All points noted. Those who are in it are using it for speculative purposes, not as a currency. January 14, 2018, 1:05 pm, https://en.wikipedia.org/wiki/Foreign_exchange_market. also look at russian, venezuala and Argentina for more proof of bitcoin. Except for ripple coin. Certianly seems like Vijay has some vested interests in Bitcoin..it is pretty obvious. Got it. Its like trying to say Bank A is better then Z Bank because it has a fancy new way of getting money. 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. It makes you want to laugh and cry. I own my currency as it is today (EUR and USD), how come you do not own yours? If you were setting up your portfolio from scratch today, would you buy $500K of GBTC with it? January 5, 2018, 7:21 pm, *cough* https://en.wikipedia.org/wiki/Tulip_mania. Bitcoin is the viral buzzword that has the momentum. Also, just because something is open-source does not mean it cant be valuable. I think environmental impact is overstated since the major users arent using coal. Yep, really fluid and efficient system that takes 3 days and $20 to record a single transaction, I remember about 20 years ago the starry-eyed optimists predicting the end of brick and mortar banks within a decade or two. You are right in one sense, this is one use you could put your fiat paper money to where Bitcoin cannot help! And if you havent been digging into the cryptocurrency world much, it gets way weirder than this. Then you are in at twice the actual price of Bitcoin. It is accumulated by countries, banks, and careful funancial entities. Do you fault coffee or corn or wheat for being non-productive, or do you appreciate them as goods, at an appropriate price? Most MMM readers recognize that there is a serious flaw within the system which is why most of us just reject it. I agree with most of this article (rather a rant, eh? January 3, 2018, 12:26 pm. But coincidentally, after I got my computer engineering degree I ended up specializing in security and encryption technologies for most of my career. I could definitely sell these for more later. Don't look at prices, look at relative prices. The value of a blockchain is its immutability, derived from its decentralization. Google, Amazon and Facebook came out of it. 7 Replies 594 Views February 10, 2023, 11:49:28 AM by index: Bonds funds vs stable value funds. that would be a PE ratio of 1. Then they go on Twitter and demand that Mr. Money Mustache apologize to his followers for telling them that speculating on future frisbee prices is not a good idea. Yeah, Ive discussed the mining with my friend from NVidia. I have accepted lifes nudge and opened up several pages of your blog and am working through them right after this, The Vigilante Nathanael January 3, 2018, 5:30 pm. We live in a world where both can, do and will exist. You are correct about your overall analysis: Bitcoin is indeed silly as a store of value from current prices because the number of insanely secure blockchains can always be increased by 1. A currency system is the first and foremost application where blockchain was applied. Do you think Governments and Regulators have sat on the sidelines so far while Bitcoin is just exploding to a point that MMM had to sit and write a huge article? Is it possible youre confusing the message of this article? And what about physical forms of cash for private sales? I completely agree, investing in Bitcoin is JUST like investing in lottery tickets. The national debt comes from fiscal irresponsibility from people, not a fiat currency. Assuming you can know the exact price of a commodity on a given day is speculative, yes. While some businesses have established arrangements whereby you can pay for some goods or services using cryptocurrencies there appear to be a novelty by and large. http://www.newsbtc.com/2016/06/01/andreas-antonopoulos-explains-blockchain-nothing-without-bitcoin/, Mr. Frugal Toque (Serious question. I agree Jay. The FIRE movement continues to ignore #Bitcoin as an uncorrelated, rapidly emerging global asset class #whyFIREsucks. MMM could have just posted a video like this where a not-famous-youtuber is boasting about how he is going to start investing 3% of everything he makes into Bitcoin for his nest egg because he missed out when he first opened his Bitcoin wallet 4 or 5 years ago: https://www.youtube.com/watch?v=ubnMyPZS86E. The real winners of the gold rush were the ones who sold shovels. The internet. Understanding the motivation is a big part of understanding Bitcoin. When we talk about Bitcoin, or Ethereum or any other digital coin, for that matter, neither ponzi nor pyramid are perfectly accurate descriptions for how these systems actually work., The cryptocoins represent a new kind of scam, a Nakamoto Scheme: https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/. They said they are going to ban it, but there was such public outcry the government just backed off and now says they are still discussing the matter! Ms99to1percent We? Something only has value if ppl place a value on it. I was tempted by the neat aspect of being involved in this thing I knew would have some kind of future value blockchain. January 16, 2018, 4:53 pm. Please dont take the Proof of Work Blockchain like Bitcoins as the Blockchain. January 3, 2018, 7:32 am. Be careful what you wish for. Bitcoins are all the same, they are not numbered, they dont rot and dont have a shelf life. It can be entertaining, though, to sit there and watch people who just happen to have $7k in small bills on them feed it into the machine at 2 am. In this video from Motley Fool Live, recorded on Feb. 23, Adeney joined. Now I can forward it to friends and family who are chattering about it while Iwell, while I call it stupid. No difference there. This inefficient design is now wasting more electricity than many entire countries. If the standard institutions werent a (govt-supported) bunch of crooks & were not in place to help only their cronies, this whole bitcoin situation would likely never have happened. Well then Biglaw Investor, youd better stop using websites or stop supporting any company that does big data research, because thats consuming considerably more electricity and its not fundamentally vital to us existing. Because I think they dont want to devalue the money too fast. Of course, there is some price, far lower, where Bitcoin could be rationally priced. Everything youve said makes sense. Because I still cant pay for groceries in my town without swiping a card or handing over some US dollars. Its speculation, pure and simple. A Ponzi scheme is a fraudulent operation designed to steal peoples money. You have unwittingly tripped up your own argument here. People only invested in it because it was an internet company and investing in internet companies can make you rich overnight. As we know from MMM teachings, safety and security are lies. MMM says: Cryptocurrencies are useful for anonymity and evading the government which is bad because we need the governemnt and we need to trust each other. Do something useful with your money. Brent Weaver >The poorest in Sub-Saharan Africa earns the same money that you sitting in Manhattan, NY do. If you think its a great investment, go ahead and buy some / a lot we are not stopping you. Id like to address each. Its rising because people are buying it up, hoping someone else will buy it at an even higher price later. Besides, how do you get BTC in the first place? Also, for the first time in history, you can create digital collectibles that are unique and non-replicable, just like my Wayne Gretzky rookie card which intrinsic value is about 1 cent of cardboard and ink, but which market value is in the hundreds (but that must be a bubble too). On the popular Coinbase it will cost you about 4% just to exchange USD for BTC. MMM, Internet has pretty much destroyed every industry it has pitted against. It isnt enough to live off of, but its definitely nice to have a net $500 or so in my pocket at the end of each month. That is when we are talking equality and progress for all! Read through this article for the contrarian view of things: https://seekingalpha.com/article/4134745-bitcoins-path-1-million-bubble-bursting-anytime-soon, Mr. Money Mustache Humanity deserves an alternative to government (aka the financial elite) controlled money. While silver and copper has been used as a form of money (notably imperial China, it was a silver based society with gold used as a high currency), golds special attributes has always been seen as a form of value storage and trusted trade medium. But it also has some ideology built in the assumption that giving national governments the ability to monitor flows of money in the financial system and use it as a form of law enforcement is wrong. 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. 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. January 4, 2018, 7:42 am. Why? Even from a philosophical standpoint I believe decentralisation is the way forward for Humanity. Long time reader, first time commenter (ha). They were literally carting around wheelbarrows full of the note because the hyperinflation the government produced killed the currency. (Its also very hard to make jewelry out of. I 100% agree with what Vijay has been saying. If not, you may want to think about selling. After all, the ONLY thing that gives a fiat money its value is what someone else is willing to give you for it. But not possible with Bitcoin transaction costs for BTC are up in the integer $ range and can take hours. But, these days you shouldnt use resistance heaters except for the lightest heating loads, because they are obsolete. I think that the point being missed in all of this is NOT that people want to evade taxes, but that they are being screwed backwards & forwards by the banks (& the tax evaders-in-chief that run them). Why not one of the other 1500 cryptocurrencies? Mr. Mustache. I dont think Bitcoin will be very snuggly. Sure, China is a renewables leader but it has limits. When contracts cannot be broken nobody needs to oversee contracts. Kevin S Coleman The potential upside outweighs the risk of the initial cost. Let me know when you find a buyer for your $70k fingernail clippings. Your in effect speculating on a winner even if you do believe the technology is the future. Episode 497: Why Bitcoin is Stupid - 2 by Mr. Money Mustache. Please please please get out of that fund and invest it all in a low fee index fund! You are just parroting what every novice tells about Money. at best. Just the same with crypto-currencies today. Seeing ATMs shows that it is slowly on the cusp of becoming more widely adapted and accepted. Good post. Ive been wondering this too. Most of us, especially in the US and Europe, are free and are allowed to accumulate wealth through education and hard work. (based on July 20th blog post) Started by caracarn. Sir, its $0.33 for that pound of bananas. Take risks, but keep educated and with good money management. Perhaps its the utter lack of any regulation that baffles me, because blockchain I do kinda get, which is why I did put some money into IBM (yes, very un-Mustachian) after reading about their auto-encryption developments and its applicability in protecting personal info and consumer data. Not only stocks, but real estate and bonds are expensive as well. I was kinda hoping he'd mention if his frugality was a factor or not. As platforms. The only flaw with your fingernail analogy is that most of your devotees would only be too willing to fork over $70,000 for them. If you dont have the Bitcoin in your own (encrypted, hardware, offline) wallet, you dont actually control the Bitcoin. In that forest there are old bricks. Full anonymity and government evasion will not be one of its features. their invested dollars add value to a society the moment they are employed.. 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. About purse.io: Do you have to pay the transaction fee to deposit the BTC to escrow? People are looking for something that is undervalued to put their money towards. But its likely just down the toilet. Blog readers. That means an implied 100% cash-on-cash return every year. I enjoyed this analysis by Aswath Damodaran, a thoughtful investor and Professor at NYU school of business. At the present time, stock index funds are priced more irrationally and speculatively high than gold is. You guys may enjoy this article about Peter Thiel: https://www.wsj.com/articles/peter-thiels-founders-fund-makes-big-bet-on-bitcoin-1514917433. MissSaraBee MMM has clearly thought about this more than most, however I think people would need to read more than this post to completely dismiss that a current crypto will have long term value. Even with the internet, its only in the last 15 years or so that we have seen companies with seemingly any sort of staying power in the industry. This Vice article explains yet another ridiculous aspect of Cryptocurrency: running the transaction network (called Mining) involves a deliberate computer-intensive crypto challenge syetem called proof of work. Most people cant afford to drop huge amounts in crypto at one time, so you have college kids paying $2-3 every week buying $50 worth of BTC. Ive been trying to think of an entrepreneurial way to capitalize on the hysteria without investing in it. 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. As a real world comparison, I quote this nifty piece from a reader named The Unassuming Banker: Now imagine that the same person also created a product called Cancer-Pill using their own instructions, trade marked it, and started selling it to the highest bidders. Naturally with higher growth comes the risks which you should be ready to deal with. January 2, 2018, 9:13 pm. A digital advertising ecosystem to fund it all. Also appreciate fungibility. I want to know will it make my day to day life easier? And it gets worse: Some large, popular components of the S&P have a PE of closer to 300, meaning it would take 300 years to earn back your initial investment. I believe MMM has missed the point completely in his rant above. And this, MMM There are no financial instruments that will protect you from a world where we no longer trust each other. Because I advocate something, I am not raving Mad! January 17, 2018, 9:00 am, bitcoin is down 50% in the past three weeks. There are other points that I cant think of right now. False analogies. And to your last point Lightning network will be cheaper? Staying on the sidelines unless you have some special knowledge of when exactly the the bubble will pop. Well, imagine you are in 1963 and you hear the speech I have a dream from Martin Luther King on abolishing slavery and you ask the question Why do you think this will happen?. I understand this is an MMM forum but i mean come on.. you have to recognize that managed risk is a part of building wealth. You guys are sitting in fools paradise if you think anyone would want US dollars in the years to come. You basically have to first deposit a lot of money (as a reserve) onto bitcoin exchange sites, which themselves are only loosely regulated and would probably become insolvent if bitcoin crashed. Tim Beck As for USD working has many reasons, required to participate in the largest economy in the world, the military power behind said economy, etc. Bitcoin is extremely risky, but it is not dumb and its value is also based on consensus. Undoubtedly the bubble will burst or mining difficulty will increase, but Ill be able to sell this supercomputer to some nerd play World of War Craft on. https://www.youtube.com/watch?v=fw3WkySh_Ho. Read your history, it happens occasionally even in the great USA (a few times actually). 26 Replies 18313 Views March 27, 2020, 01:47:17 PM by talltexan: How do you press your kids to learn money habits? I agree with Tawcan. January 3, 2018, 1:08 pm. The NEW, BEST way to absorb all of this monetary wisdom is to subscribe to the newsletter and boot camp using the boxes to the right -> You write that These are all things that people have bought in the past, and driven to completely irrational prices,. It stays below the prior high for decade at least, sometimes forever. Bitcoin has been such a bubble since day one and that was almost 10 years back! So right there you can scratch off any use of blockchain as pointless if it doesnt benefit from immutability. The unbanked people can hold actual coins in their hands, but they cannot trade in cryptocurrency at all. Bitcoins can be traced, your fingernails cant. Then I came to my senses and realized that I only want to make money providing value to society. January 2, 2018, 5:49 pm. Still no fundamentals. Ive been experiencing the Bitcoin frenzy from the sidelines, but I recently went all in, buying up 20 physical commemorative Bitcoins on eBay. 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