Full anonymity and government evasion will not be one of its features. 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. Bitcoin has its flaws and needs to improve as you mentioned: If you could have somehow monetised the Internet in 1992 and sold it, imagine how rich you would be right now? Money only has value if it is stable and trusted. 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. 3. January 3, 2018, 7:59 am. Take the decentralization, the trustlessness, the miners or the currency out and you throw the immutability out. Not everyone agrees, but it cannot, unlike cryptos, be regarded as stupid. Why Bitcoin and not another coin? The internet. You disagree. Ive been trying to think of an entrepreneurial way to capitalize on the hysteria without investing in it. I have seen several bubbles grow and then burst, and one thing you learn is that an actual bubble rises like crazy and then totally pops. That is true even if there is no earning growth, and keep in mind that healthy earnings growth is actually expected. As has the MMM investing sub-furum. Is the logical conclusion to short a mania or stay on the sidelines? 1. 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. I invested and I am sitting pretty with my finances, where are you my friend? Basically for doing the equivalent of what my grocery store does when I use a credit card. Care to mention how deep you are into it? 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. 0 transaction fees, infinite scalability, instant transaction times (2-10 seconds), and no mining (aka no ridiculous power consumption). Hows that Nvidia stock doing now that GPU sales have been skyrocketing this last year giving them two record years in 2016 and 2017? There is some potential in the future for the blockchain technology but we are just so early that its hard to pick winners. In fiat currency the car is valued at $41,940, but 18 days later, the car is valued at $31,850. You are just parroting what every novice tells about Money. Stefan Brand Shit. My gosh, where do you these people come from? Miners are competing for the job by offering profit sharing and other services. 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. Nothing is 100% guaranteed in life. I like reading your posts, as well as all the others, that make specific points about the technologies or markets, that educate, or that offer opinions, or better, opinions with rationalizations. It seems to me that whats needed here on both sides is touch of humility. Who would help the poor, elderly and uneducated those without BTC? Air and the US Dollar. Incredible comment. As a result, changes in perceived value result in big price swings. January 3, 2018, 7:36 am. farmecologist You could recreate your AAPL stocks again if you want and still keep the rest in GBTC? They seem less wise and more credentialed. Here's the one I like: 25x the annual amount you spend/4% of your assets. If that is the case, their values are strictly driven by speculative bidding, making them the worst sort of investment. Many African countries have central banks. Id love to know what your background is. Theres no way I could have paid down my debt and netted $14.5k in stocks in less than a year with less than $5k in capital. By exchanging dollars or euros for a fee? (Now, as you mentioned, it is most likely just speculation driven by greed). Long time reader, first time commenter (ha). Now they trust the mathematics, and the lack of centralized human control. LennStar Why do I trust the dollar? November 20, 2018, 12:00 pm, so other storage is NOT needed sorry, my phone likes to randomly delete words, Tor Kristen Haugen (Then Ill get out, right? I know a lot of people in the DOTCOM bubble in the 2000s that were too focused on maximizing profits and lost most of their wealth on paper after the tech crash. First: cryptocurrencies have not demonstrated lack of manipulation. However, some cryptocurrencies DO have intrinsic value, which is computational power. Maybe a couple years from now when the mortgage is paid off and we have some play money/money we can afford to lose. Ryan Thomas That is what has happened twice this century already, and could very well happen again. Justin C I dont think attacking how Bitcoin is being used is a good argument because of this. Do you really see that happening? All points noted. A blockchain without an inbuilt cryptocurrency is yet to prove itself as viable and secure. The truly irrational. Understanding the motivation is a big part of understanding Bitcoin. Seems to Petes point, theres an awful lot of marketing push behind something that has dubious use cases and limited long term value. Hardware. January 5, 2018, 7:01 am. I think environmental impact is overstated since the major users arent using coal. Congratulations on your earnings. Berkshire Hathaway Class A has paid out a dividend only once in 1967, and Warren Buffet has regretted even that. When the US dropped the gold standard it allowed the government to print paper that we perceive is valuable without any actually commodity to back it. Then Ill stick with what works for me now. Those Adults you referred to in your article had the trust and lost it with their actions. He and his wife studied engineering and computer science in Canada, then worked in . The only thing I would add as a further disagreement to MMMs article is that speculation is inherently a GOOD thing. 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. If not, why when you say that it will be worth 10trillion in a couple of years. 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. But at least 98% of MMM readers do not live in countries where this is an issue. Of course there is speculation. Why not one of the other 1500 cryptocurrencies? Will it help me achieve my financial dreams quicker? I know you intentionally limit your exposure to news, but I did not realize that you were also living under a rock. Speculating on bitcoin for this reason only really works so long as there is some new greater fool who joins in on the speculation after you have bought. One of my coworkers at MMM-HQ works for nVidia, and part of his job is hunting down mining thieves who comandeer virtual servers (cloud computing) to mine coins on their behalf. If you think that irrational bubble valuations in stocks arent possible, then you just havent studied stocks long or hard enough to be investing in them. So I also read a lot about investment bubbles and fundamentals and how to tell those apart. Please drop the bullying and come back to join the conversation. Ill stick with the stock market thank you very much. This black one here is only $1,000,000,000,000,000. There is a related problem that Bitcoin transactions are too slow and too expensive to be practical. Even from a philosophical standpoint I believe decentralisation is the way forward for Humanity. Individuals getting rich off speculation doesnt mean its not speculation. But thats just the start. As the market cap of cryptocurrencies grow, the volatility as a percent will decrease. The web. I want to know will it make my day to day life easier? Very good article! I argue that fiat currency is inefficient because its supply is always increasing. Real investments require production and income. Mr. Butler I believe the current Cryptocurrency investment mania is a huge waste of human energy, and our rate of waste has been growing exponentially. And if YOU had bought my fingernails halfway through this article at $100 instead of waiting until they were $70,000, you would be a paper millionaire too! Bitcoin is not a bubble, its the pin :), Not looking so good right now No one person has control over it and that may end up being a good thing (people are corruptible). If I understand correctly, the rate of return is VERY low because of the high hash difficulty that Bitcoin has now reached. Gold value in Ancient Rome also correlated well via military officer salary (Centurion correlating with a new Captain in the US Army). Absolutely! Anyone whos ever had to wire money between banks will appreciate the quick transaction times and low (or zero) fees of these coins. I imagine that we are both smiling at this point. 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. A similar dynamic is at play with stocks: Is $1 of ongoing future earnings worth sacrificing $1 today? To call gold a non-productive asset misses the point entirely. Episode 497: Why Bitcoin is Stupid - 2 by Mr. Money Mustache. I buy bitcoin with the expectation that bitcoin will solve the problems it currently faces and become more widely accepted thus increasing demand driving up the price. This is what is known as " The 4% Rule ". 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. The dams generate electricity whether you need it or not. This is Part 2 of 2. So no, its not a Ponzi or Pyramid scheme, but its no better than taking a spin down the Vegas Strip either. Again, this is really only true for FIAT CURRENCIES. People like planting gardens. For me, its just like watching a show that I dont know the ending of yet. Environmental issues aside, mining with hardware you already own for other purposes is about as close to getting something for nothing as there has ever been in the world, it lets you make money with something that is only otherwise useful as a way to play PC games. This is where the speculating comes in. Yes, that is your ground reality today. Even if you are the only one in the room willing to do it. Bond prices werent historically low in those other cases and Shiller PE has been high for basically ever since the guy invented it. And its value as a commodity is likely to be a lot more like corn than like gold. Well, SOMEONE has to keep the bankers & wealthy rich, right??? In Ancient Rome and today one ounce of gold bought a very nice dress suit. A wisened Mustachian looks for long term, steady gains, and their invested dollars add value to a society the moment they are employed. Now, lets see who is smiling? Andre Kostolany. Sorry for commenting again but the farms will not give you money or distribute it to those who cannot afford. Maybe a real article will get the idea to sink in. rollie fingers Mr. Butler I do believe blockchain technology and people like Charles Hoskinson and ADA are interested in uses beyond money grabs. MMM deservedly makes a fortune off this website, and stirring the Bitcoin pot will surely drive more traffic to keep blog profits rolling in. Moneymeister 16-02-2023 WIDM 2023: mijn mening en verdenkingen tot nu toe. It will never be a currency, but I do believe it will hang around for a long time as an weirdo alternative investment like gold. If so, this could negate the discount benefit for small purchases. How much are these companies worth today? Thanks, MMM! I agree Cyptocurrencies will be powerful in the future, but I dont think that will be in bitcoin. Certianly seems like Vijay has some vested interests in Bitcoin..it is pretty obvious. January 15, 2018, 9:20 am. . But I suppose its money well spent if the bitcoin mining conglomerate is behind it. Thats pretty much it. How much do you have invested in BTC? And wasnt Apple Pay and all these other card-less apps of paying for goods and services supposed to replace carrying around a physical wallet and/or cash? Consequently, theres a very limited way in which gold can feed you (and bitcoin cant), Uberartist 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. I keep thinking of that movie where the actor says Explain it to me like Im a 2 year old.. I try to lead people to conclude what I have. Doh! Bitcoin is a universal currency and is not here to just replace your USD alone! Of course, there is some price, far lower, where Bitcoin could be rationally priced. 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. Whatever they are willing to pay to enjoy owning these things themselves is their business, and may make for a fairly rational purchase. If you want to continue the ride, why not let the original investment of $28,000 ride? Bitcoins are scarce, your fingernails are not. People will overbuy it in a frenzy and oversell it when fear sets in. In order for bitcoin to be a real currency, Adeney claims, it must be three things: easy and frictionless for trading between people, widely accepted as a legal tender for all debts (both public. ..why hasnt shutting down bootlegged videos on P2P bittorrent etc been effective? If you know anyone heavily vested in bitcoin, stay in touch with them. Totally agree about cryptos- but not sure gold should be lumped in with them. If a good provides value to just one person without hurting anyone else, then it provides value to society. There is some behavioral economics at play in dividend policy in that firms that issue dividends generally have a sound, stable business with secure cash flows; the market recognizes that and probably trades the stock at a slight premium, but that does not mean that investing in firms that do not issue dividends constitutes speculating. Bitcoin is almost as irrational from current prices as are US stocks. Anyway, if your argument were correctwhich it partially isthen you of all people should be against fiat money systems like the US dollar in its current form. Finally, someone in here who understands economics and not just personal finance! Its clear from reading the comments that most people dont understand how this works. Its trust is the full force of the weapons and arsenal behind it. . This is the most blasphemous thing ever to be written by MMM. Watch on. Id argue strongly that its a good thing. Good to add this article to the (hopefully) growing list of rational explanations debunking the appeal of what my 76 year-old Grandma, a consummate investor, rightfully calls funny money. It pains me to hear friends, some of whom I have to believe are intelligent people, describing their vast spoils and commitment to cryptos. Its a speculation, pretty much like buying gold. Its absolutely astounding how the general (pretty darn) intelligent public cant tell the difference between an real asset vs an investment. Video compression tech. 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. When the common person does it, it can cause very big problems. I refer you to: https://shitcoin.me/. In 2018 and 2019, expect the speculation to subside as more tokenomics becomes important for valuations. Networking. FirstPrincipleThinking Discussion with friend from nVidia is irrelevant to bitcoin mining. January 2, 2018, 8:53 pm. Also, it is meaningless to create a Private Blockchain, as you can achieve the same thing using your existing oracle database without unnecessarily replicating transactions in multiple servers. January 2, 2018, 7:25 pm. There is already ways to pay and use your crypto currencies and companies like request.network are working on ways facilitate swapping with cryptos and fiat using oracles and smart contracts on the ethereum network. You are right in one sense, this is one use you could put your fiat paper money to where Bitcoin cannot help! I just hope my tax dollars arent used to bail these folks out. In the field of personal wealth, this means walking your children past the idling lineup of your neighbors Mercedes SUVs, over the snowy grass and up to the door of the school and being confident that you are doing the right thing. Exchanges get hacked or hacked (where the operators secretly run off with the coins) all the time. hi vinau i read what you wrote and i felt compelled to tell you that i respect you. More computing power leads to higher data integrity which creates more value which attracts more computing power, and so on. Research further. So, I harvest other peoples speculation and I dont lose anything, as I have already harvested more than what I put in. 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. All technology goes through a bit of a curve where new technologies have multiple competitors and slowly they formulate around standards and a smaller core group of players. Mr. Money Mustache Cut him some slack especially as he makes SUCH GOOD POINTS! The market can remain irrational longer than you can remain solvent.. Ive never heard of anyone investing 100% of their net worth in a single moment in time that could get penalized for that type of freak market condition. The market can remain irrational longer than you can remain solvent. No one knows what the stable value of bitcoin will end up, and betting in either direction just seems like a fools errand. as well as all legal forms of private sales (ie. 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. Retweet. Iota and RaiBlocks use something different than the blockchain to make each user a miner by requiring each transaction to verify other transactions which prevents transaction fees. I let it sit around 2.5% of my savings (Im still growing my nest egg). Yes, there are still many kinks to be worked out with BTC and there is still too much volatility for it to be taken seriously as stable currency. I also invested in a bitcoin two years ago, and paid off all my debt with it. It takes an open, transparent society that trusts its elected officials to do RIGHT. He is typing in capital letters to draw attention to specific words. I believe MMM has missed the point completely in his rant above. Yes, you can hedge in other things, but gold is fungible, dividable, small enough to hide, and has been valuable for centuries. Trust IS the value of Bitcoin. It is speculating, many cryptocurrencies will go to zero and bubbles will burst along the way. Why not one of the other 1500 cryptocurrencies? People fall in love with works of art. Keep plenty for yourself. Because theyve talked about doing away with the penny for YEARS now and yet, I still have pennies in my pocket. 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 would recommend everyone to do their own research because many of what MMM says is plain wrong. Doingone transaction burns 215 kilowatt-hours of electricity, enough to run the entire MMM household for more than a full month, or to power an electric car formore than 800 miles of driving. 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. Its a huge money maker if you can bet that youre not the bigger fool. Furthermore, I would like to emphasize that for Bitcoin (used here to refer to generic cyrptocurrencies) to become useful in an everyday sense, I would never need to change out of Bitcoin and into another currency, such as USD. Gold has always been considered a commodity of high value. Why? A nation that cannot fairly collect taxes and redistribute wealth is a corrupt/ineffective government. Do not let your own brain trick you for easy solutions! 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. These are all things that people have bought in the past, and driven to completely irrational prices, not because they did anything useful or produced any money and value to society, but solely because they thought they would be able to sell them to someone else for more in the future. Better to get an air-source heat pump, which multiplies your heat gain per dollar by hundreds of percent. But youre entitled to your opinion nonetheless. , Umm, you do know that only about half of the worlds population even has access to the internet, right? Electricity is the least of the problems, especially in an era where renewables are replacing conventional power everywhere. The bubble crashed and the internet didnt die. Mr. Money Mustache was a thirtysomething retiree who now writes about how we can all lead a frugal yet Badass life of leisure. 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. LennStar Or sell half of GBTC. The fact that Mr Money Mustache, one of THE most influential FIRE movement supporters, has made a post on itseeing how many financially illiterate people are out there is mind boggling. 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