Tag Archives: BitCoin

Long-term profitability of Bitcoin protocol

Assumptions

  1. The Bitcoin ecosystem must remain stable and profitable for all agents engaged in its day-to-day operations with no extra incentive except transaction (Tx) fees.
  2. Long term means after year 2040, when block reward will be 0 BTC (currently at 50 BTC).
  3. Maximum Bitcoin Tx fee should not exceed 1% of transaction volume. Otherwise it will not be competitive with current fiat-money transaction systems.
  4. Miners’ expect positive average operating profit margin, so let us assume a minimum of 1%. Currently at 29% +/- 30% [i]
  5. Current exchange rates: BTC/EUR 8.39 and BTC/USD 10.74

Let us evaluate current long-term Bitcoin profitability in light of  those assumptions and some statistics.

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Investment strategy

I like being right, I usually am right and I don’t like to explain myself to or argue with people who think they know better. Since I’m also lazy I’ve decided to just give you my investment strategy without any lengthy justification. Take it or leave it.

Making money

If you don’t mind being (called) a speculator this is what you can do to make a lot of money in the coming years:

  1. buy gold (physical coins/bars, GoldMoney.com, various ETFs, RCGLDAOPEN on GPW in Poland)
  2. buy silver (physical coins/bars, GoldMoney.com, various ETFs, RCSILAOPEN on GPW in Poland)
  3. buy precious metals mining stocks (e.x. KGHM on GPW in Poland)
  4. buy agricultural commodities
  5. buy agriculture and agriculture related stocks (e.x. Astarta and Synthos on GPW in Poland)
  6. buy Thorium and Uranium mining stocks
  7. buy BTC (BitCoin) or invest in a BitCoin earning business
  8. buy stocks of companies investing in Africa
  9. few more speculative investments…

Losing money

Remember, don’t be a sucker, don’t lend money, hence avoid:
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BitCoin and free market efficiency

The crash

Today, some time in the morning Mt.Gox, the biggest BitCoin exchange, crashed. One of the accounts was hacked and the database with usernames, e-mails and encrypted passwords was leaked. Right now exchange is out of service and administrators try to bring it back, with better security infrastructure in place.
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