Tag Archives: Dollar General

Investing in Bitcoin and Litecoin: My Dollar General?

Recent months have seen a Bitcoin bonanza.

I heard about the decentralized, online-only currency on NPR, the Drill Down (the tech podcast I listen to), in the newspaper, and while hanging out with friends. We discussed Bitcoin at a recent news meeting at National Geographic (where I work).

I saw on Reddit that somebody invested their retirement in the currency. Farhad Manjoo of Slate recently plunked down more than $1,000 to become a self-described speculator in the currency, getting 7.23883 Bitcoins for his troubles.

And those troubles were considerable. Manjoo had to fill out a physical wire transfer to a vendor called LocalTill, after being thwarted on Mt.Gox, the best known Bitcoin exchange. Manjoo noted how the process of buying Bitcoins wasn’t easy or straightforward, though he predicted that as the market matures it may attract more casual investors.bitcoin

Is There Money in Bitcoins? 

When I decided to dip my toes in this market, on April 28, Bitcoins were trading for an average of one for $132. At the start of this year they were going for $20. The overall value of Bitcoins is estimated at $1 billion, and yet the currency isn’t yet a true household name.

How popular and useful it becomes is very much to be seen, although there are some indications that major retailers may start processing payments with it (so far it has been largely used for black market goods online and by early investors). Financial experts warn that the “bubble” may soon pop. Only weeks ago, Bitcoins were going for as high as $266, and trading has been volatile.

Still, at least one hedge fund is investing in them, and there have been a number of similar “cryptocurrency” spinoffs, including Litecoin, which seeks to address some of the drawbacks of Bitcoin (it is said to be faster to verify and can be “mined” by computers with lower energy inputs, making it more eco-friendly, yay).

On NPR’s “On the Media,” I heard financial journalist Felix Salmon cautioning that all this recent media attention is over-hyping Bitcoins.

But the reporter also noted that if one had bought $100 in Bitcoins when it was first mentioned on Slashdot in 2009, that would have been worth roughly $1 million a few months ago.

In 2009 I was highly active on social media sharing sites Digg, Reddit, and StumbleUpon, and I’m pretty sure I remember seeing an item about the then-new virtual currency cross my desktop. I’m also pretty sure I remember thinking it would have been fun, as well as prudent, to put $100 into Bitcoin, just to see what happens.

Now, I wish I had.

My Grandpa and Dollar General

My Grandpa, Levy Clark Howard, grew up in rural southern Kentucky in a poor farming family. He went to a one-room schoolhouse and shot squirrels for dinner. During WWII he built airplanes for the war effort. Over his work life, he tried his hand at many different jobs. He taught school, bought and sold houses, owned laundromats, and sold shoes.

As a young man, he had been friends with Cal Turner. In 1939, Turner started a store in the southern Kentucky town of Scottsville and called it J.L. Turner & Son, Inc.

According to my Grandpa, Turner had asked him to go in with him on the store. My Grandpa declined. Over time, Turner’s store expanded and eventually changed names to Dollar General. There are now more than 10,000 Dollar General stores in 40 states.

My Grandpa never became a millionaire. Far from it, he lived a solidly middle class life. He did stop in to see Turner every now and then, and the men enjoyed chatting about the old days in Kentucky.

My Grandpa passed away years ago, but he never expressed regret to me that he hadn’t gone into business with Dollar General. He always told me he was happy with how his life turned out.

What Can We Learn From Grandpa?

My Grandpa’s attitude seems healthy, though I do wonder what else I can learn from his experience. I have worked on several startup projects that didn’t pan out, and I was an early adopter in social media. The latter has helped me get jobs and consulting gigs, though I certainly haven’t seen a piece of the action on the order of a Mark Zuckerburg or Biz Stone.

My Grandpa’s story teaches me that I shouldn’t dwell on past opportunities I didn’t take, but at the same time maybe I should try to remember to be open to new possibilities.

And so I recently decided I would try to buy a single Bitcoin, as well as some Litecoins, which are going for around $2.7. It hasn’t been a very consumer friendly experience.

Transaction Troubles

I first went to Mt.Gox and signed up. I tried to wire money into my account there from my bank, Bank of America, but got the following message: “According to our records, this account was previously suspended from the Funds Transfer Service therefore it cannot be added at this time.”

Mt.Gox offers few other payment options (no PayPal?), so then I tried to sign up for a service called Dwolla, which I hadn’t been familiar with. In order to use Dwolla it requires a verified account on Mt.Gox. That requires uploading scanned documents, which would add extra time since I don’t have a scanner at home.

I also couldn’t figure out a way to buy Litecoins with Dwolla. I saw that the exchange BTC, which sells Bitcoins and Litecoins, takes a service called OKPay, another I hadn’t heard of. So I signed up for that (after also signing up for BTC). In order to actually use OKPay, I had to get verified there. This took several weeks.

At first, I didn’t read all the fine print, which requires that documents uploaded to OKPay be in color, so my first attempt was rejected. Eventually, I got verified. I then wired $200 to OKPay from my Bank of America account. It took a few weeks before that money got associated with my OKPay account; I had to file a service request and upload a scan of my wire receipt, since it didn’t appear in my account on its own.

Finally, after my OKPay account showed the funds, I was able to go back to BTC. By this point, the price of a Bitcoin had fallen to $90. So I put in an order to buy 1. After a few seconds, my BTC account showed I had 0.998 Bitcoins. Sweet.

For good measure, I spent my other $100 on Litecoins, in case this newer virtual currency becomes the next Bitcoin, and jumps in value. That transaction did not clear right away, it seems there aren’t as many willing Litecoin sellers at the moment. Litecoins are trickling into my account, at the rate of one per $2.734.

This whole process was rather confusing, and a bit frustrating. It took a few hours of my time, time that I could have spent writing an article or cleaning my apartment. But I did learn a little something about virtual currency.

I don’t expect to become a millionaire by making a few small investments in something a lot of people have heard about by now. But at least I’ll be able to say that I tried not to let an opportunity completely pass me by. Hopefully my Grandpa would agree.

Once people can buy a cryptocurrency via PayPal, credit card, or brokerage account, do you think it will open the floodgates? Or is this a fad that will pass?