June 2nd, 2011

stockton-on-tees

Bitcoins: bubble rather than boom... surely?

Very interesting article on Gawker the other day about shopping for hard drugs online, using a digital currency called Bitcoins. These bitcoins can be exchanged for other real-world currencies at a number of different exchanges, albeit almost all of them with very little liquidity. Over April and the first half of May, the US$-to-Bitcoin exchange rate increased tenfold; since the story to which I linked came out, the exchange rate has gone up by well over 10% in a day. The first live number I can remember seeing when I started to look into this yesterday was about US$8.9 per BTC, and the current live number is about US$10.4 per BTC.

Blog posts are not financial advice, of course. This seems to have a lot in common with well-known, long-established scams, but certainly has enough new twists on it to make it interesting. Besides, scams rely on having interesting premises in the first place, and this one has a lovely one. If anyone out there has mad money that they want to throw away - because the risk of ruin on any investment you make must be immense - then this looks like it would be likely to give you a more interesting run for your money than a lottery ticket, or a Ponzi scheme. Despite any vaguely encouraging tone in this post, I would regard this as about as speculative an investment as a penny stock tipped by someone you don't know.

The brilliance of the Bitcoin thing is the sheer number of buzzwords that it manages to trigger in its discussion. Collapse )

My intention is to regard BitCoins as an interesting curiosity, rather than a sensible investment opportunity for me. If it turns out that I am being the Internet equivalent of the Decca record label turning down the Beatles, or - to bring the analogy up to date - one of the twelve publishing houses that supposedly turned the first Harry Potter down, well, it's still fun to blog about, and I spotted it first when the exchange rate was just under US$9 per BitCoin. (See BitCoin watch or BitCoin charts to follow the exchanges.) Perhaps there's nothing new under the sun after all, and you can't cheat an honest human.

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    impressed fascinated, amused, sceptical