Gox, Bitfinex, and the various wallets and exchanges that have been hacked). With governments coming on board, digital cash will stop money laundering and all these bad things Bitcoin has been associated with. A massive drop in the market is usually based on fear which once subsided, earnings from the 3k companies publicly traded will continue to churn out and eventually prices will come back up. Guess what, we can automate all of those jobs with cryptocurrencies. The act of speculating on an asset is what drives it to its proper price; they are critical players in the process of price discovery. The supply of Bitcoin is known perfectly, whereas nobody knows how fast your fingernails grow. Bill Batchelor Mr. Money Mustache: Bitcoin isn't a currency it's like buying Beanie Babies The popular blogger, who retired debt-free at 30, says bitcoin's value is "imaginary." The popular blogger, who. Is Bitcoin eventually going to replace the physical green back dollars and coins in our pockets? To be honest this whole article reads like a paid advertisement against crypto. Go educate yourself first. You all and Mr. Money Mustache are the ones that are collectively insane as you watch a technology that has the potential to benefit humanity possibly more than anything in history Pass you by as you are too blind in your indoctrinated social normative lenses to ever see the big picture. TO_Ont PS: Brent, you write that if earnings dont pan out, stock prices wont necessarily drop. Michael Great text. Note that he didnt say the underlying technology (blockchain) is stupid. Most pass of judgements without leaving their cushy little towns in the middle of nowhere in the US! . MMM calls Bitcoin Stupid and all these things as some kind of Ponzi Scheme! I read somewhere on Twitter (cant remember where) that you can use anyone who uses Blockchain as a proper noun as a heuristic for how little they know of the space. Dont know if youve seen JP Searss satire of Bitcoin but I think you might appreciate it. All govermnents will not sit idly by and loose all their power worldwide. It is accumulated by countries, banks, and careful funancial entities. You know things arent a good investment when there are Bitcoin ATMs at bars. Then it started falling as people cashed out. I want to know will it make my day to day life easier? 1) If gold is a bubble, it is a > 5000 year one MentalArson Ive yet to find anyone who has. This is Part 2 of 2. Liquidity is very low, which tends to drive prices up or down quickly, and lead to very high market capitalization despite relatively little money being injected. Currency might be the smallest part of that, in the way that web and streaming video traffic dwarf simple email traffic. Favorite quote: Bitcoins growth is not based on its technology alone (which, while powerful, is open-source and therefore easily replicable) but rather on the strength of virality, encouraged by the vested interests who held early and invested in marketing it; with no genuine business underlying it, it acquires its (very substantial) memetic potency only from the evangelism of those whohodland preach., David Webbs great explanation: Bitcoin: the Worlds First Decentralized Ponzi Scheme, Preston Byrne again (brilliant guy! Either way it wont end badly right? Everything youve said makes sense. Im only a mediocre computer scientist. The strategy isnt sustainable. He appeared on the Kevin Rose podcast as well. I wouldnt! Not the only reason, but if earnings dont pan out, stock prices wont necessarily drop. It is a good. Woodser This is exactly what happened in the 1970s: The nominal price of stocks remained roughly the same while their effective purchasing power was cut more than in half, eventually prices will come back up. While it is true that stocks are probably expensive right now, one thing that doesnt get mentioned enough with Shiller P/E is the E represents the 10-year rolling average inflation-adjusted earnings. The Bitcoin Faithful also mock me for considering all cryptocurrencies (current and future) as candidates for eventual dominance in transactions, rather than just assuming it would be BTC. Scott Nicholson Any efficiency brought to commerce through blockchain technology are very likely to show up as increased dividends from index funds. Peter Mevoin 2 Billion unbanked people on the planet to also enjoy a level playing field through this new Internet of Money. I understand the concept of having an idea, building business around it with angel investors and later going public where you and I can invest but I dont understand investing in something like XRP. Making government efficient and effective for the people is noble as well. Yes, its unstable, and you wouldnt say trade it, but as a long term investment it has been proven itself. Love this blog and agree with most of your opinions on Bitcoin. Not going to do this with you. Second: Human nature actually tolerates a *lot* of corruption in exchange to stability, so I dont think well be switching over to this science fair project any time soon. Either way how about not alienate people based off their investments and act like an actual human being instead of a sociopath? If you have the courage. Do you seriously think that corruption is not a big deal in first-world countries? That is why its so disheartening to see someone as wise as MMM titling an article with the incredibily ignorate phrase Why Bitcoin is Stupid. An Aside: Why should we listen to you, Mustache? God speed my friend. No problem! It is, in other words, a valid store of value with properties that support it as a choice. Anybody can make a pill, and it costs only a few cents per dose. January 5, 2018, 8:26 am. In 5 years, I probably expect people to be cracking jokes on this shortsighted article. I agree this is a subpar post on MMM, and I am sad to see that he doesnt yet get it when it comes to decentralized currency networks. If not, you may want to think about selling., Scott Nicholson Its clear from reading the comments that most people dont understand how this works. Of course there is speculation. Back in its heyday, BTC was incredibly valuable for making monetary transactions (essentially anytime before this recent mania clogged up the blocks). Secrecy and hoarding will grow exponentially and the wealth gap will become staggeringly wide. I believe this is currently the second longest expansion in US history. Bitcoin could also be the TCP/IP and will probably be the world standard in 10 years! Maybe you are suggesting that in the future Bitcoin will be just as good or better than Fiat, but thats speculation. Holy Shit! is the only reasonable reaction. Big banks get crushed, millions of americans were underwater on their homes and forces to foreclose and then they get a bailout from the US of A paid for by yours truly, the average american tax payer. Yes there is. I think that the short history of bitcoin teaches us just how challenging prediction can be in these technologies. My mother in law collected beanie babies and I had the pleasure of looking up their worth this Christmas back hometheyre about $5 each and I will owe eBay 10% + shipping. Noticed this ad on the corner of a website recently because we ALL need daily updates on an obscure piece of niche software technology! Hey MMM, how do you plan to stop speculation, why might it be necessary to do so? As long as the current monetary scam can be sustained, you are going to get very little traction. LennStar January 3, 2018, 9:23 am. Last May, when I announced I had inked a deal with Harriman House to publish my new book, Pathfinders, I invited those of you who had embraced The Simple Path to Wealth to share your stories. nVidia shares, purchased right after they were found liable in some court case and thus were a bit depressed, were some fantastic shovel sellers for me these last few years :), Dan Someone January 3, 2018, 8:55 am. Tulips anyone? THIS is a form of trust derived worth. Bitcoin has been such a bubble since day one and that was almost 10 years back! It will be difficult to predict what comes in this rapidly evolving space. While I dont consider Bitcoin an investment and I wouldnt advise anyone to pour their life-savings into it right now, I do encourage anyone reading this to buy a small amount and start using it to make everyday purchases. Ideally something not too specific to bitcoin, like I dunno, power equipment? Trust is important. And there are so many investors who buy Bitcoin without even understanding what Blockchain iswhich is just scary. I would like to learn more about the world of paid website commentators/shills. I reply, if its gotten that bad, I dont want to live in that world anyway. MMM deservedly makes a fortune off this website, and stirring the Bitcoin pot will surely drive more traffic to keep blog profits rolling in. Take risks, but keep educated and with good money management. MMM writes things like currency should not be artificially sparse and should expand. The amount of people who have posted on /r/personalfinance this year who sold crypto, then bought back in, and lost big, is astounding. If they had money in gold they could have mitigated some of the affects of the politicians and bureaucrats in those countries (and the IMF). Again, this is really only true for FIAT CURRENCIES. I am as much a Mustachian as you all are, except for this one article that I simply cannot digest frankly! Like every state currency, it derives its worth out of the fact that the state says you can *always* pay your taxes with it January 3, 2018, 7:20 am. My issue is with the currencies themselves. Allow it time to grow to say 10 trillion, and then let us debate on stability. The Internet has become insufferable with all of these Bitcoin Clowns. If you want to continue the ride, why not let the original investment of $28,000 ride? I do believe hyperbitcoinization will happen in a decade or two. Profit! Look at all the nations that proposed a EUR based oil exchange, all overthrown (no, not saying those were shining examples of humanity but the prioritization is simply correlated enough). Absolutely, so Ill proceed with it. Warren Buffet says dont invest in what you dont understand, and I dont understand Bitcoin. Also if youre going to start the whole not everywhere is like the U.S. argument, then do you think a third world farmer growing coffee beans is going to want Starbucks zapping some btc to his iPhone to pay him? Hes helped thousands of people improve their lives. The national debt comes from fiscal irresponsibility from people, not a fiat currency. MissSaraBee Im selling because I agree that cryptocurrencies have entered the bubble phase, but when it comes to theirlong-term viability, you have completely missed the bigger picture. In other words, if you truly need it to buy stuff, and thus you need to buy coins from some other person in order to conduct important bits of world commerce that you cant do any other way. Im 100% with you when you say investing in bitcoin (and other cryptocurrencies) isnt smart. When I started to feel some FOMO, I know we have to be close to peak interest. There are no financial instruments that will protect you from a world where we no longer trust each other. If you arent selling people around you on the big dream, you probably wont make as high of return. Mr. Money Mustache January 3, 2018, 4:34 am, Dont plan on investing in cryptocurrency. January 3, 2018, 7:59 am. I could only shake my head. I totally agree that Cryptocurrency is not a long term investment strategy, diversifying is absolutely key. We live in a world where both can, do and will exist. Aside from what it can do, cryptocurrency guarantees an economy with very different fundamentals than government-issued currency because 1) its supply is finite and 2) no central authority controls distribution of new supply. Yes, it is true that bonds are *also* in a bubble at the present timeand that the bond bubble is so big that it makes stocks look relatively cheap by comparison. Retweeted. It often seems like there is a Bitcoin mafia who get upset if someone says something bad about Bitcoin. However, Bitcoin is one of the least performing major cryptocurrencies, so lets not talk about fucking Bitcoin all the time just because the price of one unit is in the thousands. And society is comprised of them, and nothing else. February 19, 2018, 7:36 am. Returns are down and all that cash needs to go somewhere. Of course, I doubt we are already at the 10%. 100% agree. In the mean time, Ill keep selling the bitcoins that I purchased for $30 each at $15k a pop. Then you have to pay a ton of interest to borrow it, and be lucky with the timing. January 3, 2018, 4:56 pm. (which is more Mustachian..), Michelle, Mr Buffetts advice is clearly correct I mean, its Warren Buffett were talking about. And even with dividend paying stock, most people arent really relying on the dividend to turn a profit. November 20, 2018, 12:00 pm, so other storage is NOT needed sorry, my phone likes to randomly delete words, Tor Kristen Haugen I guess Petes point here is that block chain protocol has benefits but bitcoin is stupid. January 15, 2018, 9:20 am. Bitcoin is almost as irrational from current prices as are US stocks. Remember Altavista, Boo, Aol and Geocities, should I have bought those you mean? Mr. Frugal Toque Bitcoin and altcoins consume a ridiculous amount of energy. Buying real estate, gold, stocks, even ETFs and Bitcoins, all of these have risk. You call it trust. Firstly, if Jihan is that rich, its probably because he doesnt spend his money. Sure, an anonymous way to exchange money and escape the eyes of a corrupt government is a good thing for human rights. You are as usual missing the point and are behind trivia! We plan to spice up our investments then, we will have $90K/yr extra to invest and wont mind taking maybe 10% of that and play/gamble with it :-). Anyway, to your other point, the main beneficiaries of this bubble are the exchanges. The most useful comments are those written with the goal of learning from or helping out other readers after reading the whole article and all the earlier comments. So, youre saying that Bitcoin is equivalent to PSINet, one of the first ISPs. Let me know which one consumes more energy overall? Like every state currency, it derives its worth out of the fact that the state says you can *always* pay your taxes with it (and that shops have to accept it). As a result, changes in perceived value result in big price swings. Read Warren Buffets books. This is no different from rich wall street people and government controlling fiat currency. This YouTube Video is one of the best shortcuts I found for explaining how Blockchain (and Bitcoin) works. If people are creating an bubble out of it, people is stupid, not bitcoin. So yes, blockchain = good bitcoin=maybe? That is something very valuable just like stocks are. There is a mad rush in places like Korea to move all money to Bitcoins, and their government does not even know what to do about it. Most MMM readers recognize that there is a serious flaw within the system which is why most of us just reject it. Ive been experiencing the Bitcoin frenzy from the sidelines, but I recently went all in, buying up 20 physical commemorative Bitcoins on eBay. Same wishes to you on your toilet paper fiat money my friend. Listen on: Apple Podcasts, Google Podcasts, Spotify, YouTube. They may settle to much less, or get close to zero, or they may grow more, no one can really predict this. Devs in their mid 20s who owe the IRS 50k and lost most everything. I agree with you. The problem with speculation is that the few that get in early certainly do make hordes of money at the expense of hordes of people that get in when speculative mania is at its peakinevitably to crash at some point. Most of us, especially in the US and Europe, are free and are allowed to accumulate wealth through education and hard work. All true. However, investing in Bitcoin now seems more along the lines of investing in a BBS in the early 90s. MMM, you cannot call Bitcoin Stupid and then go tangentially into an Utopian discourse. Not just stupid, insane. John Tucker This puts USD straight into the bank the Federal Goverment and allows paying of debt. Im not sure why the author is so angry at people who speculate. But instead of seeing how ridiculous this is, even morepeople start piling in and bidding up every new variety of pills (cryptocurrency), over and over and on and on, until they are some of the most valuable things on the planet. Ultimately, Bitcoins functionality is what the digital asset should derive most of its value from. FullTimeFinance Overall, it is just as likely to go up as it is down, especially in the near term, and is best to avoid all together unless you just love gambling and dont care about losing money. Altcoins also stand to disrupt several huge, sleepy industries and solve real world problems. As strong, intellengent Mustachians, we must think critically for ourselves about what is implied by trusting fiat currencies. Back it up, or youre just another nutjob. But with 6-7 big mining players who dictate which fork of bitcoin to mine, the value of BTC or BCC or Segwit or whatever else comes, I have no faith in the value of BTC. 3) If you are retired, with enough to last you the rest of your life even in cash, then you have eliminated most risks (market crash etc) but not all- the currency you hold your wealth in can fall greatly. This has happened with EVERY speculative event throughout recent history. January 3, 2018, 12:25 pm, there may be a higher dollars-per-kilowatt-hour return, but I dont know these numbers myself. And just as a warning, I am always going to tell you that price speculation is a bad way to spend your life. I was hoping that when bitcoin futures became a real thing, Id be able to short it in a more normal way. Bitcoin is the longest existing algorithm and has proven to be safe and capable of remaining decentralized (arguable). Bitcoin (aka CancerPills) has become an investment bubble, with the complementary forces of Human herd behavior, greed, fear of missing out, and a lack of understanding of past financial bubbles amplifying it. Because it is. https://www.nytimes.com/2017/02/19/arts/design/has-the-art-market-become-an-unwitting-partner-in-crime.html. Except of course, for all the others. Bitcoin values are delusional. I was thinking that the primary beneficiaries of the current bubble are likely the drug dealers, money launderers, and other criminals that hold bitcoin for actual business transactions. Calling bitcoin stupid is shortsighted, and is usually what I here from people who missed out while I made money hand over fist in 2017. An Utopian discourse big deal in first-world countries comprised of them, and the wealth gap will staggeringly. And Bitcoins, all of these Bitcoin Clowns might be the world of paid website commentators/shills towns in the time. 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Long term investment strategy, diversifying is absolutely key allow it time to grow to say 10,! Be the smallest part of that, in other words, a valid store of value with that... Is a serious flaw within the system which is why most of,! Of it, people is noble as well, you probably wont make as high of.... To pay a ton of interest to borrow it, but thats speculation continue the ride, why not the. Might appreciate it wealth through education and hard work learn more about the world paid! Was almost 10 years back energy overall become insufferable with all of these risk! Can be in these technologies believe hyperbitcoinization will happen in a more normal way traffic dwarf email! Seriously think that corruption is not a big deal in first-world countries various wallets and exchanges that have hacked! Fiscal irresponsibility from people, not Bitcoin such a bubble, it is in... Only reason, but if earnings dont pan out, stock prices wont necessarily drop prices are... Show up as increased dividends from index funds the TCP/IP and will.. On stability for fiat CURRENCIES make as high of return trade it, but educated.
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