Man buys $27 of bitcoin, finds they're now worth $886k(theguardian.com)
theguardian.com
Man buys $27 of bitcoin, finds they're now worth $886k
http://www.theguardian.com/technology/2013/oct/29/bitcoin-forgotten-currency-norway-oslo-home
50 comments
> without putting really any effort or taking any risks
He sunk $27 into an investment that (from his knowledge at the time) had a high chance of ending up completely worthless, and a low chance of exploding in value (if bitcoin took off).
That isn't "without taking any risk". On the contrary, it was a very high-risk investment. In this case, it paid off. (It was a low value investment, but that doesn't change the relative risk: making lots of (un- or anti-correlated) low-value, high-risk investments, instead of one big one, is a way to reduce your total risk).
He sunk $27 into an investment that (from his knowledge at the time) had a high chance of ending up completely worthless, and a low chance of exploding in value (if bitcoin took off).
That isn't "without taking any risk". On the contrary, it was a very high-risk investment. In this case, it paid off. (It was a low value investment, but that doesn't change the relative risk: making lots of (un- or anti-correlated) low-value, high-risk investments, instead of one big one, is a way to reduce your total risk).
The guy is living in a Norwegian country. So $27 is probably the price of a meal in an expensive restaurant. I'm assuming he didn't make any investment but was rather curious how this thing work and wanted to hold some of this digital currency.
If he was making an investment, he'd have probably followed and tracked it. That was not the case. He just found out about it.
Otherwise, my comment wasn't about that particular detail.
If he was making an investment, he'd have probably followed and tracked it. That was not the case. He just found out about it.
Otherwise, my comment wasn't about that particular detail.
> So $27 is probably the price of a meal in an expensive restaurant.
That wouldn't qualify as an expensive restaurant in any Western country, let alone Norway (one of the most expensive countries in the world). $27 in Norway would get you about three Big Macs. A nice restaurant would be well north of $100 ($250+ if we agree on what nice is).
That wouldn't qualify as an expensive restaurant in any Western country, let alone Norway (one of the most expensive countries in the world). $27 in Norway would get you about three Big Macs. A nice restaurant would be well north of $100 ($250+ if we agree on what nice is).
Yes, it's technically a high-risk investment, but realistically it's essentially zero risk as the loss of $27 in his case probably would have had no consequences.
>> To make lots of money ($886k) you have to really push hard: Have a high-end job (at Google or a Big.Co.), have a university degree (better with a phD) and spend 20 years or more of your life to make that amount.
To be fair, you'd make this much in ~6 years as an engineer at Google. The problem with accumulation is that most people also will spend nearly as much over that time period and not have $800k in the bank.
To be fair, you'd make this much in ~6 years as an engineer at Google. The problem with accumulation is that most people also will spend nearly as much over that time period and not have $800k in the bank.
Edited, I actually meant to "save" this money. I think any average person will have considerable expenses especially when he has a family.
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This article really just tells the story that when there is a fixed supply of something, and demand increases, price increases of that thing. In some cases people have that thing stored in their attic and forget about it, in which case they get a pleasant surprise that they now can trade it for a greater value than they first purchased it for (assuming there is liquidity in the market).
Granted - the speed of the price increase of Bitcoin is very impressive - other examples from history:
- Man buys $27 of Gold Coins, finds they're now worth $886K
- Man buys $27 of Tulips, finds they're now worth $886K
- Man buys $27 of Railroad shares, finds they're now worth $887K
- Man buys $27 of (insert .com boom company) Shares, finds they're now worth $886K
- Man buy $27 of Beanie Babies, finds they're now worth $886K
Granted - the speed of the price increase of Bitcoin is very impressive - other examples from history:
- Man buys $27 of Gold Coins, finds they're now worth $886K
- Man buys $27 of Tulips, finds they're now worth $886K
- Man buys $27 of Railroad shares, finds they're now worth $887K
- Man buys $27 of (insert .com boom company) Shares, finds they're now worth $886K
- Man buy $27 of Beanie Babies, finds they're now worth $886K
Yup. But the reason this is such a big problem for Bitcoin is that Bitcoin has greater aspirations than just being the next tulip or Beanie Baby. It wants to be a real currency.
And as long as its price is fluctuating like this, you've got to be kind of crazy to be using it as anything but a novel currency.
Buyers have every reason to be hesitant to buy things using Bitcoins because of the possibility that the pizza's worth of BTC they could spend today might be worth enough to buy a house in another couple years. If you had a lottery ticket that you had good reason to believe might be a winner, would you trade it for a pizza? I sure wouldn't.
On the other side of things, sellers have rational reasons to not accept BTC out of fear that the company's bank account might rapidly diminish in value.
The (non-speculative) Bitcoin community is this fascinating caricature of currency situation in old Soviet bloc countries. Practically speaking, dollars are more valuable because of their greater stability. But people go on using the other currency anyway because of politics.
And as long as its price is fluctuating like this, you've got to be kind of crazy to be using it as anything but a novel currency.
Buyers have every reason to be hesitant to buy things using Bitcoins because of the possibility that the pizza's worth of BTC they could spend today might be worth enough to buy a house in another couple years. If you had a lottery ticket that you had good reason to believe might be a winner, would you trade it for a pizza? I sure wouldn't.
On the other side of things, sellers have rational reasons to not accept BTC out of fear that the company's bank account might rapidly diminish in value.
The (non-speculative) Bitcoin community is this fascinating caricature of currency situation in old Soviet bloc countries. Practically speaking, dollars are more valuable because of their greater stability. But people go on using the other currency anyway because of politics.
Smart money's on Railroad shares. Buy, Buy, BUY!
Except there are many more people who earned a lot on Bitcoin purposefully, not by accident.
I think what you're suggesting is there are more people speculating on bitcoin's value than the value of some of these other examples - that is probably accurate, as in many ways the barriers to entry to start speculating on the value of bitcoin are low.
Someone bought two pizzas for 10,000 bitcoin in 2009. So... that's looking like a wise investment.
http://www.wired.com/magazine/2011/11/mf_bitcoin/
(From the 20/20 hindsight department.)
http://www.wired.com/magazine/2011/11/mf_bitcoin/
(From the 20/20 hindsight department.)
> So... that's looking like a wise investment.
Article claims it was "the first real-world bitcoin transaction". Without those first few transactions from enthusiasts, bitcoin may well not have taking off. And those 10,000 wouldn't have been Laszlo's only bitcoins. So from that POV, maybe it was a pretty wise investment :)
Article claims it was "the first real-world bitcoin transaction". Without those first few transactions from enthusiasts, bitcoin may well not have taking off. And those 10,000 wouldn't have been Laszlo's only bitcoins. So from that POV, maybe it was a pretty wise investment :)
That is a good point, bitcoins would be worthless if no one had been willing to spend them. It makes me wonder if buying those pizzas was a hard decision, or if it was just an impulse buy.
ounce.me used to track the pizza value but I don't see it anymore
I guess just move the decimal point 4 places since it was 10k coins and that means the pizza is now worth over $2 Million
I guess just move the decimal point 4 places since it was 10k coins and that means the pizza is now worth over $2 Million
Bitcoins are reaching lottery-level payoffs. In 5 years, will be see a lot more of these stories?
In 5 years it'll become world currency and in 10 years all other currencies will hyperinflate relative to it and will be abandoned. Gold will go down too as more people will learn that Bitcoin is more flexible way of "storing wealth".
Knowing the bitcoin fanboys, I can't really tell if you're being sarcastic or not.
Send me a message on [email protected] (twitter: @oleganza) in 5 years and ask for 1 BTC if Bitcoin is not yet recognized as international financial instrument. I will gladly give it to you if BTC price is below $10000 or it's still not possible to pay in Bitcoin in any major city for about anything.
Thanks for the offer! http://i.imgur.com/UnOIGpT.png
I hope Google doesn't kill Calendar before 2018.
I hope Google doesn't kill Calendar before 2018.
Thing is though, that the primary purpose of money is not to store wealth, but to exchange it for stuff.
Bitcoin does not beat regular coins when it comes to that yet.
Bitcoin does not beat regular coins when it comes to that yet.
Money can only be used to exchange stuff when it has value. And it has value only when people are willing to hold it. If no one wants to invest in money long-term, then it has no value and thus cannot be used in "exchange".
After all, money does not "move", it is always stored in someone's pockets and switches owners instantly. It's just everyone has different time preferences and stores different amounts of cash for different amount of time.
After all, money does not "move", it is always stored in someone's pockets and switches owners instantly. It's just everyone has different time preferences and stores different amounts of cash for different amount of time.
Sure, hypothetically, but there is a lot that can go wrong.
Scalability is an issue. In the future we will probably have to rely on thin clients making bitcoin less attractive.
Governments won't peacefully accept bitcoin. Why would we let people make under the table payments, enabling tax evasion and laundering? They've ignored it so far but as it becomes more popular we could see action taken against it. You may object that bitcoin is decentralized and on the internet and therefore invincible. But if exchanges were shut down that would be devastating.
A better cryptocurrency could take its place.
Scalability is an issue. In the future we will probably have to rely on thin clients making bitcoin less attractive.
Governments won't peacefully accept bitcoin. Why would we let people make under the table payments, enabling tax evasion and laundering? They've ignored it so far but as it becomes more popular we could see action taken against it. You may object that bitcoin is decentralized and on the internet and therefore invincible. But if exchanges were shut down that would be devastating.
A better cryptocurrency could take its place.
1. Scalability is a solvable technical problem. Also, there are many ways to implement fast micro payments outside the blockchain and make all IOUs resolvable within a day thus preventing all sorts of fraud (e.g. fractional reserve banking).
2. Governments will die off without ability to have "budget deficits" via money printing. No one would vote for politicians because they wouldn't be able to build stuff "for free" by borrowing money from your unborn children.
3. Owners of Bitcoin have all incentives to adjust the protocol to fix all bugs and implement all useful features to not lose their wealth. Not a problem for Bitcoin and not a problem for anyone else either. Even if Bitcoin is replaced by Bitcoin2, it won't change things for the fate of the governments.
2. Governments will die off without ability to have "budget deficits" via money printing. No one would vote for politicians because they wouldn't be able to build stuff "for free" by borrowing money from your unborn children.
3. Owners of Bitcoin have all incentives to adjust the protocol to fix all bugs and implement all useful features to not lose their wealth. Not a problem for Bitcoin and not a problem for anyone else either. Even if Bitcoin is replaced by Bitcoin2, it won't change things for the fate of the governments.
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There are 2 paths a populist government can follow, left and right. Both governments persecute outsiders to the benefit of insiders. Both realise that taxation isn't a viable strategy.
In the leftist case, the outsiders are the rich and the insiders are "99%", they use deficit spending to remain in power. In the rightist case, the outsiders are wealthy foreigners and the insiders are their own citizens, they use expansion and conquest to remain in power.
Fiat currency enables leftist policies, hard money encourages rightist.
In the leftist case, the outsiders are the rich and the insiders are "99%", they use deficit spending to remain in power. In the rightist case, the outsiders are wealthy foreigners and the insiders are their own citizens, they use expansion and conquest to remain in power.
Fiat currency enables leftist policies, hard money encourages rightist.
> Bitcoins are reaching lottery-level payoffs. In 5 years, will be see a lot more of these stories?
I suspect not. Whatever the long term shape of the price curve is, I think that in the moderate term its probably something like a logistic curve, and this year saw most of the steep portion of the logistic curve and is already bending into the high-end slow-growth portion of the curve.
I suspect not. Whatever the long term shape of the price curve is, I think that in the moderate term its probably something like a logistic curve, and this year saw most of the steep portion of the logistic curve and is already bending into the high-end slow-growth portion of the curve.
lol enjoyed the comments section
shirotsku 29 October 2013 2:31pm
"Go back in time to the 80s. Buy shares in Apple. Sell shares in 2009. Buy BitCoins. Sell BitCoins in 2013. Profit."
JenniDark "Directions unclear. Bought Blackberry shares. Now what?"
shirotsku 29 October 2013 2:31pm
"Go back in time to the 80s. Buy shares in Apple. Sell shares in 2009. Buy BitCoins. Sell BitCoins in 2013. Profit."
JenniDark "Directions unclear. Bought Blackberry shares. Now what?"
Only this year Bitcoin price went up from $14 to $200 and counting. The all-time high $266 (this April) can be reached once again before Christmas.
Worth $886K to whom? It's worth nothing if you can't find a buyer (a la what happened temporarily in the housing markets).
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I spent the last year of my bachelors mining, earned something like £6 worth of Bitcoins and decided I would never spend them and donated to archive.org.
Shortly after the price skyrocketed... safe to say the biggest donation I've made to date. Oh well, can only hope it is helping them out!
Shortly after the price skyrocketed... safe to say the biggest donation I've made to date. Oh well, can only hope it is helping them out!
This article briefly mentions the Silk Road "bust"; wasn't there much speculation that they could not actually seize his money because of the crypto nature? Does that mean they got his key?
They do appear to have gotten his key.
https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4...
144k Bitcoins, transferred in 324 ("FBI" on a phone) BTC increments. Presumably, they got it via either a plea deal or by finding it on one of his devices.
https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4...
144k Bitcoins, transferred in 324 ("FBI" on a phone) BTC increments. Presumably, they got it via either a plea deal or by finding it on one of his devices.
The bigger story about SR is that Bitcoin price did not collapse 10x after the shutdown. Which shows that Bitcoin is used as gold, speculative store of wealth. And so it reasserts itself as a viable wealth transport.
Why on earth would BTC collapse 10x after the SR shutdown? If anything, it'd drive the value up as a significant portion of the money supply just evaporated.
That's also a way to look at it. But also consider that if there was significant demand in BTC just to spend on Silk Road, it would go away after SR is gone.
> to buy an apartment in Toyen, one of the Norwegian capital’s wealthier areas.
Most definitely not. It's more like an immigrant ghetto, together with Grønland.
Most definitely not. It's more like an immigrant ghetto, together with Grønland.
Sounds like my story... just that I've sold mine for $1k :)
Biggest news around the world. How people found such type of news with 100% accuracy like 26.xyzasd $ Bit coins.
But somehow this guy made the same amount without putting really any effort or taking any risks. It's like inheritance when you are suddenly rich and collected all these years efforts.
What I'm trying to convey is that living without any assets is pretty darn hard in today life. As many (the majority) of people are inheriting wealth from their grand-parents and countries, they find life much easier.
I guess this also made life more expensive. Since they have the assets, this group can raise the prices (virtually) infinitely. They can exchange assets between each other, but people who are new to the game will be screwed.
I think the same thing is happening to Bitcoins. It's becoming too expensive that we'll see the 0.01% and the remaining of the 100%. It'll be probably as worse or much worse than real life.