On Bitcoin [non-China]

I'm a bitcoin optimist, for several reasons. One of them is that I experience the inefficiencies of the current monetary system on a routine basis as someone who lives in a foreign country. Every time I want to transfer the money I make in Chinese RMB to my American bank account, I have to pay PayPal a 4% transaction fee. I hate having to use such an expensive way to transfer money, but it's better than the alternatives! (See how to use PayPal to do so here.) Compared with a wire transfer, at least PayPal is instant, and avoids the wire transfer fees from a bank which would come out to nearly as much.

PayPal's fees. 0.5%-2% sounds nice. The problem is, PayPal doesn't allow you to link a Chinese bank account!

Why should transferring money from one country to another cost so damn much? This is one of the questions that Bitcoin sets out to address. With Bitcoin, there's no banks holding your money and charging high fees to send it somewhere else. Once you own bitcoin, it's yours.


And if the Chinese government would get over its myopic fear of Bitcoin, it would be as easy to transfer money from China to America as it used to be, before Bitcoin was semi-banned here! Until this spring, one used to be able to buy bitcoin with RMB and sell it for USD, sometimes even for a profit - a chain whose first half has been broken because the Chinese Communist Party is afraid of technologies that might take away its power. [I'm still working on finding another way to buy bitcoin with RMB, and will update this post if I succeed.]

Of course, the same features that make Bitcoin great also endow it with risks. You have to be careful with the bitcoin you own, since that same absoluteness in ownership means that if somone else gets access to your Bitcoin, it's theirs - and there's nothing you can do to get it back but sit back and watch as it's absconded.

But to dismiss Bitcoin because of its disadvantages, as perhaps most famously done by Nobel laureate and frequent purveyor of common-sense-[a.k.a. mediocre thinking]-as-holier-than-thou-wisdom Paul Krugman here (clickbait title and all), is just stupid. (Here's a full takedown.) How in the hell can you be sure that such a new technology is evil?

For another example, here's a prediction from a BU professor about where the price of Bitcoin should be right now:

"Bitcoin/USD will plummet to $10 by first half of 2014" http://t.co/HOSke9wvr0 Bitcoin has already rebounded 50% within 48 hours #morons
— Dan Gilles (@ExAequali) December 19, 2013

Now, here's the live price:


Does that look like $10 to you? How did this guy get a job at BU? (Actually, don't answer that; higher education is a drug gang peddling a worthless product.)

Again, I'm not saying Bitcoin doesn't have its disadvantages. I'll be honest: I've actually lost money from Bitcoin overall. Here's my spreadsheet of purchases:

You can see that I'm down $10 as of today. I bought into the hype too much, buying bitcoins in late 2013 and early 2014 when the price was as high as $936/coin - times when, in retrospect, I really should have been selling my stock. I was hoping that the price would go up tenfold again, and didn't want to miss out. But although I'm still hopeful of seeing Bitcoin at $10,000 per coin, I think it will take time for its value, whatever it is, to be determined.

So now that the price is on the rise again, I'm recouping my losses. If the rise is temporary, I'll buy more when the price goes back down. If it keeps going up, I'll hold on and maybe continue to sell. Either way, I think I've learned my lesson, and don't feel bad at all about spending $10 on it.

Investing isn't easy, but I think if you follow the basic principle of buy low, sell high, you can make money from it, and participate in a really cool technology in the bargain. That's why I'm an optimist on Bitcoin. You can always point out the flaws in something new, but I'd rather embrace a new technology's potential, avert its risks as best as I can, and enjoy the ride.