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Bitcoin’s Fortunes and the Case of the Six Million Dollar Pizzas

Mining bitcoins today is not as easy as Laszlo Hanyecz made it look 3 years back. It's pretty clear today that the choice of buying pizzas was a bad decision.

Mining bitcoins today is not as easy as Laszlo Hanyecz made it look 3 years back. It’s pretty clear today that the choice of buying pizzas instead of holding on onto his BTC’s was a bad decision.

Back in 2010, the cryptocurrency Bitcoin was still relatively unknown. One of the early adopters of Bitcoin, a New york programmer named Laszlo Hanyecz, gave ten thousand bitcoins to get two papa jam pizzas. This was three years ago. Back then, the prize of a bitcoin, according to the exchanges handling the cryptocurrency, was 0.003 dollars each. They were basically worthless. So Hanyecz had a two yummy pizzas for basically doing nothing. Why? You get bitcoins by running a software on your computer. The longer your computer runs the more bitcoins you get. You have to have a very fast computer to mine bitcoins. Apparently, Hanyecz had a very nice set up so that he was able to mine tons of bitcoins. He spent his ten thousand bitcoins on two pizzas, and apparently at that time, he thought he had a good deal. Well, come November of that year, speculators have bidded up bitcoins to 1,242 dollars per bitcoin. In other words, one bitcoin was worth around the same prize as an ounce of gold. Crazy? Well you haven’t seen anything yet. The prize of bitcoin has skyrocketed since then, and crashed since then. At its highest point, the prize Hanyecz paid for those two papa jam pizzas reach around six million dollars. Crazy, right? Well, that’s bitcoin for you.

Bitcoin is fast gaining a lot of attention for a variety of reasons. One, it’s hard to trace. If you want to buy certain things online and you don’t want people to know that you buy that stuff online, use bitcoins. Unfortunately, this feature has made bitcoin attractive to very unsavory people. These are people who buy illegal drugs and illegal pornography online. The other reason why bitcoin is such a big hit online is that, it is used by tax evaders as an investment. Since it’s untraceable and it goes up in value, people who want to invest and not pay any taxes in their investment naturally gravitated towards bitcoin. The third reason that bitcoin has appreciated so much is that, many Russian investors in Cyprus and other places have shifted their money to bitcoin. This story just highlights the fact that cryptocurrencies are hot. If you’re looking for investment that can blow up very quickly, you might want to check out bitcoin and other currencies. Keep in mind that bitcoin is the best known. That’s why it has the best appreciation rates. But you never know, there might be an even better cryptocurrency in the future.

What is bitcoin mining?

Here’s a good article explaining what bitcoin mining is: How a total noob mined $700 in bitcoins. But beware mining bitcoins today december 2013 is alot more difficult than it was earlier this year and anyone pursuing might not make profit depending on bitcoin value fluctuation, hardware and electricity costs. Though in terms of profit another approach is mining for alternative virtual currencies.