So whats the buzz about Bitcoin?
Well, what exactly is Bitcoin? It is an anonymous virtual currency ( read: money ) that is decentralized. There is no bank, no middle man. It is a system that is completely automated system that manages itself. There can only exist a finite number of coin, no one can ‘print’ more coin, and the system is entirely encrypted so you can’t trace it back to buyers or sellers.
Sounds weird right? Well its been insanely popular and successful as of late. Read on for my hands on experience with the coin.
So there’s 2 ways of dealing with Bitcoin. Buying/Selling/Trading Bitcoins directly or by mining bitcoin. I have personally dabbled in both for about 3 years now and have had relatively great success. Checkout the video to learn more about what Bitcoin is and what I’m talking about.
So first, buying and selling Bitcoin. I first got into BTC because I wanted to do stocks. I had money laying around I wanted to save up, but interest rates suck. Then I found bitcoin through an online community, and I decided to invest a little bit. Back then, bitcoin went for $10 a coin. Had I known what I know now, I would’ve went into it much more. As many investors would say of course. I traded primarily on the Mt.Gox exchange, which went well back when Dwolla was around. Dwolla was a Paypal like service which I could use to put USD and take out USD into the BTC market very fast. But sadly, they banned the service due to a lot of issues. My success with trading was mixed. I had my ups and downs. Relatively I came out positive. And I used that to get into mining.
At the time I had a few AMD graphics cards in my computer. These cards could be used to mine Bitcoin. It’s a long story behind what ‘mining’ bitcoin is exactly and a quick google could help you out there. But essentially, blocks of bitcoin exist on the network as rewards for ‘work’. Work is done by these computers, or in my case graphics cards, and thus the workers are rewarded with bitcoin in chunks known as blocks. Find a block, get 50 BTC. That was $50 at the time and they were relatively easy to get. People would form ‘pools’ and work together, splitting the reward to the workers proportional to their work output. I made quite a bit of bitcoin that way back when because it was easy, fast, and no one else really did it.
Then suddenly ASICs came. ASICs are computer hardware specifically made for encryption. They can do what the graphics cards can do ten fold at half the price. I immediately jumped on this bandwagon with a Butterfly Labs preorder back in early 2012. A 60Gh/s BFL Single that cost me $1,000 and change. I had to bank wire it up front in the early summer of 2012, with an anticipated launch date of December 2012. That deadline came and went. Then so did January, March, May. BFL delayed over and over and over. Bitcoin was all over the place too in value. It went up to $60, then down to $5-10, then back up. Finally it eventually hit $100 or so, and I finally got my miner in August 2013 just before I went back to school. I was making almost 3/4 Bitcoin a day. But because the mining system is automated in that the more mining power exists, the harder it is to get a reward. With the ASICs FINALLY rolling out, it got hard to mine. And fast. Butterfly Labs messed with a lot of people by releasing their cheaper line-up, the 10Gh/s Jalapenos, almost 2 months before the big guns. Theoretically, I could have tripled my profits if I bought my 60Gh/s in 6 jalapenos because I would’ve had them so much earlier. It was very disheartening.
I broke even on my $1,000 investment in nearly a week and a half, then proceeded to double it. That’s when my KNC Mercury miner arrived. Just before I got my Single in the mail back in August, I preordered a $2,000 100Gh/s Mercury in July. So Butterfly Labs was playing around essentially because what it boils down to is some Swedish company pushing out a better product in 2 months compared to a company that pushed it out taking a year and a half almost, with all the money paid by customers up front. Borderline fraudulent if you ask me. And the best part is, the Mercuries outperformed 100Gh/s. They do 120-140Gh/s. So I was making almost half a coin a day again with both the KNC Mercury and the BFL Single at a combined 200GH/s in early October.
That’s when things got crazy. Bitcoin shot through the roof. It went from ~$80 to $200 is almost a single day in October. I sold a bunch to break even on my mining investment – all $3,000 of it. Then it hit $300. Then $400. Then $500. On November 18th, 1 Bitcoin cost nearly $980. The US Senate had a hearing about Bitcoin, calling it an official currency and that it acknowledges its existence essentially. People were buying and selling BTC like crazy. I watched it all live too. The Chinese had been buying into bitcoin. The Yuan isn’t doing very well and its hard to get money out of their country. Bitcoin, they feel, is great for them so they caused the initial bursts in price. But the US Senate hearing really made it fly through the roof. It crashed a little after that down to $600, but as of this writing it is at $760 at Mt.Gox.
I’ve made quite a chunk of change off Bitcoin. Primarily through mining but a little here and there with trading. I plan on paying off student loans, and I recently bought a PlayStation 4 and Xbox One with some of that profit. I have made a lot.
I’m not really using Bitcoin for its primary purpose though. Many are, and I should begin to do so myself to show support. Bitcoin is powerful. Its anonymous, nearly instant transfers, no banks, [usually] no fees, no limits, secure, pure value. Completely automated. Originally, it was used primarily for illegal drugs and guns but now its much more. You can buy home made goods, retail products, gift cards, books, and more. There was recently a Vine about it where a Subway was accepting BTC. That is insane!
Bitcoin is here to stay. Rest assured. I just got an upgrade module for my KNC miner. My original plans were to make a few BTC and duck out, sell my miners by December. Now, thats changed. The market has changed. The value and power of Bitcoin has changed. The landscape of currency is evolving and people are akin to it.
To the moon! ┗(°0°)┛
For fun, checkout this thread where people legitimately believed Bitcoin would never breach $20.