April 13, 2014

Converting computer gold to real money


Some months ago I posted about mining cryptocurrencies, concluding that it probably wasn’t worth it. Since then Bitcoin has boomed and then bust, with theft, bankruptices and possible regulation galore. Despite the volatility and bad press, Bitcoin has doubled in value since the original post (although at one point it was up over 500%). Other, minor, cryptocurrencies have oscillated in value roughly in line with Bitcoin.

In the original post I estimated that if my desktop PC mined Feathercoin for 100 days the result would be 224 FTC worth US$15.68 (7 cents per FTC). I left the mining program running after the “experiment” ended as it didn’t seem to noticably slow the computer. So now 150 days later the result is 180 FTC currently worth around US$21 (11.5 cents per FTC). The lower mining rate is due to not being a particularly conscientious miner and the ever increasing difficulty of the calculations required to mine successfully.

So what can be done with $20 worth of Feathercoin? Initially it seemed, very little. There is a Feathercoin Market of seemingly random items – none of which interested me. Next I hoped to convert the coins to US$. I found Crypto-Trade, an exchange based in Hong Kong that allowed FTC/USD trades and didn’t charge excessive fees. Unfortunately, it also doesn’t have any useful cash withdrawal options. While it is easy and cheap to withdraw various cryptocurrencies, cash can not transferred to a bank account or even Paypal. It has to be taken in the form of various east european e-payment systems. Not even the online poker sites I use would accept them. I looked into methods of conversion and found various sites charging 5-10% to exchange them for Paypal, but every single one has pages full of “this is a scam!” warnings on Google. I then considered converting the Feathercoins for Bitcoins (or Litecoin) and then using other larger exchanges to get US$ transferred to Paypal. However, the fees for this route would turn my $20 into less than the minimum transfer amount of $10! Next I looked into converting the coins to Bitcoin and purchasing Amazon vouchers with them. Many sites exist to facilitate such transfers. Unfortunately, only US$ vouchers are available and Amazon has strict policies against non-US people (like me) using them. Urgh.

At this point the situation was dire, much time had been spent on a futile investigation of Feathercoin’s utility. The whole system seems a little “wild west”, with high percentage fees, scams and frauds common. It is definitely much easier to get money into Bitcoin than the opposite. I certainly doubt the value of the system as a currency. Although it has prompted an explosion of witty aphorisms. Dunning Krugerrand and this tweet are my favourites.

Just as I was about to write the whole thing off as a folly, I found Crypto-de-Change, as site that converts cryptocurrencies for UK Amazon vouchers. I exchanged 161 FTC for a £10 voucher (about 10.5 cents per FTC). At least there is some result, but now I am more skeptical than ever. I used the voucher to buy a book by Charlie Stross – it seemed appropriate.

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