When someone has a 180 degree different opinion to you, just discredit them eh? Ill stick with the stock market thank you very much. 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. Even the Bogleheads forum has not been immune. Your turn to supply real numbers. Glad to see some sense being written to the red necks who seem to inhabit this blog! What a bargain! This part of it is ideological to me: You Must Earn Your Money By Creating Value for Everyone. January 2, 2018, 7:03 pm. That is where we are with Bitcoins. Now I can forward it to friends and family who are chattering about it while Iwell, while I call it stupid. January 4, 2018, 2:48 pm. Even if it were safe it seems to me to be a dead end as energy consumption for the expanding use becomes incredibly high. . Since we are still in the opening stages of the Bitcoin phenomenon it is BTCs perceived functionality properties that should drive the current price action, not so much the mania and the speculation aspect. All technology goes through a bit of a curve where new technologies have multiple competitors and slowly they formulate around standards and a smaller core group of players. 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. Then you are in at twice the actual price of Bitcoin. Doesnt mean you cant speculate to help you get to FIRE sooner though. Mr. Butler :) https://www.youtube.com/watch?v=g-zIbVEjVpQ, Another great satire- Seth Myers take in bitcoin. You keep talking about transactions needed for it to be a currency but fail to mention in your article that Lightning Network is in the works to address this very problem. For newer cryptocurrencies, there may be a higher dollars-per-kilowatt-hour return, but I dont know these numbers myself. Why Bitcoin and not another coin? Under certain tax-related assumptions dividend policy is irrelevant to the value of a firm says one of the Modigliani Miller theorems. Not going to do this with you.. 3. Taxation does not give money purchasing power. Is it likely worth closer to $0 than to $20,000? That capability simply did not exist before blockchain-based currencies. I agree totally. If I am able to speculate successfully and retire sooner, I would hope that the other Mustachians would cheer me on. Mr. Money Mustache was a thirtysomething retiree who now writes about how we can all lead a frugal yet Badass life of leisure. Market timing is a fools errand anyway. Its totally different when you lose your money by yourself. Mr. Frugal Toque That would be like saying corn is a speculation or coffee is a speculation. Cut him some slack especially as he makes SUCH GOOD POINTS! The most useful comments are those written with the goal of learning from or helping out other readers after reading the whole article and all the earlier comments. On the other hand valuation of bitcoin has nothing to do with merits like this.What I dont understand is how spinning off a crypto currency XRP plays a role is this (please shed some light if you can). If THAT does happen (BTC=100K), it will prove once more that BTC is not a currency at all. Wow, you really have no idea how hydroelectric power works. This fiat economy itself is only 40 year old. Read through TomTXs posts below Michael and you will get to know who started. I know, when you received hundreds of emails eventually you just have to buckle and say, Okay, damn it I will write it up. It isnt enough to live off of, but its definitely nice to have a net $500 or so in my pocket at the end of each month. Good comments Jon. Why should it not be? Mr. Money Mustache The poorest in Sub-Saharan Africa earns the same money that you sitting in Manhattan, NY do. From arranging hits to buying drugs to political corruption. 2 Billion unbanked people on the planet to also enjoy a level playing field through this new Internet of Money. I dont mind people investing in Bitcoin because its not my money. In my personal opinion, Bitcoin just seems like another form of a financial institution that is trying to say its not an institution when it walks like a duck, quacks like a duck so it must be a bank, no?! January 3, 2018, 1:43 pm, Apparently, Amazon pays people in other countries with Amazon gift cards. At least theyre cute and the grand kids like them! Some more attractive or reliable bulbs might even reasonably cost more. One of my coworkers at MMM-HQ works for nVidia, and part of his job is hunting down mining thieves who comandeer virtual servers (cloud computing) to mine coins on their behalf. I dont care either way about bitcoin and am not even sure why hydro comes into the discussion, but you cant say something so blatantly 180 degrees false and expect not to be corrected! We end up in Utopia? Dont know if youve seen JP Searss satire of Bitcoin but I think you might appreciate it. Most of this money is being spent on military operations to secure foreign resources and kill people will dissenting viewpoints in the name of national security. Again, only in nominal terms. But not possible with Bitcoin transaction costs for BTC are up in the integer $ range and can take hours. It is 14 January, 2021 when I am writing this. The people that buy into bitcoin will be hurting enough financially. Mr. Money Mustache is. It also helps to have wise, centralized humans (the Federal Reserve system and other central banks) guiding the system. >The poorest in Sub-Saharan Africa earns the same money that you sitting in Manhattan, NY do. Missing the forest for the trees kind of thing. I just dont understand the new economy. MMM writes things like currency should not be artificially sparse and should expand. Blockchain is just a computer protocol, which allows two people (or machines) to do transactions even if they dont trust each other or the network between them. > 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. Besides, theres value in bitcoin, like with gold or a comic book, or any other item people assign a value to. 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. TO_Ont More computing power leads to higher data integrity which creates more value which attracts more computing power, and so on. Take a look at this shot from the website coinmarketcap.com, and observe the preposterous herd behavior in real life: Fig.1: Various cryptocurrencies, ranked by how many people have been fooled. 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. I understand this is an MMM forum but i mean come on.. you have to recognize that managed risk is a part of building wealth. You can keep saying its a bubble for eternity. Fired & Free Mr. Money Mustache Early Retirement through Badassity Start Here About Random MMM Recommends Forum MMM Classics Mr. Money Mustache View: Fancy Magazine | Classic Blog Welcome New Readers! Anyway, in real terms, US stocks have been in a secular bear market since 1999. 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. You should have just invested in winning lottery tickets instead of bitcoin, they have had a much much higher rate of return. There is no reliable way to track or trace paper. Its a complete rip off. Im betting that the collective ingenuity and creativity of humanity will take this tech and run with it to places we can hardly imagine and theyll only ever get there if early investors like myself support and secure it while its in its infancy. They grew pretty flowers that we enjoy looking at. Hard to shove a tulip bulb through the wires, eh? Why not one of the other 1500 cryptocurrencies? A currency that unstable cant be realistically used for transactions, even if you forget about its other limitations. 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. January 3, 2018, 5:30 pm. 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. Please, Alex Anton is not shouting. Bond prices werent historically low in those other cases and Shiller PE has been high for basically ever since the guy invented it. 1) Energy consumption Bitcoin consumes a massive amount of energy to secure the network. But, is a stock index worth a CAPE ratio of near 30, meaning it would take 30 years to earn back your initial investment, not counting any loss from inflation? 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. Pretty much. 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. Great article! No doubt it will crash but I think it still has room to go. To be honest this whole article reads like a paid advertisement against crypto. Many are trying to perfect it but until there is a clear winner, different ones will emerge. Its super risky and probably not compatible with mustachianism, but that said its pretty interesting and I think it remains possible that MMM is wrong. Yes there is. but remember short positions have a possible infinite downside while buying the asset has a possible infinite up side, If you do this youre still speculating on a market that cant be understood right now. Bitcoin and altcoins consume a ridiculous amount of energy. Ideally something not too specific to bitcoin, like I dunno, power equipment? 3 years and 1 week later. Even if youre the only one doing it. Except for the chances of winning the Powerball vs a worthwhile project with (already) proven potential and mainstream bank adoption like Ripple that was mentioned knocking multiple years from your FIRE date are not the same. As long as you can find another willing buyer before the price crashes. Youll note that without prejudice and emotion, he describes the actualuses of the technology, without getting intohow we should all place uninformed bets on its future value. While were on the topic of bubbles, it seems the truly gigantic bubble in the world isnt bitcoin, but rather the global debt market. The security of the Bitcoin blockchain. At the moment, theyre incredibly volatile compared to the monetary systems of the developed world. No one person has control over it and that may end up being a good thing (people are corruptible). I agree with some parts of this article and this some parts are a bit ridiculous. Consensus over its value. January 11, 2018, 12:03 am. Plus, it costs something like $20 per transaction. But in reality, both stocks AND bonds are in a bubble. (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. Thus, they are not useful, and produce nothing useful. So, how is Bitcoin better or different? You may be smart enough to recognize why one currency is going up and another isnt and to not go all-in on something. January 3, 2018, 4:51 pm. January 2, 2018, 6:01 pm. 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. Speculation is fine, as long as you are using only money you are willing to lose. Its not as simple as you make it personally. This is the second highest cyclically-adjusted PE ratio in recorded history: Priced in gold, it is the third largest stock bubble in recorded history: http://pricedingold.com/charts/SP500-1880.pdf. If you want just one reason it is that governments will not allow it. I am laughing my ass out. They cant use these gift cards. You guys are sitting in fools paradise if you think anyone would want US dollars in the years to come. (based on July 20th blog post) Started by caracarn. The internet has provided many, many, many great investing opportunities since 1992 most of which would have been better than a BBS in 1992. 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