Assets are really weird. To make money you have to go to work. To save lots of money ($886k) you have to really push hard: Have a high-end job (at Google or a Big.Co.), have a university degree (better with a phD) and spend 20 years or more of your life to make that amount.
But somehow this guy made the same amount without putting really any effort or taking any risks. It's like inheritance when you are suddenly rich and collected all these years efforts.
What I'm trying to convey is that living without any assets is pretty darn hard in today life. As many (the majority) of people are inheriting wealth from their grand-parents and countries, they find life much easier.
I guess this also made life more expensive. Since they have the assets, this group can raise the prices (virtually) infinitely. They can exchange assets between each other, but people who are new to the game will be screwed.
I think the same thing is happening to Bitcoins. It's becoming too expensive that we'll see the 0.01% and the remaining of the 100%. It'll be probably as worse or much worse than real life.
> without putting really any effort or taking any risks
He sunk $27 into an investment that (from his knowledge at the time) had a high chance of ending up completely worthless, and a low chance of exploding in value (if bitcoin took off).
That isn't "without taking any risk". On the contrary, it was a very high-risk investment. In this case, it paid off. (It was a low value investment, but that doesn't change the relative risk: making lots of (un- or anti-correlated) low-value, high-risk investments, instead of one big one, is a way to reduce your total risk).
>> To make lots of money ($886k) you have to really push hard: Have a high-end job (at Google or a Big.Co.), have a university degree (better with a phD) and spend 20 years or more of your life to make that amount.
To be fair, you'd make this much in ~6 years as an engineer at Google. The problem with accumulation is that most people also will spend nearly as much over that time period and not have $800k in the bank.
This article really just tells the story that when there is a fixed supply of something, and demand increases, price increases of that thing. In some cases people have that thing stored in their attic and forget about it, in which case they get a pleasant surprise that they now can trade it for a greater value than they first purchased it for (assuming there is liquidity in the market).
Granted - the speed of the price increase of Bitcoin is very impressive - other examples from history:
- Man buys $27 of Gold Coins, finds they're now worth $886K
- Man buys $27 of Tulips, finds they're now worth $886K
- Man buys $27 of Railroad shares, finds they're now worth
$887K
- Man buys $27 of (insert .com boom company) Shares, finds they're now worth $886K
- Man buy $27 of Beanie Babies, finds they're now worth $886K
Yup. But the reason this is such a big problem for Bitcoin is that Bitcoin has greater aspirations than just being the next tulip or Beanie Baby. It wants to be a real currency.
And as long as its price is fluctuating like this, you've got to be kind of crazy to be using it as anything but a novel currency.
Buyers have every reason to be hesitant to buy things using Bitcoins because of the possibility that the pizza's worth of BTC they could spend today might be worth enough to buy a house in another couple years. If you had a lottery ticket that you had good reason to believe might be a winner, would you trade it for a pizza? I sure wouldn't.
On the other side of things, sellers have rational reasons to not accept BTC out of fear that the company's bank account might rapidly diminish in value.
The (non-speculative) Bitcoin community is this fascinating caricature of currency situation in old Soviet bloc countries. Practically speaking, dollars are more valuable because of their greater stability. But people go on using the other currency anyway because of politics.
Article claims it was "the first real-world bitcoin transaction". Without those first few transactions from enthusiasts, bitcoin may well not have taking off. And those 10,000 wouldn't have been Laszlo's only bitcoins. So from that POV, maybe it was a pretty wise investment :)
In 5 years it'll become world currency and in 10 years all other currencies will hyperinflate relative to it and will be abandoned. Gold will go down too as more people will learn that Bitcoin is more flexible way of "storing wealth".
> Bitcoins are reaching lottery-level payoffs. In 5 years, will be see a lot more of these stories?
I suspect not. Whatever the long term shape of the price curve is, I think that in the moderate term its probably something like a logistic curve, and this year saw most of the steep portion of the logistic curve and is already bending into the high-end slow-growth portion of the curve.
I spent the last year of my bachelors mining, earned something like £6 worth of Bitcoins and decided I would never spend them and donated to archive.org.
Shortly after the price skyrocketed... safe to say the biggest donation I've made to date. Oh well, can only hope it is helping them out!
This article briefly mentions the Silk Road "bust"; wasn't there much speculation that they could not actually seize his money because of the crypto nature? Does that mean they got his key?
144k Bitcoins, transferred in 324 ("FBI" on a phone) BTC increments. Presumably, they got it via either a plea deal or by finding it on one of his devices.
The bigger story about SR is that Bitcoin price did not collapse 10x after the shutdown. Which shows that Bitcoin is used as gold, speculative store of wealth. And so it reasserts itself as a viable wealth transport.
I have a lot of BTC lying around somewhere from way, WAY back when BTC was in its infancy. It kills me everyday not knowing how to get it back. I've been through a few computers so far and most of my data is gone.
[+] [-] csomar|12 years ago|reply
But somehow this guy made the same amount without putting really any effort or taking any risks. It's like inheritance when you are suddenly rich and collected all these years efforts.
What I'm trying to convey is that living without any assets is pretty darn hard in today life. As many (the majority) of people are inheriting wealth from their grand-parents and countries, they find life much easier.
I guess this also made life more expensive. Since they have the assets, this group can raise the prices (virtually) infinitely. They can exchange assets between each other, but people who are new to the game will be screwed.
I think the same thing is happening to Bitcoins. It's becoming too expensive that we'll see the 0.01% and the remaining of the 100%. It'll be probably as worse or much worse than real life.
[+] [-] SEMW|12 years ago|reply
He sunk $27 into an investment that (from his knowledge at the time) had a high chance of ending up completely worthless, and a low chance of exploding in value (if bitcoin took off).
That isn't "without taking any risk". On the contrary, it was a very high-risk investment. In this case, it paid off. (It was a low value investment, but that doesn't change the relative risk: making lots of (un- or anti-correlated) low-value, high-risk investments, instead of one big one, is a way to reduce your total risk).
[+] [-] runako|12 years ago|reply
To be fair, you'd make this much in ~6 years as an engineer at Google. The problem with accumulation is that most people also will spend nearly as much over that time period and not have $800k in the bank.
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] kitcar|12 years ago|reply
Granted - the speed of the price increase of Bitcoin is very impressive - other examples from history:
- Man buys $27 of Gold Coins, finds they're now worth $886K
- Man buys $27 of Tulips, finds they're now worth $886K
- Man buys $27 of Railroad shares, finds they're now worth $887K
- Man buys $27 of (insert .com boom company) Shares, finds they're now worth $886K
- Man buy $27 of Beanie Babies, finds they're now worth $886K
[+] [-] bunderbunder|12 years ago|reply
And as long as its price is fluctuating like this, you've got to be kind of crazy to be using it as anything but a novel currency.
Buyers have every reason to be hesitant to buy things using Bitcoins because of the possibility that the pizza's worth of BTC they could spend today might be worth enough to buy a house in another couple years. If you had a lottery ticket that you had good reason to believe might be a winner, would you trade it for a pizza? I sure wouldn't.
On the other side of things, sellers have rational reasons to not accept BTC out of fear that the company's bank account might rapidly diminish in value.
The (non-speculative) Bitcoin community is this fascinating caricature of currency situation in old Soviet bloc countries. Practically speaking, dollars are more valuable because of their greater stability. But people go on using the other currency anyway because of politics.
[+] [-] cruise02|12 years ago|reply
[+] [-] oleganza|12 years ago|reply
[+] [-] cruise02|12 years ago|reply
http://www.wired.com/magazine/2011/11/mf_bitcoin/
(From the 20/20 hindsight department.)
[+] [-] SEMW|12 years ago|reply
Article claims it was "the first real-world bitcoin transaction". Without those first few transactions from enthusiasts, bitcoin may well not have taking off. And those 10,000 wouldn't have been Laszlo's only bitcoins. So from that POV, maybe it was a pretty wise investment :)
[+] [-] ck2|12 years ago|reply
I guess just move the decimal point 4 places since it was 10k coins and that means the pizza is now worth over $2 Million
[+] [-] snorkel|12 years ago|reply
[+] [-] MrZongle2|12 years ago|reply
[+] [-] altoz|12 years ago|reply
[+] [-] oleganza|12 years ago|reply
[+] [-] dragonwriter|12 years ago|reply
I suspect not. Whatever the long term shape of the price curve is, I think that in the moderate term its probably something like a logistic curve, and this year saw most of the steep portion of the logistic curve and is already bending into the high-end slow-growth portion of the curve.
[+] [-] seanv|12 years ago|reply
shirotsku 29 October 2013 2:31pm
"Go back in time to the 80s. Buy shares in Apple. Sell shares in 2009. Buy BitCoins. Sell BitCoins in 2013. Profit."
JenniDark "Directions unclear. Bought Blackberry shares. Now what?"
[+] [-] oleganza|12 years ago|reply
[+] [-] JonFish85|12 years ago|reply
[+] [-] fdanconia|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] MHBerryman|12 years ago|reply
Shortly after the price skyrocketed... safe to say the biggest donation I've made to date. Oh well, can only hope it is helping them out!
[+] [-] jawr|12 years ago|reply
[+] [-] ceejayoz|12 years ago|reply
https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4...
144k Bitcoins, transferred in 324 ("FBI" on a phone) BTC increments. Presumably, they got it via either a plea deal or by finding it on one of his devices.
[+] [-] oleganza|12 years ago|reply
[+] [-] zvrba|12 years ago|reply
Most definitely not. It's more like an immigrant ghetto, together with Grønland.
[+] [-] hendi_|12 years ago|reply
[+] [-] rfnslyr|12 years ago|reply
Anyone know how to retrieve it?
[+] [-] Sam121|12 years ago|reply