Just another Bitcoin story..

[dbru77]

Hi.

This is a great forum and BTC is a great thing - though I wish I would have heard of it much sooner.
Excuse my english btw, I'm not a native speaker
Anyway, first I just needed BTC to use Silk Road. Good thing. Back then, i could by 1 BTC for about 8 Euros.
It was pretty stablefor a few months, in fact I had about 30 BTC for ~10 Euros/BTC. Thought I'd invest and wait. Good times!

My timing and overall planning was not the best, so I had to withdraw my money because I needed it. Forgot about Bitcoin, took a break from Silk Road and came back in the first week of April.
I couldn't believe my eyes - BTC just went berzerk, I think it was at 70 Euros when I saw it. I almost cried when I saw it. If only I...

So I browsed the forums, checked the facts and my mind was dominated by one thought: Boy, you can't miss a chance like that again. Who knows where this is going to? Anyway, I decided to be brave and risk something. I definitely was one of those nervous hands, driven by greed and the pain of this missed opportunity.
I invested 1000 Euros when BTC was at ~80 Euros, about 50% of my savings at that time. I used bitcoin.de because it is faster than Gox, just buy and transfer money directly.

Risk management? I would have survived a loss on the other hand I was not ready to let go of that money either.
Only invest what you can afford to lose they say. Well, fuck it  I said. If it goes up, good. If not, I would have tried to cut the losses at 10%.
You all know what happened in April. During this wild ride I got cold feet at about 160 Euros/BTC and basically doubled my investment. What a feeling. But my greed didn't allow me to be just happy, I was still caught in the tunnel of "if i had invested these 1000 euros back then...about 20x...oh my god how could i" lol

Anyway, I forced myself to slow down, missed the bottom and did another purchase at about 100 Euros and made another 20% in a few days. This time i used Gox.

Slowly the "if i had..then it would..why didn't i" thinking vanished and I went on observing what happened.

Right now, there are some things which make me think there is another race to begin soon.
But to be honest, the chances for it going very low are equal.

My opinion: recent price movements are not "normal" or "realistic". I did not get the news that BTC is now this big thing with which you can pay at ebay or amazon.
Bitcoin got very much attention mainly because of this insane rise and fall of the price.
If you ask me, Silk Road is the number one reason for BTC. Maybe online gambling. But other than that, I only see idealistic approaches (no disrespect!) and no real life application.
Though I'd like BTC to continue in succeeding and growing, I have doubts when I look at the usability - especially when it's as unstable as now.
The fiat->BTC->fiat exchanging will go on, and it makes real world usage very complicated when BTC is unstable as fuck.
Imagine you go to amazon, see a book for 0.5 BTC. You buy 1 BTC, it takes some time, you go back to amazon and the price has changed. now you have to pay 0.8 BTC. The book is roughly 50% more expensive than last time. Then you wait another week and the price dropped to 0.3 BTC. Good for you, but this also shows that any vendor has to sell his BTC immediately for "fiat" to make sure he doesn't lose money. So everything you buy with BTC will always be valued in relation to the current exchange rate.
In parallel world like Silk Road this may not be the problem, if vendor A gets BTC from customers, he could use those BTC to buy from another vendor. But in the end, the person who last receives BTC in this supply chain has to exchange them to real money. It will always end in "fiat" if the goods you can buy for BTC are limited to a few.

Next thing: Laws, government, regulation, taxes...if BTC gains popularity those things will arise, don't you think?

bitcoin.de is planning a thing similar to MtGox. They negotiate with a bank right now, and it also depends a little bit on the controlling institutions if this will work out. In either case I think the controlling institutions will have a close look at what is happening. Maybe they shut the whole thing down. It wouldn't surprise me at all.

Now Silk Road is down. That means BTC over there cannot be used. People can't spend BTC there and many vendors will cash out their BTC if it not stuck at SR.
If something bad happens to Gox in Japan, it will be a desaster for the price. And for usability. I saw the interview which the CEO of MtGox gave. Boy, that was a huge fail. If he can't speak in front of a camera, why did he do that? That was BAD publicity. Stuttering and with a horrible accent he failed to paint a picture of what its all about.
Most news are related to the bubble, not how good BTC is accepted and how well it is used. Or which advantages it may have.

Speaking of advantages, I see not many. Not being able to trace transactions may be one, but if you are an ordinary customer why should you care. Every paypal-transaction works in a second, meaning i click the button and receive the goods as if i had bought it over the counter. Instantly. When I transfer BTC from Gox to Silk Road it takes about an hour. Not very comfortable when something is advertised as a better way of paying online. Why is it better? I really dont know. It is definitely better if you want to buy contraband but other than that?
Ok cool, I have a paper wallet, but never used it. Why should I? And for Average Joe that stuff is too complicated.  Got my BTC at the exchange, transfer it from there to SR or Gox, spend it, done.

I'm not against BTC but I try to look at it from a realistic point of view. Nobody knows where and how the exchanges cash out the BTC they charge for every transaction. Nobody can be sure what is really happening behind all that. I do not beloieve in conspiracies, but an unregulated market usually develops its own dynamics.

Okay, just wrote some of my recent thoughts down. Mid-term I think the speculators will have another go, especially when good news and maybe another big exchange arise...Long term I think the price will normalize to a level below now.  
I will definitely wait and observe (like so many ) until there is significant movement. I don't care which direction to be honest but I don't think the current price is justified by anything other than speculation and greed.

On the other hand, when everything works out nice and more people actually USE BTC it may have a prosperous future.
 I just opened my mind to you and if you really read all this, respect to you! You're welcome.

Cheers

[dbru77]

A lot of words, I know  Feel free to read small bits per session, digest and come back.

If anyone has similar experiences I would be interested in reading some of that!

[SilverandBitcoins]

You seem to have an intelligent and realistic way of analyzing crypto currencies, but one thing you neglected to mention that bitcoin has going for it is that it cannot be printed/inflated by bankers and the government to meet their own agendas.  It's more like honest money- like gold is in theory.

[dbru77]

That's a good point, I agree. In a way that's what I meant when I wrote "idealistic approaches".
I think Bitcoin is very good as a blueprint for a different view on "money" or currency. The point that it is not controllable by any government or similar maybe one of its main problems, as governments like to control.
As soon as it's severely regulated or subject of legislation and control, it may come to a point where it's usability and benefits will be strongly damaged.

Not being able to track transactions means you are able to use bitcoin like a suitcase full of money in your car, heading to switzerland to safely store your money without paying taxes and stuff. I don't think any government likes such things.

I appreciate your opinion and that you read my story! Cheers.

[Rampion]

I think you miss an important point: the world is ruled by bankers, and this is a REAL problem. They set the rules, and Bitcoin has the potential to solve this problem.

I know, you say this is the "idealistic" side. It's not "idealistic". It's the reality. It's about freedom.

This does not mean that Bitcoin will succeed, it means that is worth to believe in it and support it. Many people share this view, and more will come - despite of the fact that the short-term bubbles are pure speculative mania.

[BitshireHashaway]

You have a nice way of analyzing cryptocurrencies, great idea, I may pick up on it later. Thanks for the information, and congratulations to you and your success.

[spoorancher]

Interesting post. I went in with a small investment at the bottom of the crash. I think I didn't really get what this was all about until BitFloor shut down and I had to get my money out in a hurry. The Bitcoins flew out of one country and into another like it was nothing. No other currency can do that.

[dbru77]

I think you miss an important point: the world is ruled by bankers, and this is a REAL problem. They set the rules, and Bitcoin has the potential to solve this problem.

I know, you say this is the "idealistic" side. It's not "idealistic". It's the reality. It's about freedom.

This does not mean that Bitcain will succeed, it means that is worth to believe in it and support it. Many people share this view, and more will come - despite of the fact that the short-term bubbles are pure speculative mania.

I get your point and I appreciate it. We seem to share the opinion that the banking system is a big problem.
It would be great if Bitcoin or something similar is able to change this for good.

But I have a hard time imagining that, and I admittedly do not have the educational background to point out all the pros and cons of the current system in comparison to Bitcoin.  I do know that many people see a problem in leaving the Gold standard. I am convinced every modern financial system HAS to crash every 50 or 100 years, usually somehow connected to war in the past. That's just the way a debt-based system works as I understand it. It works a certain amount of time, then it stalls, then inflation makes the majority of people poor, then people are unsatisfied up to the point where the country must handle the problem. Then you get a currency-reset. Obviously a system like that has huge flaws but there have to be some benefits also, because the living conditions and buying power of each citizen of the industrialized world has significantly increased over the last 100 years.

Its late..and this is a complex topic. Long story short, I'd like Bitcoin to succeed and have its place in the modern world.
"Curing" the financial system (if possible) is another story. Greed and corruption of the people in charge will make a change very very hard.

[Anon136]

"big thing with which you can pay at ebay or amazon"

if that happened it wouldnt cause btc price to go to 266, you would need to tack on ATLEAST one extra zero. A billion dollars in capitalization sounds like a lot but it really isnt, bill gates alone could give us another 99 billion worth of capitalization bringing the price up to 10,000 per btc. Just stop and slowly digest the implications of that, 1 single investor entering the market could bring the price from 100 dollars to 10,000 dollars.

hopefully this message will help to strengthen your hands.

[Rampion]

"big thing with which you can pay at ebay or amazon"

if that happened it wouldnt cause btc price to go to 266, you would need to tack on ATLEAST one extra zero. A billion dollars in capitalization sounds like a lot but it really isnt, bill gates alone could give us another 99 billion worth of capitalization bringing the price up to 10,000 per btc. Just stop and slowly digest the implications of that, 1 single investor entering the market could bring the price from 100 dollars to 10,000 dollars.

hopefully this message will help to strengthen your hands.

Well, I tried to play the freedom card... And there goes the greed.

I guess one argument is as valid as the other... Or not?

[Cyberdyne]

If you ask me, Silk Road is the number one reason for BTC.

I find this assumption bizarre and difficult to imagine, but then I've never even visited it.

I wonder if other people whose life revolves around bitcoin, but who have never visited SR, feel the same way.

By the way, have you ever heard of Namecheap? I've spent over $3000 worth of bitcoins there. I think one day doing that will require less than 1 BTC

[Rampion]

If you ask me, Silk Road is the number one reason for BTC.

I find this assumption bizarre and difficult to imagine, but then I've never even visited it.

I wonder if other people whose life revolves around bitcoin, but who have never visited SR, feel the same way.

I understand what dbru77 says, even if I just visited Silk Road out of curiosity, I never used it.

He actually has a good point: a lot of people finds about BTC because it enables them to solve a practical problem, which is to buy drugs. This is why having a strong real economy in BTC, apart from pure speculation, is important for true adoption. BTC also solved a practical problem for Wikileaks, and it solves a practical problem for Wordpress users coming from quite a few developing countries. BTC true value is in solving day-to-day situations, and nowadays is still very focused on pure speculation.

[solracx]

You seem to have an intelligent and realistic way of analyzing crypto currencies, but one thing you neglected to mention that bitcoin has going for it is that it cannot be printed/inflated by bankers and the government to meet their own agendas.  It's more like honest money- like gold is in theory.

+1

[dbru77]

"big thing with which you can pay at ebay or amazon"

if that happened it wouldnt cause btc price to go to 266, you would need to tack on ATLEAST one extra zero. A billion dollars in capitalization sounds like a lot but it really isnt, bill gates alone could give us another 99 billion worth of capitalization bringing the price up to 10,000 per btc. Just stop and slowly digest the implications of that, 1 single investor entering the market could bring the price from 100 dollars to 10,000 dollars.

hopefully this message will help to strengthen your hands.

Maybe I over-simplified things with the sentence you quoted.

i know that a few people buying many Bitcoins could very well let the price explode. If they do that. And if they do not cash out after creating the new price. On the other hand, a few early miners dumping their coins in the market could push the price down into single digits.
If the REAL demand for BTC (to use them to buy stuff, not as speculation object) remains constant or rises, a big dump of coins into the market would drop the price, but the continuing demand would redistribute the freshly available coins until there is some kind of balance. If demand is constant or rising, a price of 10000/BTC would of course be the new price, because when Bill Gates buys alle the coins, there aren't many left to buy, with constant demand this would also remain stable.
Both scenarios strongly depend on constant or rising demand by people who actuially use BTC as currency. And that's exactly the point where my doubts originate from.
If demand decreases the price will fall in both cases. There is no unique property which makes BTC worth buying. You buy it to use for purposes which can only be satisfied with BTC like SR or you buy it because you believe in it and in its increasing value and usability in the long term future or you buy it  because you want to speculate with it  to make short-term or mid-term profit (be it adding BTC or cashing out). If speculators lose interest there is less demand. If there was nothing to be bought exclusively with BTC, why should someone use it? Which mainstream goods of your every day life do you buy with BTC? And which one of these can only be bought with BTC? I guess none.

Lets assume these things have occured. No significant real world use for BTC anymore, maybe you could use it but why should you when you could also use classic payment methods. No more blackmarket SR and stuff. Demand is very low. So, the people who believe in Bitcoin still have their Bitcoins. The price would fall because nobody really buys any coins anymore.
If a situation like that happened - it is a very pessimistic picture i admit - where REAL demand is insignificant, who would care if someone buys every single BTC thats left? Maybe you understand what i want to say. It all depends on real world appliance and true demand from people who need BTC to do things they can only do with BTC. That is not given at this point.
The list of things you can do only with BTC is rather short from my point of view.

If someone were to buy a huge amount of BTC, why should he do that besides speculation?
Whats the point of hoarding huge amounts of BTC other than hoping it may give you some advantage in the future? Just for fun?
Why did people build huge mining rigs and spent many many dollars to set up impressive mining rigs? To have BTC. To get something for BTC at some point in the future. In any given situation any assett/commodity/good receives value through demand and availability. And a person who must be willing to give you somehting for your goods. If demand and offer don't match, your goods have no value in that situation. If you have 100,000 BTC and nobody cares about BTC, you have nothing.
If you have 1 BTC and Bill Gates makes his move, shooting BTC up to 10,000/BTC, you have something. If someone is willing to pay that price you could sell it. If someone accepts it as payment you could spend it. If no one buys your BTC for that price, you have to lower the price. If you can't spend your BTC to buy a car or food or whatever, you have a BTC which you can only sell to someone who wants a BTC. Why should anyone want it when nobody can spend it. And so forth i'm afraid i'm spinning a bit and maybe i repeat myself. sorry for that it's late lol

[dbru77]

If you ask me, Silk Road is the number one reason for BTC.

I find this assumption bizarre and difficult to imagine, but then I've never even visited it.

I wonder if other people whose life revolves around bitcoin, but who have never visited SR, feel the same way.

I understand what dbru77 says, even if I just visited Silk Road out of curiosity, I never used it.

He actually has a good point: a lot of people finds about BTC because it enables them to solve a practical problem, which is to buy drugs. This is why having a strong real economy in BTC, apart from pure speculation, is important for true adoption. BTC also solved a practical problem for Wikileaks, and it solves a practical problem for Wordpress users coming from quite a few developing countries. BTC true value is in solving day-to-day situations, and nowadays is still very focused on pure speculation.

I agree totally,  was still typing when you replied.