Internet

Bitcoin Buyers Beware: Being Greedy Ain't Easy


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Sure, Thanksgiving is about getting together with the family and all that, but let’s face it: It’s also about greed. It’s a season for stuffing your face and elbowing other people out of the way as you hunt for a cheap waffle iron. Fitting, then, that the price of a Bitcoin just crossed—at least for a little while—the $1,000 mark.

Money men who proudly call themselves greedy say that Bitcoin remains undervalued at that price. The preferred currency of online drug dealers, it’s just beginning to become a bit more mainstream. Folks such as Richard Branson are talking about accepting Bitcoin for flights on Virgin America (or, soon, spaceflights on Virgin Galactic). Stores in Silicon Valley will let you buy a sandwich and sushi with the virtual currency. Each new level of visibility is likely to push the value of Bitcoin higher.

Advocates of Bitcoin use liken the currency’s position to the Internet in its early days. We’re in the dial-up phase, they say—you should buy in before the boom of all booms arrives.

Please accept this note of pragmatic caution before you binge-buy Bitcoins over the long weekend. One tricky thing about the currency is that it requires regular attention. You can set up a Bitcoin wallet on your phone, with electronic keys the wallet app can regularly change for you. But that means you need to keep track of those keys by e-mailing copies of them to yourself or performing some other backup. If you lose your phone and your keys, you’ve lost the money.

Consider, too, stories like this one from the Guardian about a man named James Howells. He was an early Bitcoin miner, meaning that in exchange for the virtual currency, he used a computer to race other people for solutions to mathematical puzzles in Bitcoin’s underlying mechanics. He’d amassed a supply that would now be worth about $800,000, but accidentally threw out the hard drive where it was stored.

Elsewhere, there are stories about viruses that scour your PC for Bitcoins. For this reason, experts recommend that you not store them on Windows computers without antivirus software and other protections. Consider yourself warned: If you feel like buying into Bitcoin, please take the necessary precautions and practice safe greed.

Vance_190
Vance is a technology writer for Bloomberg Businessweek in Palo Alto, Calif. Follow him on Twitter @valleyhack.

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