On Tuesday evening I gave an envelope full of hundred-dollar bills to a friendly long-haired young man I’d never met in an undistinguished coffee-shop in an undistinguished neighborhood. By the time I got home, the Bitcoins I’d bought were worth noticeably less than I paid.

[Update: By morning, the wild gyrations in Bitcoins price had swung me back and forth between profit and loss several times.]

Why I Did This · Two reasons; both seem good to me.

First, I’ve been working for a long time and have built up some savings. Like they say, “diversify your portfolio”.

Second, it’s a new (where by “new” I mean “four years old”) thing on the Internet. I feel both desire and duty to experience such things. My new job has enhanced my appreciation of the power of modern cryptography; I suspect that if I’d been doing this in 2009, I would have piled into Bitcoins earlier.

How I Did This · First, I poked around on the Internet and there are exchanges where you can sign up to buy/sell, but they seemed slow and bureaucratic and overloaded, plus they wanted full-color copies of identity documents.

Next, I griped on Twitter and a Vancouver Hack Space acquaintance advised me to ask that crowd.

Next, asking VHS yielded a link to the Vancouver Bitcoin site, which as I write this is off the air.

Next, I picked a Bitcoins merchant in my neighborhood from the site and sent him email. He answered, wasn’t comfortable with what I was up to, but referred me to Adam Soltys AKA @adamsoltys.

Next, Adam and I shot emails back and forth and agreed on Tuesday night at the Sweet Tooth Café. Adam has a day job, does Bitcoins on the side, is thinking of how he might make it a career.

We talked for a while, then I gave him some money and he sent me some Bitcoins. Yes, the transaction had a bit of Sprawl-trilogy flavor, but if you recognize the reference you’ll probably find that pleasing.

Advice On Doing This · First, find someone like Mr Soltys who will advise you on what software to use and so on. Second, don’t put in any money you can’t afford to lose.

For advice on the larger questions of whether the Bitcoin mechanism is sound, and what they might end up being worth, and whether they are an anarchist tool for Sticking It To The Man or a libertarian escape-route from the tyranny of pettifogging regulation or just a Shiny Geek Toy: Go elsewhere. I hope to report back with opinions on these topics, once they’re informed by experience and I can figure out how not to be perceived as offering investment advice.



Contributions

Comment feed for ongoing:Comments feed

From: Dave Walker (Apr 10 2013, at 04:06)

Mmm. This kind of exchange - dollars or other Govt-backed currency for Bitcoin, between individuals - makes me wonder whether it presents opportunity for unscrupulous individuals to engage in bitcoin forgery, especially with those new to the Bitcoin system. After all, a correctly-sized lump of /dev/random with a convincing-looking header and footer on it, will be indistinguishable to a human eye from a genuine representation of a sum in Bitcoin - just as a lump of /dev/random with suitable file headers and a name suggesting an encrypted archive of interesting data, is a Good Thing to put in a honeypot.

It suggests that such transactions should only take place when the recipient of Bitcoin is in a position to verify the transaction has completed, at the point of transaction - so the recipient needs to have their Bitcoin environment set up (using advice independent of the Bitcoin vendor, to guard against the risk of using fake or badly-configured software), and the transaction needs to take place somewhere both parties have Internet connectivity.

I'll bet there's documents around the net, discussing secure Bitcoin exchange etiquette - if not, there needs to be...

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From: Martin Heller (Apr 10 2013, at 07:38)

The story might have come out of Reamde, except that you didn't do the transaction in virtual reality.

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From: John Cowan (Apr 10 2013, at 08:11)

So, was that your first experience with semi-anonymous commercial transactions between consenting adults? Because that's the way this post reads, really. Here's hoping you don't wake up the next morning feeling used.

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From: Kevin H (Apr 10 2013, at 10:49)

http://bitcoin.org/en/you-need-to-know

Don't forget government taxes

Bitcoin is not an official currency. That said, most jurisdictions still require you to pay income, sales, payroll, and capital gains taxes on anything that has value, including Bitcoin.

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From: Bud Gibson (Apr 10 2013, at 14:25)

Of course, right after you buy it, they have a crash:

http://arstechnica.com/business/2013/04/bitcoin-crashes-losing-nearly-half-of-its-value-in-six-hours/

I understand you did this as an experiment, so you factored in this sort of possibility. I'll be interested to hear your persepctives.

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From: Seairth Jacobs (Apr 10 2013, at 15:23)

Following on Bud's comments, this is one of those places where cryptography won't help. All you need to do is a little social engineering by creating a controlled panic, and people will effectively *give* you their bitcoins anyhow.

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From: Edward (finance exec) (Apr 13 2013, at 19:44)

> … they seemed slow and bureaucratic and

> overloaded, plus they wanted full-color

> copies of identity documents.

For someone who works on identity at Google, your hesitation at sharing a full-color copy of your passport for example, with an exchange such as Mt. Gox for example, is MASSIVELY surprising. Just put yourself in the shoes of, say, Mt. Gox (what if you were the CEO of Mt. Gox and the U.S. gov approached you and required you to show you have complied with the new rules of finance post 9/11 influenced by the the U.S. Patriot act, asking you to prove that Bitcoin traders such as Tim Bray aren't sending money to terrorists organizations)? Seriously, how naive Google employees (who alleged to work on "identity") be?

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author · Dad · software · colophon · rights
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April 09, 2013
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