(And very badly compared to other cryptocurrencies.). When I hear someone claim an investment in Bitcoin I end up smiling politely and correcting them on one point. January 11, 2018, 4:23 am. 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! 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. Until the price of bitcoin (any of the crypto currencies) achieves some semblance of stability, they will fail to be good mediums of exchange. Some people might get crazy rich, but some might just go broke because of Bitcoin. Real investments require production and income. The shovel sellers are the real winners here. And so my joker friend, how many Fiat currencies exist on this planet, have you even counted? But how do you know youre investing in Amazon, and not Pets.com? Better to get an air-source heat pump, which multiplies your heat gain per dollar by hundreds of percent. Well, shit. January 2, 2018, 6:23 pm. Bitcoin (aka CancerPills) has become an investment bubble, with the complementary forces of Human herd behavior, greed, fear of missing out, and a lack of understanding of past financial bubbles amplifying it. Some people like owning pretty jewelry. What is currently happening in Venezuela is not an isolated incident, and its incredibily naive to think that it cant happen here. 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. Banks and elites will remain even with Bitcoin, and if it goes your way it will probably the miningfarms and people who collect the most. So in order to have immutability, we need decentralization. Its like trying to say Bank A is better then Z Bank because it has a fancy new way of getting money. Update, my fingernails are up to $160,000 now. Bitcoin is the longest existing algorithm and has proven to be safe and capable of remaining decentralized (arguable). Barak PazTal Regular money has nothing behind it either. Cryptocurrency could be the proverbial cure for cancer, but if its made illegal or heavily regulated through prudent or reactionary legislation (YMMV) it doesnt really matter, does it? No. If youre one of these credible people, please do so in the comments or in a blog post on Medium that we can all read. They are speculating like crazy which has lead the government to try and protect their people through the regulation of crypto trading. Good post. What value is there? The second point is also critical: Bitcoin is only valuable if it truly becomes a critical world currency. You write that These are all things that people have bought in the past, and driven to completely irrational prices,. January 15, 2018, 9:02 am. Danny Livewire His rhetoric about trusting the wise elites of the Federal Reserve also irks me. The sooner we debunk the myth and come to our senses, the richer our world will be. Started by kayvent. offshore tax haves/ black marketsare companies moving to Ireland for tax sheltering & why does Apple have so much money overseas. 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. Id much rather invest in shares of Ripple Inc than in XRP. Ive been trying to think of an entrepreneurial way to capitalize on the hysteria without investing in it. Finally, someone in here who understands economics and not just personal finance! You cant vote with your wallet in this situation, so you have no control over what practices the miners use. Do we really want a place where youre either an Amazonian or Walmartian? January 2, 2018, 6:47 pm. . It pays you to do scientific calculation work (that many volunteers already do for nothing) on the BOINC network. Like they say, speculation is as old as the hills. Totally agree about cryptos- but not sure gold should be lumped in with them. This volatility thing that seems to be biting you folks is because Bitcoin is at 200 Billion capitalisation today. Speculation is great. Apparently, Amazon pays people in other countries with Amazon gift cards. 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. Stocks and bonds and real estate can all enter into bubbles. There are other points that I cant think of right now. Then my father used the same toilet paper for his cars and his house? When the internet / electric / grid is down, I cant pay him via my iphone and at the moment, the kid wants cash. 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. Priced in gold, they are still down more than 60%. If not, you may want to think about selling., Scott Nicholson But I did put about $600 in Bitcoin over a year ago. Personally, I think this article shows that Mr Adeney has had his blog hijacked by the Anti-satoshi ;). Thanks, MMM! Do something useful with your money. Problems that dont bother your average North American, but could be very valuable to many people the world over. 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 We have never in history had such expanding currency supply backed by NOTHING. Some Alts are even working with the existing banking infrastructure to get them up to speed and are acknowledging the unfeasibility of anonymity (Ripple, Cardano). The internet is awesome, but once in a while a bubble arises and this time virtual currencies is about to pop! I believe MMM acknowledged that blockchain was pretty cool by itself and could readily be used for such purposes. Why would anyone do business with a medium of exchange that is accountable to nobody? While MMM has some terrific points on how Bitcoin transaction costs and electrical costs are astronomical, pandoras box has been opened. Is Bitcoin eventually going to replace the physical green back dollars and coins in our pockets? FirstPrincipleThinking I totally agree. Remember Altavista, Boo, Aol and Geocities, should I have bought those you mean? If you read your history on this subject you would understand why I dont. If so, congratulations. True. While it is true that stocks are probably expensive right now, one thing that doesnt get mentioned enough with Shiller P/E is the E represents the 10-year rolling average inflation-adjusted earnings. :), https://twitter.com/elonmusk/status/941500121564332032, farmecologist The sooner we debunk the myth and come to our senses, the richer our world will be. Ill stick with the stock market thank you very much. Love this blog and agree with most of your opinions on Bitcoin. It is speculating, many cryptocurrencies will go to zero and bubbles will burst along the way. Its the last one! Bitmains S9 efficiency is at ~0.1 J/GHs. Technology is always the game changer. 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?. January 2, 2018, 7:05 pm. I was tempted by the neat aspect of being involved in this thing I knew would have some kind of future value blockchain. Basically Mr. Money Mustache seems to not see anything beyond the Federal Reserve and the toilet paper this private bank of the elite churns out! Check out RaiBlocks and other DAG-based coins. But my preferred broker, Interactive Brokers, doesnt allow shorting Bitcoin futures (the founder of IB seems very anti-bitcoin in general). Or grid power in general. So, please dont keep repeating this Blockchain is great but bitcoin is not bullshit! . Without that money is worthless as a store of value, which also makes it worthless as a long term stable median of exchange. The happiness of society is made of the happiness of individuals and nothing else. Blockchain technology may do that too. MMM calls Bitcoin Stupid and all these things as some kind of Ponzi Scheme! What if anything gives a compelling reason that bitcoin or any one of these other currencies will end up in the group? For just $2 you could be a multimillionaire. I didnt buy because I didnt know enough about the technology and in my opinion currency arbitrage takes too much monitoring for my liking. Then the mining ist just looking up data in this table. It doesnt mean they are in bubbles at any price. Agree, the valuation of these cryptocurrencies are out of whack. Im only a mediocre computer scientist. Big ERN just recommended me to your blog and now I see that you beat me to the joke I just made. Blockchain (you are the first person I read who thinks the jury is still out on blockchain (I agree)) takes more and more energy as it grows. A REAL currency must be low risk+ zero (better subzero) return+good liquidity, and all those three things MUST go together. Things arent as crazy as 2000, but this is the 2nd highest peak of all time. For more casual sampling, have a look at this complete list of all posts since the beginning of time or download the mobile app. Also, not all crypto currencies use PoW to mine / verify transactions. Even more troubling, an estimated $11 trillion of government debt now trades at negative yields. If I understand correctly, the rate of return is VERY low because of the high hash difficulty that Bitcoin has now reached. So, I use bitcoin to buy stuff with the gift cards from these people. how is this different than a crypto? LennStar However EVERY SINGLE BITCOIN TRANSACTION IS PERMANENTLY RECORDED AND TRACEABLE. January 3, 2018, 4:56 pm. (You couldnt type to me on a computer or launch a satellite into space without it.). Youre 100% right that fiat currency is only good when people trust itand that trust could be ZERO. Mr. Money Mustache 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). But thats just the start. A wisened Mustachian looks for long term, steady gains, and their invested dollars add value to a society the moment they are employed. Of course there is speculation. US is just one country in this big bad world, and not vice versa! I think I found the mistake in your reasoning. January 3, 2018, 12:48 pm. Seems to Petes point, theres an awful lot of marketing push behind something that has dubious use cases and limited long term value. Its a speculation, pretty much like buying gold. Mr. Butler I believe this is currently the second longest expansion in US history. God speed my friend. In short the author is saying that while some elements of the populous are spuiking the benefits of cryptocurrencies they have not be adopted by broader society except for the purpose of speculation. Networking. The First Attack In 2012, I invited Pete and his wife to share a guest post on Financial Samurai when he was starting out called: Early Retirement: It's Not As Risky As You Might Think. I enjoyed the cancer pill analogy, probably the best I have heard of yet. I dont have time to play PC games 24 hours a day, so I might as well use my fancy computer to make some money while Im away from it. This has resulted in the Bitcoin blockchain ledger being nearly immutable. Now lets get back to your kick-ass money savvy engineering experiments :-), Oh, dont feel too bad. Its totally different when you lose your money by yourself. Not a repeatable strategy though, Im sure. But this is not necessarily correct in every case. Pretty weak overall. You call it trust. What you are describing is called a silent crash. So when I invest in bitcoin, Im not betting that itll replace dollars anytime soon. Large hydroelectric dams are literally known in the power world for how amazingly good they are at storage. 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.". So right there you can scratch off any use of blockchain as pointless if it doesnt benefit from immutability. I agree with some parts of this article and this some parts are a bit ridiculous. Etrade is going to trade bitcoin futures. Peter Mevoin Some guy on the internet Long story short bitcoin provides value. Brent Weaver For a long answer you need to understand the technicalities of it which I am not going to educate you on! I believe the current Cryptocurrency investment mania is a huge waste of human energy, and our rate of waste has been growing exponentially. But nobody seems to be able to put together a real reason why Bitcoin isnt the next Pets.com, Uberartist Mustachianism the mental training that gets you to very early financial freedom requires you to evaluate inefficiencies in our culture and call bullshit upon them. The cost savings from implementing everything on immutable ledgers has significant cost savings and automation of processes which is why there is so much speculation. The premise was how would you expect a new money to behave price-wise against other commodities (US dollar, gold, oil, etc.)? Bitcoin dropped 20% overnight, so it is not currently a very reliable store of value. Devs in their mid 20s who owe the IRS 50k and lost most everything. Theyre not very good experts. I think that the future is virtual currencies and of course the internet in general, just not right now, and absolutely not with any of the 1400+ fakecurrencies out there. They cant use these gift cards. The market can remain irrational longer than you can remain solvent, and maybe everyone that posts here about how wonderful Bitcoin is will be minted a Bitcoin millionaire and will lock in those profits can we remain sane and humble on the other side? It is an innovation worthy of a Nobel that is being trashed by MMM and his horde of supporters who have no clue how the Internet of Money is going to replace everything we know about Banking and Finance! Plus $20 to run the transaction. With the rampant corruption on wall street is it really a surprise that the people wanted a decentralized currency? That is an implied 2% or so long-term return, and probably a negative one after inflation. As a result, changes in perceived value result in big price swings. January 2, 2018, 9:18 pm, MMM, heres a calculator that updates to show the real time profitability of mining various coins: 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. I think its more likely that youre helping launder money acquired in IRS scams and other criminal activity. And this, MMM There are no financial instruments that will protect you from a world where we no longer trust each other. So, I PayPald you the $100 for your fingernail clippings before I got to the part about them going for $70,000. Cryptos may be the money of the future, but there is nothing sane about its rise this past year. They get to sell me their give cards at a discount and I get to buy stuff from Amazon for cheaper. Unless, of course, it starts rolling *in* terrible new earnings compared to price, which is certainly possible. 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. Me personally, Im betting on the buck. Naturally with higher growth comes the risks which you should be ready to deal with. An Aside: Why should we listen to you, Mustache? Bitcoin could also be the TCP/IP and will probably be the world standard in 10 years! United States . As strong, intellengent Mustachians, we must think critically for ourselves about what is implied by trusting fiat currencies. Sure, China is a renewables leader but it has limits. When contracts cannot be broken nobody needs to oversee contracts. This is exactly what happened in the 1970s: The nominal price of stocks remained roughly the same while their effective purchasing power was cut more than in half, eventually prices will come back up. Gold and tulips and coffee and salt and any other good at a fair price, however, are an entirely different story. Thats crazy. =. I am of the opinion all of Fiat will get wiped out in a decade or two! I regularly visit flip this home seminars just to network with people who leverage all their credit to gamble on an endeavor they have no experience with. Not saying thats why he wrote the article, but just that there are certain advantages to being an Internet Celebrity, one of which is that everything you write turns to gold, er, uh, bitcoin, er, uh, whatever. Fiat currency has neither. Its a win-win situation. But sometimes they do. Also no one here is talking about who owns majority bitcoins besides sathoshi,, I guess its Jihan wu. About purse.io: Do you have to pay the transaction fee to deposit the BTC to escrow? We plan to spice up our investments then, we will have $90K/yr extra to invest and wont mind taking maybe 10% of that and play/gamble with it :-). 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. 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. This inefficient design is now wasting more electricity than many entire countries. Absolutely! By exchanging dollars or euros for a fee? These people are either shit scared of the changes that are going to come, or dont understand macro economics. (Again, you also cant go to space without it, or use your computer, but we can set that aside for the moment. Rather than maximize profits, what about minimizing regrets? So just like you say theres nothing stopping you from creating your own Bitcoin, its the same code.unless you could attract hundreds of millions of dollars of computing power to ensure data integrity on your blockchain, its as worthless as your nail clippings. However, since more USD would automagically exist, USD becomes less valuable (this is inflation its like stealing a little bit of USD from anyone with cash positions). January 2, 2018, 5:49 pm. Besides, your use of the terms fiat currencies and toilet paper tell us where you really stand. January 5, 2018, 8:29 pm. Or maybe you dont understand how exchanges work. Its well written and pretty obviously by a real software and math person. Its diversification. Im not saying to build a bunker or anything but just diversify your portfolio for different economic times. Looks like I made a big mistake then. It is a commodity. Last May, when I announced I had inked a deal with Harriman House to publish my new book, Pathfinders, I invited those of you who had embraced The Simple Path to Wealth to share your stories. 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. MMM says: There is no intrinsic value in cryptocurrencies. January 3, 2018, 7:20 am. Thats why its unwise to go all-in on something just because its going up. Very good article! For me, its just like watching a show that I dont know the ending of yet. Naturally sentiment plays an important role in BTCs price. Stay on the sidelines. Thus, they are not useful, and produce nothing useful. We will have to see if that new blockchain style will win out. I promise you, the US Government is knees deep in the blockchain and is monitoring everything. Might want to polish that up before going public again. In the mean time, Ill keep selling the bitcoins that I purchased for $30 each at $15k a pop. The kids pulverize the bricks to make brick dust, which is the most valuable currency/commodity in their forest kingdom. BURST ( http://burst-coin.org ) as an example uses PoC (Proof of Capacity). Except for ripple coin. Research further. Also, a currency should not be artificially sparse. MMM typically suggests going long in index funds, not bonds. Many or even most people can disagree with the marginal buyer about the value of the asset. January 19, 2018, 6:45 pm. Anyway, in real terms, US stocks have been in a secular bear market since 1999. Unlike gold or tulip bulbs or cigarettes or salt, no one desires dollars as goods in and of themselves. ie beauty counter for nerds. Also I would like to point out that in civil war days with different currencies things were a mess financially so now youre going to need some crypto forex to come up with exchange rates of all these different currencies really take off. FOMO! Bingo, so far you are the only one that stated the true value of any nation backed currency, notably the USD. People will release new ones all the time and people invest in them, not because they will ever be useful but because they expect the price to skyrocket. If you do not know, We have prepared this article about details of Mr. Money Mustache's short biography-wiki, career, professional life, personal life, wife, girlfriend, dating, divorce, kids, today's net worth, age, height, weight, and more facts. A large proportion of other coins are long term holds. Take risks, but keep educated and with good money management. Think of what would have happened during the great recession if bitcoin had been the staple currency. Id argue strongly that its a good thing. They saw value in it very early. Hes helped thousands of people improve their lives. I dont think attacking how Bitcoin is being used is a good argument because of this. I am Mr. Money Mustache, mild mannered retired-at-30 software engineer who later became accidental leader of Ironic Cult of Mustachianism. 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. If it goes poorly you might not a few months off your FIRE date but if it goes very well it could knock off a year. (based on July 20th blog post) Started by caracarn. January 3, 2018, 9:18 pm. An investment then would not be considered wasteful now. The internet. Even if they could benefit from the immutability, they could never be truly immutable in the sense that no trust is required at all to ascertain the legitimacy of the data. A massive drop in the market is usually based on fear which once subsided, earnings from the 3k companies publicly traded will continue to churn out and eventually prices will come back up. Funny, I was just recently approached to put up a sponsored post talking-up the virtues of Bitcoin, all for the REAL CASH reward of $100 (via PayPal of course.) Come back after a couple of years to this blog and let us see who is vindicated! Or the cars people use to haul that stuff then. Governments have no choice here. You mixed that up. Evidently you werent invested in Pets.com and other rising stars with no hope of ever getting profitable. He is skeptical of anything that has a tinge of a get rich quick scheme. And now in 2017, we sit and discuss how much better a world we have after the whole event. This is not going to happen. Why is the author so angry about this fact? It a high-tech form of protest. January 5, 2018, 8:26 am. But again, this is not investment but speculation! Its not that I enjoy seeing people suffer, but who am to talk them out of it? Because I still cant pay for groceries in my town without swiping a card or handing over some US dollars. Just Keep Calm, and Keep Investing Despite all of this hype and all the froth in stock prices, a true investor's plan can remain stable through the seasons. Like every state currency, it derives its worth out of the fact that the state says you can *always* pay your taxes with it (and that shops have to accept it). Moneymeister 16-02-2023 WIDM 2023: mijn mening en verdenkingen tot nu toe. Alright then, do you have all your money invested in cryptocurrencies? Good thing I dont invest in it! If you know anyone heavily vested in bitcoin, stay in touch with them. I really would hope that MMM doesnt sell out like most social influencers but regardless not understanding the technology is no excuse for spreading fear, uncertainty and doubt about it. For fun, I try to gauge how bad is the Fear of missing out is and how that corresponds to a peak. A boy named Sue January 2, 2018, 6:46 pm. 2) lots of other things are used as a store of value (paintings, etc) All that the US has done since 2008, is hit the ball further and further down the road while at the same time blowing it more and more with air (read Quantitative Easing). Because right now, well over half of all BTC mining power is located within China, and Xi Jinping could fairly easily decide that all of those miners need to work for him. Aside from what it can do, cryptocurrency guarantees an economy with very different fundamentals than government-issued currency because 1) its supply is finite and 2) no central authority controls distribution of new supply. 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