Great post, I have been content to sit on the sidelines and watch the show. How many decades of using toilet paper as a useful medium of exchange are required before you reevaluate your position? Read your history, it happens occasionally. Do you practice illegal tax evasion as your primary wealth strategy? Stocks and bonds and real estate can all enter into bubbles. A decentralised system where no human has the power to manipulate money supply is the best thing that any society can expect, to get its finances and economy in order. This is no different from rich wall street people and government controlling fiat currency. These days, stocks are regulated by the SEC, precisely because in the olden days, there were many, many stocks issued that were much likeBitcoin. Not just stupid, insane. Justin C pre-construction Toronto condos will generate cashflow as soon as construction has been completed, If bitcoin is a bubble, should we short it? Mr. Butler It just means that some price levels are reasonable, and some are not. Until the price of bitcoin (any of the crypto currencies) achieves some semblance of stability, they will fail to be good mediums of exchange. No difference there. This YouTube Video is one of the best shortcuts I found for explaining how Blockchain (and Bitcoin) works. Secondly, Governments are (by definition) other people, spending other peoples money on what other people tell them are other peoples problems often they screw up fiat currencies through simple incompetence they have no motivation to get it right. The people that buy into bitcoin will be hurting enough financially. This is a non-sarcastic answer: The same could be said of buying a Powerball ticket every week. but remember short positions have a possible infinite downside while buying the asset has a possible infinite up side, If you do this youre still speculating on a market that cant be understood right now. Bitcoin isnt that though. Fiat currency has neither. It all depends on how much personal enjoyment they get compared to the cost to own them. 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. Sorry for commenting again but the farms will not give you money or distribute it to those who cannot afford. :). There are sure going to be a lot of people gnashing their teeth and rending their garments when the bottom falls out of this market. The $16,728 Social Security bonus most retirees completely overlook. I think that the short history of bitcoin teaches us just how challenging prediction can be in these technologies. There is a reason that central banks own most of the wotlds gold. Evan Drake Brent Weaver I think environmental impact is overstated since the major users arent using coal. If so, this could negate the discount benefit for small purchases. Well, SOMEONE has to keep the bankers & wealthy rich, right??? Like a piece of a profitable business or a rentable piece of real estate. MMM said Government-issued currencies have value because they represent human trust and cooperation. 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). This results in a silent crash, and a loss in purchasing power for stock holderseven if the nominal price of stocks remains the same. MMM says: There is no intrinsic value in cryptocurrencies. Again, how is Bitcoin replacing that? Wow, you really have no idea how hydroelectric power works. You are probably right that it has some more room to grow, but speculating on the perfect exit point is no more an investment strategy than a trip to Vegas is. January 3, 2018, 12:13 pm. In short this is nothing more than trust. Heck no. I'm sure this had nothing to do with their personal stake in the outcome." Thank you! This is also wrong, Zimbabwe did not abolish taxation yet the worth of Zimbabwe dollar has vanished anyway. Your in effect speculating on a winner even if you do believe the technology is the future. So, I harvest other peoples speculation and I dont lose anything, as I have already harvested more than what I put in. I was kinda hoping he'd mention if his frugality was a factor or not. Herd behavior? Take risks, but keep educated and with good money management. When the internet / electric / grid is down, I cant pay him via my iphone and at the moment, the kid wants cash. Its only valuable when you cash it out to a real currency again, like the US dollar, and use it to buy something useful like a nice house or a business. For a shortcut to understanding good investing, you can also simply look up Warren Buffets thinking on almost any topic hes careful enough about offering opinions that by the time he makes a statement on something, you can be pretty sure it will be among the best answers out there. Now, with that moral sermon out of the way, we might as well talk about why Bitcoin has become such a big thing, so we can separate the usefulness of the underlying technology called Blockchain, from the mania about how people have turned Bitcoin it into a big dumb lottery. ), Im in the same boat. Agree, the valuation of these cryptocurrencies are out of whack. People like planting gardens. Its hard to quantify the lost energy and human potential, but the cost is real. destroy? But thats just the software side (Blockchain). Bitcoin CANNOT shelter you, pay dividends nor feed you. Pretty much. As soon as I read you were selling a bag of your nail clippings for $100, I thought to myself that is a great deal! No? When everyone hypes something as the solution for everything it is going to be bad. Personally, I am out of Bitcoin because it is no longer useful to me. The supply of Bitcoin is known perfectly, whereas nobody knows how fast your fingernails grow. But at least 98% of MMM readers do not live in countries where this is an issue. Check your funds. Unfortunately for most people that think they are missing out on everything, they are being lead to Coinbase and only buying the cheapest tokens available, namely Litecoin because Ethereum and Bitcoin have gotten so expensive. It is already in Beta testing and will be released this year. Today, 20 years down the road you are watching 4K videos on it! (FWIW, CAPE had actually been studied in academic settings many, many decades before Shiller, and was a favorite metric of the legendary Benjamin Graham in the 1920s and 30s. However, taking a very small gamble doesnt hurt 99% is invested in s&p 500 and that will remain like that :). Its very informative and answers many questions you raise, 2. That is when we are talking equality and progress for all! January 2, 2018, 6:23 pm. I agree with you. Bitcoin has very little usage. What a bargain! I am laughing my ass out. When evaluating investment bubbles, it means looking at where everyone is throwing their money no matter how many billions and being willing to say Bull. For one you keep bringing up this no intrinsic value point, which is common, but fail to recognize that the USD also has no intrinsic value. ), bastringue I think I found the mistake in your reasoning. Gold may be irrational, if you insist that it is. Tulips. https://t.co/wfi8XTq77s" Theyre not very good experts. Same with internet search: remember AltaVista, Lycos, Dogpile? I was one of the first subscribers to this subreddit when it was invented. On the other hand, paying a ridiculously high speculative price based only on what others *might* be willing to pay in the futurebased on little historical or reasonable evidencecertainly is insane. And this, MMM There are no financial instruments that will protect you from a world where we no longer trust each other. The root of crypto is decentralization and independence from government that empowers people. 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). Retweet. Spot on VIJAY. A currency system is the first and foremost application where blockchain was applied. Im not trying to convince anyone that bitcoin is the savior of the world but to put total trust in ones government, one that has a history of corruption is ignorant. Time will tell. This leviathan now stands at around $233 trillion, or 318 percent of global GDP. So, I use bitcoin to buy stuff with the gift cards from these people. The problems it solves for the billions of people in the second and third world shouldnt be so casually dismissed though. The real backing of the dollar is the force the U.S. government will use if its debts are called in. I am beginning to get it Mattheus. Bitcoin, although in a bubble, does have *something* behind it: It enables access to secure public ledger transactions. I remain open to more information on the uses of Blockchain, but Ive never seen a valid fundamental reason for betting on future increases in the prices of these things. Is it speculation, sure, but its no different that speculating on the future price of a stock, or oil, or the rental market. Rick Gardner Why should humanity be slaves to Banks and a few elites who control money supply? Bitcoin is a case study, and they have no idea (or choose not to believe) that theyre headed for the unfortunate future footnotes of that case. That was called new economy. Lets get this straight: in order for Bitcoin to be a real currency, it needs several things: Bitcoin has none of these things, and even safely storing it is difficult (see Mt. Bingo, so far you are the only one that stated the true value of any nation backed currency, notably the USD. Consequently, theres a very limited way in which gold can feed you (and bitcoin cant), Uberartist Speculation is fine, as long as you are using only money you are willing to lose. Naturally sentiment plays an important role in BTCs price. Its because gold is real money and everything else is a good derivative (and therefore a delusion). There are many reasonable prices for these goods that are non-speculative in nature. Returns are down and all that cash needs to go somewhere. They always do. So, they sell it at a discount instead of losing revenue. It would have sounded like science fiction, and even if he accepted it was possible he still wouldnt understand why anyone would want such a thing. I 100% agree with what Vijay has been saying. Im a regular reader and respect your opinion. Im 100% with you when you say investing in bitcoin (and other cryptocurrencies) isnt smart. Humanity deserves an alternative to government (aka the financial elite) controlled money. 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. Mr. Frugal Toque You keep talking about transactions needed for it to be a currency but fail to mention in your article that Lightning Network is in the works to address this very problem. One place where coin mining could considered reasonable is during winter in a home that is already heated with electric resistance heaters. January 19, 2018, 6:45 pm. Probably the same will happen again. I would say, Probably the same would not happen again. Lottery tickets doesnt go up in value consistently over a period of almost ten years. http://www.newsbtc.com/2016/06/01/andreas-antonopoulos-explains-blockchain-nothing-without-bitcoin/, Mr. Frugal Toque Youre playing a psychological, win-lose battle against other humans with money as the only objective. Bitcart.io takes DASH. MentalArson offshore tax haves/ black marketsare companies moving to Ireland for tax sheltering & why does Apple have so much money overseas. Say I trade you a car for 1 bitcoin on Jan 8. >The poorest in Sub-Saharan Africa earns the same money that you sitting in Manhattan, NY do. :) https://www.youtube.com/watch?v=g-zIbVEjVpQ, Another great satire- Seth Myers take in bitcoin. How can people who are so good about thinking outside the box when it comes to retirement, are so bad at thinking outside the box when it comes to new technologies? This is the greatest use of human energy and capital the world has ever seen. China is also a leader in renewables space. I am so happy to see this article! No problem! Saving billions from poverty, war, and the enslavement of banks or the lack of any banking is Altruistic. He pulled this off by living on a small percentage of his income as a software engineer, and diligently . The Money Mustache Community . dont understand why you say it will cost more? People who have been trading 100s to buy illegal goods must be making out. So we need more credible people to speak out against it. I was tempted by the neat aspect of being involved in this thing I knew would have some kind of future value blockchain. I was not as articulate as MMM in this post, but my underlying logic is the same. In stating that humans have never had a chance to own their own money you have hit on the essential problem with bitcoin and any other monetary alternative. (Now, as you mentioned, it is most likely just speculation driven by greed). A boy named Sue Guys. This one is just simply incorrect. This puts USD straight into the bank the Federal Goverment and allows paying of debt. November 20, 2018, 9:31 am, rollie fingers (a Case Study), https://medium.com/p/81f5ffa42deb?source=linkShare-6c666494704c-1516693614, https://www.statista.com/statistics/326707/bitcoin-price-index/, https://globalnews.ca/news/3977745/ethereum-blockchain-canada-nrc/, https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/, https://seekingalpha.com/article/4134745-bitcoins-path-1-million-bubble-bursting-anytime-soon, https://www.youtube.com/watch?v=g-zIbVEjVpQ, https://www.youtube.com/watch?v=aeMv9uKpAZg, https://www.cryptocompare.com/mining/calculator/btc?HashingPower=190&HashingUnit=MH%2Fs&PowerConsumption=1293&CostPerkWh=0.12, https://en.wikipedia.org/wiki/Tulip_mania, http://contrarianedge.com/2017/12/01/bitcoin-millennials-fake-gold/, https://en.wikipedia.org/wiki/National_debt_of_the_United_States. Coin mining could considered reasonable mr money mustache bitcoin during winter in a bubble, does *... 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