UK broadcast media has been full of the story of how a bitcoin miner threw away his hard drive that reportedly contained 7,500 bitcoins that at today's market price would be worth £4.5 million.

The bitcoin miner, James Howells, was shown at the rubbish tip where his hard drive lies buried under tens of metres of compacted refuse, as James ponders that even if he could find the hard drive, would it have survived several months under a wet rotting mountain of waste.

Off course the reason why he did not pay that much attention to the fortune that resided on his dumped hard drive was because when he threw it away the value was far, far less than 1/20th of today's price, with little media attention, the Bitcoin price having risen from about $14 at the start of the year to more than $1100 today.

Though throwing away £200k valuation of a couple of months ago was still a pretty dumb thing to do, which reflects the truth of the Bitcoin tulip mania as James had mined his bitcoins (solving blocks, the complexity and processing power needed is constantly increasing in response to increasing supply) several years earlier using his personal computer, and that all they were actually worth at the time was marginally more than the cost of the electricity expended, so no more than perhaps £45 rather than today's £4.5 million valuation.

So all who have been piling into the Bitcoin tulip mania need to realise that the real value of bitcoins is near 1/100,000 of the current price and therefore the potential losses they WILL suffer when this i-bubble bursts will far exceed a 99% loss!

Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of four ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series.that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

Comments

bbull26
29 Nov 13, 09:28

Bubble

Nadeem,

What are your reasons behind why you think bitcoin, i-bubble as you put it, will collapse?

Is it not an early adoption S-curve similar to the likes of facebook and twitter? Is it not somehwere that people can place their money away from the manipulation ot the banks? Are there not more and more retailers accepting bitcoins for products?

I would love to hear your views on it.

Regards

Nadeem_Walayat
29 Nov 13, 11:19

Bitcoin Ponzi Scheme

I looked into bitcoins a few years back but never mined it because it would cost more in electricity than its value.

Also that the key reasons blindly promoted in the media for using bitcoins are FALSE.

It is NOT annoniymous!

It is not decentralised, it is manipulated by a core pool of bit MINERS! Ordinary people today cannot mine for bitcoins, too much processing powerr so its in the hands of a few MINERS who control the supply.

I could go on such as early adopters have hoarded it, and if they released their supply it would crash, and they will try and release their supply because they will make 100,000 times what it cost them.

Bitcoins is a pyramid ponzi scheme, those who got in early win, everyone else loses.

If you own bitcoins you should get out IMMEDIATELY!

Best

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.