(which is more Mustachian..), Michelle, Mr Buffetts advice is clearly correct I mean, its Warren Buffett were talking about. Your highly emotional responses arent helping your case. Alright then, do you have all your money invested in cryptocurrencies? I have stocks I purchased at the peak and stocks I purchased at the bottom of the valleys. I doubt you really believe this is going to overthrow all of our current financial system. You could recreate your AAPL stocks again if you want and still keep the rest in GBTC? Dont you find it strange, though, that my grandfather used what you call toilet paper to buy his first car, and his first house? Rather like italicising. Wow, you really have no idea how hydroelectric power works. Full faith and what? 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? 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. Again, this is really only true for FIAT CURRENCIES. 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. 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. Andy Stow Doh! How else should people behave? Its odd he believes people require a government to establish a system of trust and cooperation. Right now a nascent currency like Bitcoin is not able to handle the transactions in a similar fashion due to limited bandwidth, and people like you point that out and say, look it cannot even handle the current level of transactions how is this thing going to replace Visa or MasterCard? That is something very valuable just like stocks are. I put my money where my mouth is! If you are disgusted with the mining costs of Bitcoin you should be but the fact remains new inventions like RaiBlocks has made cryptocurrency frictionless and without mining or fees with transactions at over 7,000 per second. January 3, 2018, 5:30 pm. (FWIW, CAPE had actually been studied in academic settings many, many decades before Shiller, and was a favorite metric of the legendary Benjamin Graham in the 1920s and 30s. Peopleve been lusting after gold (god knows why) for millennia because it clearly arouses something inside them. It is a commodity. Bubbles or Tulip Mania as you put it dont do what bitcoin has done since its inception in 2009. Lady Dividend (I may buy some to pay my day to day expenses, but I try to minimize the %age of my net worth sitting in cash. TO_Ont I was so sad that I missed out again ;). The internet. Its mind-boggling how much electricity is being wasted. We still need banks for other forms of financial services such as loans, investments, business services, etc.. Will Bitcoin replace that, too? Gold is not an investment, but it is an excellent form of money. If you introduced a brand new commodity to the world, would you expect the price to be stable? You can buy puts in OSTK, MARA, GROW, OSTK and RIOT. I try to lead people to conclude what I have. Good points? There is no wealth and no trade without these two things, so you might as well go all-in and trust people. Back it up, or youre just another nutjob. Are you saying wisened mustachians own no stock or ETF of any tobacco companies? Watch on. I had no idea the market capitalization of Bitcoin and the other crypto-currencies are so high. A real, usable currency CANNOT have such huge fluctuations. It is 14 January, 2021 when I am writing this. I enjoyed this analysis by Aswath Damodaran, a thoughtful investor and Professor at NYU school of business. >The poorest in Sub-Saharan Africa earns the same money that you sitting in Manhattan, NY do. No guarantees that if bitcoin drops that it will ever come back. Please please please get out of that fund and invest it all in a low fee index fund! Very good article! Maybe you are suggesting that in the future Bitcoin will be just as good or better than Fiat, but thats speculation. Adney's first tip is to change how you look at the prices of what you buy. Still no fundamentals. Bitcoin has very little usage. That is why our civilization used that rather than perishables or iron. Ryan Thomas https://www.youtube.com/watch?v=aeMv9uKpAZg, The Wealthy Accountant Could you please tell us what you are invested in and when you got in? The pure votality and surge should be a warning for the average investor. This is Part 1 of 2. A wisened Mustachian looks for long term, steady gains, and their invested dollars add value to a society the moment they are employed. Bitcoins are all the same, they are not numbered, they dont rot and dont have a shelf life. Im not saying Bitcoin is the saviour of USD imperialism. January 3, 2018, 7:12 am. Do we really want a place where youre either an Amazonian or Walmartian? The dams generate electricity whether you need it or not. Tulips. https://t.co/wfi8XTq77s" Good post. That is wrong. 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. Thats a really bad equivocation. Based on the completely over hyped behavior, Id guess its going the way of sixdegrees.com or maybe myspace if bitcoin speculators are lucky. Its closest to an MLM for me. Except of course, for all the others. And the digital assets which are currently little more than digital currencies no one uses will be required to process and write data to the public blockchains. 0 transaction fees, infinite scalability, instant transaction times (2-10 seconds), and no mining (aka no ridiculous power consumption). No one can say for sure whether or not the problems can be resolved and a highly transactable and stable currency may emerge. They saw value in it very early. January 23, 2018, 12:50 am, Why Mr. Money Mustache is wrong and Nassim Taleb is right about Bitcoin: https://medium.com/p/81f5ffa42deb?source=linkShare-6c666494704c-1516693614. However when every Joe on the street becomes an expert in an assetthen its suspect and you dont need to be clairvoyant to know that this will not end well. Subsequently, some 70 years later, Im still using that toilet paper to finance my retirement, buy cars, houses and all sorts of things? but fail to recognize that the USD also has no intrinsic value. David Wendelken Mr. Money Mustache And if immutability isnt necessary for your use case, just use a database and save yourself the headache. When we talk about Bitcoin, or Ethereum or any other digital coin, for that matter, neither ponzi nor pyramid are perfectly accurate descriptions for how these systems actually work., The cryptocoins represent a new kind of scam, a Nakamoto Scheme: https://prestonbyrne.com/2017/12/08/bitcoin_ponzi/. 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. January 3, 2018, 7:23 am. Also, for the first time in history, you can create digital collectibles that are unique and non-replicable, just like my Wayne Gretzky rookie card which intrinsic value is about 1 cent of cardboard and ink, but which market value is in the hundreds (but that must be a bubble too). To most of the Internet, Mr. Money Mustache is known as the quirky early retirement financial guy, and this is a blog about Money. They could also plateau until earnings catchup with prices.. So every time I say Bitcoin/altcoins are a stupid idea, I chuckle. Or grid power in general. Same wishes to you on your toilet paper fiat money my friend. We save up our purchases. Soon, they will be on the brink of bankruptcy and you will be able to purchase all of their stuff at a discount. also remember while the market cap is $230bn at least 20% of coins are lost from the early years. Comparing bitcoin to tulip bulbs is intellectually lazy or deliberately misleading. Great article! Well thats all due to the crypto currency craze. Let it get to 10 Trillion + in a couple or so years and then you come back talking about its stability! other currencies already provide faster, cheaper transactions. Further more rants about the skyrocketing cost of housing and how many people cannot afford their mortgages, with further people saying mortgage payments wont matter because those people can just sell for more when the payments become a problem. Speculation is essential to set a market price for anything. 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. No doubt we are in a crypto mania now, but the concept of a global digital currency has been coming since Biblical times. 4. Individuals getting rich off speculation doesnt mean its not speculation. I think that gold is nothing special its a shiny rock. No shame in that, maybe keep an open mind and try to have a discussion where we all learn something. Its a speculation, pretty much like buying gold. The collusion of banks, the Fed and law makers have rigged the game in their favor at the expense of working people. But with 6-7 big mining players who dictate which fork of bitcoin to mine, the value of BTC or BCC or Segwit or whatever else comes, I have no faith in the value of BTC. Its absolutely astounding how the general (pretty darn) intelligent public cant tell the difference between an real asset vs an investment. I have accepted lifes nudge and opened up several pages of your blog and am working through them right after this, The Vigilante With the rampant corruption on wall street is it really a surprise that the people wanted a decentralized currency? Danny Livewire Cancer-Away, CancerBgone, CancEthereum, and any other number of competitors would spring up. Stop Ironing Shirts 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. Christopher R Young Ryan Thomas This is Part 2 of 2. FullTimeFinance Plus the addiction and how crypto has started to drain people of their savings and life. Today, 20 years down the road you are watching 4K videos on it! 2) Prices rise so much that earnings increase while stock prices remain the same. I want to know will it make my day to day life easier? Guess what, we can automate all of those jobs with cryptocurrencies. Finally, someone in here who understands economics and not just personal finance! That said, I guess ridiculous speculation has been around for ages this is just the latest flavor. Dont know if youve seen JP Searss satire of Bitcoin but I think you might appreciate it. But, dont you initially invest money into Bitcoin thru your bank? I am Mr. Money Mustache, mild mannered retired-at-30 software engineer who later became accidental leader of Ironic Cult of Mustachianism. Holy Shit! is the only reasonable reaction. Millions of people streaming interactive video games. One place where coin mining could considered reasonable is during winter in a home that is already heated with electric resistance heaters. November 20, 2018, 9:31 am, rollie fingers The big players in China use hydroelectric power. Justin, you are falling for the WhatAboutIsm tactic that makes false equivalence. 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. Bond *prices* are higher than ever today, which is the reciprocal of them having a high yield. I advise you look at the 10-year PE ratio. Have you ever taken a look at how correlated the stocks of an index were? I for one am lucky enough to participate in the birthing of an alternative financial paradigm so that people have choices. Mr. Money Mustache is another veteran personal finance blogger. Michael Its rising because people are buying it up, hoping someone else will buy it at an even higher price later. January 2, 2018, 5:53 pm, Dear Mr. Mustache, I am so sorry you had to write this at all. Were human, so human. Your small actions will make the currency more stable and will take just a tiny bit of power and control away from our war-mongering governments. Jay Holden Of course get out NOW. Thats why wind farms are much more economical in areas with large scale hydro. You need some sort of fundamentals, and in bitcoin there are none. That means an implied 100% cash-on-cash return every year. Keep plenty for yourself. 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. Why? 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