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Alsadius comments on Why you should consider buying Bitcoin right now (Jan 2015) if you have high risk tolerance - Less Wrong Discussion
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Canonical investment advice is to invest in all assets in direct proportion to their scale in the world economy, if you can(and adjust to your risk tolerance by determining how much of your money to invest at all). Right now there's some 13.75 million BTC in existence, worth just over $200 per, for a total value of about $2.78 billion. For comparison, total stock market assets were $63.4 trillion in Nov 2013, and when you include things like the bond market and housing, that can easily be doubled. As such, BTC are less than 1/50,000 of the world's investable assets, so you should invest at most 1/50,000 of your investments in them.
(That said, this advice assumes you have no particular knowledge of what assets are superior investments. If you have reason to believe your estimates of future BTC price are better than the market's, then investing more can be justified)
Personally, I'm a BTC skeptic, because it's simply too tied into criminal activity, and thus governments will never leave it alone. (Yes, there's some libertarian/techno-anarchist/etc interest in it, but the killer app is still Silk Road). They can't kill the math or the block chain, but they can systematically sever all its links to the real economy, and it doesn't have the legs to stand on its own without being able to buy and sell it for real money easily.
Citation needed. The reality is that most criminals avoid bitcoin. Bitcoins can be traced, cash can't.
Most non-criminals avoid bitcoin too. The ratio is still leaning criminal. You don't tend to see stories of the FBI seizing an appreciable percentage of the USD supply from criminals, you know?
Also, to some extent reality is less relevant than perception here. If the government thinks bitcoin is only used by scruffy anarchists trying to get high, they'll come down on it whether that's true or not.
Actually, if that's what government thinks, it will be content to leave bitcoin alone.
Now, the second someone in the government realizes that bitcoin could be used to avoid taxes...
Remember, the only people who vote are old, which means that the government is selected by people who have a poor grasp of technology and for whom "Won't somebody please think of the children!" is a rallying cry and not a Simpsons quote. Drugs get hammered flat as best they can manage(which isn't well, of course, but they do try).
That said, you raise a valid point too. I've seen the similarity drawn to bearer bonds, which were shut down for similar reasons(and shockingly easily - the government said interest paid on bearer bonds wasn't a deductible expense any more, and they basically disappeared).
I don't think the drug war is driven by the age of the voters. I think it's driven by the desire for power and money.
What percentage of the population wants to legalize heroin? How much of the population gains power and money from its illegality?
(Also, the above post may have been intended with a mild spirit of sarcasm)
You don't understand. It's not the people who want to continue the drug war for power and money. It's the government and its enforcement arms.
You don't happen to think that government lacks agency and just meekly fulfills the desires of the voters, do you? X-D
Government has agency, but only a limited amount. When it comes to things like Congressmen being allowed to insider-trade legally, I'll totally believe that's political agency at work. But implementing popular policies aggressively is just common sense, not a manifestation of political corruption.
I think we have deep disagreements about this :-)
Did you forget about Silk Road even as the comment you responded to named it?
Silk Road may get a ton of press but it's a really tiny part of the bitcoin ecosystem.
But assuming that you are an enthusiast who uses bitcoin for ideological motives, what is the point of using bitcoin for anything that is not shady and/or illegal?
What competitive advantage does it have over other forms of digital funds transfer? I mean practical, short-term advantages available on the margin to the parties involved in every transaction, not political things like "the government can't regulate the supply".
It's cheap. You can send a large amount of bitcoins anywhere in the world with very very low transaction fees. Merchants can accept it without a ridiculous fee.
While your funds are stationary they are not subject to seizure. That's not a political statement by the way.
If you convert it from/to cash immediately before/after each transaction, then you face exchange fees. And if I understand correctly, most exchanges have daily limits. And anyway exchanges are shady businesses: see what happened to MtGox.
If you hold significant amounts of bitcoin then you face volatility risk.
Why not? I'm pretty sure that your government can force you to hand out your wallet.
Maybe? I mean probably you wouldn't say that if you didn't have a reliable source for it/it wasn't probably true, but I don't think it's obviously true enough that you can just start off assuming everyone's on the same page and ignore darknet markets to say "citation needed", especially not if you're at the same time acknowledging that the darknet markets get a lot of press.