document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Take a look around. And a currency thats not used for transactions isnt a real currency. January 2, 2018, 6:01 pm. And btw, just switching currency is not going to remove any debt. Subsequently, some 70 years later, Im still using that toilet paper to finance my retirement, buy cars, houses and all sorts of things? Yes, you can buy index funds with fiat money and not with Bitcoin. When my daughter asked what you could do with brick dust, the kids looked at her like she was an idiot and said, Well, buy more brick dust, of course.. I read somewhere about the power drain, and the ridiculous projections of power needs to get another X coins, and how it is going to black out the grid of the country. United States . Not only stocks, but real estate and bonds are expensive as well. There are no financial instruments that will protect you from a world where we no longer trust each other. The root of crypto is decentralization and independence from government that empowers people. Tim, do you think Bitcoin cares what the Government thinks or wants? We have been in an expansion (the weakest one in US history) for almost 9 years. There is no wealth and no trade without these two things, so you might as well go all-in and trust people. As strong, intellengent Mustachians, we must think critically for ourselves about what is implied by trusting fiat currencies. The world is changing which many westerners cannot see. January 2, 2018, 6:46 pm. Because this whole blog is built around the idea that you should seek financial security not riches. Is it likely worth closer to $0 than to $20,000? The bidding up of prices in pursuit of speculative riches is not fine. January 4, 2018, 2:48 pm. There is no opportunity for them here, but I do appreciate your expression of goodwill towards others and humanitarian leanings (misguided though they are in this specific instance.). The vast majority of the companies trying to monetize the internet failed. Do not give up. 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. Currency might be the smallest part of that, in the way that web and streaming video traffic dwarf simple email traffic. I am broadly in agreement with what you state, except the part where you think USD would not get replaced soon (depends on what soon is of course). 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! Youve made a great profit, and you can play with that $28k. A network like bitcoin that possesses millons of users and consists of billions of dollars of wealth means that in times of crisis around the world, the network itself can provide relief to anyone without discrimination. However about 6 months ago, I withdrew all my stocks and threw it in altcoins. I want to know will it make my day to day life easier? This is the greatest use of human energy and capital the world has ever seen. I am smiling because Im content to let others gamble. This leviathan now stands at around $233 trillion, or 318 percent of global GDP. According to the index, the amount of energy consumed by mining bitcoin surged about 26 percent in November alone and now totals nearly 36 terawatt hours, enough energy to power about 3.3 million homes. In Ancient Rome and today one ounce of gold bought a very nice dress suit. In other words, if you truly need it to buy stuff, and thus you need to buy coins from some other person in order to conduct important bits of world commerce that you cant do any other way. Millennial Boss This instability just further proves that it would make a terrible currency and a recent study reveals that about, Mr. Money Mustache. And there are so many investors who buy Bitcoin without even understanding what Blockchain iswhich is just scary. One book that I found very useful in understanding the greed-fear cycle (and Central Banking and the Federal Reserve system to boot) is the 2001 classic Towards Rational Exuberance by Mark Smith. 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. I cant speak for the whole of Africa being simply a Kenyan but this is mega horse shit. 2 years later, and each coin is 28,736.04 or $39,388.47. 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. As a result, changes in perceived value result in big price swings. 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. Ten years later and the price is still nowhere near that prior high, with it currently trading around $60. Not likely, bitcoin mining farms are in China because of the cheaper energy costs. Why? 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. Ive made more per hour than I do at my day job compared to the effort that I have put into this. BTW, the reason you put a small amount of your money in gold is to hedge against inflation. Maybe some other crypto-currency can overcome those issues and some have, but still a long way to go. The imaginary value of these valueless bits of computer data representsenough money to change the course of the entire human race, for example eliminating all poverty or replacing the entire worlds 800 gigawatts of coal power plants with solar generation. 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. Good points? Everything currently is too expensive. After all, you could make the same argument about Mr. Money Mustachesfingernail clippings: they may have no intrinsic value, but at least they are in limited supplyso lets use them as the new world currency! January 3, 2018, 1:08 pm. Gold has the 2 most important properties to make it function as money, scarcity and intrinsic value. 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 dont think attacking how Bitcoin is being used is a good argument because of this. Market prices are not set by consensus. I have done this, and Bitcoin has a carbon footprint which is about 500-30,000 times larger than the US dollar. And gold has at least *some* practical value you can make attractive jewelry that doesnt tarnish, use it in electronics, dental fillings. I also invested in a bitcoin two years ago, and paid off all my debt with it. No doubt it will crash but I think it still has room to go. 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. TO_Ont Again, as this chart shows, stocks, priced in gold, are still down about 60% from their peak in 1999: We probably have another few years of stocks going down in terms of gold before they bottom out and a new stock bull market (in real terms) resumes once again. Some newer, better tech has now taken BTCs place here (LTC or any DAG technology). This is the same exact dynamic as tulip bulbs: Do tulip bulbs have a value? The good news is that more transactions alone wouldnt raise the energy cost (although more transactions are currently impossible anyway), and if Bitcoin raised the price of electricity in one country it would probably just cause people to mine somewhere else. Of course, I doubt we are already at the 10%. Market timing is a fools errand anyway. I am not trying to promote it for this purpose, but it is not an invalid choice. The poorest in Sub-Saharan Africa earns the same money that you sitting in Manhattan, NY do. That means an implied 100% cash-on-cash return every year. I even read about these things for fun, with Simon Singhs The Code Book and the Neil Stephenson novel Cryptonomicon being particularly fun shortcuts to pick up some of the workings and the context of cryptography. Bookmarking this post, cant wait to come back in a year, or heck, a few years, when Bitcoin IS over 100k. Videos of Andreas Antonopoulos on Bitcoins in Youtube. Check out RaiBlocks and other DAG-based coins. You write that These are all things that people have bought in the past, and driven to completely irrational prices,. If cryptocurrencydoestake off, it will be in a government-backed form, like a new Fedcoin or G20coin. Full anonymity and government evasion will not be one of its features. Think about how many leaps needed to be made for someone in 1990 to believe such a thing was possible. Also make a calculation of how much electricity, trees and other expenses the Fiat Currencies printed on toilet paper consume as well! January 3, 2018, 5:48 am. Networking. Nothing is 100% guaranteed in life. I keep thinking of that movie where the actor says Explain it to me like Im a 2 year old.. For gamblers Bitcoin might make a good short but Im definitely too much of a wimp to try it. We will have to see if that new blockchain style will win out. Youre confusing outcome with process. Im not so sure youre right about mining them though, especially if you mine with computer hardware that you already have. We end up in Utopia? Ultimately, Bitcoins functionality is what the digital asset should derive most of its value from. Evidently you werent invested in Pets.com and other rising stars with no hope of ever getting profitable. January 3, 2018, 7:12 am. No one foresaw that VHS would win, and yet Betamax was gone not many years later. Im not advocating throwing all your money into crypto (I havent see anyone say that). Ask me Anything! Andrew Kravitz What is the US Dollar pegged to? 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. If you accept for the purpose of argument that Bitcoin has value to the world, then its essentually a land rush to get as much of it as you can while its cheap. Your fiat paper would be worthless in 10 years and you will be washing your ass with it! You have unwittingly tripped up your own argument here. By exchanging dollars or euros for a fee? Chris Urbaniak You could recreate your AAPL stocks again if you want and still keep the rest in GBTC? Take risks, but keep educated and with good money management. Couldnt have said it any better myself. When recessions hit, they need that ability to brunt the damage inflicted on people. If so, congratulations. MissSaraBee I agree with MMMs eloquent outlining of the major concerns with investing in cryptocurrencies. 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. Its like when preppers talk about arming themselves and building shelters out in the desert filled with canned goods. I have these lovely tulip bulbs for sale, please PM me. 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. Id love to know what your background is. I can trade with anyone in the world for a low price (not necessarily with bitcoin as the price has gotten expensive but with other currencies). 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. 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. If you feel comfortable developing your own metrics with which to gauge coins and want to invest in projects long term, you can. No doubt we are in a crypto mania now, but the concept of a global digital currency has been coming since Biblical times. 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. Federal reserve banks and elected governments. You WILL be wrong. Nobody needs to worry about whether terms will be met. What if you want it for yourself, or have customers or distributors that do? There is a high chance that Bitcoin doesnt remain #1 forever because there are so many cryptocurrencies, many of which with very different applications, including some that arent even based on blockchain technology. 15% off everything you buy on Amazon basically. Vijay, I think you should sell every non-bitcoin asset you own, borrow as much money as you possibly can, and buy as many bitcoins as possible. Although I do get where MMM is trying put an emphasis on the difference in investing and speculation. The bitcoin price isnt rising because people are buying the coins to conduct real business. It is a commodity. You can keep saying its a bubble for eternity. After all, you could make the same argument about Mr. Money Mustache's fingernail clippings: they may have no intrinsic value, but at least they are in limited supply so let's use them as the new world currency! Amazing. In the US we call it the full faith and credit of the United States. January 4, 2018, 7:36 am. The market can remain irrational longer than you can remain solvent.. December 10, 2018, 5:45 pm, Dang! 3) Blockchain is good, Bitcoin is bad Cryptocurrency is just one application of blockchain technology. As the legend goes, an anonymous developer published this whitepaper in 2008 under the fake name Satoshi Nakamoto. 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. Is it likely to be worth $0? Get listed and sell some shares. Cryptos may be the money of the future, but there is nothing sane about its rise this past year. I totally agree. I know, when you received hundreds of emails eventually you just have to buckle and say, Okay, damn it I will write it up. Thats a lot of electricity that can be used to power 3.3 million homes wasted. Gold has always been considered a commodity of high value. Slaves to banks and few elites? January 3, 2018, 9:04 pm. Alright, time for a thought experiment. Will it help me achieve my financial dreams quicker? The whole economy could stall in time to come, and people are worried about the small stuff. (like ATMs were supposed to replace Tellers years ago *eye roll*) And Bitcoin is replacing the banking system? Full anonymity and government evasion will not be one of its features. It can be forged. But maybe an iteration of that will be. Please let it go. And yet this is exactly whats happening with Bitcoin. Mr. Frugal Toque Although it is difficult to put a price tag on the speculation and mania portion of BTCs price, as sentiment strengthens in regards to Bitcoins future functionality prospects the price should continue to increase. Is the logical conclusion to short a mania or stay on the sidelines? Rick Gardner 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. So instead we are going to own Bitcoins that are so volatile that you will go insane? No guarantees that if bitcoin drops that it will ever come back. One question though, why not speculate with a small percentage of your net worth ie < 5%. Ryan Thomas You sound like I poop-obsessed wing nut. More computing power leads to higher data integrity which creates more value which attracts more computing power, and so on. Fiat currency was implemented in 1933 in the USA. The only reason you would be staying in is that you would hopefully still be able to find a bigger sucker when you finally do unload. Only the most weak and fearful people will allow themselves to be stolen from for the sake of mythical national security that comes from trillions of dollars of military spending. Ah yes silly me :). January 2, 2018, 8:53 pm. Putting blind faith in Government backed currency because Uncle Sam said it is worth something, is a thing of the past. Fiat currency fluctuates too, but its swings are smaller as a percentage of its total market cap. Thanks, MMM! Bitcoins etc does not make it easier at all. 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. 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? Our Banker friend goes on to explain that the first Cancer-Pill might initially see some great sales. They grew pretty flowers that we enjoy looking at. Hes helped thousands of people improve their lives. About a 1/3 of it gets taken before the IRS even gets their grubs on it. The sooner we debunk the myth and come to our senses, the richer our world will be. The alternative is front-loading energy consumption in maintaining a currency with predictable fundamentals on top of which society can run. Come back after a couple of years to this blog and let us see who is vindicated! Even if you are the only one in the room willing to do it. youre supposed to pay taxes on gains in crypto too . May be we should look at bitcoin as a product, who knows what are the other innovative ways that may come up for making more returns out of it like any product today. !, What is money? Bitcoin dropped 20% overnight, so it is not currently a very reliable store of value. TomTX, nothing was answered. That is where we are with Bitcoins. Spot on VIJAY. He is skeptical of anything that has a tinge of a get rich quick scheme. MMM deservedly makes a fortune off this website, and stirring the Bitcoin pot will surely drive more traffic to keep blog profits rolling in. Mr. Money Mustache is another veteran personal finance blogger. Take a look at the German Mark after WW1. Are expensive as well effort that I have these lovely tulip bulbs for sale, please PM me name. Later, and so on room willing to do it Bitcoin mining farms are in a crypto mania now but. Digital currency has been coming since Biblical times but this is mega horse shit you put small! 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