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Author Topic: My reasons for buying Bitcoins  (Read 1614 times)
imperi
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June 09, 2011, 01:39:27 PM
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Alright, so these are my reasons for converting dollars to Bitcoins. These are my own reasons, not copied from any website, but gained from a few months of observation. I've already bought a bunch recently but plan on buying some more.

I am pretty sure that Bitcoins are currently undervalued.

The user interfaces, guides on how to use Bitcoins, and such are terrible. People should never see a hash or know what it is. This can all be fixed in the future with trusted web interfaces. (key is trusted). Bitcoins can eventually be stored securely online without ever downloading a client, without risk of accidentally deleting your Bitcoins, and without a need to back them up. Bitcoins currently are ANTI user friendly. You nearly have to be a software engineer to understand wtf is going on.

It's hard to buy Bitcoins. You have to know what to do, or figure it out, which isn't easy. This will be made easier. It takes a while to even transfer money to do it. This makes the price lag behind demand some, probably.

There is a max exchange amount per day per account on the main trading site where 95-98% of trading occurs (max rate is $1000 per day, $10000 max per month I believe). So I think from this the price different than actual demand, since the two can't reach an equilibrium as quickly.

Bitcoins used to look like some geeky programming project just because they're cool, and people like to code for no pay, and then trade essentially monopoly money with eachother and rave about how cool their Bitcoins are. However, now Bitcoins are just starting to break into mainstream. There have been dozens of News articles about them in the last week. These news articles have been primarily negative about Bitcoins, because people are stupid in my opinion, but nonetheless they are being discussed.

People are overly paranoid about the government shutting down Bitcoins. I agree it is possible, but I rate it on a far less likely scale than most people. Also even if they are banned here, they could be adopted in other countries. Internet traffic isn't solely contained within the U.S. The price would drop but it could increase again.

Bitcoins, now that they are entering the mainstream, are possibly on the cusp of becoming a global currency. It's possible that the value could soar even higher. I think people are starting to see this and it's why the price rose 3x within the last month ($9 per Bitcoin to $31).

The dollar itself is kind of risky, and buying Bitcoins is a form of diversification, although they are much more volatile than the dollar of course.

Nobody has found a flaw in the Bitcoin protocol or network yet, out of thousands of hacker types of people who love cryptocurrency and are closely following Bitcoin. Furthermore, the network has never come close to being shut down or not enduring the strain. I don't think the network will ever fail for this reason. I think it is very scalable.

Bitcoins have risen so far by 2^8.5 from the value in September and October, on a relatively consistent basis (by my own calculations which might be wrong). The max possible they can rise is an additional 2^20, roughly, which is if they completely take over the world economy. Even if it increases just by 2^3 from where it is now I will make plenty of money.

Most people don't understand much about Bitcoins and think it is just about drug money since this is what they read on all these news articles. The website selling drugs has already been closed to the public.

Paradigm shifts are becoming increasingly more common (notable technological changes follow a logarithmic scale. Think of how years progress in the game Civilization). For example phones to smart phones, wireless connectivity, 3g now, Pads, 3D, 64GB microSD cards, streaming HQ online video, etc. within the last few years. Worldwide internet traffic is still increasing exponentially and is expected to continue.

So these are my reasons for converting a small minority (5-10%) of my savings to Bitcoins. You can disagree, but so far I have been right, since they've increase 2x-3x since I originally planned on converting. Obviously I can't see into the future, so maybe I am wrong and it's a bubble that will imminently collapse. That is why it is 5-10%. They are incredibly volatile so it is a risky thing to do.

I am not posting this as a debate, and although criticism is ok I am not looking to validate any of these points. I'm not trying to proselytize .
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June 09, 2011, 01:49:22 PM
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You might want to stick with, "they are fun and interesting." I am new to the whole thing but it is insanely complicated for a non tech person and unless that is solved, it will die off.
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June 09, 2011, 01:56:56 PM
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The only thing stopping me from doing the same is the fear of government action. In the past few days that's all I read in articles "Government crackdown on Bitcoin". I know they can't stop it but they sure as hell can make it illegal and IMO worth less for the short term.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
imperi
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June 09, 2011, 01:58:55 PM
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The only thing stopping me from doing the same is the fear of government action. In the past few days that's all I read in articles "Government crackdown on Bitcoin". I know they can't stop it but they sure as hell can make it illegal and IMO worth less for the short term.

It's possible but I don't think it is as likely as people think, or at least won't come any time soon.
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June 09, 2011, 03:28:17 PM
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The only thing that dictates value is us. Not the politicians, or their cause-of-outrage-dujour.

Bitcoin will only fail if we decide collectively to let it fail.

I don't see this happening.

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June 09, 2011, 03:58:31 PM
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THe only reason (well there's two) that I'm not buying bitcoins right now is my wife thinks it's stupid (and it's half her money), and because I don't have enough time to watch the markets Sad   So I can only slowly mine them and hope over the course of time before the bubble bursts I have enough to pay off my mortgage, then I'll do so and show my wife how awesome they are, and hope she'll change her ways.
 
Until then, it's just a minor hobby Sad

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June 09, 2011, 04:06:47 PM
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THe only reason (well there's two) that I'm not buying bitcoins right now is my wife thinks it's stupid (and it's half her money), and because I don't have enough time to watch the markets Sad   So I can only slowly mine them and hope over the course of time before the bubble bursts I have enough to pay off my mortgage, then I'll do so and show my wife how awesome they are, and hope she'll change her ways.
 
Until then, it's just a minor hobby Sad




I kid I kid. Grin

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The value of goods, expressed in money, is called “price”, while the value of money, expressed in goods, is called “value”. C. Quigley
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