As value of Bitcoin explodes upward, former Bitcoin gambling addict laments losses

The virtual currency known as Bitcoin (BTC), free from the control of regulatory bodies and taxation, is experiencing a dramatic, sustained rise in value. On Wednesday Bitcoins were valued at over $230 apiece, an increase of over $150 in just ten days.

Some economists attribute Bitcoin’s seemingly unstoppable explosion in value to Cyrpus' banking crisis.

Looking for a way around a European Union tax on Cypriot deposits, a marginal number of wealthy account holders began to shift their wealth from Euros or Rubles to BTC.

Because the transaction volume for was so low — about 2.5 million daily transactions in January — the marginal interest from Cypriot account holders was enough to cause a sharp increase in demand for the currency.

BTC first entered circulation in 2009 and struggled to maintain its value. In June of 2011, the value of BTC collapsed from $31.90 to $2 in the same day. 

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Those who resisted sell-offs during Bitcoin’s infancy may now be enjoying potentially life-changing financial windfalls. Some of the oldest Bitcoin "wallets" (software connected to Bitcoin’s large peer-to-peer network that stores the currency) contain as many as 10,000 coins, equal to approximately $2.4 million at today's valuation.

I was extremely late to Bitcoin — my interest piqued last January while researching a story on the Silk Road, an anonymous online marketplace for illicit substances. The Silk Road only accepts Bitcoin as payment. 

I incorrectly surmised at first that an online drug trade was the driving force behind Bitcoin’s then-$13 valuation. But I later came to understand its ethical worth: for example, individuals with a desire to voice opposition in nations with little tolerance for dissent can use Bitcoin to purchase blog domains anonymously, without fear of arrest. 

Bitcoins also offer privacy advantages, much like cash, by keeping transactions off of bank or credit card statements.

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I began amassing a small Bitcoin nest egg last January when the currency was valued at about $13. I mined, won Bitcoins in casual bets with colleagues and even bought a few from friends with paper cash. 

It wasn’t long before I discovered Satoshi Dice, a Bitcoin gambling game similar to a typical neighborhood dice game. To play, a user picks what odds to bet on, ranging anywhere from a 0.0015 percent to a 98 percent chance to win. Should you decide to bet one Bitcoin at 50 percent odds, you stand to win 0.9570 Bitcoin.

Gambling had never interested me. Outside of wagering $50 against a pound of bacon in a poker game while reporting from Yemen, I’d never bet a dime on anything in my life. 

But Satoshi Dice enabled me to gamble from my home computer, and clearly informed me of what I stood to win and at what odds. With a few Bitcoins to my name, I began furiously placing bets in January.

In just a few weeks’ time, I began living out the tales of gambling fortunes and folly I knew only from fiction. I fluctuated, up and down, without end. When I was down, I felt the fabled, irresistible pull to just get back to breaking even. I started using more paper cash to buy Bitcoins from friends. 

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At one point in early February, I was up by several Bitcoins. Convinced I was on the road to digital riches, I kept gambling.

But by the end of February, I’d lost it all, down to 0.13 Bitcoin. With a positive attitude, I shrugged it off as a fun experience and went back to focusing on my bank account rather than my Bitcoin wallet.

Today, my 0.13 Bitcoin is worth a little over $30. At my most prosperous, I would have boasted thousands of dollars’ worth of digital wealth at today’s valuation.

Not much is left for a reformed Bitcoin gambling addict except to stew in jealously and watch its value continue to skyrocket. But my fellow, more frugal, computer nerds and internet denizens may be on the road to becoming digital tycoons.