If A New gTLD Applicant Used His $185K To Buy Bitcoins Instead His Investment Would be Worth $30 Million

Back in May 2012 when the application period for a new gTLD’s  closed, the application fee was $185,000 per new gTLD string.

At that time the value of a Bitcoin was trading at around $5.00.

Instead of applying for a new gTLD string for $185,000 what if the applicant would have bought 37,000 Bitcoins, at $5 each.

How much would have that $185,000 investment be worth today?

Just about $30,000,000.

So why would I tie new gTLD’s and Bitcoin’s together?

Last week while I was in Argentina on a Saturday night at 2am in a nightclub, a domainer friend answered many questions I had about BitCoins and even generousness gave me one with no string attached

At the time on that Saturday night a week ago the value was $447.oo

7 days later and the value is over $800.

So my free Bitcoin’s value almost doubled in a week.

Crazy.

Its so crazy I don’t I think its something you can simply ignore or just write off as a crazy fad without giving it a second look.

BitCoin might be worth $5.00 again in a year or might be worth $100,00o or more.

Who knows.

Interestingly Argentina where the ICANN meeting was held is one of those places in which Bitcoin can really thrive.

Argentina has monetary policy issues, which is allowing an official exchange rate of 6:1 (Pesos to Dollars) where the street rate, or store rate or black or blue market rate is closer to 10:1

Simply put if you use your charge card in a store, restaurant, hotel or bar your credit card company will convert that amount in Peso’s to dollars at 6:1 and bill you in US dollars.

If you go to the same store, restaurant, hotel or Bar with hard US dollars you can therefore get a 20-40% discount.

The reason is that the local Argentina currency continues to go down in value, the government imposes a  “bank tax”.

Buenos Aires is so overrun with fraud that counterfeit bills are being distributed out of bank ATM machines.

Yes it happened to several attendee’s at the ICANN conference.

Also its pretty hard to get much out of an ATM in general in Argentina, the most I was able get out at any one time was about $200 US and had to pay a 5% service charge to do even that.

So in the city people are more than happy to take half a US dollar at half the stated rate to have cash in their hands rather than money in the bank.

Like Greece BitCoin is that type of currency which is spendable and not subject to the whim of the government.

By far when it come to technology I’m not the brighten blub but Bitcoin seems to be limited to 21 million technologically (more on this below)

Since Bitcoin is just a mathematical equation its limited by its own math.

Moreover Bitcoin is set up by design to work like  a real mine, the more the mine has been mined, the harder it gets to mine new material.

Here is some more information from bitcoin.it

“”New bitcoins are generated by the network through the process of “mining”.

“In a process that is similar to a continuous raffle draw, mining nodes on the network are awarded bitcoins each time they find the solution to a certain mathematical problem (and thereby create a new block). Creating a block is a proof of work with a difficulty that varies with the overall strength of the network. ”

“The reward for solving a block is automatically adjusted so that roughly every four years of operation of the Bitcoin network, half the amount of bitcoins created in the prior 4 years are created.

10,500,000 bitcoins were created in the first 4 (approx.) years from January 2009 to November 2012.”

“Every four years thereafter this amount halves, so it will be 5,250,000 over years 4-8, 2,625,000 over years 8-12, and so on.

Thus the total number of bitcoins in existence will never exceed 21,000,000″”

So there are only 10 million of these guys in existence.

As we know there are 265 million domain names registered in the world.

If only 1 in 20 people smart enough to have registered a domain are smart enough to want to get just 1 Bitcoin, the price could continue to sky rocket.

Especially in places like Argentina.

 

Comments

  1. Nat Cohen says

    Have bitcoins now dethroned domains as the most rapidly appreciating asset in history?

    As Rick Schwartz said about domains:”Domains would go up faster in value than any commodity or asset ever know to mankind”

  2. says

    If you check back I explained all this to you guys back in March and everybody made fun of me on DNForum. Domains are boring as hell these days with these new TLD’s. This blog is mostly just accounting stuff and long lists of domains that sold for a couple thousand. Bitcoin has controversy, Congressional hearings, Richard Branson selling space flights for Bitcoins … and huge piles of cash. I have Bitcoin miners all over the house and I still have not run the heat this year. If anyone wants to know about Bitcoin just “ask Milly Bitcoin.” In fact I was just issued my Milly Bitcoin TM last week which is just the second TM in the US with “Bitcoin” as part of the mark.

  3. says

    Hello MHB,

    Yes we have to take a look at an asset like bitcoin and see the dynamics of an asset that is very different from a far superior asset vehicle the .COM Franchise. The bitcoin value has had a very short valuation gain as compared to the .COM franchise Assets exponentially increasing 20 year run up in value.

    You cannot build a business foundation solely on a mathematical equation like the bitcoin that will have enduring results. Bitcoins are another Tech experiment with a tremendous Obsolescing cycle.

    .COM Franchise Business Addresses will prove out to be a much more prudent asset play than buying another gTLD Tech experiment.

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  4. cmac says

    From what i hear its next to impossible to cash out large amounts such as six figures or more. A major flaw to bitcoin in my opinion is the limited amount of them. Should they really take off people will buy and sell in high decimal places like .000005839024 bitcoins. Makes it difficult for the average person to understand how much things really cost and what they are getting back. I was going to buy some in the summer when the price was about 100 per but figured unless you are able to buy a lot, its not much profit. history has shown though that things that shoot up in value for no more reason than speculation, will eventually fall hard.

  5. says

    cmac – You have to know the ins and outs but you can cash out 6-7 figure amounts. If you get into 7 figured you can make direct deals with exchanges, merchant processors, and direct investors. I think the price is overhyped at this point. I have been cashing in during this upswing but I expect to buy back in.

    Bitcoin is en experimental protocol like TCP/IP. It is still difficult to use but the potential is tremendous. It is essentially programmable money that you can send like e-mail to anyone in the world. All you see now is a bare protocol and beta software. The protocol has the potential to replace many functions done by banks, stock brokers, property exchange, document verification, etc. If you go back to the early 90’s and use bulletin boards with “F” keys, etc. many people said “this will never work, it is too difficult to use, it is associated with criminal activity, you will lose all your money if you give anyone your credit card number, …

    I am shocked at the number of people who work in technology and invested in domains don’t see this. If you don’t see it then you are now those people who used to laugh at domain buyers in the 90’s. (It seems people are always laughing at me).

  6. says

    I think Jeff and cmac are pretty much spot on. Also, if hits the fan, bitcoin won’t be the choice of trade. Just like gold bars. I lean on the side of Dave Ramsey as far as that.
    Mike, maybe Florida should have paid Georgia Southern in Bitcoin :-)

  7. BrianWick says

    This all sounds good but when I hear the term “Cashing Out” well that makes bitcoin an investment commodity – not a currency. I am missing something here.

    Per Michaels reference to Argentina and obviously other parts of the world where currency is inflated astronomically like 2nd and third world countries – well it sure looks like a bitcoin is nothing more than a vehicle for arbitrage as he implies in his post IMO

  8. says

    HELP.org,

    What’s to stop another genius from creating a simpler and easier to use currency system that the world is more willing to adapt that will render bitcoin worthless?

    The first mover doesn’t always win. Apple over Xerox, Facebook over Myspace, Google over all previous SE’s, etc. There is only one internet so the comparison to domains is not accurate.

  9. says

    Bitcoin is a commodity, a currency, and a payment system all in one. This was actually discussed last week at the Congressional hearings. You can use it as a payment system and simply convert at the time of the transfer.

    It is expected that the “unbanked” will be the first mass adopters of Bitcoin. Even the poorest countries now have cell phones even if they don’t have access to banking systems. You can send small amounts easily. Also, you can send $1 Million to someone in China at 3 AM for a transaction fee of about 5 cents. Web sites can set up paywalls and charge a few cents, do an online event and charge, 50 cents, etc. The Paypal fees would exceed the transaction amount if you used them.

    There are already large numbers of competing coin systems and new ones start every day. Bitcoin is open source software and is not controlled by anyone. You can take the software and build your own coin system to compete with Bitcoin. If you look at CoinChoose there is a list that changes all the time. So, yes, another system could overtake Bitcoin. I didn’t give up my .com’s but investing in new TLD’s rather than investing in Bitcoin is a big mistake.

    I think Bitcoin is currently overhyped as it is still a long way away from being an everyday useful system. I have been selling during this upswing but it is going up much higher than almost anyone expected. In the past this was always followed by a steep decline that can happen in minutes any time of the night or day 24/7/365.

    If you go over to the Milly Bitcoin site the blog has articles about many of these issues. I do Bitcoin all day long so just enter a question if you don’t see the issue.

    BTW – Milly Bitcoin – milliBitcoin. MillyBits are worth $1 when Bitcoin is worth $1000. She will give birth to MikeyBitcoin (microBitcoin) when we get a couple more orders of magnitude.

  10. says

    Bitcoin volatility is legendary. The $800+ price tag could plummet to $100 within hours of an esoteric tech event, or the revelation of a flaw or theft of bitcoins. I’d rather invest in less volatile commodities.

  11. BrianWick says

    Paul –
    Just like Frank and a very select others – you guys know how to make money selling stuff whether it is new TLDs to new people in the internet space or something else.
    In the case of this post some apparently have made money selling bitcoins.
    It is all about sales – that is what free markets are all about.

  12. says

    This volatility will be looked at as the golden era where money can be made. Once there is liquidity in the exchanges it will probably not be an issue. I am selling in the 800’s waiting to see what happens (I started buying at $17). The last all time high was $266 and went back down to $68 for a short period and then stayed in the low 100’s for awhile. Investors manipulate the market since it is completely unregulated so these casual investors will most likely get burned. Of course the $266 people just had to to wait a few months to sell in the $800’s.

    China is driving this current price and the USA is seen as becoming irrelevant due to the regulation. Some people do development offshore on a boat in international waters off San Francisco to avoid regulations.

  13. says

    Today I was able to get my first Bitcoin. Needless to say I almost lost over $1,000 when trying to buy one off eBay, so please do yourselves a favor and do not buy Bitcoins or any other virtual currencies using Paypal/eBay, as Paypal do not protect buyers when ordering virtual items. I recommend buying your BTCs from one of the top sellers, even if it will cost more, but that way you know for sure that you will get your Bitcoins. I really hope that it keeps going like some people are claiming it will. Thankfully I didn’t pay for it, a site called FreeBitcoinsWorld.com is giving out 1BTC, as of now that is more than $800.

  14. says

    You generally can’t buy Bitcoins with Paypal/Credit cards because those charges can be disputed and Bitcoin transactions cannot be reversed by anyone. You can’t run out and start sending money to these sites before you know what you are doing.

    Nobody is giving away free 1 Bitcoin rewards. Most “free” faucets give such tiny amounts that the transaction fees are greater than the amount they give so you can’t spend it (the fees are based on the amount of data, not the amount of transaction).

  15. DomainInvestor says

    at least with tulips people had an actual tulip bulb at the end of the bubble. When this bubble ends people are going to be left with nothing.

    I will just wait until the winklevoss twins come out with their Bitcoin ETF to short.

    Pump…Pump…Pump…Pop.

  16. Louise says

    Is BitCoin on Aron Meystedt’s mind, why he included so many coin domains Heritage auction?, several of which sold?

    CoinCompany.com $1,840.00
    SellGoldCoins.com $2,990.00
    TheCoinBlog.com $373.75
    MyCoinCollection.com $690.00

    Thanx for explaining Bitcoin, since I have been ignoring it! Now I listed the “coin” domains reported sold here, in the last two years, including:

    qualitycoin.com $1,788
    cointraders.com $2,488
    coinoptv.com $1,125
    coinwallet.com 3,500 EUR
    HappyCoins.com $1,508.00
    coinx.com 4,900 EUR
    easycoin.com 2,100 EUR
    bitcoiney.com 1,100 USD
    litecoin.de 3,800 EUR

    this past May, at EmergingDomains.com

  17. says

    My 2 cents. (No pun intended)

    Bitcoins much like new tlds seem like a great opportunity to make money with. But their long term value has a lot of question marks.

    To me all currencies have to be backed by something. Some currencies are backed by gold or silver. US currency happens to be backed by guns. But if push comes to shove, what is the real value of a bitcoin? Can you trade for gold? Gold is worth something because you can trade it for essential things. Guns are good backing because they are pointed at the “bad guys” and people who wan to take away your dollars.

    But a bitcoin? If the world went to shit tomorrow you can’t even throw it at someone.

    Money is one of those things that just can’t be really truly replaced.

    Now these are just my long term concerns for BitCoins. I definitely agree all else aside there is money to be made on them and it seems lik a lot of money for those who know what they are doing.

  18. says

    To all… I here by write as a former owner of bitcoins.com ;-) this demanded me to understand in deep if Bitcoin wolud survive or not or. This is not clear to me yet because as someone said it´s full of Ifs but since then I have funded the Fundación Bitcoin Argentina and I´m the organizer of http://www.laBITconf.com just because once you understand Bitcoin, and you go beyond initial concerns such as what is backing it, who created it, what if it´s hacked, price fluctuation, etc and you begin to understand Bitcoin changes your way of seeing justice, freedom, money, banks, centralization, etc and it becomes something right to fight for and to promote everywere you can.

    I invite all of you to go beyond initial concerns and understand bitcoin in deep, all your concerns will have superior answers and bitcoin finally is the best answer to things we are used to but are not the best way they should be and bitcoin again gives new answers and solutions even in new aspects that go beyond currency.

    Fly to Argentina, be part of http://www.laBITconf.com and get involved in this revolution. Anyone traveling to the conf will have a first hand story about bitcoins.com, “why, when, and how much (you just won´t believe it)”.

    BTW there is a new buch of TLD .com or .co.in or etc that can be registered with this in mind (ie: I have theBITcard.com, BitcoinQR.com, and others).

    ENJOY!!!
    Mail me at rodolfo@bitcoinargentina.org

  19. cmac says

    this is how it seems to go:

    everyone who ha bought bitcoins hails it as the next currency, the investment that blows away all other investments, etc, etc

    everyone who hasn’t thinks its a flash in the pan, going to drop, majority used by criminals and scammers, etc

    the reality is probably somewhere in the middle.

    in the end, no matter how you look it bitcoins have a long way to go before actually being used for anything other than speculation.

    =they need to be more stable (no one is going to buy things with it when it can be worth +/-200 dollars in a day or week.

    =they need to be more secure, the amount of theft and scamming going on with bitcoins is insane. its too easy to do.

    =the whole *non reversable* thing isn’t a positive for consumers. something needs to be done in regards to this otherwise bitcoin will always be a fringe “outsider” currency

    this is just off the top of my head. i like the idea and wish i had bought some but unless you were able to invest $5000 or so when it was at least $100 per, its not worth the hassle.

  20. Louise says

    Thanx for link, @ Rodolfo Andragnes – the speakers and sponsers look like a whos who in the world of Bitcoin. Except, I don’t see the Winklevoss twins! They were in at $11 million in April, according to reports, and are working on BitInstant.com and going public. I will have to link to your site on my article on EmergingDomains.com, linked to, above, and the article Acro supplied, Much ado about Bitcoin – thanx, @ Acro!

    @ Brian Wick, NameCheap.com accepts Bitcoin; so does WordPress, and some 12,000 merchants listed here: bitpay.com/directory. There is a cafe in Wisconsin – 2894onmain.com – and a bulk grocer in San Deigo: consciouscookery.com. which offers 15% off if you pay with Bitcoin. I thought you might have some domains at Namecheap. so it’s not like you could never spend them.

  21. says

    Back before I got involved with Internet and DNS issues I handled wholesale and retail payments system policy for the American Bankers Association.

    There is a real need and tremendous potential for digital currencies, particularly to cut the transaction costs associated with credit and debit cards used for small e-transactions.

    But I am not convinced that Bitcoin is that currency.

    It is subject to all the risks of any fiat currency, plus the risks that come with potential hacking of its software code — which could lead to an infinite supply of counterfeit Bitcoins. And, like any data kept on your computer, it can be hacked and stolen – and already has been.

    The more Bitcoins are created (by “miners” who validate the chain block that ensures authenticity and are paid in new Bitcoins for that task) the longer each transaction takes, which is not very compatible with the instant online payments we are used to and expect.

    The fixed number of 21 million Bitcoins mean that once that ceiling is reached there is a high probability of a deflationary spiral for all Bitcoin-denominated assets.

    If at any point it becomes a significant payment system it will become subject to aggressive enforcement of relevant financial regulations that may require software changes. The Secret service and FBI will not be sympathetic to arguments that can’t be done. True, they can’t put Bitcoins in jail — but they can incarcerate the operators of the money exchanges that are essential to its real world use.

    Right now it is more in the nature of a commodity than a currency, because most Bitcoins are not circulating but are being hoarded to take advantage of its huge recent run-up in value.

    Which brings us to the 400% run-up in value of the past month, which just SCREAMS ‘ASSET BUBBLE’. When these bubbles burst – and they always do, because the world always runs run out of ‘greater fools’ willing to pay an ever higher price (in real Dollars, Euros, or other currencies backed by the taxing power of a state) — the aftermath is very ugly.

    It’s amazing what people have convinced themselves have value in the past, only to see the bubble burst. Like the Dutch tulip mania that saw the prices of those flowers soar to astronomical levels before crashing. For that history of temporary financial insanities see the classic 1841 volume by Charles Mackay, “Extraordinary Popular Delusions and the Madness of Crowds”. For a more recent treatment of the same subject try “This Time is Different: Eight Centuries of Financial Folly’ by Carmen Reinhart and Kenneth Rogoff.

    If you want you know more about Bitcoin then do a search for “Bitcoin: A Primer for Policymakers” issued a few months ago by the Mercatus Center of George Mason University. If you want to go deeper into its monetary policy implications then search for the “Virtual Currency Schemes” report issued by the European Central Bank in October 2012.

    That’s my two cents — in Dollars, not Bitcoins.

  22. says

    After digesting this some more, I think the tulipmania analogy is pretty good.

    For me, personally, this reminds me of the dotcom start-ups in the 90’s that didn’t make any money but soared on the stock market. 10 million bitcoins at the moment is like the current float with the 21 million a capped total shares outstanding. Bitcoins aren’t backed by anything in the physical world or by any governments just like those startups didn’t make any profits.

    I do think that the concept is very promising and a simpler, easier to use system that is more practical and that will possibly be the result of a collaboration of the global superpowers i.e. the USA, China, Russia, Japan, Germany, etc, will eventually be realized.

    Bitcoin might be the beta version of a not too distant future global digital currency.

  23. Louise says

    Interesting video profile of a techie who mines bitcoins. At that time, his software mined only one bitcoin per day – not much payment, he indicated. If bitcoins were valued at what they are today, one bitcoin / day isn’t bad!

    How I make money mining bitcoins

  24. says

    The calculations to authenticate the blockchain and thereby to mine Bitcoins have gotten much more complex as the competition intensifies in tandem with the price increase. As a result, it is no longer possible to use general purpose computers and succeed. Expensive specialized machines using ASIC chips and requiring extensive cooling are now mandatory.

    One thing I really don’t understand — With 12 million Bitcoins now in existence, we are more than halfway to the 21 million ceiling laid out by Satoshi. The need to authenticate the blockchain remains after the ceiling is reached in order to prove authenticity and prevent counterfeiting.

    But when no new Bitcoins can be created how will the miners be paid, and by whom, for their ever more expensive machinery and associated costs?

  25. says

    Oh my god so many questions and so many answers to give… :-) I’m a bit lazy to go back at 2AM to go back and answer one by one but I’ll do my best in a general way…

    a) Bitcoin transactions are free but you can add a small fee (ie:0.0001btc) x transaction if you want to rest assured that this transaction get’s into the next block minted (bitcoins are minted by blocks and once they are all the transactions done in between each minting goes into this blockchain to reccord new wallet balances). So in the future were millions of transactions will be done throught BTC the fee would represent the enough incentive to keep mining or writting this blocks.

    b) Tullips, tullips was only a speculation over the asset just like art but this asset has no other global use rather than being itself. Bitcoin instead is: + easy and cheaper to store than gold and cash, + more fractionable than cash and gold, + uncounterfakable than cash and gold, + cheaper and easier to transfer worldwide than cash and gold, + lasting than cash, and others but actually less adopted than cash and gold…

    c) If all the doubts and bad user friendlyness around Bitcoin were solved not only 4mm people would hold them but hundred of millions, but bitcoins wont grow that much so with no main concerns, how much do you think 1 Bitcoin will cost? Beside as it’s an open source software it only gets stronger, easier and securer every day and that’s why everyday more and more people uses it and believes it.

    d) having a secure unhackable wallet is EXTREMLY easy for users. They just need to keep them offline, in paper o in their mind :-)

    As I said I invite you all to be part of this revolutiona and if we meet at my conference, I’ll be glad to share this amussing story about bitoins.com

    rodolfo@bitcoinargentina.org

  26. says

    Bitcoins are nothing more than a reflective shadow or derivative of a valueless symbol for money. Its ONLY real claim to fame, which is also illusionary, is that its the futures Digital Online Currency. Its a fact that REAL Online currency transactions have been plying the DNS for decades now. This will go down as a bigger Scam than the Maddof Hoax.

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  27. accent says

    I like the idea of pushing the banksters out of my business. But they will not go quietly. And the banks control the government – witness the bailout.

    The NSA should be able to hack Bitcoin to pieces whenever it gets big enough for them to care.

  28. says

    Jeff, and who would be the scammer? Who is the Maddof? A Bubble, might be but backed by real reasons, but scamm is just using fancy words for something that has nothing to do with it and which only denotes ignorance from your side unless you support your opinions with concrete reasons.

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