Not sure if OP is trolling or...but anyway, TheDjinni's advice is actually the best you can take...clear, logical and structured
I promised him I will return the money to him by the end of 2014 with an extra $100k (10% interest). It took me a lot of convincing but I somehow managed to convince him without telling him exactly what I would do with the money.
Uh huh. Nobody with $1m to burn will buy that you can make a $100k return in 1 year on a startup. Most startups don't turn a profit until 5 years down the road.
This sounds like a joke, but I'll bite... I suppose he could be thinking you'll borrow to cover the difference when you don't meet your target, then learn a valuable life lesson when your investment fails and you're $400k in debt once you sell off your assets, and have to declare bankruptcy.
What he doesn't realize is that you're dumping it in something on purely speculative grounds and could double your money or lose it all by a difference of days. It doesn't even sound like you understand how bitcoin works or what it even is.
I feel like it's almost guaranteed.
That's your first problem. Bitcoin is not a get rich quick scheme, especially if you know little about how it works. Speculative bubbles always benefit the moguls, veterans, and hawkish traders at the expense of the young, new, and inexperienced.
1. Am I being really stupid and optimistic to think this way? How much of a chance/risk do you think it is for the price to not go up any higher in 2014? IMO, it almost seems guaranteed the price will at least hit $1200-$1300/btc sometime next year.... or is there a risk that I'm not aware of?
This plan is insane.
Bitcoin always spikes in value after a media blitz via a speculative bubble, then crashes hard a few months later. Those of us who have had their ear to the ground have seen it happen, first in May of 2011, then less so in Jan 2012, then again in August 2012. Do NOT invest in $1 million in bitcoin unless you are prepared to lose $990,000 of it.
The recent media attention that bitcoin has received is the sole thing fueling this bubble.
See:
2. I have a coinbase account and it only lets me buy a max of 50 BTC at a time. Is there a place where I can buy as many as I want w/o any limits?
This is not a transaction you want to handle online with some random exchange. Find a bunch then call them up and get a contract with a lawyer in tow, if you're crazy enough to do it.
3. Will I even be able to buy $1mil worth of BTCs? Does it depend on who's selling right at the moment I'm trying to buy some? How does this work?
I doubt there'll be enough sellers at any one point in time for you to drop $1 million into the market. Dropping $1m in a day might actually cause the speculative bubble to burst, since you'd spike the value so quickly that the speculators will panic-sell.
You'd have to buy them up at a slower pace, but that just puts you at even greater risk.
4. Will I have to pay taxes on capital gains? I don't wanna pay shit to the US gov, how would they know how much I made off BTCs?
They'd call up whatever exchange service you used and ask them for the information. If you made a significant return, the bank will notice and report it. You WILL pay taxes on this, governments proactively look for and try to snap up smaller sums than this. They would look at what you are doing as free money because you simply could not contest the wealth of evidence they will have on you. And they'll sit on it for a year so that you pay interest.
I'm thinking of putting an automatic sell order right when BTCs hit $1500 in 2014.... is that too high or should I put a lower limit? I want to guarantee some profit before I get too greedy and potentially lose my dad's money. I figured if I sell at $1500 it would be a nice $400k profit for me, I could quit my job and chill in Miami and Ibiza for a year until I need money again.
Just repeat this mantra: "Bitcoin is not a get-rich-quick scheme, Bitcoin is not a get-rich-quick scheme, Bitcoin is not a get-rich-quick scheme..." until you realize how you're letting the euphoria of naked greed cloud your judgment.
What you should do: return the money to your father and say your projections were flawed as you realized that there were some fundamental problems with your idea.
Roughly the equivalent of borrowing money from your dad to put it all on roulette in Vegas.
Basically this. The gamble is the day the bubble pops; bet safe and you make nothing, get greedy and you lose it all. If you don't have experience day-trading and aren't prepared to sit at a computer 24/7 monitoring any change in value, you aren't ready for this.
