A somewhat one-sided discussion about Bitcoins…
What the heck is a Bitcoin?
It’s a non-existent currency, a virtual number that is created out of thin air by computers performing meaningless computations (kinda wish the developers had at least programmed-in something actually useful for the “mining” processes). People assign value to it, kinda like a credit default swap, so it has a value, sometimes a stupid-high one. Its purpose originally was to be used as a virtual currency not controlled by any government to buy and sell items and services. What it has become is a wildly-speculative commodity — think pork bellies on steroids.
Why should I care?
You probably shouldn’t, unless you’re attracted by the romance of a monetary system not controlled by governments, or want to gamble on something other than horses.
What happened that made Bitcoin hit the news?
Something that was worth $12 at the beginning of the year topped off over $260 before “crashing” to the $70-100 range. BusinessWeek had a pretty good article about some Bitcoin millionaires that has a pretty good overview of the Bitcoin. This was, FYI, written before the drop.
Is it really a crash?
Of course not. Bitcoins are worth about eight times what they were worth in January. That’s not a “crash” by anyone’s estimation. On the other hand, like the housing market in the United States, it did take a serious tumble from its high point, even if the high point was wildly inflated by bogus trading. But then, the housing market didn’t start off at pre-1950 rates before the bubble, either.
Ok, smart guy, what did you do?
I never bought Bitcoins. There were a bunch of places around the Net who gave away small micro-amounts of Bitcoins, and I’d spend a few minutes every day at the beginning of the year playing these sites for tiny amounts of coin. I also played around with “working” for Bitcoin…this is back when Bitcoins were worth about $12 each, so my “work” was probably worth about 3-cents an hour average (some people reading this might suggest that’s about what I’m worth every day…). But it was kinda interesting, and my goal was to get one Bitcoin. I have to admit, I got kinda bored with it all, and ended up with less than a half-Bitcoin.
When it went stupid the other day, I decided to sell what little I had. Because of the way Bitcoin works, I had to transfer my tiny amount from the local wallet to my Mt. Gox account before I could sell on the exchange. While I was waiting for the transfer to be confirmed (it takes hours on a day when there isn’t wild fluctuations in the value), the price bottomed-out. This is not a new thing to me…my investment skills usually can be summed-up by, “Buy High, Sell Low.” ;)
But I took a flyer and set a $150 sell price on what I had, and let it sit. Turned out there was a, “dead-cat bounce,” which brought the price over that amount, my partial-Bitcoin sold, and I ended up with ~$60 in my account. (Side note: this trade took place on the 10th of April. On the 13th, I received an email from Mt. Gox telling me the trade took place. Hum…guess they were a little busy…)
So, one could say I made a “massive” profit, considering the $60 basically dropped from the sky, appearing from thin air. Hardly high finance, but an interesting experience nevertheless. Once Bitcoins stabalize, I may spend my $60 buying another partial. Or maybe not.
Ok, ok, so how do I play?
First, get yourself a wallet. There are on-line systems that will provide one for you, or you can simply download and install the client software. See the Bitcoin.org website for more information, and I suggest you read it carefully if you are going to do more than own freebie partials. Once you have a wallet, create incoming addresses; you may have hundreds and hundreds of incoming addresses, so you can have a different incoming address for each incoming transaction. Just be careful about maintaining security on your wallet…people have been “ripped-off” by viruses solely designed to attack Bitcoin wallets. Again, if you’re going to play with the free microcoins, it’s not a huge deal, but should you decide to buy any of these things, you really want to take security seriously.
Now that you have a wallet to keep them in, and an address or twelve to receive them from, time to grab some “free” partial Bitcoins. Try these places – just don’t spend all day trying to strike it rich…pretty sure it ain’t gonna happen. On the other hand, it is kinda thrilling when your wallet announces you have “free” BitCoins, even if they are tiny fractions:
CoinTube TV – Watch videos, get free partial Bitcoins
BitVisitor – View websites for a specific time, earn free partial Bitcoins
Net Lookup – A Bitcoin “fountain” (meaning they give away a really tiny fraction of a Bitcoin for doing practically nothing)
EarnFreeBitCoins – Another place to view websites for coin fractions.
btc.pt – Supposed to have movies to watch for Bitcoin partials, but was out of videos when I entered. Still, you can grab some Satoshis (0.00000001 BTC) for solving CAPTCHAs.
And if you do hit it big and become flush with Bitcoins, feel free to donate a few, either with the link or the QR code over on the right.