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Why You Should Probably Buy Bitcoins

In 2009, probably within the first couple months of its existence, I downloaded the Bitcoin client and began mining bitcoins. Back then it was really easy-- you could get hundreds of Bitcoins per week for free, but they weren't worth anything. Not wanting to waste my time, I deleted the Bitcoin client, and any bitcoins I had mined went along with it.

Last March I thought about Bitcoins again and decided to check up on them. As I read about the progress that had taken place in the preceding years and learned more about the technical aspects of Bitcoin, I was blown away. This is going to change the world, I thought.

So I bought a few when they were around $30 a coin, a few more at $80, and then again at $110. I'm not a Bitcoin millionaire or anything awesome like that, but percentage-wise, it's the best return I've ever gotten on anything. In case you don't fanatically check the price like I do, it's at around $825 per coin as I write this.

I'm going to write the rest of this blog post to explain why I think it's important that you buy some Bitcoins, but take it all with a grain of salt. I do know a fair amount about Bitcoin, but I don't know much about investing or, more importantly, your financial situation.

Reply to Why You Should Probably Buy Bitcoins

On Danny Schmidgall

Alas, while I would like to say that there is a single one-stop shop about bitcoins, there is not. As a general rule, avoid most news articles, as many are inaccurate, oversimplified, and repetitive.

As a background, read what a crytographic hash function is and how RSA cryptography works. You don't need to know every step of the algorithms, just what their inputs and outputs are, as the algorithms are purposely designed to be so complicated that nobody knows everything they do (that's the reason for a hash function).

Teach yourself the basics of bitcoin mining, transaction fees, and the blockchain.

For development, I would focus on locating things produced by specific sources who are involved in the development of bitcoins. Read anything written by Gavin Andressen, as he is the primary developer of bitcoins at the moment and everything I've read from him seems to be accurate. Review his plans for development in bitcoin version 0.9, and find his roadmap for future features.

Research the current technical issues facing bitcoins. The only issue I see that can prevent bitcoins from becoming the world currency is the 1MB transaction limit. Get an understanding of how it takes 95% to upgrade the network to get rid of the 1MB transaction limit, and how bitcoins may have already passed the point where everyone can agree on a solution to this issue. Also, read about mining pool centralization.

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