Meet 'Bitcoin Jesus,' a Virtual Currency Millionaire

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By Ansuya Harjani

The astronomical rise in the value of bitcoin -- which has surged more than 8,000 percent in 2013 -- has created a new breed of digital currency multimillionaires.

34-year-old Roger Ver began investing in bitcoins in early 2011 -- and made his first million from the virtual currency that same year -- which saw prices skyrocket from about 30 cents to $32.00 before settling at $2. He bought his first bitcoins at around $1.

With prices currently hovering above $1,000, his virtual wealth has since exploded. Ver says he doesn't feel "richer" but that his wealth is "much more liquid than it would be in a normal bank account."

Ver is one of hundreds of investors that have struck it big with bitcoin. But his association with the virtual currency extends far beyond just owning it.

He has helped seed about a dozen different businesses involving bitcoin and actively promotes the currency, earning him the nickname "Bitcoin Jesus."

"I believe Peter Vessenes [chairman of the Bitcoin Foundation] gave me the title when we were at a BBQ together. %VIRTUAL-article-sponsoredlinks%I was explaining bitcoin to about two dozen high school kids. The kids were all enthralled by bitcoin, and hanging on my every word," he told CNBC.

"Peter then commented that ' it's like you are a Bitcoin Jesus, and you have all your disciples around you,' " he added.

His venture MemoryDealers.com, a website that sells discounted computer parts, became the first mainstream business to accept bitcoins as payment. It's also worth noting that it was through this business that he made his first million, in dollar terms, back in 2003.

Ver's nickname is as colorful as his past. Born and raised in Silicon Valley, he moved to Tokyo in 2005 after serving 10 months in federal prison for selling a product called "Pest Control Report 2000" -- which he described as a firecracker used by farmers to keep animals away from their cornfields -- on eBay (EBAY).

Before that, in 2000, he tried his hand in politics, running for California State Assembly as a Libertarian, but lost.

Bitcoins Are 'Incredibly Cheap'

Bitcoin's meteoric rise in the recent weeks has led to concerns that it may be a speculative bubble, but Ver says this is not a concern for him.

At $1,000, Ver regards bitcoin as "incredibly cheap," noting that if it gains in popularity as he anticipates, each bitcoin would be worth tens or hundreds of thousands of dollars.

"The rapid price rise is due to people with money starting to realize how important of an invention Bitcoin is," he said.

"Bitcoin will experience many bubbles along its way to improving the lives of everyone on the planet. I'm not concerned with the short-term price fluctuations," he added.

Ver, who currently uses bitcoins to pay factories in China to produce electronics components for his company, says he plans to use them "to promote the ideas of Voluntaryism and economic freedom" in the future.

This past weekend, Ver made the largest-ever bitcoin-based charitable donation. Ver donated 1,000 bitcoins (more than $1 million) to the Foundation for Economic Education -- an American organization that promotes the principles of laissez-faire economics, private property and limited government to students.


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Meet 'Bitcoin Jesus,' a Virtual Currency Millionaire

Warren Buffett is a great investor, but what makes him rich is that he's been a great investor for two thirds of a century. Of his current $60 billion net worth, $59.7 billion was added after his 50th birthday, and $57 billion came after his 60th. If Buffett started saving in his 30s and retired in his 60s, you would have never heard of him. His secret is time.

Most people don't start saving in meaningful amounts until a decade or two before retirement, which severely limits the power of compounding. That's unfortunate, and there's no way to fix it retroactively. It's a good reminder of how important it is to teach young people to start saving as soon as possible.

Future market returns will equal the dividend yield + earnings growth +/- change in the earnings multiple (valuations). That's really all there is to it.

The dividend yield we know: It's currently 2%. A reasonable guess of future earnings growth is 5% a year. What about the change in earnings multiples? That's totally unknowable.

Earnings multiples reflect people's feelings about the future. And there's just no way to know what people are going to think about the future in the future. How could you?

If someone said, "I think most people will be in a 10% better mood in the year 2023," we'd call them delusional. When someone does the same thing by projecting 10-year market returns, we call them analysts.

Someone who bought a low-cost S&P 500 index fund in 2003 earned a 97% return by the end of 2012. That's great! And they didn't need to know a thing about portfolio management, technical analysis, or suffer through a single segment of "The Lighting Round."

Meanwhile, the average equity market neutral fancy-pants hedge fund lost 4.7% of its value over the same period, according to data from Dow Jones Credit Suisse Hedge Fund Indices. The average long-short equity hedge fund produced a 96% total return -- still short of an index fund.

Investing is not like a computer: Simple and basic can be more powerful than complex and cutting-edge. And it's not like golf: The spectators have a pretty good chance of humbling the pros.

Most investors understand that stocks produce superior long-term returns, but at the cost of higher volatility. Yet every time -- every single time -- there's even a hint of volatility, the same cry is heard from the investing public: "What is going on?!"

Nine times out of ten, the correct answer is the same: Nothing is going on. This is just what stocks do.

Since 1900 the S&P 500 (^GSPC) has returned about 6% per year, but the average difference between any year's highest close and lowest close is 23%. Remember this the next time someone tries to explain why the market is up or down by a few percentage points. They are basically trying to explain why summer came after spring.

Someone once asked J.P. Morgan what the market will do. "It will fluctuate," he allegedly said. Truer words have never been spoken.

The vast majority of financial products are sold by people whose only interest in your wealth is the amount of fees they can sucker you out of.

You need no experience, credentials, or even common sense to be a financial pundit. Sadly, the louder and more bombastic a pundit is, the more attention he'll receive, even though it makes him more likely to be wrong.

This is perhaps the most important theory in finance. Until it is understood you stand a high chance of being bamboozled and misled at every corner.

"Everything else is cream cheese."
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