Want to invest 100 Bitcoins Long - Which Exchange(s) ?

[StewartJ]

Folks,


This nascent currency is very interesting to me, and I think we are all on the ground floor of something big.

I have been dabbling with the BTC on Gox and Tradehill exchanges for the last week or so. I have come to the conclusion that day trading (for now) is not an option. (Unless I want to play with 10 btc a day to help pay for my coffee).

However I would like to invest longer term with a 100 Bitcoins. An investment in something with great potential, that I can review weekly or even monthly and not worry about. It's long term thing, a few years. I have already done this with silver.

Under these circumstances when and where would you invest 100 bitcoins?

Would it make sense to put 50 BTC in Gox and another 50 in Tradehill? Or all in one exchange?  Or should I buy via exchange and and then keep it in my dat wallet? Would you be comfortable investing long in the $16 - $17 price range?

Your wise feedback would be most appreciated.

Thanks in advance,
SJ

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[stic.man]

long term just buy from whichever exchange has the best prices at that moment then set them aside in a savings wallet.dat

I wouldn't keep coins on the exchange unless you planned on unloading them

[Grant]

Imo, diversification increases the risk rather than decreases it. (if you have money on 2 exchanges the chance of any of them being hacked/taken down increases by 100%).

I did hold all of my bitcoins from december till early june at mtgox (never lost a dime), and they even survived the recent DDOS and hacks But i wouldn't recommend this if you plan to hold for years.

Use a non-windows OS to create your wallet, put all your bitcoins to it. Take that machine offline, and create multiple backups on USB sticks, put them in a safe and/or in a bankbox.

[StewartJ]

Grant / Stic

Thanks for your input. The ability to secure those bitcoins is important.

SJ

[Chris Acheson]

Imo, diversification increases the risk rather than decreases it. (if you have money on 2 exchanges the chance of any of them being hacked/taken down increases by 100%).

While you do double your risk of losing some of your coins, your risk of losing all of them becomes much lower.


SJ:

I believe the next release of the Bitcoin client (0.3.24) is supposed to include support for wallet encryption.  You may want to wait for that, so that you don't have to figure out some other method of encrypting your wallet.  This should make for a relatively secure setup if you don't access the wallet after creating it.  Wallet-stealing malware would have to wait until you enter your wallet passphrase before it could get at your coins.

[tvbcof]

I wanted to do exactly the same thing.  And did.  As a slight variance on the suggestion about just keeping the bitcoins in a backed up wallet, here is what I did.

1) divided my savings into multiple wallets.

2) _CAREFULLY_ encrypted each one.  Careful means using decent crypto and good passphrases, being careful to not have any temp data somewhere that I did not realize, and using a good wiper program to get rid of my unencrypted wallets. (*)

3) put the passphrases (which are way to complex to remember) in a safe deposit box (plus some other stuff which I won't go into.)

4) put the wallets on the web where I can get a hold of them no matter where I happen to be or what of my physical possessions might have left my control by one means or another.

If I wish to go long on another batch, I'll likely modify my scheme.  It's also quite possible that I will throw this scheme away and adopt a new one.  A lovely thing about bitcoin generally is that it is simple and transparent and it, with other available tools, are like a set of tinker-toys.  It is easy 'roll your own' when it comes to solving a variety of security and accessibility problems.

(*) It took me many years to learn enough to have some confidence in my understanding of computer systems to do this.  I stuck with it for years in part because I get a paycheck to do so.  I would suggest that you consult with a knowledgeable friend if you are not focused on security and want a fairly bulletproof and flexible 'long' plan.

[error]

If you're holding long term, put the BTC on a wallet on a USB stick, and put the USB stick in your safe.