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> 9. If you don't own the keys, you don't own the bitcoins.

Always the most important point. You need to hold your keys, and be the only person to do so (unencrypted).

As for the rest, they can be summarized into this simple advice: If you're getting in, DO NOT spend more than you can afford to lose. You'll regret going into debt more than you'll regret not making a twice as big profit.

Interesting point. I have some BTC at Coinbase. Not sure how I proceed to own the keys?

Get another wallet (such as hive) and send the BTC from Coinbase to that.

I recommend https://electrum.org, even though the website doesn't look super awesome. You'll get a "seed" that generates your keys that is 12 words long. It looks something like this:

"help staple correct horse ..."

From there, just store that seed somewhere secure and you can use that to generate your keys whenever you want, on any machine you want. Personally I keep my seed in two different safe-deposit boxes and one on (shameless plug) my own encrypted text app I made called Onions - http://onionsapp.github.io.

Electrum is great, but not very easy to use (since it's desktop). Get Electrum, Mycelium or Breadwallet, depending on your platform. I've heard good things about GreenAddress, and I recommend a ledger hardware wallet. You can use the ledger with Electrum and Mycelium, so you can spend coins from desktop or mobile. I've also imported my Mycelium wallet onto my second ledger, just so I can move coins from the desktop.

Ledger is pretty good for the price tag it has. It is simlple yet effective. Trezor is a worthy mention since it can be used anywhere(even on an infected computer) whereas you need to setup the ledger on a secure host.

> whereas you need to setup the ledger on a secure host

Hmm, really? Why? The ledger sets up its own private key as well.

For Mac get the PRO Bitcoin Offline Vault https://itunes.apple.com/us/app/pro-bitcoin/id1003923093?ls=...

Coinbase lets you control your own private keys: https://www.coinbase.com/multisig

We offer multisig wallets so you can enjoy the convenience of using Coinbase while still maintaining full control over (a majority of) the private keys:

https://www.coinbase.com/multisig

I do as well. What's wrong with leaving it there?

In general nothing. In specific there is no FDIC for bitcoins so if a MtGox type situation happens then you have no coins.

There's no FDIC providing government backed insurance for most commodities, or for non-bank accounts in fiat currency (e.g., those you'd have with a typical brokerage), so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment

So for a speculative trader, I dont e that holding keys if any more essential than physically holding goods is for physical commodities; you obviously have to account for trust/security of the entity serving as your agent/broker, but that's typical.

Now, holding the keys may be essential to realizing some of the benefits of bitcoin which drive is value to some users, but for people investing in bitcoin, that may be peripheral to the purpose.

It isn't quite the same as FDIC, but there is SIPC:

https://en.wikipedia.org/wiki/Securities_Investor_Protection...

Not blanket protection, but enough to ask why such and such bitcoin exchange doesn't advertise their participation.

> so I'm not sure bitcoin is really fundamentally different than most commodities as a speculative investment

That's the point, though. You're looking at it as a speculative investment, and proceeding accordingly, which is good. The OP is admonishing people to not treat bitcoin like a standard bank account (which is all too easy to do), but rather in the same terms as you already do.

There's a qualitative difference between "I own stock that might become worthless" and "I own a security that someone could just take from me because they notice my deed just sitting somewhere unprotected."

If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help; and the stock market bookkeeping system has the technical ability restore my shares to me. If someone gets a copy of my wallet key, I've got no recourse unless (unlikely) someone can track down the obfuscated thief.

> If someone steals my Schwab account contents for Schwab's servers, I can call on the government for help

If someone steals your bitcoin from an exchange, you can call on the government for help, too. If the exchange itself is completely insolvent, that may not be effective recourse, and that risk is certainly greater for the kind of firms people have been dealing with in the bitcoin space, which often aren't held by their customers to the same standards that customers of similar services for commodities other than bitcoin would hold companies to.

That's my point: the lack of recourse isn't essential to bitcoin (yes, holding the keys is like holding cash, and not holding the keys is giving something up just like not holding cash is -- but we deal with other businesses with accounts denominated in national currencies without holding all the cash ourselves all the time, and have recourse available for losses.) The lack of accountability is because the firms people choose to do business with are, compared to the firms that people do other financial business with, shady fly-by-night operators.

Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse.

> Many times in the past bitcoin companies have been hacked, embezzled or otherwise lost user funds. There is no recourse.

Many times, other companies have had that happen, and there is all kinds of recourse. To the extent bitcoin companies are special, its because people participating in the bitcoin craze have been willing to entrust large amounts of value with companies that don't have the basic characteristics that would otherwise establish trustworthiness, or at least accountability.

Given that BTC is a currency that is not backed by a national treasury (and is, in fact, technologically not backable by printing more money), such insurance would be a prohibitively expensive percentage of a company's BTC resources.

The same features of BTC that serve as its advantage and, arguably, goal make it more difficult to offer basic protections that other fiscal infrastructures have had for decades.

You can store $100m in bitcoin on a piece of paper in a vault. It reduces perfectly to the solved problem of securing $100m in $100 bills in a vault (which, yes, you can insure).

While true, that does not offer the same protection as an FDIC-style insurance program (and restricts the storing entity's ability to compete and perform by preventing them from investing that $100m, so the market will tend ceteris parabus to punish companies that take such a step in good times with relatively-slower growth, acting as a disincentivizing counter-weight to offering insurance). In contrast, the FDIC has unlimited borrowing capacity with the US government; worst-case scenario, the Treasury can basically start printing money and the FDIC can hand it out to people with savings in failed banks.

Many see this capacity of the US Treasury to fabricate money from nowhere as the very sort of flaw that BTC's coin-generation process is intended to avoid, but that protection does not come without a price.

> While true, that does not offer the same protection as an FDIC-style insurance program

Sure, but whether that difference from "the same protection" is more or less protection depends on the number of people that $100 million is held on behalf of.

Since this is about an amount of $100m, I'd say the above suggestion (theoretically) offers much more protection than FDIC, which only covers losses up to $250k iirc...

I suspect that at the moment it may be more difficult to find an insurer for a vault with that piece of paper, compared to a vault with $100m cash though :) but perhaps that'll change.

That's security, not insurance.

FDIC-style insurance is for when the security is breached, not if.

What do you do when the money is gone? With other payment technology you can get court orders to freeze funds, or judgments against current holders.

Bitcoin, on the other hand, is irrevocable and pseudo-anonymous. In July 2011 the owner of MyBitcoin.com web wallet allegedly walked away with 50,000 btc of customer funds. We know where those funds are. You can see them on any block explorer. But it is not possible to freeze or confiscate those funds. And we don't know what real world person or people have access to the keys controlling those funds. So what are you going to do?

MtGox went under with 850,000 btc of customer funds. Its creditors are currently fighting over the 200,000 btc that was found to still be in possession by the company. The other 650,000 btc? Who knows.

It's just a simple fact of reality. If you don't have physical control over the keys for that bitcoin, it is not your bitcoin. Some of us have learned that lesson the hard way.

>But it is not possible to freeze or confiscate those funds.

That is just a limitation of the Bitcoin protocol. One could build a protocol where communities could agree to freeze (not accept) or greatly devalue those funds.

Miners could conspire to mostly freeze certain bitcoin.

It wouldn't even have to be done in a way that was visible on the bitcoin network, they would just have to agree to not include transactions from whatever addresses.

A strong majority could probably refuse to acknowledge blocks including the blocked addresses, which would be a real freeze (rather than the hassle freeze obtained by not including the address in blocks produced by the conspiracy).

You'd need >50% of the miners to do that. It is precisely what I mean by building a protocol.

Of course, without strong consensus (and a real algorithm/protocol) such attempts will likely just result in fractured blockchains (basically the state at the moment, with many competing implementations of the same basic idea).

Not really. you are talking about an attack.

You'll need 100%, because if a single miner decided to include the transaction, then it is in!

Only if that miner is successful for a block. Until then the blocked transaction stays in limbo.

You need only a cabal of >50% of the miners to agree to not build on any block that includes such a transaction.

An attack and a new protocol are the same thing.

If a single miner includes the transaction, a majority can just bypass that sole miner.

You do need 100% of something, but that something is just >50% of the miners.

It is an explicit design choice of the bitcoin protocol (feature, not a bug) that doing so requires a cabal of the majority of the hash power. With properly distributed hash power like bitcoin had in its infancy, this would not have been possible.

Short answer: get your own wallet (software/paper/hardware) and transfer BTC from Coinbase to that address.

> However big is MMM, it's probably too small for the size of the bitcoin economy right now [...]

That's very hard to quantify, but there might well be a feedback loop involving the media which leads to a price increase caused by MMM Global.

The following Google Trends data for South Africa and the Philippines shows a nice correlation between searches for bitcoin and MMM Global: http://www.google.com/trends/explore?hl=en-US&geo=ZA&cmpt=q&...

That's why I used "probably".

The thing is, transacting with bitcoin will not raise the price exponentially. BTC is already being exchanged in many millions of dollars a day.

So unless MMM turns out to be a billion-dollar ponzi scheme I don't really think it'll affect the BTC price much.

> So unless MMM turns out to be a billion-dollar ponzi scheme I don't really think it'll affect the BTC price much.

The actual transaction volume of bitcoin is not even that large. The total market cap is 6.5 billion and only because of the recent price surge.

> So unless MMM turns out to be a billion-dollar ponzi scheme

While I don't know much about this incarnation of MMM, the original MMM ponzi scheme in the early 90s is thought to have taken in about $10bn (not adjusted for inflation).

Never heard of MMM before,

Looks like Sergei is persistant with these pyramid schemes;

  In January 2011, Mavrodi launched another pyramid scheme 
  called MMM-2011, asking investors to buy so-called Mavro 
  currency units. He frankly described it as a pyramid, 
  adding "It is a naked scheme, nothing more ... People 
  interact with each other and give each other money. For 
  no reason!"[13] Mavrodi said that his goal with MMM-2011 
  is to destroy the current financial system, which he 
  considers unfair, which would allow something new to take 
  its place. MMM-2011 was able to function openly as Ponzi 
  schemes and financial pyramids are not illegal under 
  Russian law.[14] In May 2012 he froze the operation and 
  announced that there would be no more payouts.[15]


  In 2011 he launched a similar scheme in India, called MMM 
  India, again stating clearly that the vehicle is a 
  pyramid.[16] He has also launched MMM in China.[17] He 
  was reported to be trying to expand his operations into 
  Western Europe, Canada, and Latin America.[14] As of 
  September 2015 it had spread rapidly in South Africa with 
  a claimed 1% per day or 30% per month interest rate 
  scheme and warnings from both the South African and 
  Russian Communist Parties for people not to participate 
  in it.[18]

https://en.wikipedia.org/wiki/MMM-2011

Active thread talking about Sergei's current scheme: https://www.reddit.com/r/Bitcoin/comments/3p4kuf/mmm_global_...

Someone should find out the bitcoin addresses the MMM victims are sending their funds to, it may help to give an indication of the size of the problem. I'm tempted to sign up to MMM to get one of the addresses they use. Of course it depends whether they are smart enough to use a different address for each user.

> 4. I have a localbitcoins post. I usually get 1-2 requests per week. In the last few days, well, I really lost count.

Did you see a change in the type of customer?

Yes. People were usually asking in the $500-1000 range. Now, it's mostly $100. (it's my limit though).

11. The "halving" that is anticipated to take place sometime in 2016 is suddenly not so far off in the future.

> There is nothing that can guarantee that this ride is real

I'm not sure what you mean by "real" here. Even if demand is created from questionable/fraudulent sources, the transactions are just as real as any others. That's not to say it's sustainable or even driven by rational behavior (it never really is). Any trend, bubble or not, is just that - a trend. There may be numerous factors driving it, and it's almost never a good idea to make trading decisions based on the trend itself (the few exceptions of traders should be very aware of the limitations and risks involved in such a strategy).

> We'll see if the new fancy infrastructure that bitcoin got is rock-solid.

Are you referring to Bitcoin XT / BIP 101? As far as I'm aware[1], the support for this is still represented by a minority, so we're not really going to see any "new fancy infrastructure" tested, at least not for a while.

[1] http://xtnodes.com/

You misunderstand his point. The MMM ponzi schemers presumably don't want to hold bitcoins forever, and would be selling them for local currencies; if each bitcoin bought by a MMM victim is being immediately sold by a MMM con artist, then the net effect is zero and the effect on the price is much less than however much is being laundered and the price is boosted only by the float (however much bitcoins are being held at any particular second by a victim/con artist until they can send it or sell it and complete the circle).

I understand that, but it still doesn't make the trend any less "real" than trends seen from other drivers of price movement.

To explain a bit more: If a merchant receives fraudulent credit card transactions, he/she could reasonably refer to those as "not real" because once the banks discover the fraud, they have the power to move money and effectively nullify those transactions in many cases.

In contrast, on the blockchain (and off the blockchain for most bitcoin exchanges), that kind of thing doesn't normally happen. Even in Mt Gox's case where they directly manipulated the price from the inside, the people who bought and sold on the exchange still experienced "real" price movement, and as long as they got their money/BTC out before Gox imploded (which is another matter), those transactions and price movements were every bit as real as any other. From the perspective of other exchanges at the time it didn't matter at all whether the driving force for the trend was fraud or completely legitimate behavior.

Finally, if MMM's "net effect is zero" as you say, then we wouldn't be seeing the price movement that we're seeing (and a price "boosted only by the float" is no different from a price boosted by anything else), or perhaps MMM just isn't the primary driving force in the current trend.

> and a price "boosted only by the float" is no different from a price boosted by anything else

But the float is much smaller than the total volume of the fraud. If MMM is doing $10b of fraud a year, then it's not boosting Bitcoin's marketcap by $10b as one might naively guess ('$10b fraud drives Bitcoin price growth!' scream the headlines), it's boosting the price by much much less, by just the float (which could be more like $27m).

I don't think anyone claimed that there was 1:1 relationship between the volume of this (or any other) fraud and a change in bitcoin's market cap. As far as bitcoin is concerned, the particular details of the fraud are entirely irrelevant.

I don't think anyone was as exactly specific as that, but in reading discussions of MMM's possible contribution, the description was almost universally (on Reddit and HN) comparing, explicitly or implicitly, the previous MMM's total volume to the Bitcoin market cap, showing that pretty much everyone seems to have been intuitively confusing stocks with flows - the unspoken argument seems to be 'the old MMM's total was about as large Bitcoin's market cap is now; the new MMM is also quite large and may be a large fraction of Bitcoin's market cap; therefore, the recent near-doubling of Bitcoin's market cap may be mostly or all due to new MMM's large total'.

MMM works by constantly paying out. I.e. whole thing works as long as money circulate in the system. And as part of this circulation - people withdraw bitcoins and exchange these to local currency.

Don't discount how much nefarious actions can drive bitcoin prices.

Much of the $1000 bubble is discussed in terms of mtgox and "willie", but the initial peak was triggered by another driver which was the first large wave of cryptolocker infections.

It goes without saying I'd stay well clear of bitcoin still though.

> Much of the $1000 bubble is discussed in terms of mtgox and "willie", but the initial peak was triggered by another driver which was the first large wave of cryptolocker infections.

I've not read that before (and I was pretty active on bitcoinforums during the $1000 bubble). Got a link?

Here's the google trends for cryptolocker:

https://www.google.com/trends/explore#q=cryptolocker

Looks remarkably like the bitcoin price graph doesn't it?

You are working with a limited view of Bitcoin price history if you think there have only been two prior bubbles or peaks. There have been something like 6 Bitcoin 'bubbles' and busts since 2011. The very first major bubble is attributed to Senator Chuck Schumer in June 2011 advertising to the world that you could buy drugs with Bitcoin on silk road. That took the price from $1 to $32 before crashing.

http://www.reuters.com/article/2011/06/08/us-financial-bitco...

http://www.forbes.com/sites/timothylee/2013/04/11/an-illustr...

I remember that summer. Such a beautiful and simple time for bitcoin. I frantically unloaded the bitcoins I bought at $8 when the price crashed from $30 at around $15/coin, withdrawing my entire initial investment and feeling bummed about not getting out when the getting was good.

Then in a few months the 2 coins I kept were worth hundreds apiece.

So what numbers do you have to pump it to until you get your money back?

This is a blaming statement. Trust comes in all shapes and sizes, and includes information from individuals who don't trust each other sharing what they know about a given object or system. Trusting someone else's information is done on an individual basis, unless there is a decent consensus mechanism in place (Rai Stones for example).

If you don't trust what csomar is saying, then you should just say that instead of saying they are lying AND doing it for X reasons. Otherwise, you are just coming across as illogical in your arguments.

I would also point out that blockchain technologies implement a particular type of trust. Bitcoin's blockchain trust delivers an identity mechanism (note I did not say it doesn't allow pseudo anonymous identity), a way to track a value for exchange between identities, and a means to deliver a standard format of information exchange comprised of contract via script, transaction with identities and op_return codes.

That you are here doubting a known trust mechanism through a biased statement, and based on its momentary exchange value to a fiat currency, makes me not trust you as well.

I thought it was well known that you can't trust Lando Calrissian!

Maybe it's related to this auction of the silkroad bitcoins: http://www.usmarshals.gov/assets/2015/dpr-bitcoins/

Note the correlation between the registration deadline date and the start of the rise.

On top of that, remember that bitcoin has many prices, the most important ones being US dollar, Euro and Chinese Yuan. Right now bitcoin is around 500USD, but it's sitting on 450EUR. People buying in euros will be confident that the price will go up to 500EUR and they'll keep pushing up the price. Wich will push CNY price to 3450CNY, a very ugly price, so it will probably move to 3500CNY.

With all due respect, I don't think that's how markets work. I know that people tend to psychologically anchor to round figures, but I don't see this situation playing out as you've described.

In earlier days of remember I think I do remember this happening. Once the price got to a certain point (~980?) it very quickly would get up to 1000, and then hover there for a while. Part of this is because people will put sell requests at that round number.

He doesn't understand Chinese. When you said "ugly number" this is very important to the Chinse. They will push the price based on what number they are attached to.

If the price is 314.44 they will push it to 316.88 because that is the number they like, and if they dictate that price it is like they have created their own luck. At least this is my philosophy dealing with Chinese and watching their buy patterns.

There are very real 'sell walls' on most of the markets, hovering around rounded increments. Once those "barriers" get broken through, there is usually a spike in price afterward. I could totally see a spike on one market driving buys in another market, so it is a reasonable point to consider the effect cascading.

Citation, please. With evidence that it actually works with real markets.

This sounds a lot like the kinds of claims that are routinely made in technical analysis for stocks. To the best of my knowledge, new claims can always be generated because humans are very good at imagining patterns in random data, but attempts afterwards to verify those theories uniformly fail. However stock brokers have found that it is very good for business to have customers who believe in technical analysis, because it is always easy to convince those customers to trade. Therefore lots of people get exposed to all sorts of technical analysis theories about "psychological support levels" and so on. But it doesn't actually work in reality.

In 3 days the BTC price has surged around 40% without anything actually happening.

We are not talking about a regular market.

so can you buy in Dollars and sell in Euros at a profit?

Chatter in BTC trading forums puts a $3000 price target as "doable" ;)

A couple other points: mining is exploding as well with the global GHash rate / Difficulty accelerating. I have not calculated an exact correlation between price and compute but it could be an indicator of "real" moves in the currency.

The truest indicator is of course price-action. During last summer and into the fall, before Beijing implemented capital controls, when you observed the depth of book on orders on BW, you'd notice that the vast majority of orders were for even lots of ~0.0100BTC. This was indicative of algorithmic market making. Very few orders were above 100BTC. Now it's the exact opposite. Large orders with fast fills are common. I wish I had some real data and actual stats on the order book during the run-up ;( as I believe it would make a good indicator as to whether the current move is sustainable...