the lobby of a 1960s Soviet hotel. It is in fact a former hotel, but the redecoration is recent.
Before going to sleep, I looked at the grim situation in the exchanges and bought 105,000mBTC from Bitstamp at 0.062.
Roni woke me up at 4:30, he is working for me as a bitcoin broker. He has 2 years experience on Bitcoin, about 8 months full-time. With me he started Monday last week.
We had a guessing, how low it will go. We decided to set the buy orders between $0.017 and $0.050. I had specifically banned all sell orders, because I did not trust the information flows, and gave P=0.8 chances that Gox had not improved its system enough to eliminate Goxlag.
When Gox opened, we could not buy anything as our guess was too low. Order placement did not work well enough, so we just invested all the money in other exchanges at about 0.070. Inter-exchange arbitrage was deemed too difficult.
I got back to sleep soon after, only to wake up at 10:30. We took a 1-hour breakfast in a cafe down the street.
Previous day I had secured money in the exchanges by buying codes at face value. I think it was worth it, since we got the money invested at good price today. I also learned about an interesting thing, which is perhaps the single most astounding fact underlining my conviction that Bitcoin is here for good, and that the current prices will be regarded as a steal barely months from now:
I find it funny that bitcoin is such a revolutionary technology that even in the midst of its own crash, it is the only sure way to transfer wealth across the world. Today I met a businessman who, in anticipation of the crash, had sold many bitcoins in an exchange. He has 10,000s of fiat currency, but the exchange limitations will not allow him to withdraw it. Even if they did, the wire would take days. His fastest and most reliable way to cash out is to buy the bitcoins back (at a lower rate, but with a fee), withdraw them, send them to me, and take an instant SEPA transfer or cash from the counter. Think about it - how can bitcoin crash, as it is vital for transferring the proceeds of its own crash to the owner's hand?
After coming from breakfast, Roni concentrated on arbitraging, and I took my phone to call clients. I have a huge waiting list of people willing to buy bitcoins, and the limiting factor is my own time. I try to spend at least one hour per day to call my list, and on average I can close about 20,000 €/hour. I make anything between 5 and 15 percent, for the last 2 weeks, it's been closer to 15%.
Today I could offer for 10% over spot, at about €0.067 (you notice the convention: the currency is assumed to be USD if not specified, and I switched to mBTC last Friday and encourage the others to do so as well). This was possible because of the quote above. I am able to buy the fiat that you cashed out, but which is now trapped in the exchange. But the way to buy it is for the seller to transfer it to bitcoins, take it out, and sell the bitcoins to me at a discount. I offer 3-5 days bank payment, and it is working like a clock. I can sell the bitcoins on, don't have any risk, am not in a hurry, and rake in 5+10%.
I am currently selling bitcoins in my website. Today I got only one call, though. I have high minimums between 2,000 and 5,000 €, depending on the load. Serving one customer takes about 20 minutes plus the backend time, so I cannot really try to serve them all. The most I can take is about 4 per day, so you should not blame me for an attempt to make each of them the most profitable for me.
Today was the second day of bitcoin accounts in my other business. This one allows people to buy bitcoins with the silver they have already stored in the vault in Tallinn. There is about 100,000 ounces of silver there. The only problem is that if bitcoins gain traction, we will need to sell some of the silver to balance our position. For our customer, it is the effort of one email to transfer 20,000 € worth of silver to bitcoins. For us, it is a 25-kilogram silver bag that we need to sell in an illiquid market where we are already the largest player.
The "bitcoin fixing" in Silvervault today (12:00 noon Estonian time, which is the same as Finnish time, UTC+3) was € 0.0758. Funnily enough, it is not even shown in our website yet, so none of the buyers today even know as of yet, how much they paid for their bitcoins. They do it under the assumption that "the fixing is at most 10% over the price quoted in the exchanges".
It is nearing 17:15, and I need to close my 17-hour workday - admittedly I slept about 5 hours of it though - and go to spend the evening with my family. Roni already left 2 hours ago, his day was therefore shorter, although as I was sleeping, he was catching arbitrages. I needed to quit Skype when I started writing this, since he was so eager posting stuff that it distracted my attention. My last advice for him was to take a good rest over the weekend. He is a young guy and has a bitcoin position himself. It's been a ride.
It is going for 0.077 as I write. Oh, in about 1 hour or so, I have made DELETED dollars or so, just holding bitcoins.
For the longest time.
I hope you enjoyed reading, feel free to comment!
