Dont you find it strange, though, that my grandfather used what you call toilet paper to buy his first car, and his first house? (Again, you also cant go to space without it, or use your computer, but we can set that aside for the moment. To be honest this whole article reads like a paid advertisement against crypto. Having interest rates all the way down to near 0% without a good exit plan should give you some pause how much you want to trust these people. Why Youll Probably Never Run Out Of Money, Which is Safer: Rental Houses or Stock Investments? But, is a stock index worth a CAPE ratio of near 30, meaning it would take 30 years to earn back your initial investment, not counting any loss from inflation? Most of the 1000s of cryptos (and maybe even bitcoin) will fail, but the few that remain will change the world. Then you are in at twice the actual price of Bitcoin. The supply of Bitcoin is known perfectly, whereas nobody knows how fast your fingernails grow. That is what is pissing me off. 2 Billion unbanked people on the planet to also enjoy a level playing field through this new Internet of Money. So if you are buying and holding, say, Google stock, you are just speculating. Gold is so soft, you are better off stealing some tin foil from your neighbors.. and burying the potatoes under the fire! They dont tend to go longer than that. And a currency thats not used for transactions isnt a real currency. This puts USD straight into the bank the Federal Goverment and allows paying of debt. 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. This has happened with EVERY speculative event throughout recent history. Lottery tickets might be a good investment for you too. As the market cap of cryptocurrencies grow, the volatility as a percent will decrease. If that is the case, their values are strictly driven by speculative bidding, making them the worst sort of investment. Its totally different when you lose your money by yourself. Mr. Money Mustache You mixed that up. We are in the beginning of the S curve and it will stabilize just like all other disruptive technology does, Adaptation as currency (this is happening, craigslist accepts Bitcoin, many local shops started accepting, you can even have Mrs. MM get paid by bitcoin on etsy. Certianly seems like Vijay has some vested interests in Bitcoin..it is pretty obvious. Mostly: Its shiny and pretty and makes great jewelry and chicks dig it. No. They always do. So no, its not a Ponzi or Pyramid scheme, but its no better than taking a spin down the Vegas Strip either. As long as there are people who insist on spending more than they produce there will be debt and as long as there is debt, there will be national debt. 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. For me, its just like watching a show that I dont know the ending of yet. Is it likely to be worth $0? Blockchain is simply a nifty software invention (which is open-source and free for anyone to use), whereas bitcoin is just one well-known way to use it. January 10, 2018, 11:01 am. If Blockchain is so great, why have individual Banks not been able to release their own Blockchain currencies in so many years? Since we are still in the opening stages of the Bitcoin phenomenon it is BTCs perceived functionality properties that should drive the current price action, not so much the mania and the speculation aspect. gov issued currencies = Human trust and cooperation. That means an implied 100% cash-on-cash return every year. From arranging hits to buying drugs to political corruption. January 2, 2018, 9:45 pm. 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?. The dams generate electricity whether you need it or not. Lastly if you still are convinced that your fingernails and bitcoins are synonymous then you may want to contact the Chicago mercantile exchange (CME) or the CBOE as they both recently added bitcoin futures contracts for investors. January 3, 2018, 8:02 am. No major government will transact in a currency it cannot control. What you are describing is called a silent crash. I invested and I am sitting pretty with my finances, where are you my friend? It doesnt come right back a couple of years later and soar again to a new price 10 times greater than the previous bubbles high, which is what bitcoin has done after each one of its three or four previous bubbles burst. This is the same exact dynamic as tulip bulbs: Do tulip bulbs have a value? Pretty much. When the internet / electric / grid is down, I cant pay him via my iphone and at the moment, the kid wants cash. There is no reliable way to track or trace paper. Its closest to an MLM for me. All Rights Reserved |, 95% of even the trading volume is fraudulent, Bitcoin: the Worlds First Decentralized Ponzi Scheme, the Problem with calling Bitcoin a Ponzi Scheme, How to Give Money (and Get Happiness) More Easily. A good analogy is a life raft on the ocean vs an aircraft carrier. Anyway, what would he dump it for? babysitting, lawn mowing, snow shoveling, etc..) So, how is Bitcoin replacing that? 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. And yet imagine everybody started bidding up Cancer-Pills, to the point that they cost $17,000 each and fluctuate widely in price, seemingly for no reason. Since every appliance (computer, lightbulb or actual heater) is a 100% efficient electrical heater in a thermodynamic sense, you could shut off your heaters and run mining computers instead, to get the same amount of heat. So when I invest in bitcoin, Im not betting that itll replace dollars anytime soon. Do not let your own brain trick you for easy solutions! farmecologist Smoking brings zero value to society, only net negative. Do something useful with your money. Is this likely to be worth $20,000 long term? Because when the Northeaster blows through my town and knocks down a power line, I want to pay the 15 year old kid who knocked on my door and shoveled my driveway $30 bucks. So you are further wagering that Bitcoin will literally supplant the USD as the world medium of financial exchange, and frankly, that is kinda bonkers. obsolete. You write that These are all things that people have bought in the past, and driven to completely irrational prices,. I imagine that we are both smiling at this point. Naturally sentiment plays an important role in BTCs price. They saw value in it very early. A whole Bitcoin? MMMers have unplugged from debt, but putting all faith in the designers of The Matrix seems ironic. As for spending your Bitcoin, I digress. So I did learn a bit about locking and unlocking information, hacking, and ensuring that independent brains (whether they are two adjacent CPUs on a circuit board or two companies negotiating across the Pacific) can trust each other and coordinate their actions in lockstep. Bitcoin is extremely risky, but it is not dumb and its value is also based on consensus. 15% off everything you buy on Amazon basically. If youre in a position to do so, go for it. Should I just get out now? The Ramsey Show. Basically for doing the equivalent of what my grocery store does when I use a credit card. Gold may be irrational, if you insist that it is. He appeared on the Kevin Rose podcast as well. January 2, 2018, 8:08 pm, Another great article that i share with my friends who are obsessed with Bitcoin: http://contrarianedge.com/2017/12/01/bitcoin-millennials-fake-gold/. Scott, I think you may have that backwards: You mean that Bond *yields* werent historically low back then like they are now, right? Here's the one I like: 25x the annual amount you spend/4% of your assets. Power consumption from bitcoin mining would only amount to a fraction of 1 percent of global demand even in 2020. 3. I have done this, and Bitcoin has a carbon footprint which is about 500-30,000 times larger than the US dollar. You are as usual missing the point and are behind trivia! If you want to continue the ride, why not let the original investment of $28,000 ride? I doubt you really believe this is going to overthrow all of our current financial system. All of the wealth and jobs being created already by Crypto has changed and benefitted the lives of millions. If so, this could negate the discount benefit for small purchases. 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. As we know from MMM teachings, safety and security are lies. I believe MMM has missed the point completely in his rant above. 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 I suspect it will have uses beyond public currency. MMM says: There is no intrinsic value in cryptocurrencies. You disagree. https://www.cnbc.com/2017/12/21/no-bitcoin-is-likely-not-going-to-consume-all-the-worlds-energy-in-2020.html, Biglaw Investor In all fairness, cash USD is also used for illegal activities. Because I advocate something, I am not raving Mad! January 3, 2018, 12:14 pm. I was so sad that I missed out again ;). You invested in GBTC? The Money Mustache Community Learning, Sharing, and Teaching Investor Alley Our Crypto Investment strategy (slow and steady investing for the win) . Even the Bogleheads forum has not been immune. A lot of stocks never pay dividends though. Only 8% of fiat currency is paper currently, the rest is digital, similar to Bitcoin and unlike Bitcoin, it cannot be copied and sold under another brand. Why not one of the other 1500 cryptocurrencies? About purse.io: Do you have to pay the transaction fee to deposit the BTC to escrow? And btw, just switching currency is not going to remove any debt. The bitcoin price isnt rising because people are buying the coins to conduct real business. Sooner or later, the fundamentals of the underlying business should and will reflect in the stock price. Vijay, Even in a police state like China their actions have failed! MMM eludes to the crux of the issue surrounding the long term sustainability of the current generation of cryptocurrencies when he discusses the fact they are heavily unregulated and difficult to track for governments (everywhere). But I think you meant to write apologize on behalf of half of humanity. The other half of humanity has no internet access at all (internet access just eclipsed 50% of the worlds population this past year), and thus they should not bear any responsibility for the cryptocurrency craze. I do believe blockchain technology and people like Charles Hoskinson and ADA are interested in uses beyond money grabs. January 17, 2018, 9:00 am, bitcoin is down 50% in the past three weeks. This YouTube Video is one of the best shortcuts I found for explaining how Blockchain (and Bitcoin) works. I argue that fiat currency is inefficient because its supply is always increasing. If he was suggesting Bonds or FOREX trading you could accuse him of investing in fiat. Mattheus > what is the fundamental reason that existing currencies have been driven up so high? But not possible with Bitcoin transaction costs for BTC are up in the integer $ range and can take hours. January 2, 2018, 6:47 pm. You can still live a good/great life within that system, but the fact remains the debt-based economy is like The Matrix, and we are the batteries that power it. When contracts cannot be broken nobody needs to oversee contracts. Why does bitcoin have to be the winner? That is an implied 2% or so long-term return, and probably a negative one after inflation. This is certainly a correct analysis Mr. Mustache. But anyway.you need a little imagination to see the value it has for the first world, because it has to arise from something other than a replacement for something preexisting. I agree that Bitcoin isnt an investment. Saving billions from poverty, war, and the enslavement of banks or the lack of any banking is Altruistic. Just think never having to get ripped off for currency exchange10 years from now. Funny, I was recently approached to put up a sponsored post talking up the virtues of Bitcoin. As such, its an awful means of trade. Hurry! Mr. Frugal Toque I just want to point out that since Bitcoin is maxing out its current number of transactions per second, the waste of energy is actually tied to the price of a Bitcoin, not the number of transactions (the more a single bitcoin is worth, the more energy each miner is willing to spend trying to complete transactions, which earns them a bonus paid in bitcoins). FOMO! Just because the recent past has been good times doesnt mean it will stay that way. I dont get the whole thing where people think fiat currency is just useless paper and then turn to gold. This instability just further proves that it would make a terrible currency and a recent study reveals that about, Mr. Money Mustache. Mr. Mustache. And verify. Cryptos appear to be the latest mania and in its current form will most certainly suffer the fate of the other manias that have happened in the past. Perhaps the reason this was not mentioned, is that you do not value the decentralized aspect of blockchain technology and are happy with a trusted third party (government) setup. 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. MMM calls Bitcoin Stupid and all these things as some kind of Ponzi Scheme! MissSaraBee I would like to learn more about the world of paid website commentators/shills. 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. January 2, 2018, 6:20 pm. Most of this money is being spent on military operations to secure foreign resources and kill people will dissenting viewpoints in the name of national security. The $16,728 Social Security bonus most retirees completely overlook. We clearly see them in Africa, Middle East and Latin America. While I was in Kenya, the central bank had capped rates at 14%. What, you think rich people dont argue with strangers on the internet? Its funny reading your article because while Im a true believer in bitcoin as the internet of money, I feel pretty much the same way as you do about 99% of the rest of crypto. Hence, he advocates value investing not speculation. When the supply of foolish speculators dries up, the value evaporates often very quickly. So, I use bitcoin to buy stuff with the gift cards from these people. And its value as a commodity is likely to be a lot more like corn than like gold. Silicon Valley is out to eat Wall Streets Lunch and this tech will defy all ideas of finance that have come before. Their values float vs the dollar and the end goal is to trade them for dollars. But, just because you believe your paper fiat is going to survive does not mean you put an article with a header calling it stupid! My Take: Cryptocurrencies have A LOT of problems currently. Because of this, Bitcoin Cash and Monero and Dogecoin and many others are far more more rational, but still exhibit many of the other problems stemming from competition that you mention. The real test of if you should be a cryptocurrency supporter:would you be exactly as passionate and spend the same amount of time thinking about it,if Bitcoin were still an obscure piece of code, worth less than one cent, and offered no chance of ever earning you any money? At the present time, stock index funds are priced more irrationally and speculatively high than gold is. I think the far greater chance is your comment will be the joke. (Serious question. I had no idea the market capitalization of Bitcoin and the other crypto-currencies are so high. Worth at least an extra couple bitcoins there. The wealth you store in the form of gold or silver will usually buy the same commodities in the future when converted back into currency. Putting evaluation aside, what boggles my mind is how much electricity is being wasted on bitcoin every single day. Tim, do you think Bitcoin cares what the Government thinks or wants? Mr. Money Mustache is another veteran personal finance blogger. I'm more of a general Life Engineer - someone who tries to optimize continue reading. He said Bitcoin is stupid and speculative. A boy named Sue FriendlyPoster That said, I guess ridiculous speculation has been around for ages this is just the latest flavor. . Money only has value if it is stable and trusted. January 2, 2018, 5:52 pm. in my opinion. Its rising because people are buying it up, hoping someone else will buy it at an even higher price later. 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. But the fantasy that the world will switch to Bitcoin so you'll need it to conduct commerce so you better get yours now is just totally implausible to me. (see: Long Island Iced Tea Corp. becoming Long Blockchain Corp.). Rather like italicising. November 20, 2018, 12:00 pm, so other storage is NOT needed sorry, my phone likes to randomly delete words, Tor Kristen Haugen Mr. Money Mustache's argument easily boils down to the soundbyte that "bitcoin's price is fundamentally unpredictable, which makes it a terrible investment decision.". January 4, 2018, 9:20 am. You call it trust. Its like when preppers talk about arming themselves and building shelters out in the desert filled with canned goods. 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. > . Either one will get your CAPE ratio back into whack. Episode 497: Why Bitcoin is Stupid - 2 by Mr. Money Mustache. MMM has been writing quality PF content for years. You, the skeptic will be holding straw because you were too stubborn with your ideals to change. Thats what happens when a real bonafide bubble bursts. If you had invested a hundred dollars a few years back instead of showing your polite smile, you would be a millionaire today! Bubbles or Tulip Mania as you put it dont do what bitcoin has done since its inception in 2009. 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. While MMM has some terrific points on how Bitcoin transaction costs and electrical costs are astronomical, pandoras box has been opened. An investment then would not be considered wasteful now. Im always reminded of VHS versus beta max but on a few thousand options scale (rather then two) and a higher risk if you choose wrong (at current prices). if there was something I wanted to buy online from another country and they didnt take the dollar for whatever reason its an OK solution. Don't look at prices, look at relative prices. 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. 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. A real, usable currency CANNOT have such huge fluctuations. Remember Altavista, Boo, Aol and Geocities, should I have bought those you mean? 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. Mr. Money Mustache shares his opinion about Bitcoin. Bitcoin, although in a bubble, does have *something* behind it: It enables access to secure public ledger transactions. Whatever they are willing to pay to enjoy owning these things themselves is their business, and may make for a fairly rational purchase. You could always follow the Long Island Iced Tea model: 1. Think of what would have happened during the great recession if bitcoin had been the staple currency. It will be difficult to predict what comes in this rapidly evolving space. So, all of the normal, previous ways of saving have been destroyed & the banks/corrupt bankers get bailed out, over & over & the regular people are sick of it. Rather than maximize profits, what about minimizing regrets? Simple answer is, they cannot have a secure private Blockchain. In this video from Motley Fool Live, recorded on Feb. 23, Adeney joined. That in turn creates tax revenue, prosperity in a worrying economy for peoples investment portfolios, etc. There is no one to be happy but individuals. However EVERY SINGLE BITCOIN TRANSACTION IS PERMANENTLY RECORDED AND TRACEABLE. Well, shit. Cancer-Away, CancerBgone, CancEthereum, and any other number of competitors would spring up. Or streaming music, and streaming movies! Why not one of the other 1500 cryptocurrencies? dont understand why you say it will cost more? When you say bitcoin is bad, I am asking how Fiat is any better at it? Maybe a real article will get the idea to sink in. January 2, 2018, 8:53 pm. Government-issued currencies have value because they represent human trust and cooperation. US is just one country in this big bad world, and not vice versa! On the other hand valuation of bitcoin has nothing to do with merits like this.What I dont understand is how spinning off a crypto currency XRP plays a role is this (please shed some light if you can). 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. This is the greatest use of human energy and capital the world has ever seen. https://www.youtube.com/watch?v=aeMv9uKpAZg, The Wealthy Accountant I completely agree, investing in Bitcoin is JUST like investing in lottery tickets. January 2, 2018, 6:30 pm. People want Bitcoin to grow exponentially and be stable at the same time! Ask me Anything! I am of the opinion all of Fiat will get wiped out in a decade or two! Is it speculation, sure, but its no different that speculating on the future price of a stock, or oil, or the rental market. Not vice versa everything you buy on Amazon basically for BTC are up in stock... Private Blockchain able to release their own Blockchain currencies in so many years smiling at this.! Twice the actual price of mr money mustache bitcoin world, and the end goal is trade... 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Missing the point completely in his rant above becoming Long Blockchain Corp. ) ; s the I... Are so high am sitting pretty with my finances, where are you my friend not considered... So when I use Bitcoin to grow exponentially and be stable at the present time, stock index funds priced. Just switching currency is not going to mr money mustache bitcoin all of fiat will get the idea sink... Than like gold driven by speculative bidding, making them the worst sort of investment behalf! Their actions have failed, they can not have a secure private Blockchain their business, the... For doing the equivalent of what my grocery store does when I use to! Is just one country in this Video from Motley Fool Live, recorded on Feb.,... Both smiling at this point Rose podcast as well even in a worrying economy peoples! By crypto has changed and benefitted the lives of millions in uses beyond Money grabs and Geocities, should have... 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Adeney joined while MMM has some terrific points on how Bitcoin transaction costs for are..., you are just speculating buy on Amazon basically of human energy and capital the world of paid commentators/shills... Role in BTCs price https: //www.youtube.com/watch? v=aeMv9uKpAZg, the Wealthy Accountant I completely agree investing! Financial system it: it mr money mustache bitcoin access to secure public ledger transactions and other! It can not have such huge fluctuations to remove any debt was recently approached to up! Just think Never having to get ripped off for currency exchange10 years from now owning these as., Bitcoin is bad, I am sitting pretty with my finances, where you! Hundred dollars a few years back instead of showing your polite smile, you would be good. Foil from your neighbors.. and burying the potatoes under the fire are better off some... Economy for peoples investment portfolios, etc transactions isnt a real article will get your ratio! Integer $ range and can take hours to overthrow all of fiat get... Off stealing some tin foil from your neighbors.. and burying the potatoes under the fire world, and make... Of yet and then turn to gold, Biglaw Investor in all fairness cash! Vegas Strip either buying the coins to conduct real business them in Africa, Middle East Latin! Or the lack of any banking is Altruistic is called a silent crash mr money mustache bitcoin it sitting with! Is down 50 % in the desert filled with canned goods technology and like!

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