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Bitcoin trading journal: quest for 16 doubles

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  • Sep 16th, 2014 12:55 pm
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[OP]
Member
Nov 23, 2007
413 posts
40 upvotes

Bitcoin trading journal: quest for 16 doubles

I am posting this thread to log my Bitcoin transactions. I intially bought about 20 dollars worth of bitcoins (0.1 bitcoin) on a lark and for coffee money on November 1st and sold it for over 2.5 times the money CDN today.

A rough calculation tells me that if I roughly double my money a total of 15 to 16 times starting from the beginning, it will exceed one million dollars.

An analysis of bitcoin's expected performance is based on these observations:

1. Bitcoins have no intrinsic value
2. Bitcoins have appreciated exponentially over the past few years and particularly over the past few months
3. There is a limited total number of Bitcoins now and for the future
4. Anyone (or any country) could make their own digital currency, using the exact same algorithm as Bitcoin uses, and it would be equally as legitimate, or illegitimate, as Bitcoin is. I could take the Bitcoin software, rename my new currency Bitcoin Junior, and there is no reason other than herd behaviour why it should not be as valuable as Bitcoin. So although the total number of Bitcoins is limited, the total potential number of cloned Bitcoin currencies is infinite.
5. A change in government regulations could immediately make the value of Bitcoins zero, at any time.
6. Past experience shows that people will buy into a bubble (gold, real estate, Dutch tulips, tech stocks etc.) just because the price is going up. Most of them are financially illiterate.
7. Bitcoins are currently a little hard to buy - you have to jump through a few hoops to set up an account, transfer money, etc. It is getting easier to buy as time goes on, so the number of people able to buy Bitcoins will go up
8. Due to the limited number of Bitcoins, relatively illiquid market, and investor greed and stupidity, the value of Bitcoins has fluctuated wildly over brief periods of time. For example in the past week or two I have seen intraday price swings of 20% to 30%.
9. A few wealthy people and institutions such as hedge funds may be accumulating Bitcoins. Since the market is illiquid, they will not be able to buy or sell any large amount of Bitcoins without moving the price. This will give an edge to the small investor.
10. The majority of Bitcoin trading appears to come from the US and China, two nations not exactly known for free transparent markets or sophisticated investors.
11. Previous speculative bubbles (Bre-x, the tech bubble, gold, or the current real estate bubble) have continued for long after a reasonable investor (ie. me) would have thought the bubble would have burst.

Based on all the above it looks to me that the Bitcoin bubble will continue quite likely into the thousands of dollars per Bitcoin, with huge volatility from hour to hour and day to day, but overall going up until a final tumultuous crash, whereupon everybody will be quite surprised, until the next speculative bubble (perhaps a currency, metal, quantum bandwidth licensing rights, or an obscure stock in some foreign country) becomes the investment du jour. Anyway since my initial investment was $22.46, and I have spent decades being a long-term careful and methodical investor, the plan is to take advantage of price volatility and general investor retardation to change my $22.46 into a million dollars. If I fail I have lost nothing, and if I succeed it won't make much difference either, other than a bunch of numbers on a computer screen.

Anyway here is my trading log, all the numbers include 1.5% trading commission and all values are in Canadian dollars:

November 1st 2013: purchased 0.1 Bitcoin (via Interac payment to QuickBT.com) and transferred the 0.1 Bitcoin to my Blockchain wallet.

November 18th 2013: Bitcoin price exceeds $800.00 on some exchanges, I would like to sell my 0.1 Bitcoin, but there is a delay in transferring it. Contrary to the reported 1 hour transfer time, it takes over one day to transfer the Bitcoin to my trading account and by then the price has gone down. Lesson learned, keep my Bitcoin and/or cash balance in the trading account at all times

November 20th 2013: Sold my 0.1 Bitcoin for $58.78, and entered a limit order to buy 0.131 Bitcoins at $442.00
47 replies
Deal Addict
User avatar
Jun 12, 2009
1473 posts
190 upvotes
Interesting journal.
Physicists are made of atoms. A physicist is an attempt by an atom to understand itself.
Sr. Member
May 14, 2010
941 posts
76 upvotes
Halifax
What trading account are you using?
Deal Expert
User avatar
Dec 11, 2005
19011 posts
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RandomCDN wrote:
Nov 21st, 2013 6:48 am
What trading account are you using?
I'd like to know this as well.

Part of my problem with this whole BItCoin "market" is that there are so many hundreds of millions of dollars flowing through these trading firms that are TOTALLY UNREGULATED. If Mt Gox. went bankrupt tomorrow for some reason, or their founders shut the doors and fled to <random country>, any funds sitting in their accounts would be unrecoverable for all intents and purposes. So then, you usually want to pull your profits out ASAP after the trade.. but like you said above, the transactions can be slow.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
Deal Addict
Nov 11, 2004
3012 posts
238 upvotes
Ottawa
Anyone can make there own Bit Coin,,, We could make a RFD COIN

whos in?
Hello
Newbie
Oct 24, 2012
22 posts
2 upvotes
NORTH YORK
OP. Can you provide more detail on how to setup an account to acquire bitcoins?
[OP]
Member
Nov 23, 2007
413 posts
40 upvotes
pignchick wrote:
Nov 21st, 2013 1:42 pm
OP. Can you provide more detail on how to setup an account to acquire bitcoins?
On the VirtEx website. Please note I have no affiliation with this company and I agree that any and all of these unregulated bitcoin trading sites could disappear with no recourse to the investor. Don't invest anything more than spare change.

On thinking more about the future of Bitcoin, it seems certain that within 10 years there will be official national digital currencies. If done right, this would have a lot of advantages to governments:

1. Prevention of counterfeiting
2. Easy to keep track of taxation
3. Avoiding the expense of minting coins or printing paper currency
4. A traceable way to prevent fraud, corruption, drug dealing etc.
5. Hands-on real-time monitoring of the economy instead of relying on unreliable abstract statistics and indicators

Once the U.S. government prints its digital currency (and I am sure digital will replace paper currency, just like e-mail has replaced regular mail), there will be no reason for merchants or consumers to want to participate in Bitcoin, with all its risks and volatility. Therefore the end value of Bitcoin will be zero, once national digital currencies are established.

But in the meantime, selling at $588.00 looks like a bad decision with Bitcoin now at $675.00
Deal Addict
User avatar
Dec 14, 2006
2938 posts
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Montreal
Are you level 1 or level 2 verified on Virtex ?
How many days did it took to get verified ?

Thanks.
I was there at the 32$ price error at dell.ca day AND at the 150$ off price error at fs.ca
RFD price error moto: "Buy now, think later." -Ahzuz
[OP]
Member
Nov 23, 2007
413 posts
40 upvotes
Ahzuz wrote:
Nov 21st, 2013 7:22 pm
Are you level 1 or level 2 verified on Virtex ?
How many days did it took to get verified ?

Thanks.
Unverified. It didn't require any verification to buy 0.1 Bitcoin. There was no time delay to buy the Bitcoin.
Deal Addict
Jan 19, 2011
2777 posts
969 upvotes
Own one bitcoin, purchased for $187 about 12 weeks ago... I have a feeling bitcoins will be trading at $6000 to $10000 within 18 months, after which they will collapse, and settle in around the $3000 mark, give or take
"The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is."
Just a guy who dabbles in lots of stuff learning along the way. I do have opinions, and readily share them!
Deal Expert
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Dec 11, 2005
19011 posts
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trilinearmipmap wrote:
Nov 21st, 2013 3:40 pm
On thinking more about the future of Bitcoin, it seems certain that within 10 years there will be official national digital currencies. If done right, this would have a lot of advantages to governments:

Once the U.S. government prints its digital currency (and I am sure digital will replace paper currency, just like e-mail has replaced regular mail),
I think you are over-complicating it. There is no reason that a digital dollar would eliminate todays dollars. Your bills all already have inidividual serial numbers. You could in theory make a system today where you could take paper money and desposit it into a digital wallet of some kind, destroying the paper money in the process and moving it into the digital world. And then if you wanted to take your digital money and make it physical, you visit some kind of bank of canada ATM and withdraw your dollars back into plastic. It is totally possible to have digital currency without getting rid of the dollar.

This isn't the same as bitcoin though, bitcoin was made to be a currency that was not bound to a nation and that would not devalue with inflation. The problem is it was designed by computer scientists and not economists because an economist would have told them WHY it is important to have national currencies and inflation.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings

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