Monday, December 30, 2013

Bitcoin Price Progress

The the price of Bitcoin on the common exchanges has shown exceptional resilience over the last 10 days. Here is a chart showing the price on Bitstamp in US dollars.
This chart is licensed under a  Creative Commons Attribution-ShareAlike 3.0 Unported License.

There were negative news items from China and India which negatively impacted the prices, however, the upward trend continues. The fact is that Bitcoin trading has not been banned in China or India. Governments are nervous about the use of Bitcoin as currency especially concerning their loss of control of their monetary policy and have issued restrictive regulations. Despite this, the Chinese and Indians continue to invest and purchase Bitcoins. It looks like we will end the year with Bitcoins trading at a little less than $800.

Wednesday, December 18, 2013

Another Bitcoin Price Drop

Depressing week for bitcoin investors
By Sander van der Wel from Netherlands (Depressed  Uploaded by russavia) [CC-BY-SA-2.0 (], via Wikimedia Commons

The Chinese government continues to exert negative influence on the Chinese bitcoin market with additional regulations. This has resulted in a severe drop in bitcoin and other cryptocurrency prices. For those unlucky enough to have bought at $1000, the loss in value is almost 50%.
By Drawn by User:SKopp, redrawn by User:Denelson83 and User:Zscout370  Recode by cs:User:-xfi- (code), User:Shizhao (colors) [Public domain], via Wikimedia Commons

The long term prospects for bitcoin as a currency have not been significantly damaged since there are always ways to circumvent government controls and there are many markets that bitcoin can be freely exchanged besides China. This may be another buying opportunity, however, there is obviously tremendous risk with this kind of volatility.

Friday, December 6, 2013

Bitcoin price drop

By Afaber012 (Own work) [CC0], via Wikimedia Commons

Bitcoin lost over $200 today after Chinese officials said that Bitcoin was not to be considered an official currency and could not be traded by Chinese banks. The price of Bitcoins has swung dramatically over the last month. If you believe in the long term potential, this could be an excellent buying opportunity.

Monday, December 2, 2013

How to buy Litecoins

At the time of this post, litecoins can not be easily purchased with US dollars. The quickest way to obtain litecoins is to buy bitcoins first and then exchange them for litecoins.
I recommend using for the exchange. There are many others that will work as well.
By fanquake, jaromil and gavinandresen [see page for license], via Wikimedia Commons

1. Buy Bitcoins see my previous post
2. Open an account with a bitcoin exchange such as
3. Fund your exchange account with bitcoins. There should be a link to fund the account with bitcoins. The exchange will give you a bitcoin address to send the funds to. Copy this address and then go to your bitcoin wallet and click "Send Coins". Enter the address given by the exchange. Your coins should transfer in about an hour.
4. Place a bid on litecoins either at the market rate if you want immediate execution or at a lower rate if you want to try to pay less and wait for the sale to go through. Once the trade executes, the litecoins will be deposited to your account.
5. Send the litecoins from the exchange to your wallet (you need to download a litecoin wallet first. You just need the address of your litecoin wallet. Place this in the "Send To" field on the exchange website and the litecoins should be in your wallet in 10 minutes.

This will work for any crypto-currency that you want to purchase. You just need to find an exchange that allows the trading between the two currencies that you are interested in. Here is a list of exchanges with their volume and currencies.

How to transfer Bitcoins from Coinbase

In this example, I am transfering bitcoins from to
Lets say you bought 0.5 bitcoin from Coinbase. You may have to wait a few days until they deposit to your account. Once that happens, you can either leave the money in your account or transfer it.
When you click on "Send Money" the following appears:
You need to enter a bitcoin (or email) address. So you need to know what bitcoin address to move the bitcoin to. The way you find this out is as follows: Wherever you are sending the money to will provide you with the address.
For example, here is a screenshot from
You simply copy the deposit address from BTC-E and paste it in the "send money to" field at Coinbase. Once you do this the funds will transfer. It could take an hour (or longer) for the funds to be confirmed. If you make a mistake and transfer the funds to the wrong address, you will not be able to access the money and you can not reverse the transaction. Be careful.

How to make money by investing in Bitcoin

There are a few ways to make or lose money by investing in bitcoins. The first thing to understand is that bitcoins are very much like gold or a stock like Apple. It has a value and it could increase or decrease in value at any time. Unlike gold and Apple, bitcoins have been increasing dramatically over the last few years. Early investors have increased their value by a factor of 50x or more. See chart:
By Crookesmoor (Own work) [CC-BY-SA-3.0 (], via Wikimedia Commons
Bitcoins are also very volatile, its price can move up or down 20% in a few hours. This presents an opportunity for a day-trader to buy and sell bitcoins and turn a profit.
Bitcoins are traded at multiple different exchanges often at significantly different prices. At this time, 1 bitcoin is worth $1,043 at Bitstamp, $975 at BTC-E, and $1,108 at MtGox. That is a 14% spread. If you buy at one exchange and transfer to another exchange to sell at a higher price, money can be made. This is called arbitrage.
If you are an experienced trader you should have no problem making money on bitcoins. If you are a novice, be very cautious.

Strategies for making $ on Bitcoin trading/investing:
1. Buy and hold - they are likely to continue to appreciate over time due to a limited supply and increasing demand. They could also get hacked and become worthless. Bitcoin investing is risky!
2. Buy and sell - short term trades can allow talented traders to make money as the market moves
3. Arbitrage - buying low on one exchange and selling high on another

How to buy a Bitcoin

By EFF (Own work) [CC-BY-3.0 (], via Wikimedia Commons
Bitcoin Purchase
The easiest way for someone in the USA to buy a Bitcoin right now is using you use this link to create an account and buy Bitcoin, we both get $5.00 of Bitcoin free.) You don't have to buy a full Bitcoin, you can purchase a small fraction. You just need to create an account and submit your bank account info or a Visa account. You may have to wait a few days for the Bitcoin to be deposited into your account. Once you take ownership of the Bitcoin, you can send them to an exchange or download them to your wallet or do anything you want with them.

Transferring Bitcoins to Your Wallet
To transfer the Bitcoins from the account that you bought them on to your personal storage you need a Bitcoin wallet. You can download a Bitcoin wallet to your computer or smartphone. has a free Bitcoin wallet for computers that is secure and very popular. Once you download and install the wallet you need to find your address. Copy your address and paste it into the Bitcoin account (where you purchased the Bitcoins) in the field where you are asked to specify the address to send the Bitcoins to. Once you press send, the Bitcoins will appear in your wallet within 1 hour. Be sure to password protect (encrypt) your Bitcoin wallet. Be sure not to lose your password, if you forget your password you will NEVER be able to get your Bitcoins. Also be sure to back up your Bitcoin wallet. If your computer crashes, you do not want to lose your Bitcoins.

What is a Bitcoin

By CASASCIUS (CASASCIUS) [CC-BY-3.0 (], via Wikimedia Commons

A bitcoin consists of two strings of characters. See bitcoin note above. On the left side there is the private key. It is the password to the bitcoin account. On the right side of the note, you see another string of characters called the bitcoin address. This is the account number. As you can see the amount is left blank. The reason is that a bitcoin account could have any amount of bitcoin in it at a given time.

The key points are: The private key is your password, keep it private but don't loose it. If lost, the bitcoin are lost - forever. The public key is your account number. You need both keys to spend bitcoin but only your bitcoin address is needed to receive bitcoin.

Bitcoin can be stored digitally in a bitcoin wallet or kept online. They can also be stored on paper as pictured above in a paper wallet. Online storage is risky because if your bitcoin are stolen, there is usually nothing you can do about it. You can download a bitcoin wallet from: . Be sure to use the encryption feature to password protect your money. A paper wallet is also called cold storage since it is not connected to the internet.

Introduction to Bitcoin and other Crypto-currencies

I have recently explained the concept of a virtual currency to my family and friends many times over the last few weeks. People really do not understand crypto-currencies. Here is a simple guide to get you started.
By CASASCIUS. I hereby release this work into the public domain. Casascius (talk) 22:36, 18 November 2012 (UTC) (CASASCIUS) [Public domain], via Wikimedia Commons

1. Bitcoin is the most popular crypto-currency at this time. It is a virtual currency that only exists "online".

2. Bitcoins can be obtained by buying (or trading) with other people, usually through an exchange or by mining them. If you buy a bitcoin, you must store it carefully. You can download a digital wallet to hold your bitcoins.
     Popular exchanges: (easy to buy, not technically an exchange),,,

3. There are only a finite number of bitcoins possible (21 million) and most of them already have been mined. The remaining bitcoins will be mined over the next 30 years and then mining will cease.

4. Bitcoin mining is alot like mining for gold or diamonds. It is no longer for amateurs. You need a lot of expensive specialized computer hardware and there is serious competition. With the right expertise and low electricity costs, it can be profitable but it is not easy.

5. Bitcoins have value (currently about $750 each), however, they can not be easily used to purchase goods and services at this time. They can be used to buy gift cards on to major retailers. They can be converted into many currencies on the exchanges mentioned above.

6. There are many other virtual currencies besides bitcoins. They can be converted to and from Bitcoins on the exchanges.