I didn't sign up to be the Nashville Bitcoin wacko. But here I am.My journey started a couple months ago, and who knows where it will end. I've spent so much time researching Bitcoin, you'd be completely justified in calling it an obsession. It's probably safe to say that 80% of my tweets lately have been about this crypto currency. I've even taken a position with my business to support it.
So what's the big deal?
Well, if you read my last post, you'll know I have some strong opinions about our central banking system. Those opinions line up with men like Andrew Jackson. Debt, fractional reserve lending, fiat currency, and central banking create a petri dish for greed and power spun out of control.
Can Bitcoin help?
Maybe.
That's the big question. The most intelligent arguments against Bitcoin I've seen so far have more to do with Keynesian vs. Austrian economics than with the actual protocol. One argues currencies have to be controlled, deflation will never work, and debt is a good thing. The other wants to be free from central bankers, encourage savings, and invest from those savings.
But how can this be a currency? It's so volatile!
The recent loss of over 80% in value ($266 down to as low as $50) would certainly suggest it's failing in that category. That said, it would also be silly to criticize a toddler for not being able to drive a stick shift. Many disruptive technologies (email, blogging, mp3s, etc) took ten years to obtain widespread adoption.
This technology is barely 4 years old. Where will it be in 2019?
While the market cap remains below trillions of dollars, it will probably remain volatile. It might even stay volatile after that. Only time will tell. My hunch is fractions of a coin will have great value because they meet real needs not currently met by our financial tools. One of the current hurdles to overcome is the reliance on MtGox (the primary exchange) which (among many other Bitcoin sites) has been getting completely hammered by DDoS attacks. Their trade engine lags, people panic and sell, the price drops, and the hackers buy up cheap coins.
I'm constantly reading through the forums, the subreddit, and listening in IRC (#bitcoin). My friends and family are sending me every article they find about Bitcoin. Chances are I've already read them, but I do enjoy a refresher. Please, continue to send them to me (yes, the negative ones too). I really want to have intelligent discussions about this thing.
Now let me give you some advice.
If you're just interested in making a quick buck, please, leave Bitcoin alone. Your involvement will only increase volatility and delay adoption. If you understand how money works, open source technology, p2p networks, and encryption, I'd love to know why you haven't bought some already.
If you think the whole thing is interesting and you'd like to put in a little money you're willing to lose, go ahead and buy a portion of a coin for $50 or so (you don't have to buy a "whole" coin, there are 100,000,000 divisions within each coin). Percentage wise, if there's even a slight chance it gets adopted globally you could not only do well, but you could help with that adoption.
(Here's the obvious "don't take investment advice from anyone" section. Buy something because you want to, not because someone else convinces you it's a good idea.)
So how do you buy some Bitcoin?
You can start with howdoyoubuybitcoins.com. I think Coinbase (connect directly to your bank account) will be the easiest to use, once they increase their daily buy limits. I've also used Bitfloor (deposit cash at a Bank of America via LocalTill), Bitinstant (send cash via Money Gram through ZipZap) and MtGox (send from Dwolla connected directly to your bank account).
Not sure where to get started?
First set up an online wallet at blockchain.info. You now have your own Bitcoin address!
Though I started with the Dwolla -> MtGox method, their system is currently hopelessly backlogged with new account signup verifications. They are the primary exchange (they do about 80%), one of the cheapest (only 0.6% in fees plus $0.25 from Dwolla), but they are also one of the most hated due to their inability to handle DDoS attacks and API lag.
My next suggestion would be to use Bitfloor. It's really easy. You just bring cash to a Bank of America branch, ask for an out of state deposit slip, fill it out with the information you get from LocalTill, and you're good to go. The fees are between 1%-4%. UPDATE: as of 4-17-2013 6pm EST, bitfloor suspended all trading and shut down their site. Their homepage says their bank account was closed.
If you want to buy when the banks are closed, use Bitinstant. You'll pay 3.99% + 0.6% (they use the MtGox api under the hood) + $3.95 ZipZap fee. When you fill out the form, select Wallmart or CVS (they are everywhere) to make your deposit (btw, this method lets you use a debit card), and have them send the coins to your blockchain.info wallet address.
You could also try the localbitcoins.com route, but I have yet to venture into that territory.
I don't know what will happen to Bitcoin.
My hunch is it won't be ignored and won't go away. If something better comes along which is easier to adopt, Bitcoin might suffer. I see that as unlikely, given the adoption it already has. The government has a FinCEN ruling on Bitcoin, so I don't think they will outlaw it (yet). I do see the network vulnerable to denial of service attacks. Many Bitcoin related sites have been attacked lately, and it appears to be getting worse.
There are a lot of risks.
There's also a potentially huge reward. And no, I'm not talking about the price per coin. I'm talking about a system completely outside of central banking control. A system that allows individuals to control their own money. A system that promotes freedom.
That's worth taking some risk. Some might say, it's worth fighting for.
