wachtwoord

Why does bitcoin belong in the same conversation as gold? Why is there a large margin of safety at current prices? It does belong in the same conversation as gold, it's just better than gold and still much much cheaper. This brings us to the margin of safety: 300k >> 1k. @hellsten: You could have made the exact same graph for any of the two previous super-exponential growth spurts followed by crashes (the two blimps in your chart). It will probably repeat the pattern and crash at some point. Long term I think we're going way, way higher. @SD: QE is the exact opposite of Bitcoin. Because of QE, the USD inflates more and Bitcoin (as valued in USD) becomes more valuable.

If the currency and it's transactions need great computing power to survive, and at some point they are no longer going to issue fresh bitcoins, I'm curious what the plan is once the last bitcoin has been issued but they still need resources to track the transactions and fight off attempts to hack the system? As they become more valuable the issuers have incentives to issue more, I wonder if there is anything that would stop them? Bad publicity and loss of faith is certainly a strong one, but if demand is great that won't matter. For bitcoins to grow in value more and more people must be convinced they do have value. I think they are much more likely to produce a speculative bubble. Traditional money has the backing of Governments that have strong reasons to keep the currency stable, along with legions of people willing to trade them for real value. Gold is a rare tangible substance that has a long history of maintaining it's value through every disruption known to man. Bitcoins has neither of these and cannot in my mind be the "perfect currency". There aren't any issuers. The process is decentralized. Everyone controls issuing and no-one wants to deviate from the original plan because this will undermine the entire currency. When the block subsidies are gone the rewards will be restricted to fees paid for the transactions. This is growing and the idea is this will completely replace the block subsidy while being a strong enough incentive for the network to be secured.

Bitcoin is self-adaptive. The software is open source and is under constant development ('officially' it has never come out of beta either). If the majority of the network accepts a change, Bitcoin has just evolved and this has happened in the past (for example when introducing transactions that need M out N signatures to access the Bitcoins, enabling more use cases). Even if SHA-256 is compromised Bitcoin will evolve and shift to another hashing algorithm. Of course there exist many other cryptocurrencies. Here is a list with their current market caps http://coinmarketcap.com/ . Most of these are carbon-copy clones of Bitcoin however. Some introduce small features which are potentially beneficial: Litecoin uses a different hashing algorithm (Scrypt) and PPC introduced proof of stake architecture next to the proof of work one. However, because of the networking effects, both in usage, in adoption and in development it is unlikely for any altcoin to overcome Bitcoin without making a revolutionary contribution of the magnitude of the initial definition of Bitcoin. This is a very limited view at the best and only stating a fact without argumentation. Why do you believe Bitcoin isn't real?

Because it's properties make it the best form of money to have ever existed. So it's cheap at $1,000? What if it goes to $2,000? $10,000? At what point is it not a good buy? It's hard to value. Based on the amount of gold that is known to be in curculation, the price of 1 BTC would be >$300k if it completely replaced gold and did nothing else. The potential is even higher as the use of Bitcoin will unlock value that gold doesn't. For one Gold is hardly used as a currency. On the other hand Bitcoin is currently used by only a small portion of the population and therefore this is speculation on future usage. I feel there still is a very wide margin of safety.

Because it's properties make it the best form of money to have ever existed.

Just out of curiosity for the tech savy people: why has mining gotten harder over the last few years? 1. To keep the creation rate of Bitcoins stable. It was designed so that on average every hour 6 blocks (collection of transactions) will be created (mined). If there is more computational power the system auto-corrects the difficulty to make it harder (it also works the other way). 2. To make the total amount of BTC 21M and not infinity the number of coins being created needs to be reduced. Therefore block subsidy (the number of BTC created in every block) is halved every 4 years. The first halving (from 50BTC to 25 BTC) is almost a year ago. Miners create real value as they provide the security of the entire system. If you give me more computational power than the entire network I can do all sorts of nasty things such as rewriting history and spending my Bitcoins more than once. As I wrote above the block subsidy is halved every 4 years until it will reach zero at some point. The block subsidy however isn't the only thing miners get they also get the transaction fees of all the transactions they put in a block (this is expected to rise in time, see: https://blockchain.info/charts/transaction-fees?timespan=all&showDataPoints=false&daysAverageString=7&show_header=true&scale=0&address=). Fees are voluntary but miners can refuse to put a transaction in a block if they so choose. There is a convention for this (based on age of coins and size of a transaction in KB) that is currently followed by almost all miners. Long term I think the mining business will turn into a very low margin business as competition ill be quite severe.

There is nothing stopping more electronic currencies coming into being. A successor might take all of the hot money away and leave late stage investors nursing their losses. This is a possibility. Thus far none of the (many, many, many) altcoins have offered an improvement over Bitcoin. When there is no improvement Bitcoin is most likely to stay on top because of networking effects.

You can buy it and sell it again when it's worth more because more is offered on a free market. Further there is no single person that decides supply but rather the total of computational power behind the system (hashing power) that is used to protect the network from false transactions. You can join in if you like (I have in the past, now it's unprofitable with a video card because of the increase in total computational power). Furthermore supply is fixed, no matter the total computational power. There will never be more than 21 M BTC. You can book a flight on an airplane or a spaceship. You pay for a college education or buy a sandwich. I'm sure a year from now you will be able to use them in more places than now. You can buy many many more things with them and quite diverse. For instance the biggest online fast food business in the Netherlands. OKCUpid accepts Bitcoin too btw ;). And basically everything with http://all4btc.com/. Further there are many intermediaries who will plug into popular online merchant systems and allow the merchant to either receive the equivalent value in fiat currency, Bitcoin or a mix of the two. These have been quite popular.

Your two main questions: 1. Intrinsic value: What is intrinsic value? To me, intrinsic value exists when something is scarce and useful. Bitcoin is scarce (21M total supply) and its usefulness lies in it's properties: Divisibility, irreversibility, transportable etcetera. It actually fullfills the properties of money better than gold. Read: http://evoorhees.blogspot.nl/2012/04/bitcoin-libertarian-introduction.html and http://evoorhees.blogspot.nl/2013/05/bitcoin-2013-role-of-bitcoin-as-money.html 2. A Ponzi scheme is something completely different. A ponzi scheme has someone or some organization who issues the ponzi to make money and there isn't one here. Also, in the history of Ponzi scheme's I'm not aware of one crashing (multiple times) and subsequently continuing again like nothing has happened. Of course it is possible to run Ponzi scheme's with Bitcoin just the same as with other forms of wealth (primarily fiat currency). In fact, to me, fiat currency is the biggest Ponzi scheme ever devised. Lending money and subsequently printing more money to debase the value and in effect pay negative interest rates (qualified in purchasing power) in an ever continuing spiral does have the characteristics of a Ponzi scheme.

I just wanted to bump this for the people that missed out last time because the exchange rate has exploded upwards once again and I think some who dismissed the notion completely might want to have another look at it. http://bitcoincharts.com/ and the SecondMarket trust: http://www.bitcointrust.co/#Historical

The more nations with ballistic nukes, the more stable the situation IF everyone acts rationally. I want everyone to have nukes.

I think this will end up being a personal choice. I value independence a lot and have a entrepreneurial personality so I would probably opt for the more boring analyses in my own fund. Salary and future possibilities are also factors though. Don't be afraid however to one day wake up in a job you always dreaded waking up in! You will be there every step on the way , constantly re-evaluating whether you're still doing what you want to be doing. When this is no longer the case, take action! Good luck on your decision and congratulations on having the opportunity :) PS: Analyzing sovereign debt does sound seriously boring though. I'm curious whether you'll find enough information to make decisions about low grade sovereign debt in an informed matter.

Read this: http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect :) (Dunning-Kruger effect) What is a WEB buy?

Don't the CEOs get paid? They need extra employees to guide the conglomerate rather than just the separate companies ones would say. Morningstar agrees (fair value $143). I probably should have investigated when they were $8X last year ;) (I passed because I couldn't find any FCF figures)

The Netherlands is 1500-1800 Euros per year to attend university. BUT only for Europeans, people from outside the EU pay 12-15k Euro. THAT is the real price, the rest is just subsidized. I'm lucky to have been able to take advantage of this, but now I'm done I would like them to stop it as soon as possible. This is paid from tax money! Being a PhD candidate is considered a researcher job at a university so you get a salary (ranging from 2k Euro to 2.8k Euro monthly, but don't compare wages because taxes are insane here compared to the US) and pay no tuition because of this. We also don't follow classes as PhD candidates though :)

I'm going to present to options which are at best morally questionable but her situation is so shitty they are the only real ways out I can see: 1. Flee. Leave the States, get a new identity elsewhere and start over. 2. Get knocked up by some rich guy and convince him to marry you (at least she's attractive and many men are really clueless). After a few years you can leave him again. Like I said, not the best of options but purely rationally probably the best two options from the woman's viewpoint :( Edit: I forgot to answer the question. For me it would not matter as long as I could shield myself completely from being liable for the student debt. Then long term she should probably stop working (except if she likes it) because it's a complete waste of time earning wise (and a spouse without income is not something I would mind). I'm not sure if it's possible in the US to shield yourself in this fashion. In my country just not marrying is likely not enough as the mere act of living together for a prolonged period (even platonically) creates liabilities. I'm not sure of the details though. If I were in the situation I would certainly make sure I knew exactly what I was getting into. Same here in the Netherlands. The PhD I did was fun, I got to travel the world, made nice contacts and I learned things (mostly actually unrelated to the PhD, value investing is one of them). It's unlikely I'll be hired because of the degree however. Most people don't even understand I don't want to look at their mole :)

Sorry Plato, I used the forum search function thinking it worked (it doesn't find anything on "GNCMA"). I'll use Google from now on, thanks! (and no need to get grumpy ;)) There is no topic on that that I could find. Could you elaborate? A very quick view showed a small-cap (<$400M) company in the telecom industry (not the most loved industry right now) with a high PE but low forward PE, negative free cash flow, high (>1$B) in debt, low (<2%) margins, low ROE (<10% but growing), insider buys and a recent earnings call. What got you excited? :)

There is no topic on that that I could find. Could you elaborate? A very quick view showed a small-cap (<$400M) company in the telecom industry (not the most loved industry right now) with a high PE but low forward PE, negative free cash flow, high (>1$B) in debt, low (<2%) margins, low ROE (<10% but growing), insider buys and a recent earnings call. What got you excited? :)

I would advise to invest in an index fund, preferably a wide one such as the S&P500. If you want to with a mutual fund I would go with MOAT as well.

I don't think Kelly applies as this requires bets to be independent. Every two investments in the world are likely correlated and most are correlated quite strongly. Further, it's really hard to estimate an accurate win/lose chance for an investment. If using this system makes you feel safer I guess it's okay but it's all a bit arbitrary to me.

EXC @ 28.16

Kyle: I don’t think that they’ll be able to raise the Fed funds rate any time in the foreseeable future—3 to 5 years. Jim: So, that would argue that stocks would be a better play. Kyle: Unfortunately…because it feels like they’re making it the only game in town. It’s not your choice, but it’s the only answer though. http://www.financialsense.com/contributors/kyle-bass/fed-raise-interest-rates-3-5-years-stocks-only-game-in-town Well fiat just doesn't preserve purchasing power. It should be used for short term liquidity only. Not that there are many options for preserving purchasing power but Gold, Silver and Bitcoin come to mind.

Very good reason to keep refreshing this board :)

Could be both, couldn't it? ;D This time I'm not even going to respond to any future guesses at all. You guys are seriously too good at this, and any clues I give, somehow you will figure it out. I've learned my lesson once now already. Cheers! I really hate it when I cannot solve a puzzle and the answers aren't in the back for me to cheat ;)

Depending on how you measure 6-16% And I think I have way too much cash and are being overly conservative. Fiat currencies are very bad investments as you are guaranteed to lose a couple of percent of purchasing power a year.