The China Crash, Altcoins, Playing the Long Game

Not surprisingly, the currently high BTC and LTC prices simply aren't able to be sustained, especially in light of all the speculation by Chinese investors who have now been told that Bitcoin is basically persona non grata. This has been a relatively large bubble from the $150 range up to around a $1200 high, and now we're back in the $550 range and potentially still have a bit more to fall before we bottom out and start rising again. We've seen it before, and we'll see it again -- and we'll see it with pretty much every popular Altcoin worth mining! While BTC had about an 800% increase from mid to late November, Litecoin was actually even more impressive, going from less than $4 to a high of nearly $50 -- around a 1200% gain. I suspect Litecoin is going to see single digits again very shortly, but if you can, keep your coins and just wait for the next bubble, because it's inevitable.

The reason for China and other countries fearing Bitcoin and these other digital currencies is simple: it makes it too easy to move money out of the country! Oh, you can already do that in a variety of ways, but with Bitcoin/Litecoin/etc. it's trivial -- assuming you can buy the coins in the first place, of course. That's probably a large part of what has sparked this latest tumble, with China making it more difficult to buy BTC and investors getting spooked, but that's just it: governments may not like these digital currencies because they can't fully control them, but long-term this is the future.

Related to this is a comment someone made to me recently when discussing Frozen Coin (FZ). He said in effect, "Well, it's not like all of these digital currencies can survive -- most will fail." I disagree, because just like the distributed computing nature of Bitcoin makes it powerful and useful, the altcoins are just another way of distributing things. Bitcoin is the biggest name by far -- I heard a statistic that something like 45% of Americans have heard of Bitcoin -- and so it's going to be the biggest target for the governments. Heck, maybe they even succeed in shutting BTC down in some way. But if BTC fails, there are dozens of others, and some of these are working to make them even more difficult to kill off (e.g. Peercoin, PPC).

Consider this: governments and corporations have been trying to kill off illegal file sharing for years now. Eventually, they more or less realized that it's a fruitless endeavor and what they really needed was to embrace new technologies. And so iTunes went from heavy DRM music to basically go-anywhere music, Blu-rays now come with free digital copies and even a DVD, etc. And guess what? Not only did they not kill piracy, but piracy didn't kill them either -- arguably the movie industry is as healthy as ever! DRM isn't totally dead, but after all the hand-wringing and fear-mongering ("Please, somebody think of the children!"), technology marches ahead.

Bitcoin, Litecoin, and the other various cryptocurrencies are all marching ahead, some more quickly than others. While some governments are sitting back and just watching Bitcoin happen and China is actively trying to fight against Bitcoin, still others are talking about Bitcoin in a positive way. Big names in the US are discussing Bitcoin, and millions of dollars has been invested, with billions more waiting to come.

So if you bought BTC at $1000 or Litecoin at $40 and are feeling like a fool, just sit back, relax, and go find something else to do for a while. Sit on those coins and check back in five or ten years and you'll be able to laugh with others when you tell how you bought them at $1000 or $40 or whatever and thought you screwed up. Then they'll congratulate you on your good fortune and ask you to take them to a nice place for lunch -- because after all, you can afford it.

Or sell what you have, try to cover your losses in other ways, and bemoan your fate for a few years. Then move on and some day you'll be kicking yourself. Mark my words: you'll be sorry twice!

Disclaimer: This is a blog and is full of my own opinions, based on my experiences with Bitcoin, Litecoin, technology, etc. Could I be wrong? Sure. If you invest your life savings into BTC right now and lose it all, don't come knocking on my door. Be responsible and spread out the risk some. This is why I buy and mine coins rather than just buying $2000 worth of coins on a big drop like today -- I'm bad at day trading! Don't invest more than you can afford to lose, and don't go into massive debt because BTC/LTC look like a major opportunity. Grow your cryptocoin portfolio/mining farm slowly, over time. Start with $2000 and when you've recovered that cost, invest the future profits into more hardware. That's how I'm doing it!

News from China: Banks and ISPs Told to Not Use Bitcoin

Many have speculated that much of the current Bitcoin (and Litecoin) pricing bubble has been caused by wild speculation in China. Well, that bubble may have just burst, so plan accordingly. Long-term, the outlook for Bitcoin and Litecoin is still good -- in fact, the outlook in some respects is even better now. China is telling banks not to accept Bitcoin because they are afraid of the inherent power in an unregulated (meaning, not controlled by the governments) currency that can be used without their consent.

Remember when someone stole 25,000 BTC from an account and BTC prices took a dive? Remember when the US came down on MtGox and closed Dwolla withdrawals, seized a bunch of money, and made wire transfers to/from the US very difficult? The price of BTC took a short-term hit and then recovered. Remember when Silk Road got closed down and the price of BTC plummeted, followed by a rise to new heights? Remember the previous two bubbles?

We've seen this all before. If you want to play the market, by all means: sell now while prices are high and hope to buy in at a lower price. How low will we go and when is the right time to buy back in? That's the real question.

As I've said before, we're going to see $1000+ BTC again at some point, probably within the next three months, but almost certainly in the next year. Given there will only be 21,000,000 BTC ever, I'd even go so far as to say we're likely to see BTC hit $50,000 USD or more within the next decade -- that would represent a market cap of $1 Trillion, which sounds like a lot but given it's potential use as a global currency free from government regulation, I'd say it's looking more and more likely. Every government that ends up in a debt crisis (Greece, Italy, etc.) is just lending more power to the idea of cryptocurrencies, and as the two most prominent citizens, BTC and LTC are set to reign supreme.

LTC for Free

Trying to Sign Up for ObamaCare: WAHealthPlanFinder Edition

So the open enrollment is going on with Obamacare, and I figured with all the hoopla I would look into it and see how bad things really are. I'm a technical guy, so I figure if I can't get a site to work then probably no one can. But, I live in Washington, so we don't use the HealthCare.gov site -- we have our own exchange just for the state of WA: www.wahealthplanfinder.org. Catchy name, isn't it? What follows is my journey into how NOT to do things if you're trying to sign up. I've snagged a bunch of images, grayed out names and dates, but otherwise this is what you'd experience if you follow the same steps.

You start at the home page, and there are several large buttons calling for attention: Find and Compare Health Plans, Apply for Coverage, and in the bottom-right is the sign-in section. Naturally, first time users don't have an account yet, but there's an option down there: Create an account. Again, I'm a tech savvy person, so I figured I'd just jump right in and start with creating an account. This, it seems, was a terrible mistake.

Creating an account was pretty straightforward -- choose a user name (it has to have at least six characters with one number and one letter, with a maximum length of 20 characters. The password requirement is a bit more strict: at least eight characters, 1 UPPERCASE letter, 1 lowercase letter, 1 number, and 1 special character. Enter your email address, pick and answer three security questions, agree to the Conditions of Use, and you're done. Ready to search for plans and apply for coverage now? TOO BAD! Here's what you get:

Hmmm...strange, there doesn't seem to be anything to do. Maybe it's under one of the other options on the site? Well, I checked around and it appears that's not the case. The home page in particular has now changed quite a bit, as all you can do is watch a tutorial video or go back to the useless dashboard. So that's a problem, but I thought after a bit maybe they just want me to search for a plan and then apply, so let's try that.

To find a plan at all, you need to first sign out -- which makes zero sense. Finding and comparing plans when you're lot signed in is easy enough, though -- give the site your zip code, birthdates and sex (and smoking/pregnant status if needed), add household members, and then input your household income. Search for plans, and in my case I get the following:

Huzzah! Check out all these plans! And with four people and a household income under $60K, there are some subsidies available (with higher subsidies for lower incomes). So far so good. Since my family is already with Group Health and we're okay with the care we've received there, let's just limit things to the Group Health options:

The Silver plan looks pretty good, so let's go ahead and apply for that....

Oh, now I can log in or create an account! We're getting somewhere. Except, we're not, since I already created an account. If I sign in, I'm back to the empty dashboard. If I try to create a new account, the system figures out that I've already created an account (same SSN, after all), and I'm stuck again.

There are a few more pieces of information to tack on, however. First is that the "estimated price after tax credit" figures are apparently a joke -- you'll pay more than this unless you're on Medicaid, from what I've read elsewhere. And that's apparently assuming your application is even accepted, which it might not be -- if it was guaranteed, you wouldn't be applying, right? Of course, you have to go through the site if you want any chance at a tax credit; skip the exchange and you're stuck paying the full price no matter what.

My bet: even if I happen to qualify for a tax credit, it will likely end up being smoke and mirrors. If I get a $200 tax credit on my health insurance but my other federal taxes end up being $300 higher, it's a net loss of $100. And as I've mentioned before, with all of the people now guaranteed the ability to get some form of coverage (if you can't get accepted on an application, you can always go with the single provider government option), I suspect a tax rate hike is coming down the pipe.

I'll be trying to make some phone calls this week to see if I can get to the "apply" stage, which will likely require some serious time on hold. Wish me luck....