Feature Friday: Gifting Bitcoins
When our kids were born, some of our friends and family gave them savings bonds. I think we still have those savings bonds somewhere in a file in my office. I should check on them.
What are this century's savings bonds? Bitcoins, of course. I have a friend who gives Bitcoin at Bar/Bat Mitzvahs. I love that move. I plan to do it myself.
So how does one give Bitcoins? Via our portfolio company Coinbase of course.
It's this simple.
1) Go to Coinbase and open an account
2) Connect your checking account to your Coinbase account like you do at Paypal
3) Buy Bitcoin and store them in your Coinbase account
4) When its time to give Bitcoin, you just send the Bitcoin via email to the lucky recipient. They click on the email and claim the Bitcoin in a their very own Coinbase account.
Of course this lends itself to regifting without worrying that you are regifting something back to the person who originally gifted it to you. I have a friend who actually did that. Makes me laugh every time I think about it.
umm, i don’t know, it sounds a bit complicated. demo please.jasonpwright at yahoo dot com
Nahh. Its simple. Give it a try
can people from outside the US with a paypal account use coinbase?i thought aml and kyc regs stopped coinbase from accepting overseas customers.
That may be true
i think so. a pity. i prefer that a secure exchange holds my bitcoins. i can’t trust myself not to make a technical blunder and lose my coins. that would be very unfortunate.a guy at an exchange said he did exactly that and lost $200,000 of his own bitcoin in the early days.
yup, most people are like you, and this is the problem with bitcoin: too anarchist to offer the security of control. bitcoin insurance will be hard to come by and will be even harder to be legitimate.
yes, know the market.
perhaps coinbase would care to give an update here.
Is that ruling yesterday that bitcoin is a “currency” good or bad? Seems to give it legitimacy but also US supervision legally.
Not sure. But I am of the opinion that legitimacy and regulation go hand in hand and if you want the first you have to accept the second
Re US supervision industry needs to get out in front of the issue and make their own framework to keep nasty things under wraps and in control. Similar to what is done in medicine and law. And other professions. Also a good way to limit competition. Now’s the time. That way the politicians will be able to point the finger and say “it’s being handled and it appears to be working” and only deal with extreme outlier regulation.
depends who you are. if an investor with deep pockets it’s good because the cost of becoming compliant is huge and therefore a barrier to entry for ankle biters. becoming a money agent in 48 states will be too high for most. the market becomes a select cartel overnight.European regulators have stated that bitcoin is not a currency, at least for now. Bafin (the very powerful German financial regulator) has released a very carefully worded statement to this effect.
regulation will kill it, just like regulation is trying to kill lyft, airbnb, and all that type of stuff. only difference is regulation will attack even more viciously something that goes after the money supply.
I’ve soften a bit about Regs as I got older.If we had some derivative regs in 01 for CDOs we would have still hit a wall but nothing like what happened. There is some balance there and you need to deal with that to play in the US
in a system like the current one in which the regulators are corrupt, the regs just empower existing players. dodd frank didn’t put anyone in jail, just made it harder to start a financial services company.
This is awesome ! I still don`t understand how it works in terms of exchange rates . Maybe I am saying something stupid . Help me 🙂
Its a market exchange rates move in real time. Go to coinbase.com and click on “charts”
Good idea! Joy and I have the same issue and may look into it.On other note, saw this headline last nighthttp://www.france24.com/en/…imagine a drone dropping a cup of refreshment from 50 feet via parachute 😉
Coinbase (a USV portfolio company…) 🙂
and Charles Lee (Mr. Litecoin) just joined the company.
In Fred’s defense he’s usually good at disclaiming these things.I only know because it really irks me when people don’t. A good example is the nitrous.io site where two of the front-page testimonials are from investors (it’s a good product btw).
Ya I know! which is why it’s a glaring omission this time 🙂
:). Especially funny in a post urging folk to spend their hard-earned money.
great catch. fixed it. thanks for catching it.
Love the idea. Only problem is Coinbase TOS say you must be 18, so that could present a problem for your recipients.
and chocolate money is so much more tempting
hmmm. that’s an interesting problem.
You only have to be 18 to exchange dollars for bitcoins with coinbase. Once they are bitcoins there is no control over who you give it to. While coinbase may have a means of shuffling them around internally nothing stops you from sending it as a payment to any bitcoin wallet.
i was interested to read a swiss fund is backing an asic mining hardware company. some talk of an asic mining farm to try to corner the market in new coins and throttle the supply to push the price up.
i think that turned out to be a fake story
then it must have been a litecoin story
http://online.wsj.com/artic…how did it ever get published? wsj rep takes a hit
wait till they try to seriously own the transaction validation chain
Coinbase is making me really uneasy. I bought BTC at $102, everywhere I look the price right now is about $103, and yet Coinbase tells me my BTC are worth $93 apiece today. Maybe I am uneducated w/r/t currency transfer, but I bought my BTC at the FMV of BTC that day, and now they are telling me mine are worth 10% less than given market price day to day? That’s either a huge / ridiculous fee, or they are capitalizing on the fact that it is really hard to liquidate BTC into USD.Maybe explaining why this is would make for a good AVC Post one day, because the Coinbase team has barely responded to my questions other than saying “we use the average of a lot of different BTC prices to arrive at our price.” Oh.
how many days is it since you made your buy?
Jason – purchased around 6/28 for $102 per BTC. About two weeks ago, Coinbase’s graphs stopped updating data, and all of a sudden their prices were (and still are) out of whack with the rest of the market, as far as I can tell.
the apparent debasing of your bitcoin deserves an explanation.
It hasn’t been debased. It’s fallen victim to an enormous spread due to a highly illiquid market. Bitcoins can be bought for $103. As you can see, the price at which they can be sold is much lower.That’s how Coinbase makes its money. No different than the gold coin sellers floating around on late-night CNBC.
TKR – thanks for response, I would agree with the idea of the spread in an illiquid market but for the fact that Coinbase’s BUY price is also $93. They are just 10% off of the market price for some weird reason, and have been consistently for a few weeks. But when I purchased originally, this wasn’t the case.Something has obviously changed.
It’s like purchasing gold or any other alternative currency. The currency is pushed hard by he exchange as a hedge or source of value but all they really care about is driving volume for trades of relatively illiquid assets so that they can make an enormous spread.This is just hucksterism. If Fred really believes Bitcoin will be successful and will necessarily require regulation, how can he also believe that a startup like Coinbase, operating entirely outside the traditional financial system and without any regulation will be successful? Why not make Coinbase form an NA and seek FDIC protection for its depositors? Too capital intensive? Or just too ‘heavyweight’ for what is really just a pump and dump scam.Bitcoin may or may not succeed but the notion that Coinbase exists for any reason other than selling shovels to prospectors is delusional.
i don’t know what’s going on in your particular instance, though the illiquidity/volatility is going to necessitate a higher spread.
right, yea understood. just confusing because their buy price is also 10% of the MT Gox / Coindesk / BitcoinChart / etc listed price. Shouldn’t somebody be arbitraging this? I suppose since its so illiquid and there is a cap on the daily BTC purchase amount, it may not be worth the hassle. but still, its just bizzarre to me that Coinbase is 10% less than the market price, both buy and sell, over the last 2 weeks. would like an explanation from them.
“market price” is a fiction. The only real price is what someone will pay you when you’re selling.
Understand your concern. Remember the subject involves savings bond. So we’re looking at a gift for a ten yr old that is meant to be stored away for a number of years.
Dave – it’s holding a currency, not a bond. The time value of interest is meaningless in an asset that bears no interest. Increase in valuation depends entirely on external factors, either increase in demand or inflation.Neither of which is a good investment strategy for a 12 year old. Or maybe it is – maybe every kid should get penny stocks, cause what the hell?
The earlier you learn (e.g. 12 yrs old as compared to 22) that you can be “churned and burned”, the better, no? 😉
Haha – bingo!
Thanks for the clarification. But keeping simple. We get our neices/nephews savings bonds, let’s say for $25 that will be $50 when they’re entering college age. I guess we could do a halfer where we could do both and as they’re 16-18 start to look at the value of one vs. the known value of the other.
Audit the Federal Reserv…er, yeah, that’s a good question.
YES! I purchased Bitcoin on June 4, July 11 & July 12 via Coinbase. On each occasion, the buy / sell price was within a percentage point of the largest exchange prices.However, in the past 2 weeks, something changed in how BTC is priced on Coinbase. Their handy price chart literally has an unexplained gap from July 22 to August 6, during which time the spread vs established exchanges of BTC price at Coinbase went from <1% to nearly 10%.To compound the problem, Coinbase seems to think that they can take the ol’ startup route of automated non-customer service. I send them a note asking why my $$ was devalued by ~10% overnight with zero explanation, and they auto-respond “Thanks in advance for your patience and support.”In reality, I don’t have patience for my $$ being devalued, and I don’t support the unilateral, unexplained decision by Coinbase to revalue my money. I expect that someone holding $$ on behalf of me can muster a real answer that is better than the one I received: “We base our price on the average of a variety of exchanges, so sometimes our price differs from any one particular exchange. As the exchange differences stabilize, our price should be naturally self-correcting. My apologies for any trouble this has caused you!”The problems with that answer are pretty self explanatory (to start with, it’s a non-answer that is impossible for me to validate). The recent price action and company response by Coinbase don’t signal a company that is going to be around when your kids grow up to help you convert your Bitcoin to cash dollars so your kids can go to college.
Coinbase didn’t revalue / devalue your money. They are a conduit to enter the btc market. They do not make the market. If the exchange they were using is having issues then they shift exchanges. Your anger is misplaced.
No anger here. Merely a loss of confidence in and concern about Coinbase due to meaningful changes in how their price tracked to the exchanges w/o a clear explanation from the company.But the response today is a great start on earning back that confidence.See my historical thoughts on the company: https://twitter.com/search?…
> I expect that someone holding $$ on behalf of me can muster a real answer that is better than the one I received…Coinbase does *not* hold your $$. They’re not allowed to. They can only hold your BTC.> during which time the spread vs established exchanges of BTC price at Coinbase went from <1% to nearly 10%.Sounds like an opportunity. Why don’t you buy bitcoin at Coinbase, and sell it at one of these “established exchanges”? Sounds like an easy 10% gain, right? Shouldn’t you be thanking Coinbase for *selling* bitcoins so cheap – compared to “established exchanges”?
This is why Bitcoin is so, so bad right now. Basically, Coinbase is covering their ass.The main problem here is that you really can’t get out of bitcoin efficiently. Hell MTGOX stopped allowing withdraws this summer! That’ll spook a company like Coinbase.Image below is from this morning on BitFinEx.com…. that’s one of the exchanges that allows short-selling and processes withdraws in a timely manner. Their price is $93.Looks to me like Coinbase lets you buy at the high ask (MTGOX) and sell at the low bid. (BFX)At least, that should be your conclusion until they actually get back to you about the 10% ding you took by moving to an alternate currency….EDIT: To be fair to Fred Ehrsam above, I retract my conclusion that Coinbase is crushing you on the spread.To be fair to my conclusion above, it shouldn’t have come to an AVC blog post for Jason to get his answer.I stand by the idea that bitcoin is very, very bad right now with two markets 10% apart because people can’t withdraw from the main player.
are you holding bitcoins?
what would you need to see change to buy?
i’m with you.
that’s a bit of a spread
Did you notice that you can also *buy* bitcoin at a “10%” discount too?
Fred from Coinbase here.Jason, the places you are looking at prices refer to prices seen on MtGox, one major Bitcoin exchange.However, people have not been able to/have had great difficulty in withdrawing USD from MtGox for weeks. This makes the price on MtGox artificially high, as people disproportionately buy Bitcoin should they have any USD they want to take off the system. If you look around at any other exchnage or service provider, you’ll see they are relatively in line with they prices we display. Also, just to check that we’re being fair, you can see our buy price is very tight with our sell price, so it’s not like we’re taking the best of both worlds. The price actually was $102 not long ago as you said – its not as if you bought and we instantly revalued them lower.Sorry for the confusion and long explanation, but I hope this answers your question!
Fred – thanks so much for taking the time to respond here. I’ve been really concerned for weeks b/c I hadn’t heard an answer directly from Coinbase with this level of transparency.
Good answer Fred…. which exchanges does Coinbase normally push through?
thanks for stopping by
Opposite of the gift that keeps giving?
Thanks for coming by to explain this, Fred.As a Coinbase customer – I will just say that I’d prefer not to have to come here to get a direct answer from your team. Please do right by your customers and answer our Twitter questions / emails with more than generic replies. The past few weeks have damaged my trust in your platform, and when it comes to some entity that is holding my money, a lack of communication is a huge red flag.
“What are this century’s savings bonds? Bitcoins, of course.”corrected the typo in this sentence, see below.”What are this century’s savings bonds month’s penny stocks? Bitcoins, of course.”
Right – because it makes total sense to compare legal interest-bearing obligations of the world’s reserve currency to an off-the-books imaginary asset who’s valuation is driven entirely by speculation. Why not just give them a big box of tulip bulbs?
Because nobody will pay $100 for each of your tulip bulbs.
Surprised to hear you say that. I don’t own bitcoin, but the idea of a currency that can’t be manipulated by central bankers is a compelling and interesting idea.Bernanke’s war on savers has paved the way.
under the current system, it’s bernanke’s war on savers. under bitcoin, it’s whoever’s war on the whole thing. wait till there is enough incentive to control the transaction chain. someone might already be putting the pieces in place for that.in my opinion the real solution is a better central bank, not the absence of one.
I’m not sold that this century’s savings bonds are bitcoin
The century is young and you have to start somewhere.
I’m not either, but that could be attributed to my ignorance and lack of investigation/analysis devoted to the topic. Through no fault of Fred’s; he’s provided ample opportunity to become educated. 😉 It’s on my list once I get other more pressing matters sorted.But bitcoin as a gift is not such a bad idea and pretty low risk. I will definitely consider doing this.
No offense to Fred here but he compared an instrument that gives returns to 1 which is pure speculation. It makes absolutely no sense. Might as well go spend on zynga chips.
Let’s make it really simple. Bitcoins Everywhere. Any further questions?
Stop talking your book, Fred
BTW, when I called you out last fall on the BS over at Boxee, you didn’t hesitate to push back and declare you were ‘in for the long haul’. What happened to make you change your mind and bail out? Could it be that all your bluster was just that – hot air?
#ohsnap #brutal #beefalert
Trolls who hide behind anonymity aren’t the most admired people in this bar.Maybe it’s that Fred didn’t run the company and despite his backing, the founding team decided to move on?You will never know because a good board member never tells (at least without permission).
How does the community feel about declared sycophants?I see – Fred should be public about the benefits of his companies and never acknowledge any of the challenges? That’s just cheerleading.Fred loves to talk his book. That’s not a crime and may even be admirable. And it’s nice that he allows dissent on his own blog. But when someone is using their pulpit to advance a very personal agenda, it shouldn’t go unremarked and pointing it out isn’t trolling.
it’s native advertising
Pointing out that someone was wrong or criticizing them is one thing. I’ve done it before, and Fred has even agreed with my critique of what he wrote.Doing so behind the cloak of anonymity is another.And…just straight out instructing someone what not to write about on their own blog is still quite another.Come back under a different identity and be a productive member of the community. Note that I didn’t say “positive” but simply “productive.” You’ll be welcomed.
Aaron – the whole anonymous / persona issue is well-trod Internet ground and no need to bring it up again. Sorry I don’t have a company to flog via my profile and I don’t think the weight of my arguments will be strengthened by the weight of my résumé.
Anonymity has its place, though it significantly weakens your argument in this case.Instructing someone what they can and cannot write about on their own blog does not.
Can you define what you mean by “anonymity”.For example is JLM  anonymous or myself ? All of us who have been here for some time know what his real name is and what company he is (or was) involved in but to others he is in a sense totally anonymous (as opposed to you where it’s totally apparent, or Hirschfeld, Swan etc.). What about sigmaalgebra? Who is that guy? I don’t know who he is?So I think the problem is not the anonymity but the way something is said. (Perhaps it might seem better if the comment isn’t anonymous and/or we all know the commenter..) Oops. Noting today that it’s easy to figure out who JLM is but I don’t remember that always being the case where you could tie his name to his initials. It actually took me some searching to figure that one out.
To be clear — I am not opposed to anonymity. I do think it lessens your credibility in making that kind of critique. That guy sounded like a former employee or a minor investor in Boxee. Who knows?However, I don’t think anyone has any place telling Fred what he can and can’t blog about. Nobody is forcing him to read it.
“However, I don’t think anyone has any place telling Fred what he can and can’t blog about.”Well taking the other side of that (practice in arguing both sides of a topic which I find helpful) I would say that commenters like that are like the customers in a restaurant that complain. The pains in the asses. Those are the people that sometimes express opinions that others hold and open up their mouth (while others say nothing). They make things better for everyone else. Not the people that say “everything is fine” or don’t say anything at all.It may or may not matter to Fred it’s up to him. But it’s entirely possible that there are many people that feel the same way (and well we, or I, or you might not want them here!) but not expressing that same negative opinion or thought.Of course my other comments about how to say things still applies here.Along the lines of my last sentence disqus please implement a feature that allows you to proof prior to posting a comment.
This is Fred’s bar.I’ve come here a lot and criticized his points, disagreed with his views and argued for mine.But I won’t tell him what is valid and invalid for him to write about.That’s like going into someone’s bar and insisting that they turn it into a rehab clinic.If you feel that way, go start your own.
The issue isn’t who you are, what you’ve done, or even what you might be trying to do now…it’s that by specifically not having an identity (fake or real) you take all the credibility and focus away from what you say and instead put it on ‘why you say it’.You don’t have to use your real name but if you use some type of consistent identity people will focus more on what you are saying rather than how or why you are saying it.On the internet, nobody knows you’re a dog.
Most of us know this is one of his investments. But you’re right, he should have pointed it out. Probably an innocent oversight on his part.
“Most of us know”(Wasn’t his intention he does as others have pointed out normally disclose).That said I don’t think “most of us know” since there are many people who read who don’t comment.But even given that I think that most people should learn that a blog is not your physician’s medical advice and there should be no assumption at all that someone is wrong for not fully disclosing everything and anything that might give them a bias.After all assuming you are still with disqus certain people would expect you when making any comment regarding disqus to disclose that.And some people have a big problem with people making suggestions about something and then putting in a paid link that they earn a trivial amount of money from (I don’t at all). It’s De-minimis. If you are in business get used to people pushing what benefits them and their agendas (or politics) I guess. Or the church. Etc. It’s the way the world works. Be a cynic and be skeptical and you will be on the right track in terms of thinking.
True – I was referring to us regulars – and that was myopic of me. (Disclosing that now 😉
Ah, but this isn’t a pulpit. It’s a conversation. It’s fine to air your differences in a conversation, as you have. But when you do it with a mask on (anonymous), your credibility suffers.
A rose by any other name…
enjoying the numerous beefs you’ve started in this thread, tkr. you came out swinging this friday! :)regulars know “feature friday” is really “ad friday.” perhaps it should be disclosed. personally i don’t care much if ads are disclosed or not, though when i am responsible for that decision, i go with disclosure because i don’t want to get called out on it, as you have done. i think calling out is a form of enforcement of sorts.
“and pointing it out isn’t trolling.”I think what people respond to is more like “if it looks like a troll acts like a troll it’s a troll” then they throw out the troll label because it’s easier then taking the time to pick apart an argument and tell you why you might be wrong. (There is probably some wikipedia page on this concept but I don’t keep track of that stuff).Likewise you can remove the troll label that people give by simply using language that the brain doesn’t automatically flag as troll like. It’s like “red feathers” on a bird experiment. Similar to how the dentist nums you with novocaine prior to sticking you with the needle. It still hurts but not as much (even less if they give you the gas). Drill away!In any case making a statement like “How does the community feel about declared sycophants?” is sure to get everyone’s back up  because nobody is going to admit they are a suck up, right?So what you need to do (you don’t need to do anything of course I enjoy what you say and how you say it it’s fine with me) is to preface the negative with a little novacaine.Like this:”I really enjoy what people are saying here but sometimes I feel that the some members of the community are a little to much like sycophants (perhaps). Fred loves to talk his book which is great and I don’t think it’s a crime either. However it’s equally important that when someone uses their pulpit to advance an agenda others pointing that out is totally acceptable. What do the rest of you think? Am I wrong for thinking that?”Once again (using my own method) I like your comments so please continue to same them as you really do want to say them.  Seriously not bs. No time for the link I will try and find it. Except Kid Mercury You can give as much extra schmeg here as needed to blunt the things you are saying just like dosage of anesthetic. I’ve used a small dose. Use the smallest dose medically necessary.
we never hesitated in our support of Boxee. we made four investments over five years. its a tough market and folks were tired. when i say folks, i don’t mean me. when samsung came calling, it was welcome. i don’t feel badly about anything that happened with Boxee and wear that investment proudly on my sleeve
I respect that. That’s candid and honest and I think as valuable as everything else you do.Thanks for opening up.
Is that a health drink, Mr. Kid?
tkr – In the future, when I need an example of passive-aggressive I’ll just link to your disqus profile.
i may change the name of this blog to “talking my book every day since sept 2003″if you don’t like it, please don’t come herebecause that’s what i do
No worries, Fred. Like I said – you have every right to do what you do and if I were one of your portfolio CEO’s, I would be grateful. I also think your commitment to keeping the comments open is admirable.I’m just not sure everyone else here can recognize rose-colored glass.
there is a lot of sucking up and ass kissing here for sure.and i appreciate the people who disagree with me and point out the flaws in my argumentshow else will i learn?
oh snap! tkr started the beef with a powerful one-two combo. did that scare fred? HELL NO. responded back with an uppercut! #beefescalation
Waiting for you to reply to the comparison to late night gold scams. So?
the difference between gold and bitcoins has been discussed countless times already. here is a short recap:1. gold has a market cap thousands of times larger than bitcoin making it a more stable market2. gold is not dependent upon electricity3. gold is easy to understand4. gold is already treated as a monetary asset by “official” authorities. all the world’s central banks hold gold, report it as part of their balance sheet, and many of them mark it to market prices. these are the people who print money and do this. they don’t do anything with bitcoin.
No, specifically this. I didn’t ask why bitcoin was different than gold. I asked for a comment on how coinbase makes money vs. “gold coin sellers floating around on late-night CNBC”.”That’s how Coinbase makes its money. No different than the gold coin sellers floating around on late-night CNBC.”
okay, then anyone who sells anything on late night tv is the same. not much insight to be gleaned there.
“since sept.” speaking of which…
At instapundit.com there is a link to a story where a federal judge ruled that Bitcoin can be regulated. It’s a medium of exchange. Good and bad
Unless, as an investor in Coinbase, you are now saying that Bitcoin are an investment vehicle then no – BC are not, should not and will not be the savings bond of the this century.Bonds are a debt security issued while BC is a form of currency.Blurring the lines between the two on a blog you *know* is as widely read and influential as yours is – in my mind – quite irresponsible.Unsubscribing from the feed now.
It’s interesting how polarizing Bitcoin is. I’ve never bought any and don’t intend to at this point. But it’s just silly to play the “take your marbles and go home” card at this point.The interesting thing is — I don’t think Fred should see Bitcoin as a savings bond either, only because that implies that Bitcoin is a place to hold money, let it appreciate in value and turn it back into USD at some point.The only way Bitcoin really works is for it to turn into a real currency that I can pay my rent and buy groceries with. When that happens, I will care as much about the Bitcoin-to-USD exchange rate as I do about the USD-to-Euro exchange rate on a daily basis.If you have no need for dollars and can do life in Bitcoin, you don’t care.
Aaron – how could you say Fred doesn’t see it as a savings bond when that is *explicitly* what he said!
Read what I said. I said he shouldn’t see it that way.
i take your criticism and accept itbut i was thinking of it as a replacement gift not an identical security
You’ve stated at least a few times that you use this as a forum for thinking out loud and I’ve – in my mind – chuckled to myself about you “crowd sourcing” your analysis and thought process for investment ideas….freakin’ brilliant.So, talking your book is totally acceptable and quite positive in my mind. This, I thought was different. To Aaron’s point “taking my marbles and going home” was a bad choice on my part.#badgesofshameps – I *did* unsubscribe but stayed in the loop with this discussion via Disqus….another USV investment 😉
“I don’t think Fred should see Bitcoin as a savings bond either”Note he said “I don’t think Fred should see Bitcoin” and your reply to Aaron says “how could you say Fred doesn’t see it as a savings bond when that is *explicitly* what he said!”Emphasis on “should”.
at the moment it’s a place to hold value. an economy with an inflationary fiat currency is an example. if i were living in such an economy i would probably go to bitcoin as a safe haven (relative). if bitcoin had existed in the 1920s Germany could have been so different in the 1930s.later it could become a medium of exchange. that will take some time, although i hear that bitpay has 10,000 merchants. if bigger entities start accepting it the tipping point may not be that far off.it’s intriguing.
Very. But widespread consumer acceptance will not happen in an environment where you are stressed about exchange rates.When I can write a lease for my apartment with a monthly rent of X bitcoin, then consumer acceptance tips. Now I could care less what the bitcoin-to-USD rate is. I just need to have X bitcoin for rent.
that’s boring and that doesn’t make it store value
.Don’t go home. It is the push and push back which makes for an intelligent discussion and conversation on the topics of our day.Fred is not some shy retiring little lily — call bullshit on him when you must and let the fur fly. Be a provocateur and relish l’difference.Everybody agreeing on things is not what folks are looking for.Stay sharp and stay true.JLM.
JLM – thank you and, as you can see further down in this thread (http://goo.gl/KAgkoC) I admitted to my own moment of stupidity in unsubscribing. Damn you #Disqus for working so well and keeping me in the loop!!
” It is the push and push back which makes for an intelligent discussion and conversation on the topics of our day.”Seriously I mean this isn’t a place of worship or anything. It’s what makes things interesting.
To be fair though…I *do* prefer that everyone just agrees with me (since I’m always right anyway). 😉
stick around. arguing is better (though I overall agree about this)
I have it on good account that Fred might prefer this to people pandering to him. Anyway, an opposing view presented civilly is well-received here.
I think this is your most impressive investment.
I can’t go there. Yet.Bitcoin has some HUGE hurdles in front of it to be important.Proud of Fred for giving it a go though. Gotta swing for the fences.But I can’t say this is more important than Twitter, Tumblr or Kickstarter.
Yes, but this one is a truly libertarian play. And IF it is successful, as it grows it will pull Fred that way.That’s a big bet, betting “against” one’s political friends.There’s a exact moment where BTC literally topples the political class. It does to the USG, what Amazon did to retail, what the Internet did to USPS and Newspapers.There’s an exact moment, bc of BTC, that the public sector shrinks beyond anything people imagine possible today.BTC is not additive. It is true zero-sum.
That’s why I said “yet.”
it’s beyond libetarian and thoroughly in the realm of anarchy.which is why the fact that it is getting regulated is going to kill it. because the whole idea behind it is for it to not be regulated by the nation-state system. this is like two fighters in a title boxing match, but the defending champ gets to decide who wins.
attached is a pic I just took of a savings bond that was issued in 1989. There is nothing on the bond that states that it is a zero coupon bond, but it must have been purchased at a discount, no? My father found this in an old file and mailed it to me. How do savings bonds work? ps yes that is my cereal bowl below the savings bond.
I just looked this up. This savings bond (when I cash it today) will have a return of 63.52% on the note value. Series EE bonds do not protect against inflation, but series I savings bonds do. Learn something new everyday.
Thanks for sending this. I didn’t realize that it was sold at a 50% discount. Makes the return on this investment 227% not 63.52%.
so are you redeeming it
I’ve been meaning to for a while now, but haven’t made the trip to the bank yet. I’m not sure what the IRR is for 227% return over 24 years, but it surely isn’t a big number.
Back when BTC was worth about $4.50, I gave out 20 BTC worth of casascius coins (physical coins with a redeemable BTC code under a sticker) to a number of friends. Also in an ill-considered gesture which I regret, I gave one to a panhandler outside the 7th Ave Q stop in Park Slope. The gift was much more enjoyable than giving a bond, b/c I got to have many long arguments with my friends about how this stupid ponzi scheme wasn’t going anywhere. AND I got to say “I told you so” in another 9 months when the coins suddenly became a “thing”. I assume all the savings bonds that my grandparents gave me for birthdays 1 – 10 are in a drawer in my mom’s basement somewhere, but I wouldn’t know what to do with them if they were sitting in front of me right now.
we think alike Zeke. not sure if that is good or bad. but we do.
how do you redeem the bitcoin
You don’t. C-coins have a code hidden under a very tenacious sticker, which code you can enter into a website and they send an actual bitcoin to the address you select. So a c-coin is rather like a note in that respect.
My wife’s family has a saying that a gift is something you give to someone who wants it, but a present is something you give which you want them to have.Giving a bitcoin to a child at this stage in the Bitcoin lifecycle is definitely a self-serving move for Fred. There’s a high probability that Bitcoin won’t exist in 10-20 years when the recipient might want to redeem it. On the other hand, if Bitcoin’s traction increases enough to cash out a Bitcoin-related investment, USV stands to gain big even if Bitcoin itself ultimately fails.So this is really a present, not a gift–this is more like a free sample than anything else. There’s nothing wrong with giving your friends free samples of a great product you believe in. Just don’t pretend it’s anything else. If you actually cared whether the recipient would have anything of value in a decade, you’d go with the high probability of a known return rather than the crapshoot.
(replying to my own comment to make a related but different point….)The idea behind giving a bitcoin to a minor instead of a savings bond is presumably that several years in the future, the bitcoin will be worth more than the savings bond would have been.If you believe that, and you also believe that bitcoins are/will be money (or the 21st century functional equivalent), that means that your investment thesis for buying bitcoins boils down to your belief that there will be a period of sustained and substantial deflation in the bitcoin economy.IANAE, but I think nearly all economists would say that deflation is generally toxic to an economy: it leads people to hoard money, delay purchases, and so forth. A healthy economy requires stable prices to moderate inflation.So the investment thesis for long-term holding of bitcoins is that the bitcoin will suffer substantial deflation over the long term, an event which would probably destroy the bitcoin as a form of money since nobody will want to spend them.That doesn’t mean that bitcoins won’t become widely accepted as money–just that such an event is not compatible with substantial appreciation in the value of a bitcoin. Therefore, if you truly believe bitcoins are the money of the 21st century, you would not hold them as a long term investment (any more than you hold $10 bills as a long term investment).
Governments go broke too. Want an. argentine bond or Bitcoin? Maybe same risk/ reward! The US is going toward the fiscal cliff quickly.
guilty as charged and proud of it 🙂
“guilty as charged and proud of it :)”The gays made great progress when they adapted the slogan: “we’re here we’re queer get used to it”.This is similar to this strategy which I employ in certain circumstances as follows:Plan a is to be a nice guy.Plan b is to be the crazy driver that others watch out for.
The Bitcoin paraphernalia on Amazon is growing. That’s a good sign.http://www.amazon.com/s/ref…You can even buy a Bitcoin coin. #oxymoron #list
Bitcoin is the savings bond of this century**not guaranteed by any government or central banking authority*does not pay interest*fluctuates weekly by 10-20x savings bond fluctuations*not redeemable at any known US banking institution*price may vary by 10% based on which market you process through*no established recovery method for lost or stolen asset*counter-party has no known assets*purchase does not fund anything intended to benefit the citizenry*does not have century-long track record of zero failed redemptions*has not been granted legal status*makes no guarantee of future value
Ok, so what’s your point 🙂
To be clear, I’m not anti-bitcoin. People just REALLY need to know what they’re getting into…and the “savings bond of this century” ain’t it.
If you’re digitally hip, it could be.
It’s just comment bait. Imagine if he had said that a different way. There would be nothing to say any shit about.”While I don’t think that bitcoin is ever going to replace the savings bond, I think there may be some people who will give it instead of planting a tree in Israel in addition to the main “gelt” gift for the torah reader”.(Not much to argue over with that.) Fred would say LE you give me to much credit I’m not that smart!
I love comment bait and participating in the spectacle
If it bleeds it leads. Nobody wants to ride in a long car trip with a boring great aunt. (Also can’t play music and the old lady perfume is true punishment.)
If only there were a way to borrow in bitcoin-denominated notes, then it would be possible to hedge bitcoin exposure and businesses could in fact use it in much the same way as less volatile currencies.
i am glad you agree 🙂
What are this century’s savings bonds? Bitcoins, of course. I have a friend who gives Bitcoin at Bar/Bat Mitzvahs. I love that move. I plan to do it myself.It’s important to point out that when you give someone a savings bond the value of the bond at redemption is printed on the bond. It’s in your face. That’s critical to the marketing value. (What I call the “christian cross theory” regarding marrying outside your religion.). Consequently that is the number people focus on in terms of what they have received. It has an important psychological impact on the recipient. Even though they know it isn’t what you paid and it doesn’t have that value now.If the bond had the amount a gift giver paid for it instead of the redemption value I can almost assure you not as many bonds would be sold. A related concept to this is the fact that a married man will think of his net worth in terms of a dollar amount as if it’s all his money. But it’s not all his money it’s between 50 and 60% his wife’s money assuming when he got married and how good his divorce lawyer (or hers) is. He focuses on the big number without focusing on what the true number that “is his” actually is.And even in the press when someone says “Rich celebrity is worth x billion” they don’t say “Rich celebrity and his wife are worth” etc.
On a related note, I could never figure out why gift cards are always sold at face value instead of at a discount. Would make so much more sense…
Yes but depends on the purpose of the card.You could make a case for selling gift cards at a discount if the idea was to get people to buy gift cards to give you essentially free financing until they redeemed the gift cards.Of course some would use it same day (if allowed) but that would be no different than offering a discount in the store (and in theory should work better because someone would feel they are getting away with something).I go to a restaurant that allows you to (at the end of a year) buy a gift card and get a $25 bonus card. So if you buy $100 gift card you get $125 worth of cards to spend after Jan 1st.It’s a great deal ifa) you go to the same restaurant and are going to go there anyway (of course I could argue this makes you more likely to go there as well) orb) you are giving a gift (and in that case you seem like a big spender).That said there is definitely a business idea in manipulating this situation to the advantage of any store or seller. It just has to be tweaked.Let’s say donorschoice says “donate $100 today and we will allow you to give a gift that has 105% value when you decide who you want to donate to”. So I commit in 2013 but allocate in 2014. Charity doesn’t get 105% (net of fees) but treats donor as if they did donate the higher amount. (I have to work on this thought but I know there is something here that could get people to give in 2013 and not commit to who is getting until 2014..)
That obvious exploit had not occurred to me! (Don’t let me run your store…) But perhaps the fix is only to sell gift cards online that require people to travel to redeem at the store, so you are getting some “float” and also paying for a behavior that you want.
because companies make money on breakage
right, I guess it makes sense for the issuers. I’m more perplexed by why people purchase gift cards (or ask for them). although, I do appreciate getting gift cards for expensive restaurants, where I would feel guilty spending money if not “forced” into it by having an unused gift cert lying around
this post was always going to be a calculated risk
Here you go, little Johnny, this is a Bitcoin. I paid $100USD for it. I could have given you USD, or a million other things for $100, but I decided to teach you about something called a Ponzi Scheme. Some day, this Bitcoin will be worth nothing. You job is to sell it to some fool who will pay more than $100 for it. How much more? That’s up to you, little Johnny. You could try to sell it today, for $101, but remember, a fool is born every minute, so tomorrow you might have been able to sell it to that fool for $200. It all depends on how stupid you are and how you can find someone more stupid than you. It’s that easy! People say the value of this Bitcoin is based on math. Hahahahahahah. I love that part. So, you should tell that to others, too. Tell them it’s based on really hard math, so that they don’t ask any questions. Get them excited about it, even though they don’t understand it. Then, sell that bitch…and go buy yourself some stock in more of my internet companies.
Coinbase really needs to break their api key into two.. a “public” and a “private” key. Because right now if you want to as a merchant use their check out button API, you have to use an api key for each check out that if it somehow gets compromised (as mine did), automatically gives the hacker the ability to withdraw all your BTC (as my hacker did). There’s no reason the same tool to allow you to receive money has to also allow sending.
Fred, I hate to be the one to tell you, but you are a marketer.A good one, at that.
Yup, and he has the audience for it. Promotion is one of the 4P’s of Marketing,- Product, Price, Promotion, Place.
Good coincidence that Bloomberg added a Bitcoin ticker to their terminals on this same day.http://techcrunch.com/2013/…
Bitcoins seem a really unstable investment, but perhaps over time the currency will become a fully functional alternative to standard currencies.
Love how Mr. Wilson shamelessly plugs his own investments, all the time.
that’s my game
I think this is possibly the most irresponsible post you’ve ever made, Fred. I understand you want to promote a company you have investments in, that’s part of your job, but counselling people to give gifts in a highly volatile, unregulated investment whose future seems murky at best is just plain wrong. It’s like telling people to buy real-estate long after everyone knew that we were at the peak of a bubble – sure, it would make you some money, but is that the kind of person you want to be?Long post short, I have to say I’m thoroughly disappointed. I used to read this blog because you used to tell it straight with very little in the way of an agenda, and any promoting was done in a socially responsible manner. Oh well, I guess all good things must come to an end, and morals can be bought, if the price is high enough.
i think you and i have a different view of where bitcoin is goingif i thought BTC was like real estate at the peak of a bubble, i would never have written this post
That may be, but you’re legitimately advising people to use an investment in currency as a substitute for bonds. I’m sure you’re a much savvier investor than I, and I generally respect your opinion, but it seems a little nuts to me for substituting a high-risk, high-volatility investment for a low-risk/low-volatility investment like bonds.At that point, why not just tell people to throw some angel money at a startup in the name of your grand-children? Surely that’s no riskier than a digital currency with low adoption, legal troubles, and a daily median value that has fluctuated between ~$20 and ~$220 in the course of 6 months.The whole point of gifting a bond is the surety and security of it – the money is going to be there when the child turns 18. It might not have grown tremendously, but that’s not the point. If you want something with higher growth, why not a mutual fund, maybe one tied to one of the big indices. At least the DOW doesn’t regularly receive subpoenas and face weekly server crashes.
the savings bonds that were given to my kids are in the $100 to $1000 range they will not change their lives in any way shape or formi like the idea of giving a $100 or $1000 investment in a startup but that’s not easy to dobut it is easy to gift some bitcoin
Now Coinbase needs the same functionality but via twitter, facebook, and general oauth in addition to email.