backtop


Print 23 comment(s) - last by Mint.. on Nov 4 at 5:58 PM

This afforded him a nice apartment in Toyen

You always hear stories about people who tuck old comics or toys in the attic for years and later find out how valuable they've become. Some guy from Norway just did that with bitcoin.

According to The Guardian, Kristoffer Koch bought 5,000 bitcoins in 2009 for only 150 kroner ($26.60 USD). Years later, that investment unexpectedly grew into a little nest egg.

Koch originally bought the bitcoins writing a thesis on encryption. After that was complete, he forgot about them.

But when the media started heavily covering bitcoin in April 2013, Koch was reminded of his and decided to take a peek at his encrypted wallet containing those original 5,000 bitcoins. He found out that by today's rates, those 5,000 bitcoins are worth NOK5m ($886,000 USD). 

This afforded him a nice apartment in Toyen, which is a wealthy area in the Norwegian capital. 


Bitcoin value tends to fulctuate a lot, and Koch happened to see his value at the right time. In April 2013, bitcoin value peaked at $266. Then it fell to a low of $50 soon after. 

In fact, it hit a high of $197 just this month. 

For those who are unfamiliar, bitcoin is a peer-to-peer digital currency that is encrypted. It's bought with traditional currency from a bitcoin exchanger and later change them back for cash or other purchases. 

But bitcoin has had some problems in the recent past. In August, the feds questioned the legality of cryptocurrency and considered banning it or at least putting heavier restrictions on it. At that time, the bitcoin industry's largest advocacy/trade group the Bitcoin Federation met with federal regulators from the U.S. Department of Homeland Security (DHS), Federal Reserve, Department of TreasuryFederal Deposit Insurance Corp.Office of the Comptroller of the Currency (OCC), Internal Revenue Service (IRS), Federal Bureau of Investigation (FBI), and Secret Service (SS).

Earlier this month, the FBI shut down Silk Road, which was a website designed that enabled its users to buy and sell illegal drugs and other unlawful goods and services anonymously. New York U.S. Attorney Preet Bharara seized $28 million in bitcoins that belonged to Ross Ulbricht, the alleged owner of Silk Road.

Source: The Guardian



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

RE: Dammit...
By PontiusP on 10/31/2013 6:16:47 PM , Rating: 3
quote:
Generally, an economy where everyone has an incentive to do productive work fares better than an economy where people can get richer for doing nothing (basically piggybacking off the work of those who are contributing to the economic growth)


The part in parentheses described our current fiat system perfectly. When the primary function of government and the central bank is to create money and hand it to people, the situation you described is inevitable. Hard currencies prevent this situation from occurring.

Query: In a debt based money system, if interest is owed on every dollar in existence, how can such a debt ever be paid? I've never heard it correctly, convincingly, or conclusively answered by the Keynesian fiat supporters.


RE: Dammit...
By vol7ron on 10/31/2013 10:21:12 PM , Rating: 2
The primary function of government and the central bank is not to create and hand out money. That statement is absurd. Even if it happens, the government has other functions, none of which can be singled out as *the* primary (e.g. homeland security, regulation, roads, reciprocity agreements, protecting constitutional rights - when they're not stomping on them).

The central bank's function is also not to create or hand out money, it has more important issues like maintaining a stabile money system - despite what's happened in recent years, it's still considered stabile. Other functions include regulating trades/mergers/takeovers and protecting your dollar from counterfeit and theft.

Also, the money system seems to be designed in such a way that there will always be a growing global debt; however, a local economy (e.g. US) can outperform other nations, thus being profitable. But keep in mind that countries can default; they also merge and are taken over by other countries, just like businesses.


RE: Dammit...
By The Von Matrices on 11/1/2013 12:57:38 AM , Rating: 2
The problem is that the central bank and its associated government are inseparable even if they operate independently. In all major fiat currencies the government supporting the currency is also the single largest user of that currency. Therefore, that government indirectly influences the value and stability of that currency and the central bank has to correct for that.

The reason why governments don't like Bitcoin is because they can't control it. If you can't keep inflating your currency, then you have to pay off you debts because the interest payments become oppressive. You can't just continue to inflate your currency so that the real value of the debt becomes smaller and smaller.

In my opinion, I fully support government debt as long as it doesn't cause the currency to crash. The media has a bias toward government debt being a negative with no positive. In reality, the debt (a negative) is just from the government providing services to its citizens (a positive). The cost of these services not subsidized by taxes is paid through the loans citizens provide. Taking this to an extreme, if the government were to default, the citizens who provided the loans would be out of their money but they would also have had all the services and infrastructure that were paid for using those loans. They could have just paid taxes and have been out that same amount of money.


RE: Dammit...
By vol7ron on 11/2/2013 3:59:00 PM , Rating: 2
In my last comment, I don't know why "stable" was autocorrected to "stabile" - that was at no fault of my own and didn't notice it. Perhaps I've used "stabile" too much when discussing prototypes.

I'm not an expert, but I agree with the statement about control, but not because of their ability to affect inflation. In fact, inflation in the United States has been rather constant, which is great in terms of stability. Again, I'm not an expert, but I would surmise that the lack of control makes it harder for regulation. Private sectors are generally great at invention and innovation, but they can also be really bad when it comes to greed - consider profiteering, collusion, and intimidation. Bitcoin has the potential to be both really good and really bad and it's the bad reasons that I tend to play the conservative card.

The problem with government debt is there is such a thing as too much. The media likes to play it up for ratings, but the government could be a little more intelligent in how it allocates its finances. Remember, this income is coming from businesses, taxes, tariffs, foreign countries, etc. but people want to have a say in how their taxes are spent - after all, they are doing the work for that money.


RE: Dammit...
By Mint on 11/4/2013 2:13:52 PM , Rating: 2
Your question hasn't been answered because it's nonsensical, although I have seen others ask the same thing so I'll try to answer it.

Debt is not supposed to be entirely paid simultaneously. Money IS debt: When you earn it, somebody owes you future goods/services in return. Fiat currency basically results in assets of real societal value backing it as opposed to a precious metal given arbitrarily inflated value from its attachment to a monetary system.

If you want to understand fiat currency, think of an economy with no money at all where we just trade assets. The moneyless analogue of new money from the Fed eventually going to a mortgage is as follows: I want to build a new house, so I give the builders and the previous landowners shares of the house that is about to be built, with all this tracked by the bank. As I work for others and earn my own salary of other asset shares, mortgage payments effectively swap them for the ones on my house, until I own it entirely.

Fiat currency effectively blends all these asset shares into a homogeneous mixture so that we don't need a stupendous amount of information on hand about world assets to understand if we're getting ripped off in a transaction.

Debt is how money gets attached to assets in the way described above. Until we run out of things to build, i.e. societal endgame, there's no problem with the economy's total debt never being paid back.

Inflation targeting is, by definition, the maintenance of the common understanding of value mentioned above.

Interest is the market clearing price for building new assets, which must be controlled to prevent varying inflation/deflation breaking that common understanding of value.


"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki