I was fairly involved in Libertarian circles. A friend brought bitcoin to my attention in 2010. And I have to admit I didn't play too close attention nor invest that much time in research but I liked the general gist that I got. With the same friend's help I bought $25 worth of bitcoin at just over 15 cents each. I was thinking of it more as supporting an idea more than anything else. I didn't think much about it after that.

Many computers and hard drives later those keys are long lost. Yeah, I feel pretty stupid.

It occurs to me that if the IRS wants to use its rules to make things as difficult as possible for bitcoin accounting it could interpret the law this way. Each use of bitcoin creates two transactions: the purchase and the change returned. The change gets a new address. This could be considered a new piece of property. Thus for each transaction you would have to keep track of the original purchase price of the bitcoins, the value in USD at the time of sale (keeping record of exchange rates in the case of non-USD sales) and then the current value of the change returned.

I'm sure someone will write software to automate this process, but until they cold make it a real bitch to stay compliant. And of course as always no two agents would interpret the law the same way.

As with almost any question posed to the IRS you will get a number of different responses approximately equal to the number of agents asked.

$100 @ $5 per bitcoin would be 20BTC. If you sold them right at the peak of Nov 29, 2013 at $1242, you would have received $24840.00. Far outside the limits of the '~' symbol I would say.

My first instinct was that this was a ridiculous idea. Then I remembered that these are the same masses that perceive $4.99 to be a dollar less than $5.00. So if education is not possible, perhaps simple mind games are the way to go.

As long as if and when Coinbase is hacked you don't go complaining and suing I've got no philosophical problem with the concept. In my mind buying the best home security system on the market and then posting your address and passcode online would be a silly thing. But that's me. It's a fine line between cautious and paranoid.

When I switch from thinking of Bitcoin as an investment to a currency I will probably keep a little in a live exchange. About as much as I keep in USD in my wallet I figure. By then the technology will have matured a bit as well (as will the hacking techniques <sigh>)

One must balance ease of use with how much one is willing to lose.
It all comes down to personal choice, which I think is the one thing we all here can agree on

The MtGox event scared the 'dumb money' out of the speculation game. That's where the bulk of the volatility comes from: dumb money and those chasing it. I think most people are currently in a wait and see mentality. Looking to see how the Governments and the entrepreneurs respond.
Or maybe that's just me. 

Buffett is risk averse. If he can't fully understand something he isn't going to recommend it. And as much as I love the bitcoin concept it is a large gamble. It is a gamble I am taking (although I got in early and sold half when it was just about where it is now, so I won't feel too dumb if the bottom falls out.) but would I suggest it to someone that has kids to feed? Buffett believes in the smart safe play. And when he says sell, that is when I really pay attention. He saved my ass in the dot.com bubble.

While I think he is wrong on this one, I have done quite well over the years listening to Buffett. And his Internet comment you make fun of probably saved me from moving to a smaller house.