Speculation is fine, as long as you are using only money you are willing to lose. They are speculating like crazy which has lead the government to try and protect their people through the regulation of crypto trading. January 3, 2018, 9:18 pm. Even with the internet, its only in the last 15 years or so that we have seen companies with seemingly any sort of staying power in the industry. January 2, 2018, 5:53 pm, Dear Mr. Mustache, I am so sorry you had to write this at all. 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. You keep spouting off nonsense. 15 Replies 10705 Views March 26, 2020, 05:23:27 PM . As of now, BTC has none of those characteristics. Mr. Money Mustache @mrmoneymustache Follow @mrmoneymustache There's nothing wrong with blockchain technology - as I said in the article. If you dont have fiat money to buy the bitcoin then someone is going to have to start getting paid in btc. Even if they made a hundred trillion dollars next year, you wouldnt see any of it unless you sold your stock to someone willing to pay a higher price for it (or they started paying dividends). Thank you Jane, I have been waiting for someone to point this out! Mr. Money Mustache shares his opinion about Bitcoin. 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? Adeney lives in Longmont, Colorado, and contends that most middle-class individuals can . We have never in history had such expanding currency supply backed by NOTHING. ), but to include gold bullion is not quite fair. If history is any indication of the future, we can presume the government will print more USD to make up for lost revenue. 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? The fees are incredible. This article seems ranty/irrational. LennStar Because I think they dont want to devalue the money too fast. Im sorry MMM, but the consensus is that your fingernails are worth nothing (you couldnt even pay me to hold them), and that 1 BTC is worth more than your bike. Its a vicious cycle, but Ive just got to bite the bullet instead of going Wah, it was $2 cheaper a week ago.. Mr. Money Mustache Also appreciate fungibility. This does not help educate those of us on the fence about these technologies; it only gives the impression that you are bullying. 3. People speculating in this mania are in their 20s and werent there in 1999. Some more attractive or reliable bulbs might even reasonably cost more. Tom expressed an argument that separating the technology from this particular implementation is important, and offered his opinion that the future blockchain implementations might be none of the current ones on the market. 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. These ideas are most problematic: MMM Says: Trust world governments to control fiat currencies. Take a look at the German Mark after WW1. 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. For gamblers Bitcoin might make a good short but Im definitely too much of a wimp to try it. 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. Then whats the whole point of this currency, why not just use dollars and euros directly? Is it likely to be worth $0? Bitcoin is not stupid per se. Im not saying Bitcoin is the saviour of USD imperialism. I try to lead people to conclude what I have. David Wendelken I read somewhere on Twitter (cant remember where) that you can use anyone who uses Blockchain as a proper noun as a heuristic for how little they know of the space. I enjoy and appreciate your blog and the core messages you send the world, and thanks for raising this fascinating subject. NOTHING HAPPENS! They always do. That is why I also invest in government bonds. Why you ask? If you think that irrational bubble valuations in stocks arent possible, then you just havent studied stocks long or hard enough to be investing in them. How much do you have invested in BTC? How much of your net worth is in this investment? However i travelled last year and found bitcoin is fast becoming the reserve currency for many African countries that have no banking or any infrastructure and is replacing the dollar. Mr. Frugal Toque Big banks get crushed, millions of americans were underwater on their homes and forces to foreclose and then they get a bailout from the US of A paid for by yours truly, the average american tax payer. A currency that unstable cant be realistically used for transactions, even if you forget about its other limitations. That means an implied 100% cash-on-cash return every year. It a high-tech form of protest. Rule of thumb is never put everything in one basket. 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! Heres a great description of the whole scene by Chain CEO Adam Ludwin. People are genuinely mad at me for calling out this speculative aspect (note that I did not criticize blockchain at all, just the idea of uninformed people betting on future price increases for the arbitrary coins). He appeared on the Kevin Rose podcast as well. Your turn to supply real numbers. But a collective insanity has sprouted around the new field of cryptocurrencies, causing a totally irrational worldwide gold rush. The Money Mustache Community . The market can remain irrational longer than you can remain solvent. No one knows what the stable value of bitcoin will end up, and betting in either direction just seems like a fools errand. In that forest there are old bricks. Will it help me achieve my financial dreams quicker? Well said! Theyre stunningly shiny, surprisingly heavy duty, and generating plenty of buzz on Twitter where Im giving them away. obsolete. Thanks for your perspective on an interesting topic. January 3, 2018, 12:14 pm. I want to know will it make my day to day life easier? Missing the forest for the trees kind of thing. MMM said Government-issued currencies have value because they represent human trust and cooperation. youre supposed to pay taxes on gains in crypto too . A timeline in yearsmy probability calculator says 99% or better that youll lose money, possibly all of it, if you hang on for years. OK, But What if Bitcoin Becomes the World Currency? Speculation is great. A stock is a share of an actual company, bound by rules and regs (however imperfectly administered, at least they exist). It is 110% of your total and entire GDP, and that is just your Federal Debt. The unbanked people can hold actual coins in their hands, but they cannot trade in cryptocurrency at all. Ryan Thomas The second point is also critical: Bitcoin is only valuable if it truly becomes a critical world currency. The internet became an amazing avenue for wealth. (based on July 20th blog post) Started by caracarn. The $16,728 Social Security bonus most retirees completely overlook. Rather like italicising. January 3, 2018, 12:22 pm. Amazon has a stated strategy of no profithow does one price that? I have stocks I purchased at the peak and stocks I purchased at the bottom of the valleys. Im only a mediocre computer scientist. Given that China has a lot of bitcoin mines and electricity is produced by coal in China mostly thats a lot of unnecessary CO2 that just got bumped in the atmosphere. Ah yes silly me :). This is so weak. January 2, 2018, 5:54 pm. Mostly: Its shiny and pretty and makes great jewelry and chicks dig it. The poorest in Sub-Saharan Africa earns the same money that you sitting in Manhattan, NY do. I have to disagree with one of your points here: in a worst-case scenario, if you have enough gold, you may be able to beat it between some rocks to make a serviceable frying pan. January 15, 2018, 11:44 am. Speculation of these underlying earnings is what often pushes stock prices higher. Mr. Money Mustac. You have failed to separate the technology from specific implementations. You can give up that wet dream right now. I feel anything worth putting money in should, in broad over-simplified terms at least, be comprehensible even to a simpleton like me. A lot of jobs today exists only to oversee things. With governments coming on board, digital cash will stop money laundering and all these bad things Bitcoin has been associated with. A boy named Sue babysitting, lawn mowing, snow shoveling, etc..) So, how is Bitcoin replacing that? So, they sell it at a discount instead of losing revenue. I also invested in a bitcoin two years ago, and paid off all my debt with it. The only flaw with your fingernail analogy is that most of your devotees would only be too willing to fork over $70,000 for them. Im not saying to build a bunker or anything but just diversify your portfolio for different economic times. 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. Right now, I think that this space allows people to be their own VC. Mr. Money Mustache is another veteran personal finance blogger. VTSAX returned over 22% last year. The bitcoin price isnt rising because people are buying the coins to conduct real business. Why Bitcoin and not another coin? I dont know how many of you can even get to understand what this is but hopefully you understand something from the URL I share below of how mining is done, and why this is not some idiotic electricity consuming joke! Power consumption from bitcoin mining would only amount to a fraction of 1 percent of global demand even in 2020. A bitcoin is not an investment, just as. But boy, are you wrong on this one. Gold is not necessarily a speculation. MissSaraBee It is already in Beta testing and will be released this year. 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. Interesting article, with some great points. 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. January 4, 2018, 7:42 am. But I get that most of these things arent problems that need solving in the first world. Fiat currency has neither. Look up ethereum and Eos and read deeply on how fundamental this decentralised future beholds. Full faith and what? Yes, that is your ground reality today. The collusion of banks, the Fed and law makers have rigged the game in their favor at the expense of working people. 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. E.g. Bitcoin/Ethereum mixers. We still need banks for other forms of financial services such as loans, investments, business services, etc.. Will Bitcoin replace that, too? And so my joker friend, how many Fiat currencies exist on this planet, have you even counted? January 3, 2018, 1:08 pm. Im selling because I agree that cryptocurrencies have entered the bubble phase, but when it comes to theirlong-term viability, you have completely missed the bigger picture. Do I trust the people at the federal reserve that helped cause the 2008 crash and didnt call it beforehand? This is where the speculating comes in. Is it possible youre confusing the message of this article? I just recently read that someone in metro Vancouver Canada liquidated $100,000 worth of their retirement savings and used that money to purchase servers for bitcoin mining. So If Jihan wakes up on the wrong side of the bed and decides to dump all his coins then it will open up hell hole for every one else. And if immutability isnt necessary for your use case, just use a database and save yourself the headache. Staying on the sidelines unless you have some special knowledge of when exactly the the bubble will pop. Check your funds. January 3, 2018, 12:26 pm. But, dont you initially invest money into Bitcoin thru your bank? Its very informative and answers many questions you raise, 2. As a real world comparison, I quote this nifty piece from a reader named The Unassuming Banker: Now imagine that the same person also created a product called Cancer-Pill using their own instructions, trade marked it, and started selling it to the highest bidders. LennStar Many African countries have central banks. There are many reasonable prices for these goods that are non-speculative in nature. FOMO! I have shown from above that their is value in digital currencies. EvoInvestor Please dont fall for Hype, generally fed by the Banks and their Media! It can have applications in the monetary system, contracts, and even as a component in higher level protocols like sharing files. 1. No one person has control over it and that may end up being a good thing (people are corruptible). As has the MMM investing sub-furum. The people that buy into bitcoin will be hurting enough financially. Transactions are happening instantaneously and at as low a cost as a Satoshi! No guarantees that if bitcoin drops that it will ever come back. Making government efficient and effective for the people is noble as well. 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. When the internet / electric / grid is down, I cant pay him via my iphone and at the moment, the kid wants cash. Doh! The supply of Bitcoin is known perfectly, whereas nobody knows how fast your fingernails grow. Bitcoin and altcoins consume a ridiculous amount of energy. You guys are sitting in fools paradise if you think anyone would want US dollars in the years to come. So what Im saying isdont dismiss it based on where you see todays generation using todays rudimentary blockchain with todays technology and society. It will be difficult to predict what comes in this rapidly evolving space. January 3, 2018, 4:34 pm. And just as a warning, I am always going to tell you that price speculation is a bad way to spend your life. Even if you assume block chain currency will replace all gold, which I do agree with you is a bit of a pipe dream, how do you know which one? Well said, Bill. I read an interesting article regarding the price fluctuations, but I cant find it now. 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. Lets be frank. . January 3, 2018, 9:49 am. There valuation of pretty much everything but Bitcoin and Ethereum is unjustifiable. Stocks and bonds and real estate can all enter into bubbles. As for your other comment, no sir, no amount of corruption is tolerable if you have the choice to get rid of it! The internet. But it also has some ideology built in the assumption that giving national governments the ability to monitor flows of money in the financial system and use it as a form of law enforcement is wrong. The shovel sellers are the real winners here. Subsequently, some 70 years later, Im still using that toilet paper to finance my retirement, buy cars, houses and all sorts of things? Good points? Fiat currency fluctuates too, but its swings are smaller as a percentage of its total market cap. It needs to expand with the supply of goods and services in the world, otherwise we end up with deflation and hoarding. However, governments and institutions are investigating the uses of some platforms, like Ethereum: https://globalnews.ca/news/3977745/ethereum-blockchain-canada-nrc/. Stay on the sidelines. Invest in anything wisely and safely. This is yet another extreme example. The financial strategist has established a large audience by favoring slower-paced bets on surer outcomes over cryptocurrency's notorious high-risk-high-reward scenarios. My friend who has a Masters in Computer Science inquired with me about investing in Bitcoin before Christmas and I told her essentially what I thought as mania. Returns are down and all that cash needs to go somewhere. Not everyone agrees, but it cannot, unlike cryptos, be regarded as stupid. Talk of being blissfully ignorant! Many or even most people can disagree with the marginal buyer about the value of the asset. As the people in Greece and Iceland found out, along with people in many other countries. 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. If you can afford to lose the $500K and want to let it ride, go for it. Even if youre the only one doing it. But if it goes down, I wont put anymore money into it. Maybe a real article will get the idea to sink in. January 2, 2018, 7:03 pm. So we need more credible people to speak out against it. Whether you should get out is a difficult question. This MMM article seems almost contradictory to what has become an investment philosophy that reciprocates with many people. Facebook is probably the 4th or 5th legitimate social media platform. Episode 496: Why Bitcoin is Stupid - Part 1 by Mr. Money Mustache (Bitcoin Crypto & Financial Independence). 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. Its rising because people are buying it up, hoping someone else will buy it at an even higher price later. Your comment is timestamped January 7, 2018. By exchanging dollars or euros for a fee? Shes allergic to nickel and tin and lead. If not, you may want to think about selling. I cant help but feel that a big part of the reason for Bitcoins continued rise is that theres no safe, practical way for us Bitcoin-skeptics to actually take a short position on it. Were human, so human. Understanding the motivation is a big part of understanding Bitcoin. Westerners will not see the benefit for sometime as we have no purpose ourselves for bitcoin but once it becomes a single global currency that can be used in every shop of the world then everyone will be holding bitcoin. January 4, 2018, 7:28 am. First: cryptocurrencies have not demonstrated lack of manipulation. 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. I was not as articulate as MMM in this post, but my underlying logic is the same. Mr. Money Mustache was a thirtysomething retiree who now writes about how we can all lead a frugal yet Badass life of leisure. So in order to have immutability, we need decentralization. It doesnt mean they are in bubbles at any price. Crypto currency as an ecosphere financially has benefited the tech industry dramatically, and if you invest like Mr Money Mustache advises, that means you probably have a good amount invested into the S&P 500. So theres a positive feedback loop here. But observing long term norms of valuation and noticing when they are out of whack is not called being speculative. This idea that you HAVE TO OWN ONE FULL BITCOIN is madness. That is where we are with Bitcoins. He is skeptical of anything that has a tinge of a get rich quick scheme. The reason that people have never owned their own money as you inelegantly put it, is because there is no full faith and credit under this model. bitcoin @ 7k, down close to 70%. The Cryptocurrency bubble is really a replay of the past: A good percentage of Humans are prone to mass delusions which lead to irrational behavior. 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. How much are these companies worth today? Either way it wont end badly right? The water can be stored behind a dam for weeks, months, sometimes *years* if the dam is big enough. If FIRE is your goal, Id get out. Raising this fascinating subject total market cap supply of goods and services in the first world dont want think. Like me the first world worth putting money in should, in broad over-simplified terms least. About its other limitations of us on the Kevin Rose podcast as well has been associated with Eos read! 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