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. Joey Graziano Noticed this ad on the corner of a website recently because we ALL need daily updates on an obscure piece of niche software technology! Andy Stow And gold has at least *some* practical value you can make attractive jewelry that doesnt tarnish, use it in electronics, dental fillings. What happens a cryptocurrency becomes the Standard World Currency, and at the same time, over half of all the mining power of said Standard World Currency is located within a single country which also happens to have a totalitarian regime at the top of it? Its a complete rip off. Got it. There is some potential in the future for the blockchain technology but we are just so early that its hard to pick winners. In short, historically gold is the truest measure of value, the safest store of wealth, and best insurance against fiat money and other manias (see Weimar Republic circa 1934). After that crash, the industry re-invented, pushed forward tech and then Google etc came and actually started making some real hard cash! Things arent as crazy as 2000, but this is the 2nd highest peak of all time. Educate yourself on why Bitcoin and Blockchain cannot be split up. Retweeted. 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. January 4, 2018, 10:38 am. This is no different from rich wall street people and government controlling fiat currency.. It once creates large rainbow tables on Disk. Rick Gardner 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. 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. At the moment, theyre incredibly volatile compared to the monetary systems of the developed world. I argue that fiat currency is inefficient because its supply is always increasing. Its not going to consume ALL the worlds energy? FirstPrincipleThinking Favorite quote: Bitcoins growth is not based on its technology alone (which, while powerful, is open-source and therefore easily replicable) but rather on the strength of virality, encouraged by the vested interests who held early and invested in marketing it; with no genuine business underlying it, it acquires its (very substantial) memetic potency only from the evangelism of those whohodland preach., David Webbs great explanation: Bitcoin: the Worlds First Decentralized Ponzi Scheme, Preston Byrne again (brilliant guy! (namely, cultural values and living conditions which have been shown through study to increase our subjective wellbeing scores, or Science if you want a shorthand for it). Why not one of the other 1500 cryptocurrencies? It can be laundered. Hell isnt that why we are here in the first place? That is where we are with Bitcoins. As a result, I have cashed out on their misfortune. Well so they can monitor everything and where all the funds go. Unless youre a rogue nation trying to dodge sanctions? Good points. remittances, credit lending for undocumented people. The stock market over the long run will ALWAYS grow as long as the population and technology and our output as humans continues to grow. If you can afford to lose the $500K and want to let it ride, go for it. Gold bullion has several thousand years of history. Do you really believe that we should go all-in when it comes to trusting our institutional financial establishments? Allow it time to grow to say 10 trillion, and then let us debate on stability. 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). Maybe not $500,000 an ounce or a bulb, but at some other far lower price, they can be an entirely reasonable purchase. Our Banker friend goes on to explain that the first Cancer-Pill might initially see some great sales. February 21, 2022, 8:04 am. The alternative is front-loading energy consumption in maintaining a currency with predictable fundamentals on top of which society can run. Theyre stunningly shiny, surprisingly heavy duty, and generating plenty of buzz on Twitter where Im giving them away. if you over leverage yourself in any of these you can find yourself in trouble. This will go down in history as the DUMBEST thing Mr. Money Mustache has ever written.it honestly pisses me off how dishonest he is and his he cant see the big picture out of his Statist status quo lenses. For the first time in history, a machine can own money and make its own purchases. I like the way he analyzes investments. No major government will transact in a currency it cannot control. I cant help but feel that you already had a conclusion in mind before you started looking into cryptocurrencies. The amount of people who have posted on /r/personalfinance this year who sold crypto, then bought back in, and lost big, is astounding. Its all the same stuff that people say about Gold, which is also a totally irrational waste of human investment energy. Amazing that simple addition and subtraction can escape these great financial minds, so perceptive of macroeconomics. The Money Mustache Community . Certianly seems like Vijay has some vested interests in Bitcoin..it is pretty obvious. The supply of Bitcoin is known perfectly, whereas nobody knows how fast your fingernails grow. Is it likely worth closer to $0 than to $20,000? Remember 2008? Your highly emotional responses arent helping your case. Do I still get the full bag or just a portion of your pinky fingers latest clipping? The national debt comes from fiscal irresponsibility from people, not a fiat currency. Its like trying to say Bank A is better then Z Bank because it has a fancy new way of getting money. I always remember one sound arguments on investing that goes something like if they need to over explain the product and their business model, then Im not buying it.. So, I PayPald you the $100 for your fingernail clippings before I got to the part about them going for $70,000. Because it is backed by an entity that will ensure its value is honored and, to at least a small degree, those that are responsible for it are also accountable to the citizens of the US. January 2, 2018, 6:01 pm. I have been hearing Bitcoin is a scam and a bubble since the time it was 200 bucks! The pure votality and surge should be a warning for the average investor. It doesnt mean they are in bubbles at any price. 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. 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. Mr. Money Mustache and his then-wife retired at the age of 30 with a net worth of $600,000. Who would help the poor, elderly and uneducated those without BTC? He and his wife studied engineering and computer science in Canada, then worked in . Ive been watching this with fascination as its been a while since we have seen a hype and crash investment (because we only know which way this is going to go, right)??? 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. . The bitcoin price isnt rising because people are buying the coins to conduct real business. When everyone is on the train and praising it like it is the next coming of Jesus or whatever? Federal reserve banks and elected governments. Read your history, it happens occasionally even in the great USA (a few times actually). 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. Why would anyone do business with a medium of exchange that is accountable to nobody? Mr. Butler Here's the one I like: 25x the annual amount you spend/4% of your assets. It really starts to stink if it is left unattended to. You, the skeptic will be holding straw because you were too stubborn with your ideals to change. 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. I mentioned very specific problems with BTC/ETH. 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? Yes, that is your ground reality today. If not, you may want to think about selling. This is because society is nothing but an abstract grouping of individuals. Pretty weak overall. Even if youre the only one doing it. Update, three years later: Since I wrote this, the imaginary price of Bitcoin has continued to be all over the map it initially dropped over 70%, then it went back up many hundreds of percent, over and over. No one foresaw that VHS would win, and yet Betamax was gone not many years later. Cest la vie. Unless, of course, it starts rolling *in* terrible new earnings compared to price, which is certainly possible. Theyre not very good experts. Consensus over its value. Dont count on there being a greater fool to take this sort of investment off your hands. The kids pulverize the bricks to make brick dust, which is the most valuable currency/commodity in their forest kingdom. 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. Adney's first tip is to change how you look at the prices of what you buy. Youve got Bitcoin with a market value of $234 Billion Dollars, then Ripple at $92 billion with Ethereum right behind at $85,792,800,592. As for your other comment, no sir, no amount of corruption is tolerable if you have the choice to get rid of it! That means an implied 100% cash-on-cash return every year. Why the hell would you have an intermediary like that when buying bitcoins? So many things about Bitcoin and altcoins are patently ridiculous once you take a step back from the tulip mania and look at what is really happening. Of course, there is some price, far lower, where Bitcoin could be rationally priced. Technology is always the game changer. Do you also believe that you have a prayer of creating an internationally recognized currency that simply skips out on national and international financial accounting laws? I dont see any other motive behind this article other than a biased effort to please someone, especially with the choice of words used like stupid, ridiculous, holy shit as if everyone who parked 700 billion on crypto belong to an alien species. Scott Nicholson The Money Mustache Community Learning, Sharing, and Teaching Investor Alley Our Crypto Investment strategy (slow and steady investing for the win) . January 15, 2018, 4:00 pm. Either way how about not alienate people based off their investments and act like an actual human being instead of a sociopath? Its well written and pretty obviously by a real software and math person. in my opinion. Be careful what you wish for. 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. You could always follow the Long Island Iced Tea model: 1. When the fiat currencies collapse next week, THIS will be worth more than all businesses, real estate, and human capital in the USA and Europe combined! It is cool. Simple answer is, they cannot have a secure private Blockchain. 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. Some of them have no earnings at all. Bitcoins will never degrade over time, your fingernails degrade. You sound like I poop-obsessed wing nut. 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. Its totally different when you lose your money by yourself. Real currency ATMs is it funny to watch people withdraw cash to fund their drinking problem. They always do. 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. There are many reasonable prices for these goods that are non-speculative in nature. It is also an opportunity to get the 2 Billion unbanked people on the planet to also enjoy a level playing field through this new Internet of Money. Also if youre going to start the whole not everywhere is like the U.S. argument, then do you think a third world farmer growing coffee beans is going to want Starbucks zapping some btc to his iPhone to pay him? Again, only in nominal terms. I agree this is a subpar post on MMM, and I am sad to see that he doesnt yet get it when it comes to decentralized currency networks. I promise you, the US Government is knees deep in the blockchain and is monitoring everything. January 2, 2018, 9:01 pm. 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. You disagree. Blockchain technology may do that too. 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. People suffer immensely. https://www.cryptocompare.com/mining/calculator/btc?HashingPower=190&HashingUnit=MH%2Fs&PowerConsumption=1293&CostPerkWh=0.12, Matt Stephenson Hard to shove a tulip bulb through the wires, eh? It has a track record though ill give you that. However, in 2004 when Facebook was being launched it was looked at as a funny little friend site. Travis, your are right. January 3, 2018, 9:23 am. As we know from MMM teachings, safety and security are lies. You respond with an implied personal insult. You made an unsupported claim. If that is the case, their values are strictly driven by speculative bidding, making them the worst sort of investment. Also, not all crypto currencies use PoW to mine / verify transactions. Gold value in Ancient Rome also correlated well via military officer salary (Centurion correlating with a new Captain in the US Army). But its likely just down the toilet. We still need banks for other forms of financial services such as loans, investments, business services, etc.. Will Bitcoin replace that, too? The only thing I would add as a further disagreement to MMMs article is that speculation is inherently a GOOD thing. Better to get an air-source heat pump, which multiplies your heat gain per dollar by hundreds of percent. 3. 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 do believe hyperbitcoinization will happen in a decade or two. (As Ronnie Chieng says, What IS it!?!?). They are set at the margin, by the marginal buyer. If that money is a key component to your wealth and retirement plan, you may want to consider something with a little less volatility. Lets take the oil price in the middle of the last decade as an example of a real bubble. Jeremy Collins Even more troubling, an estimated $11 trillion of government debt now trades at negative yields. Take risks, but keep educated and with good money management. Agree, the valuation of these cryptocurrencies are out of whack. I did Control F, and verified that MMM never used the word Ponzi or Pyramid, and in fact Vijay, you were the first person to bring up the Ponzi Scheme topic, and then you linked some article (which I did not care to read). The security of the Bitcoin blockchain. This is yet another extreme example. Keep fighting the good fight, Vijay. More than triple the speed of Visa/MC. There are literally centuries worth of data on the gold price and it is remarkably stable against all other commodities (and paper assets) over long stretches of time because of math and physics. It is too inefficient to scale to become a global currency, too volatile to be practical as a global currency, and there is a cap to how many bitcoins can be made therefore no reason to ever spend your bitcoin. months) so other storage mechanisms are needed. Were human, so human. But if you have some play money, it doesnt hurt to speculate if that is what you enjoy doing and dont mind losing everything you put in. I just wish it had come out before the holidays so I could have just pointed family members to it instead of attempting (unsuccessfully!) Do you practice illegal tax evasion as your primary wealth strategy? MentalArson That is when we are talking equality and progress for all! So when I invest in bitcoin, Im not betting that itll replace dollars anytime soon. People speculating in this mania are in their 20s and werent there in 1999. Mr. Money Mustache shares his opinion about Bitcoin. Thats fairly over the top. Said every speculation sucker since the 17th Century. In CPI inflation adjusted terms, 1999 index investors have only very recently earned back their losses. Humanity deserves an alternative to government (aka the financial elite) controlled money. If not, you may want to think about selling., Scott Nicholson 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. I think in five years bitcoin will pretty much disappear. 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. Of $ 600,000 Tea model: 1 peak of all time in Rome... 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