Meanwhile, I studied investing starting at age 18, which allowed me to retire at 30 (16 years ago) Then I studied Bitcoin for months, digging to the bottom: there's nothing there. Id love to know what your background is. That means an implied 100% cash-on-cash return every year. This is not characteristic of a healthy financial system (particularly so many years into a global recovery), but rather a zombie one thats been artificially propped up since the financial crisis. It has reached the point that a big percentage of stories in the financial news and questions in Mr. Money Mustaches email inbox are about whether or not we should all invest in BitCoin. Now the ball has reached proportions where it could blow up anytime, and people in this forum are talking about the small change like the bubble and P/E ratio in the stock market. January 3, 2018, 8:50 pm. There valuation of pretty much everything but Bitcoin and Ethereum is unjustifiable. Its all the same stuff that people say about Gold, which is also a totally irrational waste of human investment energy. Its a speculation, pretty much like buying gold. January 2, 2018, 6:30 pm. You need some sort of fundamentals, and in bitcoin there are none. Bitcoin finally surpassed $40K and topped at $41,940 on Jan 8. Im a regular reader and respect your opinion. I think in five years bitcoin will pretty much disappear. Many are trying to perfect it but until there is a clear winner, different ones will emerge. This means that the long-term value of Bitcoin comes down to its value as a commodity. Reward for Risk is worse for Powerball. Ive been trying to think of an entrepreneurial way to capitalize on the hysteria without investing in it. The EntreLeadership Podcast is a must-listen for any entrepreneur or business leader looking to take their business to the next level. Digiconomist notes this would make bitcoin the 59th biggest energy consumer if it were a country.. That said, I did buy $300 of Bitcoin back in November (which is a tiny fraction of a percentage of our net worth) on the off chance it keeps escalating like crazy. I will say that it has taken me some time to wrap my head around blockchain related ideas and how they could have value. Its like saying they are investing in lottery tickets. Since the Fed can always print as much currency as it wants, I would probably bet on scenario #2 as well, so perhaps were half in agreement. It takes an open, transparent society that trusts its elected officials to do RIGHT. Broadband. The internet is awesome, but once in a while a bubble arises and this time virtual currencies is about to pop! I would like to learn more about the world of paid website commentators/shills. Gold is relatively inert (wont rust except for very tiny amounts of oxydation), it is relatively easy to verify its authenticity (its malleable, the good ol biting the coin to see if it dents, you can melt it to look for impurities as well as hard to fake the colour with lead based forgeries). It also could be a bubble, but the crypto billionaires (the few or the hundreds who end up winning) will still need to buy their Doritos and Gameboys and lambos and helicopters, and Ill own shares in those companies no matter which currency is used. There used to be cool arbitrage opportunities on a website called purse.io, where you could buy amazon products for a discount using bitcoin but transaction fees have made those types of business models (temporarily?) Even more troubling, an estimated $11 trillion of government debt now trades at negative yields. January 2, 2018, 9:01 pm. How many do you need? The amount of people who have posted on /r/personalfinance this year who sold crypto, then bought back in, and lost big, is astounding. On the other hand, if youre cool with allowing remote-controlled robots to kill 3rd world women and children in your name, then keep using only US Dollars. I'm more of a general Life Engineer - someone who tries to optimize continue reading. Millennial Boss But if it goes down, I wont put anymore money into it. The root of crypto is decentralization and independence from government that empowers people. Warren Buffet says dont invest in what you dont understand, and I dont understand Bitcoin. It often seems like there is a Bitcoin mafia who get upset if someone says something bad about Bitcoin. Governments can inflate the prices as they wish, how is that model sustainable? Volunteerism could get you only so far, but the data could only ever be as safe as the amount of resources it takes to break the system. I agree with MMMs eloquent outlining of the major concerns with investing in cryptocurrencies. December 10, 2018, 5:45 pm, Dang! LennStar Its not going to consume ALL the worlds energy? Im in the same boat where I dont understand it and it doesnt make sense to me in the real world. If you have the courage. For casual observers, make sure you set the hashrate to the correct value (some defaults appear incorrect to me).. and remember that the reward of these cryptocurrencies goes down rapidly the hash puzzles become more difficult and the Bitcoin reward for each puzzle drops. I started laughing and said he should take his profits and move on because this will not end well, although inevitably many people will be left holding the bag. The population has lost trust in the institutions of governance with good reason. I keep hearing everyone speculating on whether or not they should invest in Bitcoin, while at the same time googling what cryptocurrency and block chain is. I dont know that page very good, but I think that answers this question ;). So, I use bitcoin to buy stuff with the gift cards from these people. The timestamp on these comments is pretty helpful to see who was right! More? And you dont want it for this purpose anyway after all, do you currentlyhide your money in offshore tax havens and transact your business on black markets? You are attempting to speak truth to disillusioned citizens, you will face resistance. Tim, do you think Bitcoin cares what the Government thinks or wants? I buy a stock with the expectation that the company will perform and the value in the future will be higher than it is today. People suffer immensely. January 2, 2018, 5:54 pm, I considered investing in Bitcoin back in the summer, but decided to spend my time doing other Mustachian things such as enjoying the outdoors and spending quality time with family and friends. That is what has happened twice this century already, and could very well happen again. The problem with most folks here is, if you really want to know Bitcoin you have to Know Computing to really appreciate what this is all about. They only speculate that others may want them in the future. I am of the opinion all of Fiat will get wiped out in a decade or two! Your Mom and Pop will surely use fiat paper, but probably not you in your later life, and certainly not your kids. China is also a leader in renewables space. Is this likely to be worth $20,000 long term? The Cryptocurrency bubble is really a replay of the past: A good percentage of Humans are prone to mass delusions which lead to irrational behavior. David Wendelken We save up our purchases. January 3, 2018, 9:18 pm. I am laughing my ass out. I would say that I am above it all, but I have to admit, there are days when I get caught up and am tempted to get in the game (if only to short it!). January 16, 2018, 4:53 pm. The cryptocurrency is the glue that holds the system together. Mr. Money Mustache on Twitter: "I dunno man. Here's the one I like: 25x the annual amount you spend/4% of your assets. Justin, you are falling for the WhatAboutIsm tactic that makes false equivalence. That is a fairly dumb sock puppet, since he never spoke about them. This is Part 1 of 2. Bitcoin is not a bubble, its the pin :), Not looking so good right now Mr. Frugal Toque That is where we are with Bitcoins. Bitcoins will never degrade over time, your fingernails degrade. Maybe a real article will get the idea to sink in. The reason is that its not an investment. This video epitomizes the Bitcoin market right now. Speculation is very useful and I dont think anyone is going off on peoples choice to speculate, but people are very bad at properly evaluating risk. I use purse.io to buy stuff from Amazon. It is an honor to be doing this session! And if you havent been digging into the cryptocurrency world much, it gets way weirder than this. Bitcoin is not stupid per se. I can see scenarios where some of these platforms develop staying power and become increasingly valuable for the actual work that they are needed to accomplish. Well said, Bill. A timeline in yearsmy probability calculator says 99% or better that youll lose money, possibly all of it, if you hang on for years. Same with internet search: remember AltaVista, Lycos, Dogpile? Problem I have with this article is the blatant statement that Bitcoin is Stupid! (I may buy some to pay my day to day expenses, but I try to minimize the %age of my net worth sitting in cash. Very interesting. The real backing of the dollar is the force the U.S. government will use if its debts are called in. Everything currently is too expensive. Feel free to throw in some early questions. Mr. Money Mustache is another veteran personal finance blogger. A blockchain without an inbuilt cryptocurrency is yet to prove itself as viable and secure. Think that would fly at the grocery store? We? The Ramsey Show is a podcast by Dave Ramsey, a financial guru and bestselling author. And even if that was true, there are still many forms of private sales going on everyday where people dont want a traceable form of payment / exchange. Not everyone agrees, but it cannot, unlike cryptos, be regarded as stupid. It certainly is for day traders in short term. Think of what would have happened during the great recession if bitcoin had been the staple currency. In one of my IRAs I bought some AAPl in 2009 for $28k. This is because society is nothing but an abstract grouping of individuals. Is it possible youre confusing the message of this article? However, some cryptocurrencies DO have intrinsic value, which is computational power. 7 Replies 594 Views February 10, 2023, 11:49:28 AM by index: Bonds funds vs stable value funds. You respond with an implied personal insult. Do I still get the full bag or just a portion of your pinky fingers latest clipping? Investing means buying an asset that actually creates products and services and cashflow for an extended period of time. Michael Thats almost the opposite of how hydroelectric dams work (I did a couple years of power research in Quebec, which also has massive dams). Being knowledgeable about finance does not mean being knowledgeable about economics. This is the most blasphemous thing ever to be written by MMM. Im not saying to build a bunker or anything but just diversify your portfolio for different economic times. I have accepted lifes nudge and opened up several pages of your blog and am working through them right after this, The Vigilante 2) Volatility the market cap of Bitcoin and other cryptocurrencies is small compared to that of fiat currencies. Even if you are the only one in the room willing to do it. An implied 100 % cash-on-cash return every year to the next level have happened during the great recession Bitcoin. 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