Richard Falkvinge, who describes himself as "the founder of the first Pirate Party and is a political evangelist, traveling around Europe and the world to talk and write about ideas of a sensible information policy," blogged about his mind-bogglingly insane idea to put all his savings into Bitcoins.
Not only that! He is also putting all he "can borrow" into Bitcoins!
Well, when people start doing insane things like Mr. Falkvinge, you have to wonder whether Bitcoins are at a peak in terms of price. Now, I agree with Mr. Falkvinge that Bitcoins are really cool, and they could revolutionize the world financial systems. However, at this point, it is certainly not "guaranteed" that they will, and there are a whole host of reasons why this might actually not come to pass.
At this point, I think it is fair to say that there is a "chance" that Bitcoins will succeed. But there is also significant reason to be concerned that in the future (maybe the near future) Bitcoins will turn out to be a complete failure and become virtually worthless. The point is, nobody knows.
But Mr. Falkvinge is committing a huge error by converting his savings to Bitcoins and buying them with all he "can borrow."
Let's look at it this way. Even if everything Mr. Falkvinge says comes true about Bitcoins, and they continue to go up in value parabolically, what is the point of what he is doing? If he is right, he would still do fine if he put 1/3 of his savings into Bitcoins and did not buy them with debt. If Bitcoins go up 1000% or more from their current price, which is what it seems he is expecting giving the tone of his post, he should be rolling in dough if he puts 1/3 of his savings into Bitcoins and buys none with debt.
But what if his rosy scenario does not come to pass? What if tomorrow morning the US government shuts down MtGox and the value of Bitcoins crashes to virtually worthless? What if next week a competing crypto-currency is unveiled with all the advantages of Bitcoins, and even some additional ones, like corporate or government backing, greater security features, etc.? Certainly could happen.
Even if Mr. Falkvinge is 99% convinced that he is right about Bitcoins, his bet is still a terrible one. If the 1% disaster comes to pass, he will be virtually wiped out, and for no reason! He could have made a similar bet on Bitcoins future without risking his entire financial stability.
The only situation in which his idea actually makes sense? If he is not serious, invested a reasonable sum in Bitcoins, and is just trying to dupe the next round of bagholders into buying in to the system to increase the value of his holdings. Really, it's hard to say which is worse, that he really is so crazy, or that he is an evil scheming genius...
But either way, hopefully nobody is taking his advice.
Tuesday, May 31, 2011
Monday, May 30, 2011
Updated Review of BitcoinPlus: Bitcoin Mining from your Browser
Last week, we profiled a web-based Bitcoin mining site, BitcoinPlus, that lets you earn Bitcoins through your browser.
In our previous post, we criticized the site for only sendoung out payouts in 0.01 increments, and not advertising this up front, so that it can take a long time to receive your payment (finally got paid after one week!). However, this limit is apparently posed by the Bitcoin system, not the site. Also, with the difficulty increasing for bitcoin mining, the payout amount per session that BitcoinPlus offers dropped this week from almost 0.0002 to around 0.0001, almost doubling the time it takes to get to 0.01 Bitcoins. As long as you understand how long it can take to generate 0.01 BTC, you shouldn't be disappointed by the site. BitcoinPlus still basically offers BTC for nothing, so one can't complain.
Also, according to the site's owner, you can run BitcoinPlus in your account on as many computers as you want at the same time. If one can take advantage of this, it could substantially increase the frequency of payouts. There is no benefit to running BitcoinPlus on multiple browsers in the same computer, however, as it already uses all of the idle computing power available on your computer.
In our previous post, we criticized the site for only sendoung out payouts in 0.01 increments, and not advertising this up front, so that it can take a long time to receive your payment (finally got paid after one week!). However, this limit is apparently posed by the Bitcoin system, not the site. Also, with the difficulty increasing for bitcoin mining, the payout amount per session that BitcoinPlus offers dropped this week from almost 0.0002 to around 0.0001, almost doubling the time it takes to get to 0.01 Bitcoins. As long as you understand how long it can take to generate 0.01 BTC, you shouldn't be disappointed by the site. BitcoinPlus still basically offers BTC for nothing, so one can't complain.
Also, according to the site's owner, you can run BitcoinPlus in your account on as many computers as you want at the same time. If one can take advantage of this, it could substantially increase the frequency of payouts. There is no benefit to running BitcoinPlus on multiple browsers in the same computer, however, as it already uses all of the idle computing power available on your computer.
Sunday, May 29, 2011
Bitcoin's Future: Bubble or Revolution?
Here are some scenarios I see for the future of Bitcoins.
(1) Price continues to rise, people hoard Bitcoins, and the parabolic move upward continues.
(2) Same situation as above, except that as Bitcoins are not actually used in transactions, only hoarded, eventually the system breaks down and Bitcoins crash in a frenzy of selling.
(3) New users and new money doesn't enter the Bitcoin economy at a high enough rate to keep the price steady or rising. As Bitcoin holders see the price dropping or languishing, they sell, and this creates further selling pressure.
(4) The US government or some collection of governments initiates some action that causes people to become skittish about using Bitcoins (high profile prosecution of criminals laundering money with Bitcoins, attacking MtGox or the network, etc.). The value of Bitcoins crashes.
(5) Same situation as above except the government action causes the value of Bitcoins to increase dramatically, as the government is only able to make marginal inroads in disrupting the use of Bitcoins, and the attack on the purchase/sale of Bitcoins make them harder to get hold of, while demand rises.
(6) Mining difficulty becomes excessive, many average people give up mining, and price does not continue to rise along with the increase in difficulty costs, causing a crash in price and profits for miners and investors simultaneously, destroying the Bitcoin ecosystem.
(7) Competition introduces a new crypto-currency, and users switch to the new currency, either because it has better features, government or commercial backing, better user interfaces, or something else. The value of Bitcoins crashes.
(8) Bitcoins stabilize at the current price level, and either become the greatest technological revolution since the internet, or a neat tool used by a few geeks, criminals, and online poker players.
Which one of these scenarios will come to pass? Or maybe something else entirely?
(1) Price continues to rise, people hoard Bitcoins, and the parabolic move upward continues.
(2) Same situation as above, except that as Bitcoins are not actually used in transactions, only hoarded, eventually the system breaks down and Bitcoins crash in a frenzy of selling.
(3) New users and new money doesn't enter the Bitcoin economy at a high enough rate to keep the price steady or rising. As Bitcoin holders see the price dropping or languishing, they sell, and this creates further selling pressure.
(4) The US government or some collection of governments initiates some action that causes people to become skittish about using Bitcoins (high profile prosecution of criminals laundering money with Bitcoins, attacking MtGox or the network, etc.). The value of Bitcoins crashes.
(5) Same situation as above except the government action causes the value of Bitcoins to increase dramatically, as the government is only able to make marginal inroads in disrupting the use of Bitcoins, and the attack on the purchase/sale of Bitcoins make them harder to get hold of, while demand rises.
(6) Mining difficulty becomes excessive, many average people give up mining, and price does not continue to rise along with the increase in difficulty costs, causing a crash in price and profits for miners and investors simultaneously, destroying the Bitcoin ecosystem.
(7) Competition introduces a new crypto-currency, and users switch to the new currency, either because it has better features, government or commercial backing, better user interfaces, or something else. The value of Bitcoins crashes.
(8) Bitcoins stabilize at the current price level, and either become the greatest technological revolution since the internet, or a neat tool used by a few geeks, criminals, and online poker players.
Which one of these scenarios will come to pass? Or maybe something else entirely?
Friday, May 27, 2011
Bitcoin Traffic Explosion
According to Alexa, the main Bitcoin site, Bitcoin.org is now ranked #4,136 in the US for traffic.
A month ago it wasn't even in the top 20,000. And given that Alexa rankings trail 3 months of traffic, the real ranking is probably much higher.
Time on site is declining, suggesting that the new users aren't as likely to stick around as the old, but not as quickly as traffic is increasing, so some must be sticking around. More than a third of the traffic is going to the forum.
The Alexa graph looks remarkably similar to the Bitcoin price graph, which has similarly epxloded over the last couple months. Where we go from here is anyone's guess. The Bitcoin site's reach is still only 0.05% of the internet right now, so there is still a lot of room to grow.
Also, internationally traffic is strong. The United States is not even the country where Bitcoin is most popular. Here is a list of Alexa traffic rankings for Bitcoin.org as of today by Country:
A recent article regarding a possibly Bitcoin Apocalypse suggests that the traffic spike and interest in Bitcoins might be a temporary phenomenon, and if traffic crashes, the price of BTC will crash along with it. That is probably true if it occurs.
But so far traffic is increasingly rapidly. Interest in Bitcoins has not yet peaked it seems.
A month ago it wasn't even in the top 20,000. And given that Alexa rankings trail 3 months of traffic, the real ranking is probably much higher.
Time on site is declining, suggesting that the new users aren't as likely to stick around as the old, but not as quickly as traffic is increasing, so some must be sticking around. More than a third of the traffic is going to the forum.
The Alexa graph looks remarkably similar to the Bitcoin price graph, which has similarly epxloded over the last couple months. Where we go from here is anyone's guess. The Bitcoin site's reach is still only 0.05% of the internet right now, so there is still a lot of room to grow.
Also, internationally traffic is strong. The United States is not even the country where Bitcoin is most popular. Here is a list of Alexa traffic rankings for Bitcoin.org as of today by Country:
| Finland | 453 |
| Switzerland | 1,017 |
| Austria | 1,967 |
| Canada | 2,105 |
| Argentina | 2,718 |
| Denmark | 3,132 |
| Australia | 3,212 |
| United Kingdom | 3,433 |
| Belgium | 3,963 |
| United States | 4,136 |
| Poland | 4,538 |
| Chile | 4,556 |
| Bangladesh | 5,081 |
| Russia | 6,220 |
| Portugal | 6,529 |
| Mexico | 7,662 |
| Romania | 8,056 |
| Sweden | 8,717 |
| Philippines | 9,084 |
| Germany | 9,480 |
| Netherlands | 9,981 |
| France | 10,297 |
| Japan | 10,354 |
| Ukraine | 13,563 |
| South Africa | 14,886 |
| India | 15,865 |
| China | 16,104 |
| Italy | 18,185 |
| Pakistan | 20,582 |
| Brazil | 21,160 |
| Spain | 21,416 |
A recent article regarding a possibly Bitcoin Apocalypse suggests that the traffic spike and interest in Bitcoins might be a temporary phenomenon, and if traffic crashes, the price of BTC will crash along with it. That is probably true if it occurs.
But so far traffic is increasingly rapidly. Interest in Bitcoins has not yet peaked it seems.
Is Bitcoin Ready for the Mainstream?
In the last week, major news outlets have started to report on Bitcoins. The Washington Post, the Atlantic, NPR, and others.
Traffic to bitcoin websites has increased, as has the price, which is nearing $10 USD for one Bitcoin (1 BTC). So Bitcoins are starting to make it into mainstream discussion.
In the near future, the story will likely be picked up by all the major news organizations, and an even greater flurry of interest in Bitcoins will explode. Think FoxNews, ABC, NBC, NYTimes, Drudge, HuffingtonPost, CNN, MSNBC, BBC, CNBC, SeekingAlpha, and you get an idea.
Bitcoin, however, may not be ready for this media onslaught. Anybody who has used the bitcoin client can see this instantly. It does not have a nice, clear user interface. Knowledge of technical computer concepts, Ports, IP addresses, etc., is often necessary to solve problems with the software. A lot of the discussion about Bitcoins is conducted by people who are in the top .00001% of tech-savvy people in the world. Perhaps the top 1-2% of tech-savvy individuals may feel comfortable using Bitcoins, but before it gains mass acceptance, there needs to be a much softer, friendlier entry for newbies.
I am of the belief that Bitcoins is not a scam, but it is very likely a speculative bubble. The current price is based on a hope that Bitcoins will be able to go mainstream, and if they do, then even more price increases will likely be on the way. The concept, and potential, is beyond cool. But right now it seems very hard to imagine that a casual reader of the NYTimes or Drudge will follow a link to information about Bitcoins and feel comfortable using the software. The media attention may be coming a little too soon for Bitcoins.
Traffic to bitcoin websites has increased, as has the price, which is nearing $10 USD for one Bitcoin (1 BTC). So Bitcoins are starting to make it into mainstream discussion.
In the near future, the story will likely be picked up by all the major news organizations, and an even greater flurry of interest in Bitcoins will explode. Think FoxNews, ABC, NBC, NYTimes, Drudge, HuffingtonPost, CNN, MSNBC, BBC, CNBC, SeekingAlpha, and you get an idea.
Bitcoin, however, may not be ready for this media onslaught. Anybody who has used the bitcoin client can see this instantly. It does not have a nice, clear user interface. Knowledge of technical computer concepts, Ports, IP addresses, etc., is often necessary to solve problems with the software. A lot of the discussion about Bitcoins is conducted by people who are in the top .00001% of tech-savvy people in the world. Perhaps the top 1-2% of tech-savvy individuals may feel comfortable using Bitcoins, but before it gains mass acceptance, there needs to be a much softer, friendlier entry for newbies.
I am of the belief that Bitcoins is not a scam, but it is very likely a speculative bubble. The current price is based on a hope that Bitcoins will be able to go mainstream, and if they do, then even more price increases will likely be on the way. The concept, and potential, is beyond cool. But right now it seems very hard to imagine that a casual reader of the NYTimes or Drudge will follow a link to information about Bitcoins and feel comfortable using the software. The media attention may be coming a little too soon for Bitcoins.
Thursday, May 26, 2011
Bitcoin Help for Mac Users
I just had a problem with my Bitcoin client for Mac, it stopped downloading blocks in the blockchain, had only 1 connection, and was not receiving bitcoin transactions I knew had been sent. My khash/s rate was very low, and I knew the program was not working the way it was supposed to.
A user on the Bitcoin Forum guided me through what to do, and now I want to lay it out step by step for other mac users in case anybody else is having trouble connecting and downloading the blockchain or receiving Bitcoins on a Mac.
Here are the steps I went through to solve the problems:
(1) Place the Bitcoin application in the Applications folder.
(2) Open the Bitcoin application.
(3) Go to "Preferences" in the Apple menu from within your Bitcoin application (for me I have two Apple menus here so I pick the one on the right).
(4) In "Preferences", make sure that "Connect through socks4 proxy" is NOT selected.
(5) Click Apply and then OK.
(6) Quit the Bitcoin application.
(7) Open the Terminal application.
(8) When you receive a prompt, input the following text into Terminal and then press return:
(9) When you receive your next prompt, input the following text into Terminal and then press return:
(10) At this point, Bitcoin should open within Terminal and start connecting to more peers and downloading blocks, for me this happened very quickly.
(11) Once your blocks are downloaded and connections established, you can quit the Bitcoin application and Terminal, and then reopen Bitcoin without Terminal in future times, and your Bitcoin application should remember the connections.
I hope this helps people who are having a Bitcoin client that doesn't work on their Mac, like was happening for me. If you have any questions about this process, post them on the Bitcoin Forum, the folks there are very helpful.
If you were helped by this explanation, and would like to send Bitcoins, you can do so to: 1JxsbbP2k5KHYGWtmggT7yJJ4eRtj7n9sJ
A user on the Bitcoin Forum guided me through what to do, and now I want to lay it out step by step for other mac users in case anybody else is having trouble connecting and downloading the blockchain or receiving Bitcoins on a Mac.
Here are the steps I went through to solve the problems:
(1) Place the Bitcoin application in the Applications folder.
(2) Open the Bitcoin application.
(3) Go to "Preferences" in the Apple menu from within your Bitcoin application (for me I have two Apple menus here so I pick the one on the right).
(4) In "Preferences", make sure that "Connect through socks4 proxy" is NOT selected.
(5) Click Apply and then OK.
(6) Quit the Bitcoin application.
(7) Open the Terminal application.
(8) When you receive a prompt, input the following text into Terminal and then press return:
cd /Applications/
(9) When you receive your next prompt, input the following text into Terminal and then press return:
Bitcoin.app/contents/macos/bitcoin -addnode=69.164.218.197 -addnode=64.22.103.150 -addnode=173.242.112.53 -addnode=178.79.147.99 -addnode=184.106.111.41 -addnode=91.85.220.84 -addnode=173.224.125.222 -addnode=86.5.50.90
(10) At this point, Bitcoin should open within Terminal and start connecting to more peers and downloading blocks, for me this happened very quickly.
(11) Once your blocks are downloaded and connections established, you can quit the Bitcoin application and Terminal, and then reopen Bitcoin without Terminal in future times, and your Bitcoin application should remember the connections.
I hope this helps people who are having a Bitcoin client that doesn't work on their Mac, like was happening for me. If you have any questions about this process, post them on the Bitcoin Forum, the folks there are very helpful.
If you were helped by this explanation, and would like to send Bitcoins, you can do so to: 1JxsbbP2k5KHYGWtmggT7yJJ4eRtj7n9sJ
Selling Silver for Bitcoins
Couldn't pass this one up. Someone on the Bitcoin Forum is offering to sell his silver for bitcoins. If that's not a sign of the times, I don't know what is.
Silver is one of this year's all-time speculative frenzies. Although I may be wrong, it appears that silver's frenzy has ended, and that it is currently wobbling around before it crashes back down to a realistic valuation. Peter Brandt, who has been perfect on his calls on silver recently, suggested that spot silver may go up to the low 40's only to crash down into the 20's. Although his call was admittedly based not on technical analysis, it does seem very plausible, and would be similar to the price action during the bursting of the last great silver bubble in the wake of the Hunt Brothers attempt to corner the silver market.
Bitcoins, on the other hand, look a lot like silver in their parabolic rise, but may not have reached the bubble peak just yet. In fact, as awareness about bitcoins is only starting to spread to the mainstream, we might even be in the early stages of the speculative frenzy.
So if you are in to speculative mania, yes, investing in Bitcoins may be a good move right now.
But if silver's recent crash teaches us anything, it is that these speculative frenzies can end fast and painfully. Silver, which actually has commercial applications and has been a store of values for thousands of years, has a price floor at least. Bitcoins? Perhaps these have a price floor as well, only time will tell. But for now, nobody knows.
Silver is one of this year's all-time speculative frenzies. Although I may be wrong, it appears that silver's frenzy has ended, and that it is currently wobbling around before it crashes back down to a realistic valuation. Peter Brandt, who has been perfect on his calls on silver recently, suggested that spot silver may go up to the low 40's only to crash down into the 20's. Although his call was admittedly based not on technical analysis, it does seem very plausible, and would be similar to the price action during the bursting of the last great silver bubble in the wake of the Hunt Brothers attempt to corner the silver market.
Bitcoins, on the other hand, look a lot like silver in their parabolic rise, but may not have reached the bubble peak just yet. In fact, as awareness about bitcoins is only starting to spread to the mainstream, we might even be in the early stages of the speculative frenzy.
So if you are in to speculative mania, yes, investing in Bitcoins may be a good move right now.
But if silver's recent crash teaches us anything, it is that these speculative frenzies can end fast and painfully. Silver, which actually has commercial applications and has been a store of values for thousands of years, has a price floor at least. Bitcoins? Perhaps these have a price floor as well, only time will tell. But for now, nobody knows.
Problems with the Proposed Bitcoin Futures Market
Over at the Bitcoin Forum dacoinminster has a proposal to allow betting on Bitcoin futures. You can speculate on the value of bitcoins on 7/1/2011, here are the rules he has proposed regarding payouts:
On the other hand, if the value of BTC goes way up, and I am right, I can make out like a bandit. So the market seems definitely skewed to reward increases in the value of BTC. So, while this futures market may function as a sort of call option market for Bitcoins, it does not seem to be a very good way to provide an opportunity to take a short position in the value of BTC.
2) The "bitcents" represent your bet on the USD price of bitcoins on July 1, 2011 at noon U.S. pacific time. Examples:There seems like there might be a problem with this futures market, namely that if the value of the BTC crashes, even those that win might still lose. For example, lets say I bet 10 BTC that the USD value of BTC on July 1, 2011 will be 1 BTC. There are 100 other entrants who on average also bet BTC, and 5% of whom also guessed 1 BTC. So I split 980 BTC among 5 other winners, and get 196 BTC. Great, right? Well, not really, I made an investment that had a value of $80 USD and now I receive a payout worth $196 USD, because the value of BTC has dropped in the interim. Assuming everyone bet rationally, I had a 5% chance of basically doubling my money. This is a losing bet, even if I think that the value of BTC is likely to fall to 1 BTC by the date in question, this bet is probably not a rational one to make. So there seems to be a big flaw in this futures market.
a) A bet of 1.13 BTC sent to that address is a bet of 1.13 BTC that bitcoins will be worth $13 USD on July 1st
b) A bet of 12.08 sent to that address is a bet of 12.08 BTC that bitcoins will be worth $8 USD on July 1st
c) A bet of 0.15 sent to that address is a bet of 0.15 BTC that bitcoins will be worth $15 on July 1st
d) You can use sub-cents if you want. A bet of 0.015 BTC is placed on $1.50 per bitcoin
3) Winnings will be put in one pot and distributed as follows:
a) 98% of the pot will go to the winners (those within + or - $0.50 of the final value)
b) 2% of the pot will go to me
c) The pot will be split among winners by the size of their bet multiplied by the number of days in advance they made their bet (days will be fractional with resolution in seconds, per block explorer timestamps)
On the other hand, if the value of BTC goes way up, and I am right, I can make out like a bandit. So the market seems definitely skewed to reward increases in the value of BTC. So, while this futures market may function as a sort of call option market for Bitcoins, it does not seem to be a very good way to provide an opportunity to take a short position in the value of BTC.
Wednesday, May 25, 2011
Two Ebay Bitcoin Sales
10 BTC sold today, May 25, 2011, for $100. This is a hefty premium over MtGox, although presumably it is an easier format for many people to acquire BTC.
20 BTC sold on May 22, 2011, for $147.
The seller, gabriel*d, was the same in both transactions and received positive feedback for the transaction from Ebayers with higher feedback scores.
There has been some discussion as to whether Ebay would even allow sales of Bitcoin, especially since Ebay owns Paypal, and, well, theoretically BTC could challenge Paypal. Plus there are potential problems in using Paypal to buy items like PTC according to Paypal and/or Ebay's terms of service. So far there have only been a small number of BTC auctions on Ebay, though, so perhaps Ebay or Paypal hasn't really taken note of the sales.
If Bitcoin is currently in a speculative frenzy, which definitely appears possible, there needs to be a constant influx of "new money" to keep prices rising and prevent a market collapse. Ebay sales might provide just that source of "new money" if more and more BTC can be sold on Ebay. This would serve a dual purpose of bringing in "new money" and increasing awareness of BTC, as many casual, potential BTC participants are likely never going to go on MtGox, whereas they already have Ebay and Paypal accounts ready to go...
Tread carefully folks!
20 BTC sold on May 22, 2011, for $147.
The seller, gabriel*d, was the same in both transactions and received positive feedback for the transaction from Ebayers with higher feedback scores.
There has been some discussion as to whether Ebay would even allow sales of Bitcoin, especially since Ebay owns Paypal, and, well, theoretically BTC could challenge Paypal. Plus there are potential problems in using Paypal to buy items like PTC according to Paypal and/or Ebay's terms of service. So far there have only been a small number of BTC auctions on Ebay, though, so perhaps Ebay or Paypal hasn't really taken note of the sales.
If Bitcoin is currently in a speculative frenzy, which definitely appears possible, there needs to be a constant influx of "new money" to keep prices rising and prevent a market collapse. Ebay sales might provide just that source of "new money" if more and more BTC can be sold on Ebay. This would serve a dual purpose of bringing in "new money" and increasing awareness of BTC, as many casual, potential BTC participants are likely never going to go on MtGox, whereas they already have Ebay and Paypal accounts ready to go...
Tread carefully folks!
Two WebCL Web-Based Bitcoin Miners Spring Up
Coined.com (great domain name!) and KradMiner.com. KradMiner looks to be a little more user friendly.
I couldn't try out either one because I am using a Mac and WebCL isn't standardized for Mac yet. Oh well.
Looks like a very cool development.
In other news, Bitcoins are now worth almost $9 USD, a jump of almost $2 in one day, which again shows that either they are the greatest thing ever to come along, or are a huge speculative bubble setting up for a nasty crash. Stay tuned...
I couldn't try out either one because I am using a Mac and WebCL isn't standardized for Mac yet. Oh well.
Looks like a very cool development.
In other news, Bitcoins are now worth almost $9 USD, a jump of almost $2 in one day, which again shows that either they are the greatest thing ever to come along, or are a huge speculative bubble setting up for a nasty crash. Stay tuned...
NPR's All Things Considered Does Piece on Bitcoins
May "do for banking what the internet did for publishing" according to NPR.
I am still entranced by how cool Bitcoins are as an idea, but skeptical of how practical it will actually be for a Bitcoin economy to develop.
Also, the value of Bitcoins shot up with a huge block of buying following the segment airing. I wonder if the SEC is going to investigate whether Robert Siegel and Annie Lowrey bought some Bitcoins right before the show.
Web-Based Bitcoin Mining / Generating
The folks over at BitcoinPlus have a neat little Java App that lets you generate bitcoins through your web browser. Also, you will get paid free bitcoins even if you have a slow computer and a slow connection, on a fairly regular basis.
You won't get paid a lot, though, I've been using it for two days and half about 1/2 a bitcent. Whoopeee! Given current prices of bitcoins, that's about $0.03. Not enough to retire yet, but I'm getting there... Another thing to note is that the site will only send you bitcoins in increments of 0.01 BTC, or 1 bitcent, which might take a couple days to get to. Plus, the site doesn't really make it clear upfront that there is such a limit, it's only when you actually get to the send screen that you learn that you need 0.01 to receive any bitcoins. But it seems this is a standard limit many free bitcoin services put on their payouts.
Still, a very cool and fun way to generate bitcoins for free while browsing the web. And, it looks like they may have an option for embedding their app in the future. Neat!
Alexa shows that the site had a burst of traffic when it debuted and then it has slowly tapered off, suggesting that people may not be impressed with the slow generation and don't stick around. Well, I am sticking around until I get my 0.01 BTC at least!
You won't get paid a lot, though, I've been using it for two days and half about 1/2 a bitcent. Whoopeee! Given current prices of bitcoins, that's about $0.03. Not enough to retire yet, but I'm getting there... Another thing to note is that the site will only send you bitcoins in increments of 0.01 BTC, or 1 bitcent, which might take a couple days to get to. Plus, the site doesn't really make it clear upfront that there is such a limit, it's only when you actually get to the send screen that you learn that you need 0.01 to receive any bitcoins. But it seems this is a standard limit many free bitcoin services put on their payouts.
Still, a very cool and fun way to generate bitcoins for free while browsing the web. And, it looks like they may have an option for embedding their app in the future. Neat!
Alexa shows that the site had a burst of traffic when it debuted and then it has slowly tapered off, suggesting that people may not be impressed with the slow generation and don't stick around. Well, I am sticking around until I get my 0.01 BTC at least!
Bitcoins, Gold, and Short Domains
Cross-posted at NNNNNdomains.
For those of you who have been following the spark of interest in Bitcoins, here is an interesting take. The folks over at Launch make the following predictions regarding Bitcoins:
These are some bold predictions! Although I would not be incredibly surprised if they came true.
But looking at the comments on the article, some excellent points are made. Lets say Bitcoins do go parabolic in a speculative frenzy, like silver (SLV) recently did. Parabolic rises almost always end with very severe crashes, Bitcoins aren't going to rise in value parabolically for ever. For one, as some of the comments point out, one of the primary values of a currency is "price stability." The more Bitcoins rise parabolically, the less value they have as a currency and the more they would appear to resemble tulips or other classic speculative frenzies.
Bitcoins share some similarities with cash and some with monetary commodities like gold. They can be used in transactions like cash, and like gold they can be "mined" to produce more of them, although there apparently there is a fixed limit on how many and how frequently Bitcoins can be "mined" or "generated" digitally. So the supply of Bitcoins is even more fixed than gold.
Anyways, what does any of this have to do with short domains? Well, there was a speculative frenzy around short domains in 2008, with the LLLL.com buyout (four letter .com domains), and the attempted buyouts of a whole host of other short domains for which there is a fixed supply. After LLLL.com domains were all registered, prices shot up parabolically and at one point were trading at $60 minimum for the four ugliest letters you could imagine.
Needless to say, as most speculative frenzies do, the market crashed. LLLL.com's dropped in price by at least 1/3 and other short domain types that had been "bought out", such as NNNNN.com's (five digit .com domains), ultimately fell in value so that the buyouts were not sustained as people decided it was not worth paying the fee to re-register their domains.
Interestingly, though, the market crash was not a total collapse. LLLL.com's remain completely bought out, more are ending up in the hands of "end users", companies or individuals that buy domains from the domainers that hold these domains for resale, and prices for resale have been steadily rising since they crashed in 2008. As for NNNNN.com's, there were more than 15,000/100,000 available in 2008 before the buyout began in earnest, and most of the domains bought out were not re-registered in 2009. However, in the last few years, many Chinese domainers have been slowly but steadily snapping up these domains. There are now less than 1% of NNNNN.com domains left, and if current registration trends continue, it seems they will be bought out at some point in the next year or so as well.
Unlike Bitcoins and gold, they aren't making any more NNNNN.com or LLLL.com domains. So in a sense domains are a wiser investment. Also, they have more real uses (nearly 50% of NNNNN.com domains can be used as US zip code domains, and Chinese sites frequently use numeric domains, and many other uses are possible). As more and more people in other countries, not only China, go online and look for domains, demand will likely put increasing pressure on prices for short domains.
On the other hand, there are two problems with domains that don't exist for gold and Bitcoins. One is registration fees that must be paid every year. For NNNN.com's that sell for a $500+ minimum it is not really a problem to pay a $8/year registration fee, especially when your domain receives some revenue from traffic and the value of NNNN.com's has been rising much faster than the annual registration fee. But for a lower-quality NNNNN.com or LLLL.com, the registration fees make it more difficult to justify investing in these short domains. If you don't make enough from (1) large "end-user" sales to cover the annual registration fees, (2) traffic, or (3) rises in reseller prices, the registration fees can end up destroying your hopes for your domain investments.
The second is that while they aren't making any more NNNNN.com's, they are making more extensions, and if you can't find your NNNNN.com, you might be able to find the same number in .us, .pro, .net, .in, .uk, .biz, and on and on... Might not be as pretty as the .com, but paying $8 might be better than dealing with an exorbitant "end user" price quoted by a domain reseller. Also, there's always the "fivethirtyeight.com" example, where the NNN.com version was probably way too expensive, and yet the spelled out version still went on to become a very successful domain.
But in the end, .com is king, as evidenced by registration data and the continued use of prime .com domains even in foreign countries that have their own extensions. Plus, even if someone does go and use another extension, if you own 538.com, you are probably still making $$$ from all the type-in traffic you get from people who are trying to find the more famous site.
The continued support for prices of LLLL.com's and the continued registration of NNNNN.com's shows that the speculative frenzy of 2008 may have ended badly for a lot of domainers, but the underlying fundamentals for short domains are still there. Here's to a slow, steady rise in registration, use, and values for short domains. Speculative frenzies always end badly, as they probably will for the last bagholders to get in to the Bitcoin frenzy, but it looks like we might be finally on a path for reasonable, sustained growth in the prices of these very useful short domains.
For those of you who have been following the spark of interest in Bitcoins, here is an interesting take. The folks over at Launch make the following predictions regarding Bitcoins:
Let’s Make Some Predictions
============
We are 100% certain that governments will start banning bitcoins in the next 12 to 18 months. Additionally, we’re certain bitcoins will soar in value and a crush of folks will flood the system and start using them.
Currently there are 6M coins at $6.70 each for a total economy of about $40M. Bitcoin speculation and hoarding will also cause a massive spike in bitcoin value. For example, if 10M people find out about bitcoins in the next year and want to buy $100 worth, $1B will be infused into the bitcoin economy.
These are some bold predictions! Although I would not be incredibly surprised if they came true.
But looking at the comments on the article, some excellent points are made. Lets say Bitcoins do go parabolic in a speculative frenzy, like silver (SLV) recently did. Parabolic rises almost always end with very severe crashes, Bitcoins aren't going to rise in value parabolically for ever. For one, as some of the comments point out, one of the primary values of a currency is "price stability." The more Bitcoins rise parabolically, the less value they have as a currency and the more they would appear to resemble tulips or other classic speculative frenzies.
Bitcoins share some similarities with cash and some with monetary commodities like gold. They can be used in transactions like cash, and like gold they can be "mined" to produce more of them, although there apparently there is a fixed limit on how many and how frequently Bitcoins can be "mined" or "generated" digitally. So the supply of Bitcoins is even more fixed than gold.
Anyways, what does any of this have to do with short domains? Well, there was a speculative frenzy around short domains in 2008, with the LLLL.com buyout (four letter .com domains), and the attempted buyouts of a whole host of other short domains for which there is a fixed supply. After LLLL.com domains were all registered, prices shot up parabolically and at one point were trading at $60 minimum for the four ugliest letters you could imagine.
Needless to say, as most speculative frenzies do, the market crashed. LLLL.com's dropped in price by at least 1/3 and other short domain types that had been "bought out", such as NNNNN.com's (five digit .com domains), ultimately fell in value so that the buyouts were not sustained as people decided it was not worth paying the fee to re-register their domains.
Interestingly, though, the market crash was not a total collapse. LLLL.com's remain completely bought out, more are ending up in the hands of "end users", companies or individuals that buy domains from the domainers that hold these domains for resale, and prices for resale have been steadily rising since they crashed in 2008. As for NNNNN.com's, there were more than 15,000/100,000 available in 2008 before the buyout began in earnest, and most of the domains bought out were not re-registered in 2009. However, in the last few years, many Chinese domainers have been slowly but steadily snapping up these domains. There are now less than 1% of NNNNN.com domains left, and if current registration trends continue, it seems they will be bought out at some point in the next year or so as well.
Unlike Bitcoins and gold, they aren't making any more NNNNN.com or LLLL.com domains. So in a sense domains are a wiser investment. Also, they have more real uses (nearly 50% of NNNNN.com domains can be used as US zip code domains, and Chinese sites frequently use numeric domains, and many other uses are possible). As more and more people in other countries, not only China, go online and look for domains, demand will likely put increasing pressure on prices for short domains.
On the other hand, there are two problems with domains that don't exist for gold and Bitcoins. One is registration fees that must be paid every year. For NNNN.com's that sell for a $500+ minimum it is not really a problem to pay a $8/year registration fee, especially when your domain receives some revenue from traffic and the value of NNNN.com's has been rising much faster than the annual registration fee. But for a lower-quality NNNNN.com or LLLL.com, the registration fees make it more difficult to justify investing in these short domains. If you don't make enough from (1) large "end-user" sales to cover the annual registration fees, (2) traffic, or (3) rises in reseller prices, the registration fees can end up destroying your hopes for your domain investments.
The second is that while they aren't making any more NNNNN.com's, they are making more extensions, and if you can't find your NNNNN.com, you might be able to find the same number in .us, .pro, .net, .in, .uk, .biz, and on and on... Might not be as pretty as the .com, but paying $8 might be better than dealing with an exorbitant "end user" price quoted by a domain reseller. Also, there's always the "fivethirtyeight.com" example, where the NNN.com version was probably way too expensive, and yet the spelled out version still went on to become a very successful domain.
But in the end, .com is king, as evidenced by registration data and the continued use of prime .com domains even in foreign countries that have their own extensions. Plus, even if someone does go and use another extension, if you own 538.com, you are probably still making $$$ from all the type-in traffic you get from people who are trying to find the more famous site.
The continued support for prices of LLLL.com's and the continued registration of NNNNN.com's shows that the speculative frenzy of 2008 may have ended badly for a lot of domainers, but the underlying fundamentals for short domains are still there. Here's to a slow, steady rise in registration, use, and values for short domains. Speculative frenzies always end badly, as they probably will for the last bagholders to get in to the Bitcoin frenzy, but it looks like we might be finally on a path for reasonable, sustained growth in the prices of these very useful short domains.
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