4 ms·

Why I'm Putting All My Savings into Bitcoin (2011)

41 points by bemmu 9y ago

baxtr 9y ago
Well, what a clever man
- zerr 9y ago
  I wonder if he does the same nowadays...
- gscott 9y ago
  The problem is it was probably all stolen by now.
  - jameslevy 9y ago
    Why do you think it would be stolen? Is this because many wallets were generated with weak security in 2011? I've heard many anecdotes about weak Bitcoin wallet security in the earlier years but haven't really seen many definitive information about just how much Bitcoin was hacked from brainwallets, etc.
- therealasdf 9y ago
  I would call him lucky, not clever.
qbrass 9y ago
Here's the 2011 HN posting if you want to see what people thought then. https://news.ycombinator.com/item?id=2596475 https://news.ycombinator.com/item?id=2596475
- tbabb 9y ago
  > Asset bubbles run on the bigger fool principle, and they end when you run out of bigger fools to sell to. If folks have really started cleaning out their bank accounts and borrowing money to buy bitcoins [...] then it seems to me that the world is about to run out of bigger fools. The fatal mistake is underestimating how many fools the world is capable of providing.
  - eip 9y ago
    There is literally quadrillions in wealth measured in the various currencies of the world. So far crypto isn't even 0.1% of that. The true fool is the one who believes crypto has any more or less intrinsic value than fiat.
    - wz1000 9y ago
      Fiat has an intrinsic value, in that it can extinguish your tax liabilities. Come April 15th, it doesn't matter whether your income is in bitcoins or onions or beanie babies, you will have to acquire USD somehow to pay the IRS their share. https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism
      - jjeaff 9y ago
        Not just taxes, but any legal debt in the US. The law allows you to use USD to extinguish any debt, public or private. Your debtor does not have to accept Bitcoin unless they want to.
      - whiskers08xmt 9y ago
        Could it be argued that crypto has intrinsic value in it's ability to hide from these tax liabilities? I've seen Bitcoin, and other crypto-currencies, compared to the off-shore tax evasion market, as it seems to be able to fulfil much the same purpose. Of course, Bitcoin as a vehicle for tax evasion isn't a good brand, unless you're very libertarian.
        wz1000 9y ago
        Everyone needs to pay taxes if they don't want to have the police kick in their door and drag them off to prison. Most people don't have an unavoidable need to evade taxes. Using bitcoin to move around assets and evade taxes presuposes that it has a value. It cannot be an explanation for the value of bitcoin. As we've seen from all the altcoins and bitcoin forks, crypto-"currency" tokens are not exactly a scarce resource. You can create an infinite variants of them, or an infinite copies(forks) of the same blockchain. There is no fundamental reason(i.e. you can't tell just by looking at the properties of the token) why Coin A exchanges for more USD than Coin B. Some of these tokens can have some intrinsic value, when the coin is set up in such a way that you can "redeem" them for computation time, data storage, content etc. Then it functions in a way similar to an accounting or point system. But beyond this, the price of cryptocurrency tokens is propped up by nothing more than speculation.
- zeep 9y ago
  doesn't sound to much different then today...
smdz 9y ago
Back in 2011, there were much lesser threats to Bitcoin than what we have now. Most people did not take Bitcoin seriously until now. Most people did not want to buy it because they were scared/skeptical about it (a perfect time to invest). Recently many novices who don't understand cryptocurrencies have invested in it - And very likely that fueled the recent rally upto 10k and well beyond that. Its not a good time to invest or buy bitcoins now. Plus the transaction costs have become significant large to ignore. As of now (near 2018), comparing these bureaucratic threats to that of just a p2p networks is just not correct and may be naive. (It was different in 2011 when this was not well recognized). What if governments disallow converting Bitcoin to real currency? Why would a govt not use points like - Taxes, Money laundering and terrorism - to prevent bitcoin? Or may be they allow it with some kind of significant bitcoin-conversion-tax?
- sitepodmatt 9y ago
  It doesn't seem out of realm of possibility that KYC/AML/whatever will be enhanced for cryptocurrency to/from fiat exchanges, and I don't think cross border nature will exempt to (i.e. exchanging fiat to crypto on a foreign exchange) - look at non-EU companies charging VAT for EU customers for example. Take Monero for example, the potential privacy coin, some people think that it will be next Coinbase currrency (I think this is a pump though as they grasp onto any hints like it's solid) and that they will fully satisfy regulator requirement by Monero Coinbase users withdrawing to their own Monero wallet and providing Coinbase the viewing key so Coinbase can say to regulator it went from JohnB to JohnB. I have a hard time believing this will last long and I doubt Coinbase do to, regulations are a moving target and loopholes will get closed fast or at least eventually. Drop fiat at the edge though and then it's a different game, but what do people start from? mining? mechnical turk tasks? some global airdrop for every human on the planet - is this was even remotely possible that would be interesting.
- AlexCoventry 9y ago
  > What if governments disallow converting Bitcoin to real currency? The real threat is that the security guarantees for the distributed consensus on the blockchain history make economic assumptions which don't apply to sovereign actors. If the US decides to assemble enough ASICs to construct bitcoin double spends, it can just do it. If China decides to expropriate the mining hardware in its jurisdiction and use it to construct double spends, it can just do it. Investing in cryptocurrency is like trading the national currency of a very promising but poorly defended young nation. There's a lot of money to be made, but the bottom will fall out if they're invaded.
ProxCoques 9y ago
In 2015, I got him to reply to a mention about this on this tweet: https://twitter.com/KimDotcom/status/800388921255280642 https://twitter.com/KimDotcom/status/800388921255280642 Seemed to imply that he was happy with his decision, but wouldn't do the same thing now.
AlexCoventry 9y ago
FWIW, you could get a similar return today by buying the ETH presale in 2014.
drewm1980 9y ago
Did he cash out yet?
- qbrass 9y ago
  https://falkvinge.net/2017/06/11/right-money-bitcoin-hits-3000-1000x-entry-point-six-years-ago/ https://falkvinge.net/2017/06/11/right-money-bitcoin-hits-30... https://falkvinge.net/2017/11/17/new-google-management-decided-search-cost-20-take-eight-hours-deliberately-unreliable-bitcoin/ https://falkvinge.net/2017/11/17/new-google-management-decid... Guessing that he moved it to Bitcoin Cash.
waterside81 9y ago
Isn't this inaccurate in today's climate? > Use case: the key advantage for bitcoin is that it does away with all bureaucracy, all transaction fees, and perhaps foremost, all transaction delays and gatekeepers in the financial system. Maybe in 2011 that was the case?
justaaron 9y ago
Whenever i see articles with titles like this I'm reminded that a common practice in the financial world is to encourage the general investing public to buy something we wish to have hyped, to create the next level of buyers to buy us OUT of a product we wish to divest from, as we see a peak and trough in the near future...
chinathrow 9y ago
> Short version of what bitcoin is: it is a currency, but an entirely new kind of currency that can’t be seized or frozen by governments, one which is integrated with its transaction system where transaction fees are optional, and where you can transfer any amount anywhere instantly without any authority knowing or interfering. Ha, of course a government can seize any assets these days. We've seen this a couple of times already.

41 points by bemmu 9y ago

baxtr 9y ago

Well, what a clever man

zerr 9y ago
I wonder if he does the same nowadays...
gscott 9y ago
The problem is it was probably all stolen by now.
- jameslevy 9y ago
  Why do you think it would be stolen? Is this because many wallets were generated with weak security in 2011? I've heard many anecdotes about weak Bitcoin wallet security in the earlier years but haven't really seen many definitive information about just how much Bitcoin was hacked from brainwallets, etc.
therealasdf 9y ago
I would call him lucky, not clever.

qbrass 9y ago

Here's the 2011 HN posting if you want to see what people thought then. https://news.ycombinator.com/item?id=2596475 https://news.ycombinator.com/item?id=2596475

tbabb 9y ago
> Asset bubbles run on the bigger fool principle, and they end when you run out of bigger fools to sell to. If folks have really started cleaning out their bank accounts and borrowing money to buy bitcoins [...] then it seems to me that the world is about to run out of bigger fools. The fatal mistake is underestimating how many fools the world is capable of providing.
- eip 9y ago
  There is literally quadrillions in wealth measured in the various currencies of the world. So far crypto isn't even 0.1% of that. The true fool is the one who believes crypto has any more or less intrinsic value than fiat.
  - wz1000 9y ago
    Fiat has an intrinsic value, in that it can extinguish your tax liabilities. Come April 15th, it doesn't matter whether your income is in bitcoins or onions or beanie babies, you will have to acquire USD somehow to pay the IRS their share. https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism
    - jjeaff 9y ago
      Not just taxes, but any legal debt in the US. The law allows you to use USD to extinguish any debt, public or private. Your debtor does not have to accept Bitcoin unless they want to.
    - whiskers08xmt 9y ago
      Could it be argued that crypto has intrinsic value in it's ability to hide from these tax liabilities? I've seen Bitcoin, and other crypto-currencies, compared to the off-shore tax evasion market, as it seems to be able to fulfil much the same purpose. Of course, Bitcoin as a vehicle for tax evasion isn't a good brand, unless you're very libertarian.
      - wz1000 9y ago
        Everyone needs to pay taxes if they don't want to have the police kick in their door and drag them off to prison. Most people don't have an unavoidable need to evade taxes. Using bitcoin to move around assets and evade taxes presuposes that it has a value. It cannot be an explanation for the value of bitcoin. As we've seen from all the altcoins and bitcoin forks, crypto-"currency" tokens are not exactly a scarce resource. You can create an infinite variants of them, or an infinite copies(forks) of the same blockchain. There is no fundamental reason(i.e. you can't tell just by looking at the properties of the token) why Coin A exchanges for more USD than Coin B. Some of these tokens can have some intrinsic value, when the coin is set up in such a way that you can "redeem" them for computation time, data storage, content etc. Then it functions in a way similar to an accounting or point system. But beyond this, the price of cryptocurrency tokens is propped up by nothing more than speculation.
zeep 9y ago
doesn't sound to much different then today...

smdz 9y ago

Back in 2011, there were much lesser threats to Bitcoin than what we have now. Most people did not take Bitcoin seriously until now. Most people did not want to buy it because they were scared/skeptical about it (a perfect time to invest). Recently many novices who don't understand cryptocurrencies have invested in it - And very likely that fueled the recent rally upto 10k and well beyond that. Its not a good time to invest or buy bitcoins now. Plus the transaction costs have become significant large to ignore. As of now (near 2018), comparing these bureaucratic threats to that of just a p2p networks is just not correct and may be naive. (It was different in 2011 when this was not well recognized). What if governments disallow converting Bitcoin to real currency? Why would a govt not use points like - Taxes, Money laundering and terrorism - to prevent bitcoin? Or may be they allow it with some kind of significant bitcoin-conversion-tax?

sitepodmatt 9y ago
It doesn't seem out of realm of possibility that KYC/AML/whatever will be enhanced for cryptocurrency to/from fiat exchanges, and I don't think cross border nature will exempt to (i.e. exchanging fiat to crypto on a foreign exchange) - look at non-EU companies charging VAT for EU customers for example. Take Monero for example, the potential privacy coin, some people think that it will be next Coinbase currrency (I think this is a pump though as they grasp onto any hints like it's solid) and that they will fully satisfy regulator requirement by Monero Coinbase users withdrawing to their own Monero wallet and providing Coinbase the viewing key so Coinbase can say to regulator it went from JohnB to JohnB. I have a hard time believing this will last long and I doubt Coinbase do to, regulations are a moving target and loopholes will get closed fast or at least eventually. Drop fiat at the edge though and then it's a different game, but what do people start from? mining? mechnical turk tasks? some global airdrop for every human on the planet - is this was even remotely possible that would be interesting.
AlexCoventry 9y ago
> What if governments disallow converting Bitcoin to real currency? The real threat is that the security guarantees for the distributed consensus on the blockchain history make economic assumptions which don't apply to sovereign actors. If the US decides to assemble enough ASICs to construct bitcoin double spends, it can just do it. If China decides to expropriate the mining hardware in its jurisdiction and use it to construct double spends, it can just do it. Investing in cryptocurrency is like trading the national currency of a very promising but poorly defended young nation. There's a lot of money to be made, but the bottom will fall out if they're invaded.

ProxCoques 9y ago

In 2015, I got him to reply to a mention about this on this tweet: https://twitter.com/KimDotcom/status/800388921255280642 https://twitter.com/KimDotcom/status/800388921255280642 Seemed to imply that he was happy with his decision, but wouldn't do the same thing now.

AlexCoventry 9y ago

FWIW, you could get a similar return today by buying the ETH presale in 2014.

drewm1980 9y ago

Did he cash out yet?

qbrass 9y ago
https://falkvinge.net/2017/06/11/right-money-bitcoin-hits-3000-1000x-entry-point-six-years-ago/ https://falkvinge.net/2017/06/11/right-money-bitcoin-hits-30... https://falkvinge.net/2017/11/17/new-google-management-decided-search-cost-20-take-eight-hours-deliberately-unreliable-bitcoin/ https://falkvinge.net/2017/11/17/new-google-management-decid... Guessing that he moved it to Bitcoin Cash.

waterside81 9y ago

Isn't this inaccurate in today's climate? > Use case: the key advantage for bitcoin is that it does away with all bureaucracy, all transaction fees, and perhaps foremost, all transaction delays and gatekeepers in the financial system. Maybe in 2011 that was the case?

justaaron 9y ago

Whenever i see articles with titles like this I'm reminded that a common practice in the financial world is to encourage the general investing public to buy something we wish to have hyped, to create the next level of buyers to buy us OUT of a product we wish to divest from, as we see a peak and trough in the near future...

chinathrow 9y ago

> Short version of what bitcoin is: it is a currency, but an entirely new kind of currency that can’t be seized or frozen by governments, one which is integrated with its transaction system where transaction fees are optional, and where you can transfer any amount anywhere instantly without any authority knowing or interfering. Ha, of course a government can seize any assets these days. We've seen this a couple of times already.