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Why I’m Putting All My Savings Into Bitcoin

452

Swarm Economy

Swarm Economy

These past days, I have done a lot of thinking about bitcoin that ended up with me investing all of the money I had saved and all that I can borrow into the currency. Here’s why.

In two posts now, I have considered the effects of bitcoin on society. A lot of more thinking has been done than has been described in writing, and it has resulted in me putting all my savings into this currency.

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.

I will demonstrate how it is used a bit further down in this article.

Here are the three key reasons I bet on bitcoin:

Past performance: the currency has increased in value one-thousandfold against the US dollar in fourteen months. Yes. Read that again: one-thousandfold, fourteen months. There is currently no indication it would stop or has saturated; quite the opposite.

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.

Key uptake drivers: doing the math, I predict that it has at least another thousandfold increase to go in the coming few years, and that’s counting conservatively.

DISCLAIMER: NOT FINANCIAL ADVICE
If calling this article “financial advice” could make Falkvinge legally liable in your jurisdiction, then this is not financial advice. If it could be construed as something else that would make Falkvinge liable, then it is not that, either. Rather, it is a description of a thought process.

Let’s look at these three considered factors one at a time.

1. Past Performance of Bitcoin

Normal currencies vary by a few percent over the course of a year. Not bitcoin. On March 30 of last year, somebody asked for $50 for 10,000 BTC (bitcoin) in the trading and wasn’t taken up on the offer. He got an offer of $25. Still, somebody claimed in the thread that the going rate was about USD 6,50 per thousand bitcoin. That’s per thousand. So while there are conflicting numbers between $2,50 and $6,50 as the rate for 1,000 BTC, let’s be conservative and go with the higher $6,50 per thousand BTC and compare it to today. As of midnight UTC on May 29, 2011, the rate is USD 8,30 per bitcoin.

In the past month, the value has tenfolded.

In the past three months, the value has hundredfolded.

In the past fourteen months, the value has more than thousandfolded.

This can be hard to grasp. If you had changed 2,500 euros into bitcoin last spring, they would be worth more than two point five million euros today.

I challenge you to find one other commodity with this pace of appreciation. And there’s no indication it’s slowing down or saturating. Quite to the contrary: interest is picking up. It was only yesterday that the first article in mainstream media in Sweden was posted. (It sounded a bit like when the Internet was first presented: “thousands of people and shops are turning to a new digital currency…”)

Now, past performance is no guarantee of future performance. But I’ll be returning to that.

2. How Bitcoin Is Used

Bitcoin looks pretty much like any other computer program. It can be installed from bitcoin.org and is available for Windows, Mac, and Linux. If you didn’t know the underlying differences, you might think you were looking at your bank account. But you’re not connected to any bank — you’re connected to the bitcoin network, and what you are looking at is the money you have in a file on your computer, and only on your computer.

As long as you have this file, nobody can seize your money. Or look at your account balance, for that matter. You can make copies of the file. It is very wise to make copies, encrypt the copies, and store encrypted copies in many places. The money is in the file, in the form of cryptographic signatures recognized by the bitcoin network. (Copying the file doesn’t give you twice the money, but losing the cryptographic signatures will make you lose the money.)

So let’s say I want to transfer money to a friend in New Zealand. I hit Send Coins above, and enter my friend’s bitcoin address. In this case, I am picking it from the address book. I am choosing to send half a coin, roughly the price of a cup of coffee today.

As I hit Send, which I did right after taking this screenshot, my friend in New Zealand got this coffee money instantly, and it was deducted from my balance.

Sounds easy and straightforward, doesn’t it? It sounds just too easy. So just to illustrate, let’s take a look at all the normal things that didn’t happen:

  • Nobody logged on to a bank of any kind.
  • No bank page for complicated foreign transactions was loaded into any browser.
  • No expensive foreign transfer fees were applied. In fact, no transfer fees were applied at all.
  • No banks were holding on to the money for a couple of days. My friend had the money instantly.
  • No bank holidays were relevant. I did this on a Sunday.
  • No governmental economic blacklist was consulted. He could be a criminal under New Zealand law for all I care, but what matters to me is that he is my friend.
  • Nobody got the chance to seize the money before my friend in New Zealand got it. Or afterwards.
  • An alternative to a bank transfer would have been to use Visa or MasterCard. They did not get a cut, either.
  • No tax authority saw the transaction or the money.

In fact, nobody knows that he got it except me and him. And he doesn’t know who sent it to him; he only sees the address he received it at. He’s probably a bit confused or surprised right now.

It’s not hard to see how this will replace the current financial systems, is it?

Of course, my friend doesn’t have to be in New Zealand. Just like when mobile phones arrived, I don’t have to know where he is, or care, for that matter. He could be on the other side of the planet, right here in Sweden, in Southeast Asia, or on the Space Station in low Earth orbit. It doesn’t matter. All I need is a bitcoin address and a net connection, as does he.

So why don’t you try installing the software? Then go to this page to get two bitcents for free, just to try it out.

3. The Key Uptake Drivers

So why am I so certain that the value will continue to grow? So certain that I bet all of my own money on it?

The supply of bitcoin is limited, and on a timescale of years, it is fairly constant. Nobody will issue more bitcoin to meet demand. This means that as more people exchange national currencies for bitcoin, the value of one bitcoin rises.

Usually, financial analysis is driven by financial analysts. This is something as unusual as a financial analysis from a civil liberties perspective.

To safeguard fundamental civil liberties for the entire population, the best bet is to guarantee the liberties for those who barely deserve it. The bottom of the barrel. But human rights do apply to all humans. If you manage to guarantee rights to the people who are despised, you have also guaranteed it for everybody else.

And in this case, it is just like that — it is the bottom of the barrel who are going to secure civil liberties for the rest of us with regards to our own money.

There is currently about USD 50 million in the bitcoin system, and just over six million coins in circulation, valued at $8 each. Up until now, demand has largely been driven by enthusiasts.

The value of a bitcoin can’t be held constant — if 12 more million dollars is exchanged into bitcoin, the value of a coin will rise to $10. The more people who want to use the system, the more people will need to exchange a portion of national currency for bitcoin, and the more money will go into the system. The more money there is in the system, the more a single bitcoin will be worth.

(UPDATE: As has been pointed out, the above paragraph is a simplification of the mechanics of a market.)

Some people have ridiculed the bitcoin currency because you can’t use it to buy a hot dog on the corner. The legacy banking system is much more suited to everyday tasks due to inertia and the networking effect. In this observation, they are entirely correct, and yet they are but a millimeter in that observation from drawing the conclusion why the uptake and value of bitcoin will skyrocket once people understand just how revolutionary it is:

The secondary uptake wave after enthusiasts is not going to come from those who use legacy banking daily and are comfortable with it. It is going to be people who don’t want or are not allowed to use the legacy banking system for their everyday transactions.

The total money supply in the world is about 75 trillion US dollars. It varies a bit daily with currency fluctuations, but it’s on that order. Estimates say that between 5% and 30% of this supply is in the black market with illicit work and services. Let’s be conservative and pick 5%; let’s assume cautiously that four trillion US dollars worldwide is in the black market.

Most of this is arguably with local small-scale services — a craftsman who repairs your lawnmower and doesn’t give a receipt, an unlicensed taxi driver — but using the law of uneven distribution, we can assume that about 10% of this underground economy is of the large-volume high-tech variant. You know, the kind of economy that is capable of building undetectable submarines to smuggle narcotics, submarines so advanced that the US Navy isn’t able to detect them.

Let’s assume, again conservatively, that these high-tech operations shift 15% of their monetary transactions into this undetectable and untrackable financial system over the coming years, to try it out. That brings us to 15% out of 10% out of four trillion USD, coming to 60 billion USD that will enter the bitcoin system in cautious estimates.

The use case is undeniably compelling. But 60 billion USD that enters the bitcoin system in the coming years means that the value of a bitcoin will increase another thousandfold: the value of the system in total as of today is about 50 million USD.

At that rate, the money for a cup of coffee I sent above has become enough to buy a nice car instead.

Of course, this number assumes that nobody in Wall Street is greedy enough to want in on the value skyrocketing of bitcoin. In the real world, I am expecting investors to pump in more money into the system just to get their own share of that value increase. The sharks on Wall Street positively jump at the opportunity of seeing a 25% increase in their portfolio; we’re talking about a 100,000% increase here. Therefore, money from Wall Street and other investors will also boost the bitcoin rate at a proportion I’m not prepared to guess.

These two combined are likely to drive the uptake of bitcoin into normal daily commerce in a tertiary wave. Webshops first, then the physical world.

That’s why I’m putting all my savings into bitcoin now. In a best-case scenario, those savings can get three more zeroes after them in three to four years, based on these numbers.

4. Threats

I can bet a good deal of money that banks and credit card companies will lobby to have bitcoin outlawed, using whatever reasons they can dream up, as this technology makes them obsolete. But bitcoin is a peer-to-peer network. We have seen in the past twelve years how easy it is to shut down such networks, and governments stand to make as much a fool of themselves as the record industry did, if they go down that route.

I don’t think the prospect of looking like fools is going to scare many politicians, though. They’re kind of used to doing that. In any case, they’ll succeed about as well as the record industry did, i.e. not at all.

A more serious threat would be if somebody discovered a cryptographic weakness in the bitcoin network that allowed them to forge money. While the network appears resilient to this — the entire network is aware of the entire money supply, so you can’t pretend you have fake money and successfully pass it off — only time will tell if it really is. Until then, it is undeniably a bit of a risk. But it is one I am very prepared to take, given the potential payoff.

(UPDATE: As has been pointed out, an alternate threat is a competing cryptocurrency. But that’s not really a threat to cryptocurrencies as such; it may also strengthen the networking effect as long as there is interoperability.)

5. How To Buy Bitcoin

It’s a bit tricky to buy bitcoin. MasterCard and Visa are not very cooperative and refuse to service merchants who trade in bitcoin. It seems they don’t like it. (We file this fact under “No shit, Sherlock.“) But it can be bought anonymously.

Most people trade on an exchange known as MtGox, at mtgox.com. You can register a trading account anonymously there and buy bitcoin from equally anonymous sellers. But in order to get national currency into your account, you need to make a bank transfer to MtGox. I’ve done it using euro-based transfers. It’s annoying as the banks hold on to the money for a couple of days (bitcoin, anyone?) but the USD do end up in my trading account, and I am notified when this has happened. It works well.

The one annoyance may be that I am not allowed to transfer more than $1,000 worth of bitcoin per day to my computer from the exchange, due to US regulations. So I’ll have to transfer my portfolio in portions to my own computer in 24-hour cycles. But once that is done, they’re under my control. (Some other people may prefer to keep the bitcoin on the exchange. That would be their choice, and has its own set of risks.)

6. Finally, a Plea to the Developers

Bitcoin has appreciated like crazy, and as described, I predict it will continue to do so. There are already eight decimal places in the system. Please make it possible to use milli- and microbitcoins as soon as possible; bitcoin will continue to climb like crazy and may even accelerate. A currency where the smallest unit can buy you a small house is not practical for everyday use.

I would like to be able to use millicoins and microcoins. I know the system can handle it down to 1/100 of a microcoin; please make it possible in the interface as well.

MORE ON BITCOIN
This is an article on bitcoin. You may also want to read my first thoughts where I called this The Napster of Banking, and my analysis of how it impacts welfare and taxing.
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About The Author: Rick Falkvinge

Rick is 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. He has a tech entrepreneur background and loves whisky.

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This article is also available in other languages: Hungarian.

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452

  1. You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

    • .1
      BUGHUNTER

      OK, if I am a big bank and want to destroy this upcoming danger to my global dominance I just need to buy ALL bitcoins that will ever be generated and never sell them again. Should be cheap enough. What happens then? Will you keep your bitcoins until the end of time?

      • .1.1

        By buying all bitcoins available, the only thing that would happen is that the value of bitcoins will increase alot, until you can’t afford more. Buying all bitcoins is also a stupid idea because a new bitcoin network to be filled with new bitcoins can be created instantly, and that doesn’t cost anything.

        • by you’re own fact that “new bitcoin networks with new bitcoins can be created instantly, and that doesn’t cost anything.” Will be the same reason why bitcoin will first have to become less valuable. If anyone, anywhere can create, then where is the value?

      • .1.2
        repo

        Jacob Hallén
        May 29, 2011 – 23:59

        Bitcoin is a defationary currency by construction.. I I got ahold of some, I would keep them and spend my USD/SEK/EUR instead. There is a risk of Bitcoin being highly illiquid.

        However, I think that the biggest threat is the possible success of Bitcoin. Should it become popular and useful, it will be outlawed in all nations. Punishments for holding Bitcoin will be at the level of printing your own money. Governments will use their monopoly on violence to protect their monopoly on minting currency. Otherwise the core power of governments will go away.

        While you can possibly persuade governments not to do house searches for copied music, this will not be the case for alternative currencies. No effort will be spared in asserting government control over national finances. As long as the alternative currency stays fringe (like Canadian Tyre money for instance), it can be tolerated, but as soon as it empowers people to circumvent taxation, money laundering prevention or gives people the ability to send money internationally without government control, you will have the authorities coming down on you like a ton of bricks.
        RESPOND TO THIS

        62.1
        Rick Falkvinge
        May 30, 2011 – 00:05

        Absolutely. In this scenario, it’s going to be as close as you can get to an all-out civil war between the taxers and the taxees, and be very interesting.

        I wrote more about this in my first post in the subject, “the Napster of Banking”.

        Of course, if politicians are able to read the writing on the wall, they are going to adjust the taxation base right away so that cryptocurrencies aren’t going to hurt the nation’s tax revenues. Just like they have already acted sensibly with other P2P technologies and embraced change… or not.

        But is it a given that the taxers will win, even with their monopoly on violence? Not necessarily. It depends on being able to focus your forces on specific offenders — if a large enough portion of the population is doing something, the police force isn’t effective other than as a deterrent in creating examples.
        RESPOND TO THIS
        62.1.1
        Rebel Nimrod
        December 7, 2013 – 07:02

        READ THIS PART. The rest is irrelevant.

        Doesn’t it seem relativly stupid to wage an all out war against the bankers?!
        Dividing their efforts against it/us, only advertises means for martial law.
        (Which in my opinion is the general purpose of the CIA for BTC anyway.)
        There is a reason pirates don’t sail the seas anymore, so stop the RPG, eyepatch.
        and don’t get things started on soma-pirates, useless argument.

        That’s like polish abductions where I come from,
        they place a baby terence doll on the side of the road,
        wait for you to stop the car and they heist your car,
        while smashing in your face with a hammer.
        Nothing elegant, and basicly a gamble, so cruel,
        you’d have to be starving for months to resort to such atrocities.
        (Been there, had other plans though)

        To avoid such problems eventually comes down to stop being human,
        or driving cars alltogether… It’s not a question of solving one crime,
        it’s about solving the roots of these evils.

        Bitcoins?
        It’s a provocative move, made by a suicidal maniac,
        with no regards to human decency, fueling an ever more corrupting system,
        which would be better of without monetary systems,
        if it was only common sense to you all.

        If you don’t want to feel inclined towards moral guilt,
        and being pursued by “men in black”.
        Start wearing those tin-foils and use your mind.
        I read something stating, if it sounds too good to be true..
        Well, Believe it, it’s too good to be true.
        End of story.

        And besides, I’m a mathmetician and cryptographer doing
        excessive research, i didn’t even (ever) hear off this crap until a week ago,
        it took my 4 hours reading official forums and this debate to conclude the following. (Btw. this tech is so outdated already… really)
        ((they just don’t teach you anything high end))

        No matter where it peaks, and what amounts of money it makes you.
        Eventually a quick decline in services will appear,
        due to legal persecution of tax-dodging.
        Since it can’t be centralized, it will never be fully accepted,
        putting money in this pyramid scheme,
        will eventually come down to supporting a temporary peak,
        in the criminal network. (and yes, all currency is the same really. Clever)

        Somewhat similar fact, (you are allowed to hate me, your “rights”)
        Don’t support homo-sexual churches, just because they all stick
        together. They won’t bring forth healthy children,
        and they will spread filth, disease and moral confusion,
        just because they want to be different and embraced for who they are.
        Homosexueals belong in the closet, like all normal perverts,
        Criminals belong underground, wether living or dead. (Not judging them..)

        Bitcoins will never truly see the light of day in the mainstream west,
        unless it’s as supposed (by me), a CIA scheme to impose martial law.
        Then the results be even worse, hyperdeflation is a joke,
        it’s not how the hidden hand works, just telling you this, trust me on this.

        BTC? It’s Hitting the surface, calling out terrorsits,
        and using the new mathematica wolfram alpha to gather information,
        on all you uninterested, dumbed down people.
        just to get a fully statistical database on all of you (who can’t see the truth),
        it’s staring you straight in the eye as we speak.
        Didn’t you notice the recent changes on the web?
        Youtube, project free tv, just two mainstream examples.

        Listen to Richard Stallman, you should be throwing your smartphones
        out of the window, stop posting on facebook,
        and most off all. Sell any electronical device that is not protected securly,
        demand better equipment for your labour and efforts.
        This year, files of Interpol, banks everything got “accidently”
        stolen due to security issues… OR just remote controlled unsecured servers.
        Which reminds me of the nuclear standard in the early days,
        the password was supposedly 000000000, which could’ve started
        an all out nuclear war in the cold war, which offcourse was a
        sockpuppet war, both partnered since the fall of the tzar.
        To impose a one world government in the end…
        Destroying all sovereignity all over the world.
        Offcourse there was no risk to start with,
        they want you to know they are in complete control.
        Just don’t be to loud and complete about it.
        So that history is written the way the need it to be written.
        That is, offcourse, (logical to me) in a machiavellian scheme.

        People please, do some homework.
        Screw chasing money, just make sure you got food on your table,
        that your ahead of times, and keep the internet up, open and uncensored.
        This BiTCh is not a revolution, it’s a scam. The only real revolution,
        is the internet, connecting people. And we shouldn’t have to resort,
        to spiritual enlightenment, like we’re hiding the truth in an age of emanation.
        We have an english bible, and don’t have to wait for green lights.
        Our ancestors paved a way of corpses fighting for this,
        and you’re debating like allknowing creatures, missing the whole clue given…
        You’re going to get raped by your own apocalyptic revelations.
        You will be sad and demoralized in the end, simply accepting slavery.
        The way they need you to be.

        We’re one people of the same earth, under the sun
        Don’t believe in promises of limitless heavens.
        Just be there for one another, and fight those who defy that.
        Amen

        Btw. I don’t believe in any god.
        Just like I don’t believe in a just emporer of the empire.
        They all deserve inhuman treatment.
        Unfair trials and torture to commit to the truth,
        right before their head gets impaled on a spear.
        And their “officers” hung at the edge of town.
        The same they’d do to me, and I don’t care.
        I’m not scared, at least not anymore since they’re activly pursuing me anyway..
        My death is imminent, don’t wait till it’s too late for you.

        One love! Keep the fight alive, and look the arrogant “believers” in the eye,
        they don’t respect you, they won’t explain cause they don’t want to know,
        and they will allways mock you with a sideways grin on their smug faces.
        Dividing you against each other. In pretence of half-ass logics,
        they have no heart, only those words they emit to cling to,
        which they copied from others anyway..

        The only reason I’m not naming myself here,
        is because you would only hype shit that’s already hitting the fan,
        the CIA knows who I am anyway.
        I’m a barbarian at the gates.
        I won’t be a fool dying for false beliefs.
        And I don’t care about martyrship either.
        Any man, alone, can change the whole of humanity,
        if he so pleases and pursues that path.
        opportunities will be presented.
        The people do adore fighters.
        Especially open and honest ones.
        Willing to die as the heroes they truly are.
        Don’t get demoralized, make your own decisions.
        Fight for YOUR “SELF”, you don’t need to remain dependant.
        It’s easy really, just accept, look for and find the truths,
        here’s a good start. Consider it their arrogance,
        and my warning to you.

        http://www.youtube.com/watch?v=owGEpJ1F7-o

    • .1
      WARNING

      This is just a warning for all the euphorized people that do not have a clue about what is goig on here: DO NOT invest big money in bitcoin now – the software is FULL OF BUGS, the client does not even encrypt your wallet and in no time “steal bitcoin wallet” will be a standard feature of any malware. Heck, the whole system is still so beta, it will be overrun by cyber mafia in no time,

      An article like this one is the big honeypot many guys have only been waiting for to bait the clueless newbies – we will see many bitcoin incidents in near future.

      If you really want to invest in bitcoin, you should do it like this::
      Do not use a commercial operating sytem like MAC or WINDOWS, both are full of holes, use an encrypted linux or bsd machine – if you do not know how to do that, leave it alone. Do not install any not-free software on that machine – no flash, no java, no other gimmicks. Best to use a LIVE-CD of a Linux System.
      Use TWO different wallets, or even more. Generate a “vault” wallet and put it away in a safe (real safe!). Use the other wallet for day-to-day transactions and from time to time send bitcoins to the vault address – years from now, when you need to access your savings, retrieve the wallet file from the safe. Once the whole blockchain is loaded, your coins will be waiting for you..

      It was shown in the past, that online banking with several security precautions was not safe enough. It is absolutely irresponsible to release a “cryptocurrency” with a client software, that not even encrypts your “money” you ave on your machine – if any real bank has produced such a software, the whole internet would have been laughing at them beeing extremely lame – but no, because it is “cool geeks” they are allowed to release things that have zero security built in and people are following like stupid.

      Bitcoin as an idea might be interesting, the software however is definitely not trustable at the moment, it is far away from beeing usable with real values – there are simply not enough ressources put into development and developers seem not to have too much knowledge of how to develop secure systems, just look at the code…

      • .1.1
        Rick Falkvinge

        Do not use a commercial operating sytem like MAC or WINDOWS, both are full of holes, use an encrypted linux or bsd machine – if you do not know how to do that, leave it alone. Do not install any not-free software on that machine – no flash, no java, no other gimmicks. Best to use a LIVE-CD of a Linux System. Use TWO different wallets, or even more. Generate a “vault” wallet and put it away in a safe (real safe!). Use the other wallet for day-to-day transactions and from time to time send bitcoins to the vault address – years from now, when you need to access your savings, retrieve the wallet file from the safe. Once the whole blockchain is loaded, your coins will be waiting for you..

        The people who feel inspired by this post should note very carefully that these are best practices, and that I follow them to the letter for a reason.

        • Fucs U

          Mafia lapdog speaking…

          “best of practices”
          It’s retarded really.
          Did your bank account ever need to be “Split up”.
          then divided over multiple banks to be safe…

          Not really.
          And NO, I don’t like banks and bankers and money,
          and definatly not bitcoins. It’s a share in the criminal industry,
          but worse, It’s already controlled by intelligence agencies over the world. Another DUD for worldwide revolutions.
          As is all monetary redistribution of wealth.

          Get back to watching your One Piece episodes,
          sad advertiser. Come and get me if you got something to say.
          Your the newb headhunter, only thing worse than this btc shit,
          is a pirate party…

      • .1.2

        “the software is FULL OF BUGS”

        Which?

        “if any real bank has produced such a software, the whole internet would have been laughing at them beeing extremely lame – but no, because it is “cool geeks” they are allowed to release things that have zero security built in and people are following like stupid.”

        Banks shouldn’t produce anything. Having a company that is both a bank and a software publisher calls for a really bad vendor lock-in. If a bank (or “real bank” as you call it) produces anything, then it would be a miracle if it wasn’t tied to a single method for authentication and encryption that cannot be replaced, no matter how insecure or inconvenient it is. Cool geeks make software that does one thing well and leaves other tasks to other software. Integration with various encryption software would be a good thing. I currently use Bitcoin with ecryptfs and make backups with GNU Privacy Guard.

        “there are simply not enough ressources put into development and developers seem not to have too much knowledge of how to develop secure systems, just look at the code…”

        Just look at the code yourself and say something that means something instead of just FUD.

      • .1.3
        A

        The language you are using can be understood by those who already understand. For those who are new, You are speaking too techie.

        • stunt

          Did you really invest all your savings back then? If you did you must be rolling the dough now! Coins are at $65.00 today. Even if you did not get in till they were 9.00 that would mean an investment of 1000 would be worth over 7000 now. It would have been hard to hold out this long..coins are very volatile.

        • @stunt:

          No, that’s not what I wrote – I invested all of my savings and all that I was able to borrow.

          I tried catching a few swings and ended up losing money every time (I should just have held on to it), but overall, it would be wrong to say anything else than my investment having done very well indeed.

          I don’t have quite enough money to retire (at 40), but on the other hand, that scenario is fast approaching.

          Also, I would be able to pay back what I borrowed since quite some time back. But I’m not doing that, the interest on bitcoin is quite a bit higher than the interest on the loan… :)

          Cheers,
          Rick

  2. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  3. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  4. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  5. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  6. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  7. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  8. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  9. 1
    n

    as of version 0.3.21, the client shows full precision of transactions, and allows to send full precision amounts. there’s still a .01 fee required for tx < .01 however. but that's going down to .0005 in the next version. as far as microbitcoins – you'll probably find this thread very interesting: http://forum.bitcoin.org/index.php?topic=10049.0

    cheers for the nice article, btw. :)

    • 1.1
      Rick Falkvinge

      Oh, fab! Thanks!

      And if you like the article, do retweet it. :)

      • 1.1.1
        Robert

        RICK:
        “The supply of bitcoin is limited, and on a timescale of years, it is fairly constant.”

        How is this controlled??? This is the fundamental question which does`nt seem to have been addressed! At least in fiat money we know which SOB`s are creating more of it.

        Bitcoin needs to explain this point, who or what creates the bitcoins? How do we know that some time in the future the entity with the power to create bitcoins will create for itself many bitcoins and cash them in and exchange for paper, gold/silver?

        • Anonymous

          Each BitCoin is numbered, and there’s only a fixed number of possible BitCoins. Once they’re all “discovered”, that’s it.

        • Use Bitcoins

          No single “entity” makes bitcoins. They are created by everyone mining bitcoins with the client and you can’t make bitcoins for yourelf

      • 1.1.2

        Robert, Bitcoin is decentralized. There is no entity having power. How Bitcoin works is an agreement of all computers connected to it. I suggest you to go to any website describing how Bitcoin works.

  10. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  11. 2

    "Why I’m putting all my savings into #Bitcoin." | Falkvinge on Infopolicy http://ur1.ca/4ata1 via @glynmoody #dys136

  12. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  13. 3
    Klas

    Interesting.
    Feels kinda iffy to invest so much into a currency which by default is 100% flexible though.

  14. 4
    n

    Rick: what is this “tweet” you speak of? :) hehe

    Klas: what do you mean by “flexible” ? almost every currency currently in existence is backed by nothing but fiat, and has a floating exchange rate.

  15. RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy

  16. 5
    o

    n: But a fiat is the guarantee of a human government, an organization backed by a nation of people. Bitcoin is backed by a network, and not a very large one at that.

  17. 6
    Anonymous

    Bah ha ha ha ha, you uber derp.
    Cheers for adding value to the currency that everyone is mining for free

    • 6.1

      There’s an explanation for that. The more nodes get in the net, the slower it is to produce bitcoints for each of them, and one day they won’t be produced anymore. That’s what’s making the cryptocurrency’s value skyrocket.

  18. MT @Falkvinge U thought the © wars were bad? The war over $$ supply is just starting; & I’m going all-in http://is.gd/G42jAr <~k Sheer…1/3

  19. 7

    There are also other risks: bitcoin might be like napster and not succeed in the long run, being replaced by a better alternative.

    • 7.1
      Stu

      Napster was centralized: Gnutella was the first decentralized, open source alternative, and it is still very strong today: http://en.wikipedia.org/wiki/Gnutella#Software

      • 7.1.1
        Rick Falkvinge

        True. I’m using Napster here more in a shock sense than in a technical sense. We’ve learned a lot about how to make P2P resilient against governments and law since the Napster days.

      • 7.1.2
        Freek

        Gnutella? Really? Gnutella promised search coverage using scoped flooding, and of course it didn’t scale up. If you’re using a k-hop search with m connected peers you’re going to reach a maximum of O(m^k) peers. M is bounded by your network (and usually constrained to a pre-set maximum), and k is a small constant to avoid congestion. When n goes to infinity your coverage goes to zero.

        Gnutella was a failure because it tried to do something that is really easy to do centralized (search) in a distributed way. Bittorrent works so well because of centralized trackers with nice web interfaces. Of course these can get taken down, but as long as new sites keep popping up to cash in on the ad revenue I’d say it’s still the superior model.

        Gnutella is very similar to Bitcoin though in that it was hyped to death by well meaning programmers and laymen technologists with the distributed systems community standing on the sidelines shaking their heads.

      • 7.1.3
        Freek

        ps: here’s a nice debunking paper on Gnutella: http://www.cs.rice.edu/~alc/old/comp520/papers/ritter01gnutella-cant-scale.pdf

        I quote;

        “That summer we all saw a rush of press on Gnutella, and the rumour mill started churning. Most stories covering Gnutella were grossly and inappropriately evangelistic, praising the not-yet-analyzed Gnutella as a technology capable of delivering on wildly fantastic promises of fully distributed, undeterrable, unstoppable, larger-than-life file sharing on the grandest scale. Many folks were convinced that Gnutella was the next generation Napster. Gene Kan, the first to spearhead the Gnutella evangelistic movement, claimed in one early interview: “Gnutella is going to kick Napster in the pants.” Later Kan admitted “Gnutella isn’t perfect”, but still went on to say that “there’s no huge glaring thing missing”. Well, something just wasn’t right, and though we couldn’t see it, it did seem pretty glaring.”

        “We all understood the excitement. Herein was a technology that could potentially prove the true magnitude of Metcalfe’s Law. That realization evoked nothing short of the phrase “holy shit!”. But what I couldn’t understand was why no one was questioning the legitimacy of these claims. For several months the only analyses anyone heard of practical implementations were generalizations and speculative comments, without much scientific or mathematical basis.”

  20. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  21. 8
    Cathal

    What a hero!
    I hope you use your Bitcoin-wealth wisely in the future.

  22. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  23. 9

    You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  24. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  25. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  26. 10
    Mark McBee

    Ponzi Scheme. Is Bitcoin back by gold or silver? If not then it is all about fiat crap. Hyperinflate bitcoin is the future just like the US dollar.

    • 10.1

      Is gold and silver backed by anything? How does the supply of gold in reserves compare to the demand for manufacturing of some small tools and cables?

    • 10.2
      Josh

      Please do your research, bitcoin can never hyper inflate, there will only ever be 21 million of them.
      It can only hyper deflate wich means their value only goes up. So saving in them actually makes sense. the only thing stopping this is if not enough stores accept them as currency.

      • 10.2.1
        Erik Hultgren

        Maybe you should do your research. The value of a currency is determined by supply and demand, and the supply in turn is determined by the amount of money and the velocity of circulation. Bitcoin can only controll the amount of money but nothing else.
        Bitcoins value has in a rather short time dropped from 31$ to 10$. Since there is no prices that are set in bitcoin at the moment, that woud be equivalent to an annual inflation of several billions percents.

  27. http://is.gd/G42jAr gelesen. Jetzt glaube ich, dass Bitcoin total dumm ist und Falkvinge kein VWL kann (und bankrott im Knast enden wird) m(

  28. 11
    Gitle Mikkelsen

    Two errors in your article:

    1. Transfers are not instant, it can take a few hours for a transfer to be confirmed by the network. Which brings me to:
    2. Transfer fees. Sure, you CAN send bitcoins without fees, but it is recommended to pay a few extra bitcents per transfer, because it makes the network confirm the transaction faster. In the future with lots of miners, I imagine fees are pretty much a must unless you want to wait days per transfer.

    • 11.1
      Rick Falkvinge

      You are factually correct. However:

      1) My friend in New Zealand sees the money instantly. It does take some ten minutes for them to be confirmed by the network, so he can spend them. In any case, this is instantaneous compared to the legacy banking system.

      2) I did note that transfer fees were optional, and that this transaction was sent without them. It is conceivable that people will choose to days longer time for transactions to confirm, as long as they can see them as pending immediately. I have received fairly large transactions without fees with no problem.

      • 11.1.1

        Fees are optional, and transactions without them will probably eventually go through. The point is that with _no_ transaction fees, there will eventually be noone mining either, and then _no_ transactions will be confirmed. Thus transaction fees is an utmost requirement for bitcoins to succeed as minable coins.

  29. >@bitcoinmedia >@Falkvinge copyright wars, bad? The war over #money supply is just starting & I’m going all-in! http://is.gd/G42jAr #bitcoin

  30. 12
    synonymous

    Bitcoin is still in development. It has only about 20000 users across the world. I like it a lot, but it’s probably good to remember that at this momen, Bitcoin is just a relatively small open source project that is in it’s early “beta testing” stage. Just one working exploit could destroy the entire bitcoin economy.

    A similar product from some big trusted brand like Amazon, eBay, Paypal, etc. could send Bitcoin back into obscurity real fast too. Nerds would still use it to buy drugs online, but it would never hit “mainstream”. I think that a lot of the value BTC has now is based on this speculation, that it will be big one day, but I dunno.. Fore example Linux has been around for 20 something years and it’s still not user friendly enough to gain mass popularity. It probably never will.

    My financial advice would be to not invest any more than you can afford losing.

    • 12.1

      If I was sure that Bitcoin success would be one day comparable to Linux success, I would invest all my money into Bitcoin.

    • 12.2

      Linux is huge. It’s on the currently biggest selling as well as most rapidly growing mobile platform (Android). Mobiles since last year outsell “regular” computers.

      Mass popularity?

    • 12.3
      ANNM

      Linux doesn’ẗ have mass popularity? What about webservers, routers, DNS servers etc? Or if you want stuff geared towards “consumers”, what about wireless routers, what about Kindle, what about Android phones?

    • 12.4

      Linux doesn’t even have a user interface, so saying that Linux is or isn’t user friendly is nonsense. Linux is a component in operating systems that have other components such as Gnome, KDE, bash or various parts of Android providing user-interfaces.

  31. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  32. 14
    Wally

    I have a bridge to sell, would you like to buy it?

  33. 15
    Chrus

    Can you buy a car or house with bitcoin? Can you go to college with it? Good luck!

    • 15.1
      Rick Falkvinge

      This is the networking effect, the problem that I describe in the article, and why the next level of uptake will be among other kinds of transactions.

      Thanks!

  34. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  35. 16
    Putr

    I still can not decide if your a Genious/Visionary or just play Crazy.

    But looking at your track record I’m happy I’m already on the bitcoin bandwagon.

  36. RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy

  37. 17

    I love the idea of Bitcoin. And I love the way it is picking up momentum. But as with everything, there are risks. Some that we can predict and some that we cannot. I, therefore, will not invest all my money. Just like I won’t ever put all my money into one savings account or as stocks in one single company. Spreading meens spreading the risks (and the gains, too, unfortunately). I have just wired another €200 into my bitcoin portfolio, and hope to a) gain from its increasing value and b) start buying stuff with it.

    Just like with all great ideas, many people spread FUD. The fact that this whole currency is open source makes it ready for a hole flamewar. Like synonymous, telling lies about Linux (android, servers, infrastructure, a fail?) people will lie about Bitcoin. Not because they want to, but because they are badly informed. FUD.

    Bitcoin. It has certain risks. But it already has proven to make people a lot of profit. And has already proven to be a valid, usefull payment method.

    • 17.1
      Sigivald

      Lies about Linux?

      He said it didn’t have mass popularity – and to anyone but a Linux zealot or who was deliberately missing the point he obviously meant desktop popularity.

      Routers and servers are not what anyone but the aforementioned groups think of when they think about “OS popularity”.

      Phones are an edge case – but even then he’s right, in that nobody but the zealots thinks “Android is Linux!!!!” in terms of their phone choices and “popularity”.

      Linux is not a popular phone OS.

      Android is.

      Google’s complete stack and marketing and support infrastructure are the value, not the Linux kernel and userland. They could nearly literally just as easily have used BSD.

      (This is also why, to explain why he’s even more right on what he actually meant, “the year of Linux on the Desktop” has been “this year or next year” since 1995 – and why the first actually popular desktop Unix came from Apple (based very roughly on FBSD), and why Linux still isn’t more than a footnote in that market.

      Nobody in the target market cares about “Linux” or “BSD”. They care about good user experience, and that’s so much more work than anything else that you can graft it onto any Unix you want, if you have that level of manpower and the ability to do good interface.

      Gentoo will never make a decent desktop because they don’t have that. Apple could have made one on any Unix because they do.)

      In short, “statement you didn’t read closely enough to understand” and “lie” are not isomorphic categories.

      (And on your novel claims, “past performance is no guarantee of future results” is an important thing to recall.

      In 2001, it was “proven” that real-estate speculation in Miami had made people a lot of profit, after all. And then it all fell apart.)

      • 17.1.1

        I see that you are trying to say that because Linux works invisibly behind a user interface and can be replaced by another kernel it should not be counted. It’s like saying that every metal producer is a failure because people call the products including those metals by the name of the company assembling the product and not the company producing the metal.

  38. 18

    Why I’m Putting All My Savings Into Bitcoin http://zite.to/mLFhDc via @Ziteapp

  39. 19
    Diedre

    How much savings did you have? If it was $20, who cares.

  40. Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy RT @falkvinge

  41. 20
    rogueliberty

    LOL…BITCOIN.

    They show a picture of what looks like shiny gold coins, but they are not, because BITCOIN is not backed by ANYTHING but 1′s and 0′s…it’s Digital $ (.)

    This will be your cashless society…currency backed by NOTHING…just like everything is today.

    BITCOIN is not MONEY. There is a dfference between CURRENCY and MONEY. MONEY must be everything a CURRENCY is, but also be A STORE OF VALUE.

    BITCOIN…LOL…SHTCOIN is a better name.

  42. 22

    I’d never recommend that people put all their money into currency speculation because of the extreme risk involved. It’s much more responsible to tell people to become economically productive and sell goods and services in the currency so that you get a *sustainable* increase in the value of BItcoins.

  43. 23
    spike

    so the real question is, how fluid is the conversion back to conventional currency. That is, IF I place USD$1 into BTC and it rises in value to USD$100, am I able to trade that BTC currency back for any other conventional currency just as I am able to do between USD & EUR e.g..

    That will technicality will have considerable sway on adoption of BTC as a currency for obvious reasons, not the least of which will be speculation and “short sales”. The ability for an individual to drive the value up, and then dump BTC for conventional currency could be as hazardous in the ether as in “the market”.

    • 23.1
      xymostech

      Currently, the only real way to convert the bitcoins back into traditional currency is by trading it out with people who want bitcoins. Mt Gox trades about a million bitcoins per month (you can see some statistics here: http://bitcoincharts.com/markets/), so it is fairly easy to get your money back out.

  44. 24
    ANNM

    How much of the bitcoin transactions are actual payments for goods or services, and how much of it is currency speculation? If the latter dominate, as everything I’ve read about it indicates, doesn’t that make the system incredibly vulnerable and risky as an investment?

    • 24.1
      ANNM

      Also, considering the small number of actual exchange sites, what would happen to the value of bitcoins if it suddenly became much harder to buy dollars for them? For example if the government of the country where MtGox is running decided that it was illegal, and shut it down?

  45. 25

    Excellent article, and as @ploum said : if i were sure bitcoin would get the same success as linux. I would have spent all my savings in.

  46. 26
    Richard

    There’s no relationship between the amount of money that people have put into Bitcoin and the price at a given time. If almost everybody doesn’t want to buy bitcoin for the next hour, the price is whatever someone will accept. This is the same as a stock price – it’s only linked to supply and demand at a given point in time, not how much money has actually been put into a stock.

    • 26.1
      Rick Falkvinge

      This is true. My description is somewhat simplified.

      Still, if people want to trade $60B of value using the bitcoin network, the sum of bitcoin will be worth at least that much.

      But you’re technically right. Everything is worth exactly as much as somebody is prepared to pay for it at that point in time.

  47. 27
    Chrus

    Someone took his real cash and gave him a .jpg of gold coins with a leprechaun next to them. LOL. Not like our money today isn’t valued on anything, but I can still buy day to day things with it.

  48. 28

    Why I’m Putting All My Savings Into Bitcoin http://bit.ly/lrnXiO – thoughts on bitcoin anyone?

  49. 29
    corxi

    You can’t be serious, it’s a joke right?? You expect me to believe you put all your savings in a “file”??? The numbers you have just stated in your article add up to one result only: BUBBLE! A stampede in an out. And yes, more Bitcoin will be placed on the market to meet demand, it’s called greed and it will happen, watch it….May I suggest you convert you life savings back to fiat tyen convert again to gold and silver whilst you can, if you really were foolish enough to convert everything to Bitcoin, that is..

  50. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  51. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  52. 30
    corxi

    @ Jack: oh yeah? Isn’t it plausible to think Bitcoin will need to devalue if it’s going to be successful? So that ppl can afford to convert that is….secondly, transfer fees are actually flying around, so more Bitcoins, more fees, correct? Now then, write in this post an elaborate description of you “mathematical” analysis as of why no more Bitcoins may be added…

    • 30.1
      ANNM

      New bitcoins are generated by computing lots and lots and lots of SHA hashes. Short of a revolution in CPU technology, it is not possible to generate them much faster without spending a lot of money on it. There is no central bank that issues the coins and can decide how many to release during a certain period.

    • 30.2
      greg

      The rate of creation is an agreement between nodes. If you are not running the majority of the well-connected nodes in the network (which is not very feasible, since nodes are not extremely naive and they are spread around the world), you can’t create money out of thin air.

      The network creates 6 blocks per hour on average. If it creates blocks slower or faster than that, network adjusts the difficulty to generate blocks to compensate, so that coin generation is predictable. Currently, each block carries a 50 BTC transaction to the generator of the block. So only 300 coins in total are created throughout the world each hour. This amount is halved every four years.

      (See: https://en.bitcoin.it/wiki/Blocks)

    • 30.3
      what

      bitcoins can be divisible. You can go down to .00000001 bitcoins currecntly. with 21 million total bitcoins, and if the value of .00000001 bitcoins is one dollar, that means the bitcoin economy in whole can handle 2,100 trillion dollars. The World Bank estimates there is $40.887 trillion in the world.

      Transfer fees are collected by the mining computers, and go back into the economy.

      Bitcoins cannot be added to the system because it is designed to automatically reject invalid coins, and if someone were to alter these rules to allow their client to accept them, their client and the coins they make cannot be used on the original bitcoin network and will be rejected.

  53. 31
    Ashley

    Another ‘threat’ to the appreciate of btc is a competing crypto-currency. The number of btc’s may be mostly fixed, but the number of such currencies is wide open. And I tend to think it would be a good thing to have more such operations/networks on the go. Mind you this would not be a threat to the core value of btc, just it’s speculative value.

  54. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  55. 32
    corxi

    Thus there’s no limit to the new issues, according to your description….what happens when people sell Bitcoin for fiat, do the hashes “retire” the surplus Bitcoins?

    • 32.1
      ANNM

      You don’t seem to understand how currencies work at all. What happens when someone sells USD for EUR? Do the dollars “retire” to the federal reserve? Of course not, they are now owned by the person who sold the euros. The same thing happens with bitcoins.

  56. Is this a valid long term money experiment? RT @falkvinge http://is.gd/G42jAr #bitcoin #swarmeconomy

  57. 33
    Jan-Erik

    1. Could I print bitcoins out, with some kind of barcode for the signature? And the the hotdog salesman just hold it up to the webcam to get the validity confirmed?

    2. Is there a link to a more technical description? The most interesting thing is how the amount of money is limited. Should calculation capacity for hashes transform linearily into Bitcoins, the currency WILL loose most of its value as computers go faster at and exponetial rate. But I think there was a scheme to prevent that, wasn’t it?

    • 33.1
      ANNM

      1. If you are doing “out-of-band” transactions, e.g. giving someone a private key to a bitcoin address with a fixed amount of money on it, there is no way for the receiver to be sure that you aren’t double spending, e.g. giving the same private key to several people. Working around this probably requires a physical system that is as hard to forge as real cash and issued by someone who everyone trusts, and then you might as well use regular cash instead. If you want to read about a cash system built on top of bitcoin, search for “bitbill”.

      2. The currency generation is limited in several ways – first, the computational problems to solve become harder and harder with time (the threshold that a hash value must be below in order to be considered a “solution” is lowered), the number of bitcoins awarded per solution gets lower and lower, and there is a fixed number if bitcoins that can be generated. Once that number is reached the award for solutions will come entirely from transaction fees.

      All these limitations come from pre-defined rules and will only work as long as a majority of the nodes on the network agree on them, which I think makes the system a bit fragile.

  58. 34
    corxi

    Dear oh dear, it’s not about Forex….it’s about the actual money supply…you do realise that any central bank in the world can dry up the money supply as a control tool….they “retire” currency from the market….Simple question: can the underlying code execute such task???

  59. 35

    Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy RT @falkvinge

  60. 36

    If you have Firefox 4, you can mine Bitcoins using your video card here: http://kradminer.com Mining using your video card is 100′s of times faster than cpu mining.

  61. 37
    corxi

    Ok thank ANNM, I now have the necessary elements to make an informed decision

  62. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  63. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. http://is.gd/G42jAr #bitcoin

  64. 38
    Grozkov

    This is beyond stupid! Hope no one follows Ricks example.
    Would be interesting though to know how much of Swedish taxpayers money he is going to invest, as Rick’s “fortune” is built with taxpayers money.

    • 38.1
      Scary Devil Monastery

      You are really desperately hoping he’s wrong as if he’s right he will in the next few years have made millions?

      And no, Grozkov, Rick performs a duty in return for his salary. Whatever he does with said salary is his own choice. Unless your intent was to imply that every official employed in sweden is guilty of embezzlement and fraud because they invest their salaries in the stock market, i think you should shut up now.

      I own stocks in the market, paid for by the salary my employer gives me every month. According to your warped logic that makes me an embezzler from my employer?

      Do you, actually, not have anything factual or relevant to add to any debate?

  65. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  66. 39

    Putting everything into bitcoin. genius or total idjit? http://j.mp/l1bvNO

  67. 40
    Putte

    Dear Rick,

    I don’t want you to lose your money and I think that there are huge risks in this speculation gamble. Here are the red flags:

    The extreme appreciation of Bitcoins is probably driven by media attention and by private US investors who don’t fully understand the nature of this instrument. I think that this is driven by the same factors that have pushed the price of gold and silver through the roof – the fear of a total collapse of the US dollar and hyperinflation. Look at inflation.us for an overview of this worldview. If US hyperinflation doesn’t occur these instruments will most likely fall in value (including Bitcoins).

    A currency with such a volatile price is hard to use as a value keeper and a medium of exchange. If it goes up like this it might as well go down, adding uncertainty to normal trade transactions. Speculators might love how Bitcoins have appreciated but the price volatility adds an increasing risk of a price collapse.

    Even though Bitcoin is the market leader in this emerging segment for P2P money today, the principle can easily be replicated with other coin schemes. The psychological effect of using micro-Bitcoins should not be underestimated. If people have to sell their car for to get 0.1 micro-Bitcoin they will think twice about the risks of a value collapse.

    Other “currencies” that start without this extreme value appreciation for the early adopters will feel fairer and less like being the last entrant in a Pyramid game.

    Finally, future quantum computers might make it very easy to “mine” the remaining Bitcoins.

    • 40.1

      The day quantum computers are used for tasks as bitcoins mining, I think we would have other problems to care about ;-)

      • 40.1.1
        Rick Falkvinge

        …like the breakdown of ALL current cryptosystems, including the one used in bitcoin. :)

        • harveyed

          Not necessarily. Tunneling public keys (key exchanges) over OTP would probably make it at least quite difficult even for quantum computers.

  68. 41
    Daniel X

    Correct me if I’m wrong, but isn’t the biggest vulnerability of bitcoin, the possibility that a massive amount of computing power / nodes could be brought online to either prevent confirmation of new transactions, or confirm false transactions? An entity with the right amount if resources (say, the NSA) would be able to do this, no? And (putting on my tinfoil hat) surely some nefarious government entity will have access to quantum computers long before anybody else…

    Also, re: the meteoric rise of BTC value, do we have any idea of the daily transaction volume? ie, is anybody really USING them yet, or is the price simply increasing due to hoarding / speculation / nowhere to spend it?

    • 41.1
      Per "Wertigon" Ekström

      A botnet would also be able to do what you say. So it’s a very real concern…

      • 41.1.1
        Freek

        Actually the problem is not so much botnets trying to take over, as much as miners getting ddossed by other miners to increase their chances of getting coins. It’s already happening.

    • 41.2
      greg

      You can see the daily transaction volume here: http://bitcoinwatch.com/ , but it’s hard to tell what the transactions are for, and most of them wouldn’t probably fit your description of “using”. But I can confirm from personal experience that at least part of it is for goods and services.

  69. 42
    killerstorm

    Untrackable, huh?

    Every Bitcoin node knows about your transactions because it is in block chain now.

    See here: http://blockexplorer.com/address/1NCNQf4ww3CZisNyD4J9XZQBQKt28Bj45H

    Now we know you Bitcoin addresses, that is, addresses you’ve received Bitcoins to. They can be used to find parties who have sent you Bitcoins, your other addresses (as client often uses multiple addresses to send money) etc. It is much more trackable than you think. To be really anonymous you need to use certain tricks, e.g. anonymizing services, but then you depend on those services…

  70. 44
    Christopher

    Did you write this article to pump up your own bitcoin value by enticing new user? This is classic ponzi. When faith in this ‘currency’ is lost then so to will be your money. Traditional fiat currency is at least based on the economic health of a nation. Bitcoin is based on nothing. A fool and his money…

    • 44.1
      harveyed

      Bitcoin is based on a decentralized structure which makes it more robust to centralized middle-men fiddling and gambling about (banks or other financial institutions gambling away the wealth of investors). We had a situation like that not so many years ago in the United States. Quite some banks were bailed out by their governments (in the end by the tax-payers).

  71. 45

    Is this a valid long term money experiment? RT @falkvinge http://is.gd/G42jAr #bitcoin #swarmeconomy

  72. 46
    John

    The state is not likely to protect your Bitcoins from theft. The courts will not enforce any transactions involving Bitcoins. Real money is backed by the state monopoly of violence.

    • 46.1
      harveyed

      Well if that was true then banks would be allowed to fail and not be bailed out after financial fails like that 2-3 years ago?

      It’s much more like the state monopoly of violence will not be able to seize your money to bail out the big banks. Which actually was quite a bit of what happened 2-3 years ago.

  73. 47
    Bc

    Fascinating. Bitcoin seems to function properly as a trusted third party to settle transactions , and as a store of value. Gresham’s law should not be a problem as the “bad money” competing to drive out bitcoin can simply be improved by converting it to bitcoin. The modern monetary theory crowd will argue that bitcoin won’t be accepted in payment of tax. Sounds like a feature not a bug to me. I expect the next big opportunity will be escrow, and bitcoin lending. Also simple password authorization of same without wallet hash is desirable. Many issues to consider. Many advantages too. It will start with curmudgeons like me. So be it.

  74. 48
    Freek

    Hi, I’m a PhD student working at a parallel distributed systems department. I strongly advise anyone against investing heavily in Bitcoin. The problem is that there is no way in hell the system as it is currently designed is going to scale up in the face of transactions/second.

    The reason why peer-to-peer systems tend to work so well is because they distribute the load over multiple nodes. The assumption is usually that these nodes are ‘friendly’, and p2p networks are notorious for being vulnerable to attacker nodes who can game the system for their own purposes. To avoid this, Bitcoin does not distribute the work, rather it replicates it. More transactions means more work, and more nodes also means more work as every transaction must be broadcast to every node. The reason why your transaction takes minutes is because the transaction rate is currently limited artificially to only 7/second. The only way for Bitcoin to scale up to support a large economy is to move the nodes to data centers like the ones Google, Microsoft, Amazon, and Yahoo have. There is already talk about a two-tier system to incorporate such ‘power nodes’.

    https://en.bitcoin.it/wiki/Scalability

    • 48.1
      Rick Falkvinge

      It seems, from the link you provide, that the problem is already being addressed in a serious manner?

      • 48.1.1
        Freek

        If you read their page you can see that they have no clue how to scale it up. There is no clear path towards high volume transactions, only a vague idea of using supernodes. As soon as you have such a two-tier network you basically have an elite of high-powered data centers owned by big corporations running your system rather than a flat network of anonymous commoners like you and me. I wonder how economical it is to run a supernode which shifts around a gigabyte of data/second, and whether anyone will be able to get return on investment in the near future. Note that these are numbers for 2000 transactions/second, which is what VISA is doing right now using a centralized system. Their own discussion on scalability describes the supernodes required to handle this volume as ‘futuristic’. In other words, they admit that Bitcoin needs futuristic bandwidth just to be on par with VISA.

        What bitcoin is proposing is basically taking the VISA servers and replicating them all over the world, and then keeping all the replicas in sync. If there’s any disagreement over a transaction, there’s majority rule. To make sure people don’t just throw botnet at the system to get a million votes, they make everybody do a lot of useless calculations so that you need to have more processing hardware than everybody else in the network put together to be able to get majority So now you have a decentralized system that has become so inefficient in both processing and communications overhead (all nodes need to be synced) that at some point ordinary machines and consumer-grade bandwidth cannot keep up.

        What you end up with is a system run by big corporations, with all the legal and financial consequences that brings along with it.

  75. 49

    I am mining on cpu, which is very slow, yet value of my 10 btc has gone from nothing to $80:) and rising

  76. 50
    Mumfi.

    Now, if someone would set up a fractional reserve banking system that supports bitcoins…

    I’m more philosophically inclined to trust systems like ripple. Where the fractional reserve problem is distributed per individual user, and there is full legal support. At least in Swedish law. One should agree on a base for the money creation thought.

  77. [...] Why I’m Putting All My Savings Into Bitcoin [...]

  78. 51

    This article on Bitcoin, which works on similar principles but on high speed, reminds me of that: http://bit.ly/l1bvNO

  79. 52
    EricH

    You might want to consider that bitcoin is flawed; here’s an article (which, frankly, I don’t understand) from a cryptographer expressing doubt:

    http://www.links.org/?p=1175

  80. 53
    C. Lawrence Wenham

    “I challenge you to find one other commodity with this pace of appreciation.”

    Tulip bulbs. Netherlands. 1637.

  81. 54

    Why I’m Putting All My Savings Into Bitcoin http://zite.to/mLFhDc via @Ziteapp

  82. 55
    Jesper

    Makes me think of “For the Win” by Cory Doctorow. For some reason.

  83. 56

    If past performance does not predict future returns, YOU CAN’T USE IT AS EVIDENCE. Yet it’s your *number one* piece of evidence that you’ve used to put your entire savings and then some into Bitcoin.

    You’re either lying or you’re one of the biggest idiots to ever walk the planet. I hope you lose your shirt, because if you get lucky that’s all it’ll be, luck, yet others will walk away thinking that it’s a good idea to jump off a bridge just because everyone else is.

  84. 57
    Umm

    My primary worry would be liquidity.
    -Because the demand to buy bitcoin is low, the likelihood being able to sell the bitcoin whenever he wants (ideally at height of bitcoins worth) is also low. This is the same reason that penny stocks are difficult to make a profit it. While the value may go up significantly, you can’t realize this profit until you find someone to sell it to (and in order for them to buy it, they have to think it’s going to go up even further). USUALLY PEOPLE TRY TO DRAW ATTENTION TO THE PENNY STOCKS THAT THEY OWN TO INCREASE DEMAND (AND THEREBY PRICE), AND THEN SELL EVERYTHING BEFORE THE BOTTOW FALLS OUT. Hopefully that’s not what you’re trying to do here…
    -Currently there aren’t too many companies that accept bitcoin for products or services.
    -Any currency is only as valuable as the people using it believe it is (ie. the dollar is only a piece of paper, but because the seller believes that its worth is equivalent to a candybar, he will trade it).
    -Once people realize that they cannot use bitcoin for goods or services, the likelihood is that there will be a mass exodus, and the price will fall rapidly as people want to sell their un-useable bitcoin for a currency that still has value. With so few buyers, the discount will likely have to be pretty hefty in order to attract other buyers into a falling investment.

  85. 58

    Just like it is a bad idea to put all of your eggs in a single basket, it is a bad idea to invest all of your wealth in a single asset. There is a reason why professional investors never ever do that.

    And it looks to me like the price of BTC shows all the classic signs of a bubble: There are no changes in the fundamentals, like increased BTC liquidity or less BTC being offered in the market.. Instead we have a lot of new and unexperienced investors coming into the market, expecting that the price will continue to rise.

    But if/when the the offers to buy fall back to a more normal level the price of BTC will bounce back.. When this happens many of the people who geared their investments (like Falkvinge effectively did when investing for borrowed means) will be forced to go out of the investment to cover their losses, and price falls will accelerate. I would not be surprised if we saw the price of BTC bounce back very quickly to below USD 2 at some time within the next half year.

    I agree that hedging against the coming financial crisis is a good idea. But Bitcoins will not buy you food if you have no electricity. Gold will. It is worth listening to people who experienced the financial crisis in Argentina, though I expect the coming crisis to be much worse. Here is an example: http://www.survival-spot.com/survival-blog/argentina-collapse/

    • 58.1
      KyleSmith

      The fundamental we can use to evaluate bitcoin is the difficulty factor – the size/power of the network. It is growing exponentially, along with the price.

      Liquidity is also increasing, fast. Volume traded on mtgox is lately surpassing $400,000 USD daily. Volume was $10,000 USD not long ago.

      Big changes in the fundamentals (to match the big change in price).

    • 58.2
      harveyed

      Yes I agree that you shouldn’t have all your eggs in one basket. A more moderate way of doing it would have your own PC mining bitcoins whenever you don’t use it. That way it won’t cost very much for you (maybe a small hardware upgrade once in a while, not too expensive), and you’ll still profit after a while if bitcoins really turn out “mainstream”.

  86. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  87. 59
    Brazos

    That was an aggresive move. If you lose your savings fine. You have still your income. If you lose borrowed money then you have to pay back many years.

    So if you put in thousands and *if* only sky is the limit then you have millions to play with some years later.

    • 59.1
      Rick Falkvinge

      Something like that, yes. The rule that you should never risk more money than you can afford to lose stands true. I have not risked more than I can recover from in a worst case scenario — as you say, I still have my income and I will be able to pay my bills.

      But then again, bitcoin has huge political effects that I want to encourage, too. If I can make a buck off of it in some five-year perspective, all the better. I believe in this.

  88. 60

    Why I’m Putting All My Savings Into Bitcoin http://zite.to/mLFhDc via @Ziteapp

  89. 61
    Colby

    I would say the biggest risk is that everything you own is stored in a file. If say a virus/malware is able to get a hold of that data and phone home, what’s to stop it from transferring funds around? No law is there to protect you from theft and like others have said, it is purely digital.

    Just like criminals that mine gold on World of Warcraft (yes this true, google it) there will be those that do it for bitcoin too. Love the idea but I think the tech community has a ways to go to perfect it. For now, this is an experiment where the original owners and creators are making a profit off of speculation like any other stock in the stock market.

    • 61.1
      NOTAL

      This risk can be mediated by storing your “savings” wallet in multiple places in an encrypted form. Alternately savings can be stored at an online wallet service. This would be safe from any virus from getting it on your computer, but adds the vulnerability of a dishonest online wallet service operator.

    • 61.2
      greg

      Well, you could divide your “saving” coins in multiple wallets, encrypt them and create many redundant remote copies. If I stole your computer, I would only have access to the coins you keep in your “current” wallet. Besides, encrypted wallets will be introduced soon, on the default client.

    • 61.3
      Scary Devil Monastery

      Well, in that respect WoW gold miners and Bitcoin operations would be no different than Burmese sweatshops. Although there may be problems with scaling and several other assorted issues, ANY currency or value today is subjected to “mining”.

  90. 62

    Bitcoin is a defationary currency by construction.. I I got ahold of some, I would keep them and spend my USD/SEK/EUR instead. There is a risk of Bitcoin being highly illiquid.

    However, I think that the biggest threat is the possible success of Bitcoin. Should it become popular and useful, it will be outlawed in all nations. Punishments for holding Bitcoin will be at the level of printing your own money. Governments will use their monopoly on violence to protect their monopoly on minting currency. Otherwise the core power of governments will go away.

    While you can possibly persuade governments not to do house searches for copied music, this will not be the case for alternative currencies. No effort will be spared in asserting government control over national finances. As long as the alternative currency stays fringe (like Canadian Tyre money for instance), it can be tolerated, but as soon as it empowers people to circumvent taxation, money laundering prevention or gives people the ability to send money internationally without government control, you will have the authorities coming down on you like a ton of bricks.

    • 62.1
      Rick Falkvinge

      Absolutely. In this scenario, it’s going to be as close as you can get to an all-out civil war between the taxers and the taxees, and be very interesting.

      I wrote more about this in my first post in the subject, “the Napster of Banking”.

      Of course, if politicians are able to read the writing on the wall, they are going to adjust the taxation base right away so that cryptocurrencies aren’t going to hurt the nation’s tax revenues. Just like they have already acted sensibly with other P2P technologies and embraced change… or not.

      But is it a given that the taxers will win, even with their monopoly on violence? Not necessarily. It depends on being able to focus your forces on specific offenders — if a large enough portion of the population is doing something, the police force isn’t effective other than as a deterrent in creating examples.

      • 62.1.1
        Rebel Nimrod

        READ THIS PART. The rest is irrelevant.

        Doesn’t it seem relativly stupid to wage an all out war against the bankers?!
        Dividing their efforts against it/us, only advertises means for martial law.
        (Which in my opinion is the general purpose of the CIA for BTC anyway.)
        There is a reason pirates don’t sail the seas anymore, so stop the RPG, eyepatch.
        and don’t get things started on soma-pirates, useless argument.

        That’s like polish abductions where I come from,
        they place a baby terence doll on the side of the road,
        wait for you to stop the car and they heist your car,
        while smashing in your face with a hammer.
        Nothing elegant, and basicly a gamble, so cruel,
        you’d have to be starving for months to resort to such atrocities.
        (Been there, had other plans though)

        To avoid such problems eventually comes down to stop being human,
        or driving cars alltogether… It’s not a question of solving one crime,
        it’s about solving the roots of these evils.

        Bitcoins?
        It’s a provocative move, made by a suicidal maniac,
        with no regards to human decency, fueling an ever more corrupting system,
        which would be better of without monetary systems,
        if it was only common sense to you all.

        If you don’t want to feel inclined towards moral guilt,
        and being pursued by “men in black”.
        Start wearing those tin-foils and use your mind.
        I read something stating, if it sounds too good to be true..
        Well, Believe it, it’s too good to be true.
        End of story.

        And besides, I’m a mathmetician and cryptographer doing
        excessive research, i didn’t even (ever) hear off this crap until a week ago,
        it took my 4 hours reading official forums and this debate to conclude the following. (Btw. this tech is so outdated already… really)
        ((they just don’t teach you anything high end))

        No matter where it peaks, and what amounts of money it makes you.
        Eventually a quick decline in services will appear,
        due to legal persecution of tax-dodging.
        Since it can’t be centralized, it will never be fully accepted,
        putting money in this pyramid scheme,
        will eventually come down to supporting a temporary peak,
        in the criminal network. (and yes, all currency is the same really. Clever)

        Somewhat similar fact, (you are allowed to hate me, your “rights”)
        Don’t support homo-sexual churches, just because they all stick
        together. They won’t bring forth healthy children,
        and they will spread filth, disease and moral confusion,
        just because they want to be different and embraced for who they are.
        Homosexueals belong in the closet, like all normal perverts,
        Criminals belong underground, wether living or dead. (Not judging them..)

        Bitcoins will never truly see the light of day in the mainstream west,
        unless it’s as supposed (by me), a CIA scheme to impose martial law.
        Then the results be even worse, hyperdeflation is a joke,
        it’s not how the hidden hand works, just telling you this, trust me on this.

        BTC? It’s Hitting the surface, calling out terrorsits,
        and using the new mathematica wolfram alpha to gather information,
        on all you uninterested, dumbed down people.
        just to get a fully statistical database on all of you (who can’t see the truth),
        it’s staring you straight in the eye as we speak.
        Didn’t you notice the recent changes on the web?
        Youtube, project free tv, just two mainstream examples.

        Listen to Richard Stallman, you should be throwing your smartphones
        out of the window, stop posting on facebook,
        and most off all. Sell any electronical device that is not protected securly,
        demand better equipment for your labour and efforts.
        This year, files of Interpol, banks everything got “accidently”
        stolen due to security issues… OR just remote controlled unsecured servers.
        Which reminds me of the nuclear standard in the early days,
        the password was supposedly 000000000, which could’ve started
        an all out nuclear war in the cold war, which offcourse was a
        sockpuppet war, both partnered since the fall of the tzar.
        To impose a one world government in the end…
        Destroying all sovereignity all over the world.
        Offcourse there was no risk to start with,
        they want you to know they are in complete control.
        Just don’t be to loud and complete about it.
        So that history is written the way the need it to be written.
        That is, offcourse, (logical to me) in a machiavellian scheme.

        People please, do some homework.
        Screw chasing money, just make sure you got food on your table,
        that your ahead of times, and keep the internet up, open and uncensored.
        This BiTCh is not a revolution, it’s a scam. The only real revolution,
        is the internet, connecting people. And we shouldn’t have to resort,
        to spiritual enlightenment, like we’re hiding the truth in an age of emanation.
        We have an english bible, and don’t have to wait for green lights.
        Our ancestors paved a way of corpses fighting for this,
        and you’re debating like allknowing creatures, missing the whole clue given…
        You’re going to get raped by your own apocalyptic revelations.
        You will be sad and demoralized in the end, simply accepting slavery.
        The way they need you to be.

        We’re one people of the same earth, under the sun
        Don’t believe in promises of limitless heavens.
        Just be there for one another, and fight those who defy that.
        Amen

        Btw. I don’t believe in any god.
        Just like I don’t believe in a just emporer of the empire.
        They all deserve inhuman treatment.
        Unfair trials and torture to commit to the truth,
        right before their head gets impaled on a spear.
        And their “officers” hung at the edge of town.
        The same they’d do to me, and I don’t care.
        I’m not scared, at least not anymore since they’re activly pursuing me anyway..
        My death is imminent, don’t wait till it’s too late for you.

        One love! Keep the fight alive, and look the arrogant “believers” in the eye,
        they don’t respect you, they won’t explain cause they don’t want to know,
        and they will allways mock you with a sideways grin on their smug faces.
        Dividing you against each other. In pretence of half-ass logics,
        they have no heart, only those words they emit to cling to,
        which they copied from others anyway..

        The only reason I’m not naming myself here,
        is because you would only hype shit that’s already hitting the fan,
        the CIA knows who I am anyway.
        I’m a barbarian at the gates.
        I won’t be a fool dying for false beliefs.
        And I don’t care about martyrship either.
        Any man, alone, can change the whole of humanity,
        if he so pleases and pursues that path.
        opportunities will be presented.
        The people do adore fighters.
        Especially open and honest ones.
        Willing to die as the heroes they truly are.
        Don’t get demoralized, make your own decisions.
        Fight for YOUR “SELF”, you don’t need to remain dependant.
        It’s easy really, just accept, look for and find the truths,
        here’s a good start. Consider it their arrogance,
        and my warning to you.

        http://www.youtube.com/watch?v=owGEpJ1F7-o

    • 62.2
      smell

      Firstly, bitcoins are currently pretty liquid. The way I understand it, bitcoin is the first currency where liquidity is directly measureable… mind you, I am no expert. See https://en.bitcoin.it/wiki/Bitcoin_Days_Destroyed

      Secondly, I can’t see house searches occurring. It would be a huge civic rights violation. OTOH possible action against exchanges is likely… in the long term, I agree with the OP. Bitcoin is here to stay…

    • 62.3
      Scary Devil Monastery

      Not to forget though, assuming the authorities confiscate every USB flash stick they do find, what would they do with it or you considering there’s nothing but random data on it (as long as you don’t put in your 20-digit encryption key).

      The violence monopoly is, de facto, completely useless whenever you try to apply it against a sufficient proportion of your citizenry. Sweden would have to turn into Libya civic rights-wise before you’d end up seeing any effect.

      • 62.3.1
        Elmo

        Since the Internet is an international affair, you could also just have the CIA using rubber-hose decyphering in some third world country merchant and acquire information on all the people who have traded with them, they could abduct you and take you somewhere dark and put the rubber hose to you (or rather the water board in this case) and they could also set up their own fake accounts accepting Bitcoins for whatever it is you want to buy with them and bust you when you try to collect your goods.

      • 62.3.2
        harveyed

        Well the scary is that you have exactly that kind of development in at least us and uk. “Security” above all. Libery down the drain.

  91. 63
    Erlend

    What happens if one of the bigger players, say amazon, google, or even visa, decides to enter this market with a competing currency? Perhaps one that’s integrated with a debit card, for instance, which would be a huge selling point. My bet would be that new investors would ignore bitcoin and go with the new and (at least appearingly) more trustworthy currency. Soon anyone actually doing business in bitcoins would stop accepting it for fear of being left with a huge pile of worthless SHAs, and the value would plummet more or less overnight. Just saying, caveat emptor and all that.

    • 63.1
      Rick Falkvinge

      The value of bitcoin is just like the value of the internet:

      nobody owns it, nobody controls it.

      So if Google tried to launch Googlecoin, they would miss the entire value proposition of bitcoin.

      • 63.1.1
        Stoj

        Bitcoin is open source
        Google ( any major corporation ) can mimic it overnight
        and create hashes that compute irrespective of hardware
        lets say, for how long you are a Google user
        or whatever truly mimics a decentralized network
        instead of Nerd-racks with 80 GPU’s setting the house on fire

  92. 64

    Why I’m Putting All My Savings Into Bitcoin http://zite.to/mLFhDc via @Ziteapp

  93. 65

    “Free-fallin’, and I’m free-fallin’, and I’m….FREE-E-E
    FREE-FALLIN!”

    Yep. (Goin’ ‘all-in’ with BitCoin – backed by nothing. Completely digital. Sounds like some people are going to LOSE – a LOT of money).

  94. 66

    But, then again, the value of their USD and Euro’s is going to ZERO, shortly, anyway.

  95. 67

    So, hey, why not sign up for Bitcoin NOW – WHAT HAVE YOU GOT TO LOSE?????

  96. RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy

  97. 69

    Why I’m Putting All My Savings Into Bitcoin http://goo.gl/h7J4D #bitcoin

  98. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  99. 71

    Founder of Pirate Party Sweden: Why I’m Putting All My Savings Into Bitcoin http://bit.ly/mvdPjB #bitcoin

  100. 74

    BitCoin – New Currency On The Block Appreciating Like Crazy http://bit.ly/jjFagT

  101. 75

    BitCoin – New Currency On The Block Appreciating Like Crazy http://bit.ly/jjFagT

  102. 76
    Roland

    Rick has successfully described bitcoin as the worlds largest pyramid game. I use bitcoin to support a relative abroad but Ricks “investment” should make the warningbells ring loud enough to break every eardrum in the world.

  103. 78

    Why I’m Putting All My Savings Into Bitcoin http://zite.to/mLFhDc via @Ziteapp

  104. 79

    Why I’m Putting All My Savings Into Bitcoin http://zite.to/mLFhDc via @Ziteapp

  105. 80

    Do you really think this is going to succeed? RT @sergihn: Why I’m Putting All My Savings Into Bitcoin http://zite.to/mLFhDc

  106. Why I’m putting all my savings into BitCoin – Rick Falkvinge: http://is.gd/G42jAr

  107. 86

    Why is Rick Falkvinge (Swedish Pirate Party founder) putting all his savings into Bitcoin? http://bit.ly/mbMBch

  108. 87

    With a Land Value Tax like proposed by Henry George, instead of income tax, it will be of no interest for the government to hunt down bitcoin users. If you own land you have to pay taxes and land can´t be digitalized and encrypted in files… so there is no way around it.

    The land value tax has got huge advantages, for both people and market, over income tax and VAT so it would be only for the good anyway. In a scenario where Bitcoin is a huge success, then the government could agree to accept parts of the tax base in bitcoins as well. All for the benefital progress of society.

    I think it would be best to promote a Land Value Tax now and have the debate going before the cryptocurrency revolution is starting to make notice in the economy!

  109. 88

    @giulioprisco – http://bit.ly/jZg99c -That’s a old decisssion Falk is making but he has a point there…..

  110. 89

    @giulioprisco – http://bit.ly/jZg99c -That’s a old decisssion Falk is making but he has a point there…..

  111. 91

    Why Rick Falkvinge puts his money into BitCoin http://bit.ly/jZg99c

  112. 92

    Why I’m putting all my savings into BitCoin – Rick Falkvinge: http://is.gd/G42jAr

  113. 93

    Why I’m putting all my savings into BitCoin – Rick Falkvinge: http://is.gd/G42jAr

  114. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  115. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  116. Dans la lignée de cet article : http://is.gd/qvhg3G, j’ai commencé à traduire celui-là : http://is.gd/G42jAr ici : http://is.gd/XCQg5E

  117. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  118. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting. And I’m going all-in. http://is.gd/G42jAr #bitcoin

  119. 97

    "Why I’m Putting All My Savings Into Bitcoin" by Pirate Party founder @Falkvinge http://t.co/AMIx9UQ

  120. 98

    "Why I’m Putting All My Savings Into Bitcoin" by Pirate Party founder @Falkvinge http://t.co/AMIx9UQ

  121. 99

    Interestingartcile: Why I’m Putting All My Savings Into Bitcoin http://bit.ly/lrnXiO

  122. 100

    Interestingartcile: Why I’m Putting All My Savings Into Bitcoin http://bit.ly/lrnXiO

  123. 101

    Dans la lignée de cet article : http://is.gd/qvhg3G, j’ai commencé à traduire celui-là : http://is.gd/G42jAr ici : http://is.gd/XCQg5E

  124. 103

    Interesting, with the problems curriencies are facing now,, and web2.0 tech becoming increasingly widerspread and used by a generation now who cant imagine a world of no interent or no facebook, i think there will be a ‘land grab’ on digital currencies, and bitcoin is sure not to be the winner at the end – there will be too many well financed organisations competing, it would just be unlikely. could work out tho, ill buy a few!

  125. 104

    Founder of Pirate Party Sweden: Why I’m Putting All My Savings Into Bitcoin http://bit.ly/mvdPjB #bitcoin

  126. 105

    Rick is putting all his savings into Bitcoin. Who dare? #Falkvinge #bitcoin http://goo.gl/qeB4b

  127. 106

    Not all of my savings, but seriously considering buying a descent load … http://zite.to/mLFhDc via @Ziteapp

  128. 107

    Not all of my savings, but seriously considering buying a descent load … http://zite.to/mLFhDc via @Ziteapp

  129. 108
    Thomas

    The value of Bitcoins are depending on trust! So one or two sites like this can kill it, very quickly….
    http://evilpacket.net/2011/may/17/stealing-bitcoins/

    I am not a techie, I have no clue whatsoever if this site has a point or not. But it doesn’t matter – since the value is only based on trust and hopes.
    For me, I will keep my traditional investments – one of the reasons being that I know want my money to drive sustainable growth of companies and generate new jobs.

    • 108.1

      It doesn’t have a point. It just tries to look like it’s saying something by having a cool black background color. It isn’t even about Bitcoin, but about a website.

      • 108.1.1
        Thomas

        The point is, that it does not really matter whether it is correct or not.
        Bitcoin will increase in value, as long as there is an inflow of new players. And it will lose value as soon as this inflow stops, if it stops.
        Just like any other pyramid game.

    • 108.2
      Scary Devil Monastery

      The “value” of anything is based merely on trust and hopes. 2009 should be the latest reminder of that. It’s a fact that USD and EUR only operate under the assumed “belief” by all major actors and stakeholders that one unit of USD is, in fact, worth one unit of USD.

      As soon as the belief in the major market drops the currency takes a nosedive. No effort has actually succeeded in tying a currency to a de facto “stable” value.

      As for “my money to drive sustainable growth” – no, no – It’s the other way around. “growth” rather driving currency strength. Which is why too great success in national industry prompt keynesian measures by governments to restrain the resulting exchange rate of the national currency.

      In short…you may choose to place faith in BitCoin or not as you please. Bear in mind that your arguments as stated are completely faith-based however.

      • 108.2.1
        Thomas

        The value of US$, € or RMB is to some extent based on both trust and hope/fear of the future. But there is also a substantial monetary reserve to back up this trust and fear. Something that Bitcoin lacks.

        The alternative to invest in Bitcoin is not only to invest in currencies. Investing in stocks creates an opportunity for sustainable growth and new jobs. And that will not happen when playing with Bitcoin.

        • harveyed

          Well the behaviour of both state and big banks the last few years clearly SHOULD have made quite some people weary of the flaws of entrusting central control of money and currencies.

          Maybe it was not a coincidence that bitcoin was conceived in 2009 – the year of the big gambling fail of centralized currency financial institutions…

  130. 109

    Bitcoin, la divisa virtual que te hará rico, al menos virtualmente: http://bit.ly/lq1WTh

  131. 110

    I’m not quite at this stage…but interesting read…"Why I’m Putting All My Savings Into Bitcoin"
    http://ht.ly/55TzS

  132. 111

    I’m not quite at this stage…but interesting read…"Why I’m Putting All My Savings Into Bitcoin"
    http://ht.ly/55TzS

  133. 112

    1997 schrieb ich 1 Artikel über 1 Enthusiasten, der sein kpl. Vermögen in CyberCoins bei der Dresdener Bank wechselte: http://bit.ly/lNQYpY

  134. 113

    1997 schrieb ich 1 Artikel über 1 Enthusiasten, der sein kpl. Vermögen in CyberCoins bei der Dresdener Bank wechselte: http://bit.ly/lNQYpY

  135. 117

    If the value of a bitcoin continues to grow this quickly it will price most people out of the market. While many people won’t mind spending $8-9 for a single coin, a very small percentage would pay $100+ for the same coin.

    If I want to buy a $5 item using bitcoin currency, how would I do this if a single coin is worth $100?

    If you’re plunking down your life savings you must be very confident that the system won’t be hacked.

    • 117.1
      Don Kongo

      http://forum.bitcoin.org/index.php?topic=10049.0

      The protocol already supports paying with decimals, just like any other currency, and when it becomes silly, as you point out, the plan is to move the decimal place just to make it feel more natural. The thing is, of course, that people will still be spending $8-$9 and get $8-$9 in value, at that point, which may change along the way – again, just like any other currency, though the dynamics driving the change is new and may be unpredictable.

      There is absolutely no guarantees that the money put into bitcoins today will be worth anything in a year. Falkvinge is making an informed, calculated guess that it will survive, in which case it IS very very likely it will continue to grow as an investment. But it is a guess and there are no guarantees.

      • 117.1.1
        Rick Falkvinge

        There is absolutely no guarantees that the money put into bitcoins today will be worth anything in a year. Falkvinge is making an informed, calculated guess that it will survive, in which case it IS very very likely it will continue to grow as an investment. But it is a guess and there are no guarantees.

        This.

        What he said.

  136. 118

    Why I’m Putting All My Savings Into Bitcoin – http://bit.ly/jZg99c

  137. Hmmmmm I’m not convinced (yet) RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy

  138. 120

    Hmmmmm I’m not convinced (yet) RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy

  139. 121
    Tomat

    Sounds like Rick is moving into insider trading and currency-hyping for his own benefit. Well he isn’t a self proclaimed Ultra-Capitalist for nothing.

    • 121.1
      Rick Falkvinge

      Hi, Grozkov. This is your one (1) warning. Do not attempt to appear like multiple people with your consistent smearing.

      Next time you’re acting rude, you will be shown the way out.

      Cheers,
      Rick

      • 121.1.1
        Tomat

        OK Rick You know what just ban me. Everybody already know by now that you are a two faced Ultra Capitalsitic hypocrite who knows almost nothing about what you write about. . Except for some of your fave pets like Scary who worship you. above everything else.

        Bye Byooo

    • 121.2
      Scary Devil Monastery

      You mean purchasing stock in a certain company and telling others you did amounts to insider trading “Tomat” (Grozkov)?

      Wow. That’s even worse than your previous claim that what a person chooses to do with his salary and savings should be the business of his employer.

  140. { A new currency system. Wonder how i missed that. haha } RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr

  141. 122

    { A new currency system. Wonder how i missed that. haha } RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr

  142. 123

    Why I’m Putting All My Savings Into Bitcoin | Rick Falkvinge | Falkvinge | 29 May 2011 http://j.mp/j77FEu

  143. 126

    a comprehensive look at my favourite form of currency these days – #BITCOIN: http://bit.ly/lNQYpY

  144. 127

    a comprehensive look at my favourite form of currency these days – #BITCOIN: http://bit.ly/lNQYpY

  145. 128

    Why I’m Putting All My Savings Into Bitcoin
    http://t.co/K3AdMfu
    @falkvinge

  146. 130

    Swedish Pirate Party leader puts his savings in #bitcoin http://j.mp/lNQYpY Bookmarking to reread in a year’s time + http://flic.kr/p/9NRkgj

  147. RT @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy

  148. 131

    Nice article on Bitcoin: Why I’m Putting All My Savings Into Bitcoin http://bit.ly/lrnXiO

  149. 132

    So, who else is putting their money in Bitcoin? http://t.co/TEKHW5Y (via @pascalvanhecke)

  150. 133

    So, who else is putting their money in Bitcoin? http://t.co/TEKHW5Y (via @pascalvanhecke)

  151. 134

    Wanna laugh? Read about a new investment opportunity: Bitcoins http://zite.to/mLFhDc #investment

  152. 135

    Más #bitcoin: a favor (Falkvinge dl PPirata invertido todos sus ahorros!) http://bit.ly/mIcyss y en contra http://b.qr.ae/in0UHR vía @lavigi

  153. 136

    Sweden Pirate Party founder Rick Falkvinge puts his life savings into bitcoin. http://j.mp/irYQEh What is it they say about bravery?

  154. 137

    Sweden Pirate Party founder Rick Falkvinge puts his life savings into bitcoin. http://j.mp/irYQEh What is it they say about bravery?

  155. RT @Falkvinge: You thought the copyright wars were bad? The war over the money supply is just starting … http://is.gd/G42jAr #bitcoin

  156. 140

    Pretty bold! MT @jerrybrito: Pirate Party founder Rick @Falkvinge puts his life savings into #bitcoin. http://j.mp/irYQEh #futureofmoney

  157. 141

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://ow.ly/1cY8oc

  158. 142

    Rick Falkvinge puts all his savings into Bitcoin http://bit.ly/lNQYpY

  159. 143

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://t.co/PhfgjD8

  160. 144

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://t.co/PhfgjD8

  161. [...] nouvel article de Rick Falkvinge à propos de bitcoin (dans la lignée de celui-là) traduit par mes soins. N’hésitez pas à [...]

  162. 145

    Why Rick Falkvinge is putting all his savings into Bitcoin http://goo.gl/neZHN

  163. 146

    I agree with @tylercowen. This guy is a fool: http://goo.gl/DTojb. Well, I have less pleasant things to say, but you make up your own mind.

  164. 147

    As @MargRev so aptly put, thisman is a fool http://bit.ly/jZg99c #bitcoin

  165. 149

    Current Browsing: "Why I’m Putting All My Savings Into Bitcoin" http://bit.ly/jI2Xdi http://bit.ly/kiUKQy /via @Falkvinge #BitCoin

  166. Rick #Falkvinge, founder of the first Pirate Party puts all his savings into #Bitcoin: http://is.gd/G42jAr

  167. 150

    I *THINK* this is satire. I hope so anyway>> "Why I’m Putting All My Savings Into Bitcoin" – Falkvinge on Infopolicy http://bit.ly/ljg5RF

  168. 151

    Why I’m Putting All My Savings Into Bitcoin – Pirate Party Founder Falkvinge http://ow.ly/1cYxH2

  169. 152

    Why I’m Putting All My Savings Into Bitcoin – Pirate Party Founder Falkvinge http://ow.ly/1cYxH2

  170. 153

    Rick #Falkvinge, founder of the first Pirate Party puts all his savings into #Bitcoin: http://is.gd/G42jAr

  171. 154

    Interesting comment: http://is.gd/diDiBj I really wish I would have the time to fully understand the concept. #Bitcoin

  172. 155

    Interesting comment: http://is.gd/diDiBj I really wish I would have the time to fully understand the concept. #Bitcoin

  173. 156

    @bengarvey I don’t have a primary source, but here is where the stat is from: http://bit.ly/lNQYpY

  174. 157
    Rassah

    $80,000?!?! Holy crap Rick, are you trying to be the George Sorros of the digital world?

  175. 158

    @maartenverheyen Euro’s verkopen en Bitcoins kopen? Maakt alternatieve currency een kans? http://t.co/TEKHW5Y

  176. 161

    @olligunst What are your thoughts on Bitcoin? Played with it yet? This guy is going all in: http://bit.ly/koqjTI

  177. 162

    Why I’m Putting All My Savings Into Bitcoin http://bit.ly/mihPfe 貯金全てをビットコインにした男。

  178. 163

    Why I’m Putting All My Savings Into Bitcoin http://bit.ly/mihPfe 貯金全てをビットコインにした男。

  179. 164
    konrad

    this just smells like the tulip mania.
    One day we will look back and be like “WTF were thez thinking selling their car to buy 1 digital bitoin”

  180. 165

    Jesus wept… "Why I’m putting all my savings into Bitcoin" http://t.co/hRFwvfD << @Philip_Salter

  181. 166
    No

    “The money for a cup of coffee I sent above has become enough to buy a nice car instead.”
    If it sounds too good to be true, it usually is.

    • 166.1
      Rick Falkvinge

      Yes.

      The trick is being able to tell when things are usual and when they’re highly unusual.

      Being highly unusual doesn’t guarantee anything else, of course. Just that normal rules don’t automatically apply.

  182. 167

    Why I’m Putting All My Savings Into Bitcoin http://bit.ly/lrnXiO

  183. 168

    If you havent hear of Bitcoin, you will soon be hearing a lot more http://j.mp/lNQYpY via @johnbattelle

  184. 169
    Michael Long

    So…. you spend real money to buy “virtual” currency, which you then use to “pay” back a friend for a cup of coffee…. for which he ALSO spent real money.

    So. How does your friend actually get his $5 back?

    At least with Square or PayPal, money is actually transferred and deposited into his account.. Here he “may” be able to find a market and he “may” be able to find someone else to buy his virtual money, for which he “may” get $5.

    Get back with me when Amazon or some other major retailer lets you pay with virtual money…

    • 169.1
      Rick Falkvinge

      An entirely correct observation. This is one hurdle that Bitcoin needs to clear, but there is enough vested interest in it by now that I expect that it will be cleared soon enough.

      I’ll be returning to three four hurdles that Bitcoin needs to clear in upcoming posts.

      Cheers,
      Rick

  185. 170

    If you all had dumped your money into bitcoin when this article came out ($8 per coin), you’d all be smiling right now ($14 per coin).

  186. 171
    John Smith

    I’m also kind of curious how much you went “all in” with. I just bought $10K worth of bitcoin and “moved the market” but I wouldn’t say that’s a significant sum. If you don’t want to divulge that’s cool, just think numbers kind of matter when making strong arguments in favor of any sort of investment.

  187. 172

    In what way is this NOT a pyramid scheme?

  188. 174
    riggasconi

    pay attention. sell before the crackdown. there is a very obvious point of failure in the 50%+1 logic of bitcoin. check http://www.quora.com/How-can-Bitcoin-be-hacked

  189. 175

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://bit.ly/lGmEMV

  190. 176

    nice article about #bitcoin @falkvinge Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin #swarmeconomy

  191. 178

    Wie darf man Falkvinges Einschätzung denn bewerten? Nur eine Anekdote im Kurzzeithype? http://goo.gl/XDegc #Bitcoin

  192. 179
    Ferdinand

    I’ve one question.

    If I lost my file where I have saved all my bitcoins, do these bitcoins market would disappear forever?

    If I lost e.g. Bitcoins 10,000, does that mean that the total global bitcoins 10,000 that would disappear there would not be in use?

    That would mean that when they were losing bitcoins would be less money in the world.

    Although the solution would surely generate more bitcoin up again bitcoins 21,000,000.

    • 179.1

      Bitcoins cannot disappear, but you lose your control over them if you lose your private keys, and they will stay where they are and cannot be used anymore, unless you happen to find those private keys that you lost. The actual bitcoins are stored in every computer connected to the Bitcoin network, so there are many of copies of them, and anyone can see them, and they will not disappear even if you remove them from your computer. The only thing you have privately is a file with keys to Bitcoin addresses, which allows you to sign transactions to transfer bitcoins from those addresses to other addresses. As your file with keys is private, nobody else can see that you lose it. Storing several encrypted copies of your file with private keys at distant locations is recommended.

  193. 180

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://bit.ly/lGmEMV

  194. 182

    @Christophe3_0 is hier iedereen aan’t brainwashen. RT @kvanbeeck: Why I’m Putting All My Savings Into Bitcoin http://is.gd/G42jAr #bitcoin

  195. 183

    en este artículo @Falkvinge cuenta por qué está poniendo todos su ahorros en BitCoin http://bit.ly/jZg99c

  196. 184
    enoriverbend

    “Past performance: the currency has increased in value one-thousandfold against the US dollar in fourteen months. Yes. ”

    So, then, the more obvious question is: How the hell do I short this bubble?

  197. 185

    ein sehr optimistischer Artikel von Rick Falkvinge "Why I’m Putting All My Savings Into #Bitcoin" http://bit.ly/lrnXiO

  198. 188

    This is how developers take over the world… http://t.co/QhI4Isc @bitcoininfo

  199. 189

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://j.mp/l7eHjn (via Instapaper)

  200. 190

    @kyledrake RT @bunengine: this guy is not just investing all his money in bitcoin, but borrowing more to invest. [...] http://t.co/hWFRmPP

  201. 191
    Francisco

    Hi Rick, I am also very enthusiastic about Bitocoin and have invested some of my money too (though not 100%+). The reason I am not “all in” is for the following vulnerability I have seen very few people acknowledge or take seriously. You see, Bitcoin is not as “peer to peer”, nor as “decentralized” as Bittorrent, because it depends on the miner network to operate well. Moreover it depends on the miner network HONESTY to operate well. In other words, its not merely a transaction between two parties. You depend on third parties, in this case the miners. Right now, the miners hashing infrastructure is valued at app. 50 million dollars. So the most expensive imaginable attack to render the network useless would cost a mere 50 million dollars, this way the attacker gets more than 51% of hashing power and takes control of the chain for as long as he wants. Of course one can think of much more cost efficient ways to damage Bitcoin. So the point is: We are talking about a system to allocate the world resources via the control of the monetary supply. Could any intelligent person deny that there could be people or groups willing to invest millions, billions, of even trillions of dollars to control or damage the network? Right now the “invulnerability” of the network is nonexistent. But the again, solutions can and probably will be found as there have been found with the P2P file sharing attacks over the years. But Bitcoin is more difficult to defend. Because its technology depends on third parties, and also because it threatens the very nature of the power of the current economic powers, that is money creation and control. So making the analogy between Bittorrent and Bitcoin is not enough. Bitcoin is a different beast. Anyways, I think digital crypto currencies will be the most exciting technological journey since the invention of the internet. Would like to read your thoughs on this.

    • 191.1
      Rassah

      One thing that needs to be pointed out: dollar bills an’t calculate hashes, and can’t work as miners. You need hardware. Specialized hardware that can do a lot of heavy parallel processing. CPUs just don’t cut it any more (my one crap video card can do 25x more calculations than my overclocked 6 core CPU). Getting $50mil for someone is relatively easy, but getting the hardware is not. If you check online, you’ll find that pretty much all the best hardware that works most efficiently at mining (ATI 5830 and 6990) is completely sold out everywhere. Every online store you check, it’s out of stock. So he only other option is to use CPUs, and I believe to counter the GPU power, the cost of that power wll be significantly bigger than $50mil

      • 191.1.1
        Francisco

        Any powerful and organized group with that amount of resources looking for a strategic goal, could easily buy or build a factory to build hashing hardware. And I mean, not go to China and buy a 3D Gaming card factory, thay would be the dumb way. I mean designing and building specialized hasing hardwarethan can outperform Gaming Cards by a factor of 10 using the same investment. This is not speculation, but existing posibilities.

  202. 192

    Rick Falkvinge is putting all his savings into Bitcoin, and explains why: http://t.co/sFOIycL

  203. 193
    flapjack

    Mr Falkvinge must be sweating bullets right now lol

  204. 194
    walter

    I have to ask: Are you insane? Or just pumping up the pump before the dump? Putting all your money into these electronic tulip bulbs is madness. I just hope you are lucky enough to get out before the market crashes. Good luck,

    • 194.1
      harveyed

      Well quite some people think the current centralized system of currencies is madness, they’ve already been right once (2009) and that was when bitcoin was concieved. Maybe bitcoin in it’s current form is not the solution, but clearly decentralized crypto-currencies have some good properties that centralized currencies don’t.

  205. 195
    Brendan

    You margin bought bitcoins. Jesus Christ.

  206. 196
    Jon

    “I challenge you to find one other commodity with this pace of appreciation.”

    I can think of half a dozen off the top of my head, but lets start with the first one:

    Tulips.

    http://en.wikipedia.org/wiki/Tulip_mania

  207. 197

    Bitcoin euphoria http://t.co/vsQiGAD Found via @tylercowen and I agree with him. A fool. My gut feeling is another Ponzi scheme?

  208. 198

    So Falkvinge decided to dump his savings into BTC back when one BTC was about $8.

    BTC are currently valued at roughly $20 per BTC when last I checked Gox. that’s a 275% rate of return on investment. He could dark pool out HALF of what he put in, right this second, and he’d have completely covered ALL of his potential losses on the venture, PLUS made 25% extra in cash. PLUS he’d still have half of his original BTC investment appreciating in value with the absolutely hilarious knowledge that if the BTC deflated in worth to less than one cent he’d have still made returns (25%) that most stock market investors would crap their pants over to see quarterly… in less than one month.

    I’m sure some of the people calling him a crackpot early on in these comments are feeling pretty stupid.

  209. 199

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://j.mp/l7eHjn (via Instapaper)

  210. 200

    Why I’m Putting All My Savings Into Bitcoin http://bit.ly/lrnXiO #fb

  211. 201

    Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy http://bit.ly/mLuwY5

  212. 202

    Ancora sulla "lotteria" Bitcoin ; http://bit.ly/ipEVa8 (2.5k un anno fa oggi sono uguali a ca 2.5mios euro)

  213. [...] benutzen, bis dahin bleibt es eher ein Investment. Allerdings sollte vielleicht nicht jeder gleich sein ganzes Vermögen in Bitcoins tauschen, wie Piratenparteigründer Rickard Falkvinge. Jedenfalls scheint die Idee einer dezentral [...]

  214. 203

    “If you had changed 2,500 euro into bitcoin last spring, they would be worth more than 2.5 million…” #in http://j.mp/l7eHjn

  215. 204
    John Smith

    I love that the value of bit coins has dropped by almost 50% since this article was published, hope anyone who followed his advice found the riches you were looking for!

  216. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  217. [...] value of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  218. [...] value of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  219. [...] value of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  220. [...] value of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  221. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  222. [...] value of Bitcoins has quadrupled?and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  223. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  224. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  225. [...] value of Bitcoins has quadrupled?and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  226. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  227. [...] value of Bitcoins has quadrupled?and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  228. [...] value of Bitcoins has quadrupled?and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  229. 205
    eduard

    Mtgox crackdown. And now, what?

  230. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  231. 206
    Michael Long

    “The Bitcoin community faced another crisis on Sunday afternoon as the price of the currency on the most popular exchange, Mt.Gox, fell from $17 to pennies in a matter of minutes….”

    How’s that working for you now?

  232. [...] value of Bitcoins has quadrupled?and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  233. [...] halved. T&#1211&#1077 founder &#959f Sweden’s Pirate Party m&#959&#957&#1077&#1281 &#1072&#406&#406 &#1211&#1110&#1109 savings &#1110&#1495t&#959 Bitcoin (w&#1211&#1110&#1089&#1211 disappoints mе I &#1211&#1072&#1281 [...]

  234. [...] value of Bitcoins has quadrupled?and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  235. 207
    alienwarfare

    Wrapster files were cool. ;p

  236. [...] Why I’m Putting All My Savings Into Bitcoins [...]

  237. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  238. [...] Rick Falkvinge-why I’m putting all my savings into bitcoin. Rick Falkvinge is the founder of the original swedish pirate party  and writes an informative article describing why he spent all of his life savings buying bitcoin. [...]

  239. [...] driva säljet av Bitcoins så hårt som Rick Falkvinge gör kan bara bero på två saker. Antingen är han av ideologiska skäl övertygad om att Bitcoin [...]

  240. 208
    Gorfian Empire

    Neither I nor anybody I know can actually buy anything anywhere with bitcoin, and neither I nor anybody I know would accept bitcoin for anything. It’s hilarious to watch all the lemmings jumping over this virtual pump-n-dump scheme though. The ATI graphics card makers sure are lovin’ it.

  241. [...] Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy – [...]

  242. [...] thought I was only talking about real, physical gold coins? Bitcoin, the new cryptocurrency which everybody loves so much, is just as shiny and gold and coiny as anything else we’ve had so far. It’s probably [...]

  243. 209
    Don O

    lol, I bet he’s regretting this all now.

  244. [...] like any early currency and exchange, with the founder of Sweden’s Pirate Party throwing his entire life savings into Bitcoins, while one user had nearly $500K worth of Bitcoinage stolen, and last month we [...]

  245. [...] like any early currency and exchange, with the founder of Sweden’s Pirate Party throwing his entire life savings into Bitcoins, while one user had nearly $500K worth of Bitcoinage stolen, and last month we [...]

  246. [...] like any early currency and exchange, with the founder of Sweden’s Pirate Party throwing his entire life savings into Bitcoins, while one user had nearly $ 500K worth of Bitcoinage stolen, and last month we [...]

  247. [...] like any early currency and exchange, with the founder of Sweden’s Pirate Party throwing his entire life savings into Bitcoins, while one user had nearly $ 500K worth of Bitcoinage stolen, and last month we [...]

  248. [...] like any early currency and exchange, with the founder of Sweden’s Pirate Party throwing his entire life savings into Bitcoins, while one user had nearly $500K worth of Bitcoinage stolen, and last month we [...]

  249. [...] like any early currency and exchange, with the founder of Sweden’s Pirate Party throwing his entire life savings into Bitcoins, while one user had nearly $500K worth of Bitcoinage stolen, and last month we [...]

  250. [...] of Bitcoins has quadrupled—and then halved. The founder of Sweden’s Pirate Party moved all his savings into Bitcoin (which disappoints me; I had hoped they were buried on Oak Island) just as US Senator [...]

  251. [...] like any early currency and exchange, with the founder of Sweden’s Pirate Party throwing his entire life savings into Bitcoins, while one user had nearly $500K worth of Bitcoinage stolen, and last month we [...]

  252. 210
    Anon Ymous

    Dear Mr. Falkvinga,

    So, now that bitcoin appears to crash, what’s your plan B and how do you justify this descision?

    • 210.1

      There are only two endgames for Bitcoin – either it fails for some reason, in which case it will be worthless, or it fulfills its promise and becomes an anonymous widely-used exchange currency, in which case, today’s values are magnitudes below the endgame.

      Either endgame will take 12-36 months to materialize.

      Fluctuations on the way there are not very interesting.

  253. 211
    Bulwersator

    “Normal currencies vary by a few percent over the course of a year. Not bitcoin.” – so true :D

    • 211.1
      WiseOldGuy

      Hmmm….then how did the “value” of a bitcoin go from just over 30USD down to under 10USD? The entire premise that a bitcoin will only appreciate in value is laughable–as the author himself notes in a reply, value is determined by what someone is willing to pay for something at a given point in time. At one point in time, tulips were the most valuable commodity on Earth; now I can get them at any garden store for less than the cost of a cup of coffee.

      This is speculation, pure and simple, and anyone who puts all his/her eggs in one basket is a fool. Based on the date this article appears to have been produced, the author has already lost a considerable amount of “value”; whether it will come back is speculative. Regardless of how “rare” a bitcoin is, the “value” is still determined by how much someone is willing to pay for it. If you got in during the initial wave, you still have significant “value” that can be converted into legal tender or exchanged for goods or services from someone who will accept it. If you got in later, your “value” is dependent on the fluctuations in relative worth–the very thing you seem to suggest can’t happen w/ bitcoins. A good recent comparison would be the IPO for Dunkin Donuts; if you got in on the IPO, you made a significant profit, but if you waited until the initial wave passed, the market will determine how you will fare.

      Nor do I see Wall Street jumping on this bandwagon. It’s true there have been plenty of bubbles in the past and there will be more in the future, but they all share a common element: they burst. The trick is to know when to get out. Knowing that bubbles will burst, any decent analyst will follow a bubble w/ better intrinsic “worth”: real estate, technology and gold, for example–the last three big bubbles we’ve had. But bitcoins? I think not; analysts like to keep their jobs, after all, and would have a hard time explaining why they are recommending bitcoins. There’s just no tangible worth.

      I agree w/ the statement someone here made: only put in as much as you can afford to lose. Hope for significant appreciation, and if you get it, take your profit and run. Or you can mine for the coins, which would only involve the fixed costs for computing equipment. But sinking everything you have (and in the author’s case, some things you don’t actually have) into such a speculative investment is a sucker bet.

  254. 212
    sipak

    I have major disagreement on the value of bitcoin you infer in your post. The value of currency is not determined by how much is pumped into it. People are buying / exchanging bitcoin for 1 milion USD or so per day. But the value doesn’t rise with every exchange. The fundamental value of currency is determined by the size of economy which is transfered by means of it. Take monetary agregate M3 of any country and divide it by GDP, You should get a number between 1 and 2 or something like that. Now if you make an assumption about future size of bitcoin economy, you can say that the value of all bitcoin is of the same order. The resulting value of bitcoin is probably the same as you got, but the reason is different: it is the value of exchanged good that give fundamental value to currency not the fact that somebody speculatively buys for a lot of money.
    The force behind the fundamental rise of value is that as more and more people will be starting to use it for purchasing goods and services, they will need it to hold it for small time a least, and often they will keep a some amount as investment or just reserve. This will shrink supply of bitcoins free for selling for dollars, so people who really need to transact in bitcoins will push its price higher in terms of dollars. Higher value of bitcoin will bring down nominal prices of goods in bitcoin, so now people will need less bitcoin for purchasing goods which could bring the price of bitcoin in dollars down a bit if the amount of value of exchanged goods per period of time doesn’t grow more… This is “local” mechanism of currency value and prices revelation. The real driving force is not really any speculative buying.
    It can also be argued that the fact that the fiat money of today are not backed by nothing is irrevant, because it is exchanged goods that give it its value. It is truly backed by, only by the economy behind it. The flaw of fiat money systems is that it can be defrauded (inflated) by authority which issues the currency. This is the only but fatal flaw of today money. If fraude goes slowly, nobody objects (we fulishly believe in stable or slowing growing prices in growing economies insted of falling prices which would be more natural). In case of severe currency fraud we get high inflation and even hyperinflation, which ultimately destroys the currency.
    It is interesting that people think that gold is “best store of value” or that it is “inflation hedge”. It neither the first nor the second one. True is that gold is currency with inflate very very slowly. In times of high paper money inflation more people is moving to slow-inflating gold currency, so the gold currency is gaining in real value while paper currencies are loosing value even faster than they would loose just because of inflation. In desinflaion phase the flow is reversed because it is more convenient to use paper currency than gold in transactions, so the gold currency looses some value. This is also reason why gold prices are far more volatile then actual inflation of any currency. For the same reason the gold does not simply hedge any inflation, instead, gold negates and amplifies the effect of paper currencies inflation.
    Now the great thing about the bitcoin is that in long term it is more like gold because it won’t loose much of value steming from inflation, and in short term is it more like fiat currency, because it is efficient in transactions. The fact is that bitcoin is far more efficient than any transaction system of today… These two feature together is why bitcoin is a fatal threat to other fiat currencies. We could end up with bitcoin standard insted of gold standard in the end. Governments will try to fight it, that is for sure… The only way how to take down bitcoin would be to create “nationcoins” national analogies of bitcoin enforced by governments where everybody has to exchange the money 1:1 for nationcoin. But as far as I know politians and economists, I would bet on that they are not that smart and they will not accept the bitcoin competion. They will just try to stop it by law and force so they will loose all the spare time when they could do anything effective. (sorry for being so long)

  255. 213
    Gabriel

    I don’t think its smart to have every egg in the same tray. But maybe your are a real gambler Mr Falkvinge, well I wish you the best of luck

  256. 214

    Bitcoin is fundamentally flawed as a currency, and there is no good reason to use it as a payment system. http://gracefool.posterous.com/why-bitcoin-is-a-scam

    But now that you’ve bought into it, it’s in your best interests to defend it regardless.

  257. 215
    Duck monstre

    To quote an old adage “It seemed like a good idea at the time”. hahahaha

  258. 216
    Jixtreme

    I hope you don’t need to retire anytime soon! Here’s hoping for the bottom…

  259. 217
    Adalbert

    @Christopher Wood

    Did you actually read that blog entry? Only true thing is that the inventors of bitcoin (and every1 who invested than) are making probably a bunch of money . The rest is crap and not proved in any way.

  260. 218
    Clue

    Does it mean that I can create my own new website and my new intenet money with a better marketing plan than “bitcoin” tomorrow, allowing me to become rich in USD and € by selling to everybody my new virtual webcoins with no value? Great!!!
    Hum, cuz…, where are the USD and euros you gave to bitcoin compagny, now ? Not in my pocket by now, but it should be somewhere…

  261. 219
    Walter

    Here we are 4 months after Mr Falkvinge put all his savings into bitcoin when it traded at about $8. Bitcoin now trades at about $4 and has done nothing but slowly fade away since June. Told ya it was just a bubble. Bwahahahahaha!!!!! Suckers.

  262. 220
    Anonymous

    Now around $2, have you cashed out of Bitcoin yet?

  263. 221

    So um….. wow..

    Any regrets?

    FYI – Next time another tulip craze happens, maybe you’ll listen to those of us with reason who said “It’s a speculative commodity bubble – hello!”

  264. [...] lo scambio di valuta “reale” con bitcoins. C’è gente che ci ha messo dentro tutti i propri risparmi.In termini più tecnici, ogni utente che scarica un client Bitcoin può generare uno o più [...]

  265. [...] The rapid rise in value that it has experienced may in fact be because there is a Bitcoin bubble. This guy is evidence of that. But it’s hard a priori to differentiate between a bubble and the [...]

  266. [...] Why I’m Putting All My Savings Into Bitcoin – Falkvinge on Infopolicy These past days, I have done a lot of thinking about bitcoin that ended up with me investing all of [...]

  267. [...] Rick. Why I’m Putting All My Savings Into Bitcoin. May 29, 2011. – Okay, Falkvinge gets on here simply because he is the founder of the First [...]

  268. [...] Why I’m Putting All My Savings Into Bitcoin by Rick Falkvinge describes how the virtual currency value has improved 100,000% in 14 months. The guy allegedly invested all his savings into Bitcoin currency in the hope to cash it out later and make profit (in real dollars). Funnily enough, this has nothing to do with Bitcoins being a currency used to trade goods and services, but rather working just as financial speculation means. Nothing new here. [...]

  269. 222
    Seth

    Bitcoins trading at $12.40 USD over a year later. Curious if Falkvinge had the stomach to ride out the last year w/out dumping any. I think he will eventually be vindicated, will be especially interesting to see what happens to the USD after the 2012 presidential election.

  270. 223
    Anonymous

    If he rode it out, he’d be up 50%, if he dumped at the bottom, he’d have lost 75%. I wonder if he stuck by his principles.

  271. [...] wer sich daraus keine eigene Meinung bilden möchte, findet hier hier je ein Plädoyer dafür und dagegen, und hier ein interessanter Artikel über das Potential von [...]

  272. [...] article, but I just came across it and it was the most fun article on Bitcoin I’ve ever read. Why I’m Putting All My Savings Into Bitcoin I do not put all *my* eggs in a basket, so on that point I disagree with the author. The primary [...]

  273. [...] maj 2011 gick Rickard Falkvinge ut offentligt med att han hade investerat “alla sina besparingar och allt han kunde låna” i bitcoin. [...]

  274. 224
    Oksigen

    Rick, you are rich now. Congratulation !!!

  275. [...] asking if it’s a bubble. At the end of the day, I think BitCoin has all the fundamentals to legitimately go to $10,000 or even $100,000 a coin. Whatever price you’re probably paying for BitCoin today will seem a bargain a few years from [...]

  276. 225
    James t

    I decided to give BitCoins a shot today..only to discover it’s $155+/coin…ugh.

  277. [...] 2013年3月,路透社报道,有一位加拿大小伙,决定将房子卖掉,换成BTC——大家惊呼,这真是个疯狂的想法!可事实上,这只是小巫而已,真正的大巫,是个传奇性人物——瑞典海盗党的创始人,Rickard Falkvinge。此人早在2011年5月29日,就宣布将自己所有的财产都换成了BTC,这还不够,他还借了很多钱,大量囤积BTC。 [...]

  278. [...] organization founded on a platform of digital privacy advocacy—declared in an article titled “Why I’m Putting All My Savings Into Bitcoin” his intention to do just that. On June 9, 2011, the price of one bitcoin reached an all-time high [...]

  279. 226

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  282. [...] The author has a significant investment in bitcoin. Specifically, he went all-in two years ago after having run these very numbers. You've read the whole article. Why not [...]

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  286. 232
    Simon

    Is not the trouble with deflationary currencies they can’t meet the demand for money.

    In this scenario the obvious issue is competing currencies. Presumably there is nothing to stop the creation on an infinite number of digital currencies of similar nature.

    That said so far no one seems to be pushing infinite numbers of currency, but if suddenly another contender for the money arrives, and the pool of money invested is finite the value could halve quickly, and the investors spread their risk, or perhaps invest new money in the new deflating currency.

    That said well done for getting in early and taking the risks. Probably wise to push for smaller and smaller subdivisions in order to meet the demand for money.

  287. […] vangen – hoe het er volgende week voorstaat weet niemand. Hoewel sommige bitcoiners – zoals de oprichter van de eerste Piratenpartij – al hun spaargeld in de valuta hebben gestoken, zullen dergelijke waardeschommelingen niet […]

  288. […] del primo Partito Pirata, si è mostrato da subito un convinto sostenitore del futuro dei bitcoin dichiarando a maggio del 2011 di voler investire tutti i suoi risparmi in […]

  289. […] These past days, I have done a lot of thinking about bitcoin that ended up with me investing all of the money I had saved and all that I can borrow into the currency… CONTINUE […]

  290. […] In two posts now, I have considered the effects of Bitcoin on society. A lot of more thinking has been done than has been described in writing, and it has resulted in me putting all my savings into this currency… CONTINUE […]

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About The Author

Rick is 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. He has a tech entrepreneur background and loves whisky.

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