I Bought My First Bitcoin This Week and So Far I've Made $50

I'd been bugging a friend of mine to sell me one of his bitcoin for months. He'd always demur—until last Monday, when I got a late-night message. He would let me have one, he said, at 15% below the market price, if I paid him in cash. He had to buy some limited edition records. That, and a single bitcoin was suddenly worth $100.

So that'd be $85—a non-trivial amount of pocket change for a guy who makes his living writing blog posts like this one. Should I do it? Should you do it too? Or is this a totally asinine investment in an unreliable digital currency that will plummet once the bubble bursts? Or will its value continue to skyrocket, and leave my friend feeling like the guy who dumped 10,000 BTC on a couple of pizzas?

Hard to say.

See, even as little as half a year ago, to most non-hacker, coding-illiterate layfolk like myself, bitcoin was a curio. It was a novelty; an experiment in crytpographic currency most commonly linked to buying drugs or other illicit deepweb dithering. Its value spiked and crashed, and had little practical use. Tireless advocacy from the bitcoin community led to an increasing number of above-board vendors to accept bitcoin, and its value slowly rose. It was always incredibly volatile, though, and after one of the major bitcoin exchanges was hacked, it lead to a spate of "Rise and Fall of Bitcoin"-type think pieces and an uncertain future for the fledgling currency.

Bitcoin bounced back, found its legs, and sauntered on—and then Cyprus happened. After the snafu in Cyprus, bitcoin started soaring. Analysts thinkthat the meltdown in the EU nation and the spike in BTC are linked—Europeans (and others) looking for a currency that big banks and governments couldn't freeze or regulate found a lot to like about Bitcoin. That, combined with increasing interest from major banks and investment firms, bitcoin got hot, and fast. Which is where we are today—still totally uncertain as to whether bitcoin is a sound investment or not.

Luckily, I have access to a resource that most bit-curious dabblers don't: the Motherboard team. I put the question—Should I buy a bitcoin?—to the staff, and was met with a font of wisdom available only to those lucky few who work in our hallowed halls (or have internet access and read our blog).

Mr. Derek Mead, our esteemed editor, was first out the gate: "Volatility is the main concern," he wrote. "You could buy it for 15% below cost, cash it out, and make an easy $5, or you could buy it and hope the price keeps rising. Personally, while I'd use bitcoin for a quick transaction, I still think volumes are too low (and thus too susceptible to crash) to treat it like forex trading."

That was a good point—if I didn't need cash, I could just fork over the dough and immediately sell the bitcoin and full price online.

Alec Liu, Motherboard's resident bitcoin expert, however, suggested I have a bit more fun with it:

You should buy it just for the novelty factor. And after prices continue to climb, you'll wish you had gotten more. The queue to get verified at Mt.Gox right now is almost 10K. That's 10K new customers who are most likely not trying to signup so they can sell.

Is this a bubble? Probably. Will the price keep going up? Probably. As Joe Weisenthal at Business Insider points out, bitcoin is experiencing hyperdeflation. People will continue to hoard since prices keep going up. (Plus, there's not much you can buy with them anyway on a practical level.)

It's the bitcoin perfect storm.

Ultimately, Alec's advice was to buy: "My personal strategy has been buy and hold. But when friends ask how to buy some, I offer to sell a couple. So far, this has been good for weekend beer money."

Who can argue with that? I decided to buy my first bitcoin.

Buying a bitcoin is easy if you know someone who wants to sell. If you don't, you'll have to be willing to hand over your credit card info to a BTC exchange to load up—which many are justifiably skeptical of doing, seeing as how one of the major "wallets" (sort of your bitcoin bank account) was just hacked yesterday. That, or you'll have to go through a rather labyrinthine process involving registering for membership on an exchange and using Moneygram to convert cash to BTC with a payment processor like BitInstant, as New York Magazine's Justin Roose decided to do.

In my case, I just emailed my friend and told him I was game to do the deal. I set up a wallet on blockchain.info, picked a user name, and was provided with an ID number. I paused a moment to watch the transactions flashing across the website's main page like a stocks on a ticker—traders were transacting millions of dollars worth of bitcoin every second. The whole thing suddenly felt wild, like a cyberpunk casino.

I sent my friend the ID and he test-deposited 0.02 BTC in my account. When the small amount cleared, he sent the rest. By the time we were finished with the transaction, a single bitcoin was now worth $115. I had already made $30.

That was Tuesday. By Wednesday, BTC climbed to $125 to 1 BTC. Today, it's over $138. That, friends and lovers, is $50 in the (incredibly volatile crytpo) bank.

More than anything, though, owning a bitcoin draws me into the action; I'm personally vested now. I'll watch the news—about incipient regulation, about the dwindling herd of competitive bitcoin miners, about the currency's entry into the speculation big leagues—with a wider eye to the chaos. It's a portal into what may very well be the currency of the future, of the truly transnational digital age. Or what may not be. Busines Insider's Henry Blodget mused that bitcoin might rise to as much as $400 each. Or it may not.

Either way, I'm along for the ride. The Motherboard discussion I'd started continued on, and the writers and editors waxed philosophical about the potential value and true nature of a solely digital currency. But I'm more inclined to mirror the sentiments of Kelly Bourdet, who pens Motherboard's Future Sex column.

"I'm so jealous," she wrote. "If anyone wants to sell a single bitcoin, I will buy it. Just to have it."

I know how you feel, Kelly. But I'm not selling.