Why Bitcoin is Stupid

Well, shit. I’ve been watching this situation for a few years, and assuming it would just blow over so we wouldn’t have to talk about it here in this place where we are supposed to be busy improving our lives.

But a collective insanity has sprouted around the new field of ‘cryptocurrencies’, causing a totally irrational worldwide gold rush. It has reached the point that a big percentage of stories in the financial news and questions in Mr. Money Mustache’s email inbox are about whether or not we should all ‘invest’ in BitCoin.

We’ll start with the answer: No, you should not invest in Bitcoin. The reason is that it’s not an investment. Just like gold, tulip bulbs, Beanie Babies, 1999 dotcoms without any hope of a product plan, “pre-construction pricing” Toronto condominiums you have no intent to occupy or rent out, and rare baseball cards are not investments.

Update, six 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. This instability just further proves that it would make a terrible currency – and a recent study reveals that about 95% of even the trading volume is fraudulent. People get excited about Bitcoin when the price goes up, but that’s because they like making money – not because the underlying object has any actual value or usefulness.

These are all things that people have bought in the past, and driven to completely irrational prices, not because they did anything useful or produced any money and value to society, but solely because they thought they would be able to sell them to someone else for more in the future.

When you make this kind of purchase, which you should never do, you are speculating, which is not a useful activity. You’re playing a psychological, win-lose battle against other humans with money as the only objective. Even if you win some money through dumb luck, you have lost some time and life energy, which means you have lost.

Noticed this ad on the corner of a website recently … because we ALL need daily updates on an obscure piece of niche software technology!

Investing means buying an asset that actually creates products and services and cashflow for an extended period of time. Like a piece of a profitable business or a rentable piece of real estate. An investment is something that has intrinsic value – that is, it would be worth owning from a financial perspective, even if you could never sell it.

Now, with that moral sermon out of the way, we might as well talk about why Bitcoin has become such a big thing, so we can separate the usefulness of the underlying technology called “Blockchain”, from the mania about how people have turned Bitcoin it into a big dumb lottery.

This separation is important because the usefulness of Blockchain is the primary justification people use for the big dumb Bitcoin lottery. 

Once you make this separation in your mind, you can see that Blockchain is a simply a nifty new software invention (which is open-source and free for anyone to use), whereas Bitcoin is just one well-known way to use it.

Blockchain is just a computer protocol, which allows two people (or machines) to do transactions even if they don’t trust each other or the network between them. It can have applications in the monetary system, contracts, and even as a component in higher level protocols like sharing files. But it’s not some spectacular Instant Trillionaire piece of magic.

As a real world comparison, I quote this nifty piece from a reader named The Unassuming Banker:

… imagine that someone had found a cure for cancer and posted the step-by-step instructions on how to make it on-line, freely available for anyone to use.

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.

I think we can all agree a cure for cancer is immensely valuable to society (blockchain may or may not be, we still have to see), however, how much is a Cancer-Pill worth?

Our Banker friend goes on to explain that the first Cancer-Pill might initially see some great sales. Prices would rise, especially if the supply of these pills was limited (just as an artificial supply limit is built right into the Bitcoin algorithm.)

But since the formula is open and free, other companies would quickly come out with their own cancer pills. Cancer-Away, CancerBgone, CancEthereum, and any other number of competitors would spring up. Anybody can make a pill, and it costs only a few cents per dose.

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. Because of this, newspapers start reporting on prices daily, triggering so many tales of instant riches that you notice even your barber and your massage therapist are offering tips on how to invest in this new “asset class”.

But instead of seeing how ridiculous this is, even more people start piling in and bidding up every new variety of pills (cryptocurrency), over and over and on and on, until they are some of the most “valuable” things on the planet.

NO, right?

And yet this is exactly what’s happening with Bitcoin. And if you haven’t been digging into the cryptocurrency world much, it gets way weirder than this. 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.

“Holy Shit!” is the only reasonable reaction. You’ve got Bitcoin with a market value of $234 Billion Dollars, then Ripple at $92 billion with Ethereum right behind at $85,792,800,592.

These are preposterous numbers. The imaginary value of these valueless bits of computer data represents enough money to change the course of the entire human race, for example eliminating all poverty or replacing the entire world’s 800 gigawatts of coal power plants with solar generation. Why? WHY???

An Aside: Why should we listen to you, Mustache?

I’m only a mediocre computer scientist. But coincidentally, after I got my computer engineering degree I ended up specializing in security and encryption technologies for most of my career. 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. I even read about these things for fun, with Simon Singh’s 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 that’s just the software side (Blockchain). 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.

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. Even if you are the only one in the room willing to do it.

In the field of personal wealth, this means walking your children past the idling lineup of your neighbors’ Mercedes SUVs, over the snowy grass and up to the door of the school – and being confident that you are doing the right thing. Even if you’re the only one doing it.

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. Shit. Guys. Not going to do this with you.”

So I also read a lot about investment bubbles and fundamentals and how to tell those apart. 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. For a shortcut to understanding good investing, you can also simply look up Warren Buffet’s thinking on almost any topic – he’s careful enough about offering opinions that by the time he makes a statement on something, you can be pretty sure it will be among the best answers out there.

And of course, the purpose of this whole aside is that I want to establish credibility with you, so you will give this article some consideration. I believe the current Cryptocurrency “investment” mania is a huge waste of human energy, and our rate of waste has been growing exponentially.

The sooner we debunk the myth and come to our senses, the richer our world will be. So we need more credible people to speak out against it. If you’re one of these credible people, please do so in the comments or in a blog post on Medium that we can all read.

Why was Bitcoin Even Invented?

Understanding the motivation is a big part of understanding Bitcoin. As the legend goes, an anonymous developer published this whitepaper in 2008 under the fake name Satoshi Nakamoto. It’s well written and pretty obviously by a real software and math person. 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.

This financial libertarian streak is at the core of Bitcoin, and you’ll hear echoes of that sentiment in all the pro-crypto blogs and podcasts. The sensible-sounding ones will say, “Sure the G20 nations all have stable financial systems, but Bitcoin is a lifesaver in places like Venezuela where the government can vaporize your wealth when you sleep.”

The harder-core pundits say “Even the US Federal Reserve is a bunch ‘a’ CROOKS, stealing your money via INFLATION, and that nasty Fiat Currency they issue is nothing but TOILET PAPER!!”

It’s all the same stuff that people say about Gold, which is also a totally irrational waste of human investment energy.

Government-issued currencies have value because they represent human trust and cooperation. There is no wealth and no trade without these two things, so you might as well go all-in and trust people. There are no financial instruments that will protect you from a world where we no longer trust each other.

So, Bitcoin is a protocol invented to solve a money problem that simply does not exist in the rich countries, which is where most of the money is. Sure, an anonymous way to exchange money and escape the eyes of a corrupt government is a good thing for human rights. But at least 98% of MMM readers do not live in countries where this is an issue.

So just relax, lean into it, and grow rich with me.

OK, But What if Bitcoin Becomes the World Currency?

The other argument for Bitcoin’s “value” is that there will only ever be 21 million of them, and they will eventually replace all other world currencies, or at least become the “new gold”, so the fundamental value is either the entire world’s GDP or at least the total value of all gold, divided by 21 million.

People then go on to say, “If there’s even a ONE PERCENT CHANCE that this happens, Bitcoins are severely undervalued and they should really be worth, like, at least a quadrillion dollars each!!

This is not going to happen. 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! 

Why not somebody else’s fingernail clippings? Why not one of the other 1500 cryptocurrencies? Shut up, just send me $100 via PayPal and I’ll send you a bag of my fingernail clippings.

Let’s get this straight: in order for Bitcoin to be a real currency, it needs several things:

  • easy and frictionless trading between people 
  • to be widely accepted as legal tender for all debts, public and private
  • a stable value that does not fluctuate (otherwise it’s impossible to set prices)

Bitcoin has none of these things, and even safely storing it is difficult (see Mt. Gox, Bitfinex, and the various wallets and exchanges that have been hacked)

The second point is also critical: Bitcoin is only valuable if it truly becomes a critical world currency. 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 can’t do any other way. Right now, the only people driving up the price are other speculators. The bitcoin price isn’t rising because people are buying the coins to conduct real business. It’s rising because people are buying it up, hoping someone else will buy it at an even higher price later. It’s only valuable when you cash it out to a real currency again, like the US dollar, and use it to buy something useful like a nice house or a business. When the supply of foolish speculators dries up, the value evaporates – often very quickly.

Also, a currency should not be artificially sparse. It needs to expand with the supply of goods and services in the world, otherwise we end up with deflation and hoarding. It also helps to have wise, centralized humans (the Federal Reserve system and other central banks) guiding the system. In a world of human trust, putting the wisest and most respected people in a position of Adult Supervision is a useful tactic.

Finally, nothing becomes a good investment just because “it’s been going up in price lately.”

If you disagree with me on that point, the price of my fingernails has just increased by 70,000% and they are now $70,000 per bag. Quick, get me that money on PayPal before you miss out on any more of this incredible “performance!”

Figure 2: Random people on Twitter doing some deep, useful Investment Analysis on Bitcoin. (Update from late 2018 – Mike ended up being wayyyy wrong.)

The world’s governments are not going to let everyone start trading money anonymously and evading taxes using Bitcoin. If cryptocurrency does take 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.

And you don’t want it for this purpose anyway – after all, do you currently hide your money in offshore tax havens and transact your business on black markets? Do you practice illegal tax evasion as your primary wealth strategy? Probably not, because life is better and wealthier when you aren’t living a life of crime.

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. This is a known bug in our operating system, and we have designed some parts of our society to protect us against it.

These days, stocks are regulated by the SEC, precisely because in the olden days, there were many, many stocks issued that were much like Bitcoin. Marketed to unsophisticated investors as a get-rich-quick scheme. The very definition of an unsophisticated investor is “Being more willing to buy something, the more its price goes up.”

Don’t be one of these fools.

Further Notes

About the Comments Section: Normally, I try not to publish comments that are just emotional reactions or totally uninformed. For this article, I have set the bar much lower to show you the religious conviction that crypto speculators have.

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”).

The general trend seems to be accusing me of “not doing enough research”, even after I dug into this stuff pretty deeply for a long, long time. I remain open to more information on the uses of Blockchain, but I’ve never seen a valid fundamental reason for betting on future increases in the prices of these things.

And just as a warning, I am always going to tell you that price speculation is a bad way to spend your life. This part of it is ideological to me: You Must Earn Your Money By Creating Value for Everyone.

Here’s a great description of the whole scene by Chain CEO Adam Ludwin. You’ll note that without prejudice and emotion, he describes the actual uses of the technology, without getting into how we should all place uninformed bets on its future value. 

The real test of if you should be a cryptocurrency supporter: would you be exactly as passionate and spend the same amount of time thinking about it, if Bitcoin were still an obscure piece of code, worth less than one cent, and offered no chance of ever earning you any money? Because if you’re going to be an evangelist for anything, it needs to be purely based on the underlying merits, not what you hope it will do for your personal fortune.

This YouTube Video is one of the best shortcuts I found for explaining how Blockchain (and Bitcoin) works.

This Vice article explains yet another ridiculous aspect of Cryptocurrency: running the transaction network (called “Mining”) involves a deliberate computer-intensive crypto challenge syetem called “proof of work”. This inefficient design is now wasting more electricity than many entire countries. Doing one 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 for more than 800 miles of driving.

Another interesting side-effect of bitcoin mining: big sales of computer graphics cards, and theft of electricity and cloud computer services. 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. Some of my conversations with him inspired the research in this article.

I enjoyed this analysis by Aswath Damodaran, a thoughtful investor and Professor at NYU school of business

Another intelligent case by highly experienced crypto business lawyer Preston Byrne. Favorite quote:

“Bitcoin’s growth is not based on its technology alone (which, while powerful, is open-source and therefore easily replicable) but rather on the strength of virality, encouraged by the vested interests who held early and invested in marketing it; with no genuine business underlying it, it acquires its (very substantial) memetic potency only from the evangelism of those who hodl and preach.”

David Webb’s great explanation: Bitcoin: the World’s First Decentralized Ponzi Scheme

Preston Byrne again (brilliant guy!): the Problem with calling Bitcoin a Ponzi Scheme

  • Steven January 3, 2018, 6:20 am

    As a computer scientist, I have to disagree with how you are framing your argument. You are mostly focusing on purely price of the crypto and not it’s actual benefits. The value crypto can have is several fold. First, you can send any amount anywhere in the world for practically nothing and don’t have to worry about going through banks. Platforms like Ethereum are not meant to be a currency (although work well as one), but are poised to be the future of financial transactions and provability on the web. For instance, look at crypto kitties, the latest sensational hype about digital cats. As stupid as I think it is, people are able to purchase these digital cats from a smart contract on the blockchain and prove without a doubt they are the singular owner, which then makes for an interesting application. Think of the applications with stocks, trading cards, or other needs for verification without a third party. That’s where the true innovation and value will be. To me it’s almost as if we were able to have a chance to invest in The Internet as a whole, now we actually have a chance to invest in it’s next evolution directly. Yes its open source, but so are plenty of coding language/platforms like C#. Why doesn’t some just make C#2? They could, but there is too much infrastructure/support/developers for the original that it remains in charge. Bypassing blockchain technologies is missing out on Web 3.0.

    All that being said, investing purely for price speculation without understanding the underlying technology is very dangerous, and I believe Bitcoin no longer fulfills the original goal. Thanks for the great advice M.M.M! hodl carefully.

  • SingingWhore January 3, 2018, 6:22 am

    Well good morning Mr. Mustache! I had a feeling bitcoin was a silly investment idea and now you’ve explained it well. The only time I’ve considered purchasing bitcoin was during the backpage payment crisis that may have made bitcoin necessary to pay for escort ads. Instead, I mailed in money orders until debit cards were once again functional on the site. Some businesses are starting to accept bitcoin and backpage still does. But like you said, its alot riskier than it is functional.

  • Gerard January 3, 2018, 6:39 am

    Wait, there’s a highly speculative product that requires huge amounts of electricity and is priced far beyond the value that it’s actually shown, and it’s NOT Tesla? :-)

    • Garrett January 4, 2018, 1:27 pm

      At least with a Tesla you can drive it from point A to point B in the physical world.

    • Mr. Money Mustache January 5, 2018, 1:10 pm

      I assume our friend Gerard is talking about Tesla stock (also a bubble valuation based on profits, but at least it’s doing a great thing for the world)

      and not the cars (which are priced far lower than their competition in the very non-mustachian luxury segment which is why they have come to dominate that part of the car market) :-)

      • George Boutin June 27, 2019, 7:11 am

        I think we should not consider electric cars as being a luxury. They are a very important step towards better air quality and oil dependence.

  • Michael J. Wiener January 3, 2018, 6:43 am

    I didn’t realize you used to work in cryptography. I’ve written a few papers you may have seen. I agree with your take. The best way to profit from bitcoin or other cryptocurrencies is to try to break the underlying hash function, not that I’m wasting any time on that myself. I have all the money I will ever need, largely because I don’t spend much. Or at least I don’t spend much compared to my former coworkers in high-tech. By your standards, I’m quite the spendthrift.

  • MostlyHarmless January 3, 2018, 6:44 am

    Hashgraph addresses the major underlying issues with most block chain — there is no cryptocurrency built on it yet, but it seems to offer at least the mathematical basis for a distributed ledger tech that could work as a currency (but in many other situations) — it is fast enough for one thing.
    Baird’s talk Berkeley is very interesting, see https://hashgraph.com/#video
    I think society could benefit from a libertarian views you refer to, but I guess time will tell. It could enable some very interesting societal shifts, but if so it won’t be built on bitcoin, it will be on something else, perhaps hashgraph, perhaps that plus some other building blocks.

  • Ron Cameron January 3, 2018, 7:33 am

    Wow. There’s a shocking amount of “Yay Bitcoin!” sentiment on here. I’m clearly out of touch, or we as a society still haven’t learned our lessons from history.

    It really just comes down to two things:
    1) Bitcoin in a non-productive asset. Investing in -productive- assets is hard enough as it is, let alone non-productive ones. For a blunt opinion about gold that could be applied to any non-productive asset, here’s Warren Buffet: “You could take all the gold that’s ever been mined, and it would fill a cube 68 feet in each direction. For what that’s worth at current gold prices, you could buy all—not some—of the farmland in the U.S. Plus, you could buy 16 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?””

    2) Anything that shoots up 8 bazillion percent in a short period of time is just screaming bubble! That also includes productive assets.

    There has also been some discussion on here about buying another specific non-productive asset because it’s price went up recently. I’m no sucker. I’m waiting . Eventually the toe nail clippings will be released and THAT’S where the real money belongs.

    • ABGecko January 3, 2018, 11:25 pm

      1. If you consider the fact that Bitcoin is a technology that has utility, and there are thousands of people working on it (it is evolving, changing and improving), it is analogous to a productive asset and a share of technology company combined into one.

      2. It can be difficult to differentiate between mass adoption and a bubble. None of us are expecting that Google search bubble to crash, even though it’s just code.

      • Mr. Money Mustache January 5, 2018, 12:52 pm

        Right, so you might be justified in someday buying shares in a profitable company that makes money through the application of blockchain technology. Preferably through its presence in the S&P500 (or at least the Wilshire 5000) group of companies via an index fund.

        Just as most Mustachians own some shares of Google through the same mechanism.

        What we DON’T purchase, is individual Google searches wrapped up in encryption and labeled as “coins”, hoping we can sell them to other people for more money in the future.

        This difference, between an investment and a speculation, is what none of the critics so far have been able to bridge. It doesn’t matter how widespread blockchain becomes – it still doesn’t justify the prices of coins going up as they have. That part is purely driven by uninformed FOMO greed.

    • Justin C January 4, 2018, 8:34 am

      #1 Is largely correct. Gold is a non-productive asset. But then again, so are corn and coffee and oil. The point of them is not that they generate ongoing investment returns. The point is that they are “goods” in and of themselves.

      At some prices, gold and corn and coffee are clearly cheap compared to long term norms. At some prices they are clearly expensive. At others, they are about fairly priced.

      Determining which range you are in isn’t terribly hard. You just look at the long term cross rates of different commodities against each other, and against paper assets like dollars or stocks.

      By such measures, gold is about fairly priced. Which is a nice change of pace in a world where stocks are *insanely overvalued*. On the other hand, things like silver and platinum and oil are remarkably cheap.

      (Incidentally, some foreign stock markets are about fairly valued or even cheap.)

      You are absolutely correct on #2. This is something that MMM seems not to understand: Even productive assets like stocks or real estate can be in ridiculously bublicious overvalued territory.

      Why he doesn’t take his reasoning and apply it more evenly I have no idea. He has a huge blind spot around stock valuations. Some prices are just absurd to pay for stock indexes, from a long-term perspective.

      To say things are a “bit” frothy right now would be an understatement. This is currently the second highest cyclically-adjusted PE ratio for US stocks in recorded history, second only to the giant dotcom bubble:


      Priced in gold, it is the third largest stock bubble in recorded history:


      There are dozens more data points just like these. Yes indeed can productive assets be in a bubble! A bubble as big as Bitcoin? Maybe not. But a bubble nonetheless.

      I’ll keep on buying assets that are cheap or fairly priced and avoiding the ones that aren’t. It doesn’t take much extra effort, and learning how to determine one from the other is generally helpful both in business and in life.

      • Ron Cameron January 4, 2018, 12:05 pm

        For the record regarding #2 – I don’t think the stock market is “in ridiculously bublicious overvalued territory.” The overall market is high by some measures, and spot on by others. The Shiller PE is highly skewed by data from Jan 1, 2009 where the PE measured 70.91 near the BOTTOM of the market, when things were cheapest. You could have looked at that number in a vacuum and thought it was overpriced, but in reality it was super cheap.

        I think MMM understands there are bubbles, but knows you can’t effectively change your investing strategy based on them. Stay the course and you’ll do fine. Get distracted by market noise, and someone will eat your lunch.

        • Justin C January 5, 2018, 6:34 am

          You can certainly adjust your investment strategy in the face of bubbles though. And very effectively.

          This chart is indicative of one such strategy that works again and again, and is very simple to execute:


          Other strategies can work too. Simply put, you just avoid buying the assets that are in bubble territory, and buy ones that are undervalued instead.

          By any reasonable metric, US stocks are overvalued: Price to sales, price to book, cape, regular PE, price compared to gold or other commodities, price compared to international equities, price compared to GDP and so on.

          If it were only CAPE that was showing US stocks to be overvalued you might have a point. But it’s not. It’s all of them.

          That is not “market noise”. It is economic fundamentals. You ignore it at your own peril.

  • Jon January 3, 2018, 7:52 am

    As a speculative trading vehicle this market is so juicy it’s mind blowing. I returned a realized gain of nearly 95% in 5 weeks. You have a ton of coins now that continuously explode. You can easily trade bullish breakouts on volume spikes and sell when support levels don’t hold up. Buy and hold forever? No way. This market and all its shills scream A LOT like the “peak oil” shills of the early 2000’s. It’ll be interesting to see where this all is in 10 years. In the meantime, I’ll keep trying this incredible volatility. What a time to be alive.

  • AndiK January 3, 2018, 8:15 am

    Thank you for an interesting read! What I find curious about Bitcoin is that its proponents like to state how you cannot add more Bitcoins. And maybe you can’t, but just look at the long list of bitcoin forks that have happened (there must have been 30 forks or more, see https://en.wikipedia.org/wiki/List_of_Bitcoin_forks). I do not really understand what the difference is in creating new bitcoin vs. forking a new bitcoin derived currency…

    BTW: I would be thankful if anyone could explain to me how transactions will be validated once all bitcoins have been mined. In my understanding, cryptominers are paid by newly created bitcoins which is why they put up all that effort required for validating new transactions. Why would anyone continue to supply Bitcoin with processor power once all bitcoins have been created?

    • BryanG January 3, 2018, 1:02 pm

      The transaction fee system, already in place, will pay for the future mining efforts once the 21 million BTC are all accounted for.

    • Mike Sandrik January 3, 2018, 1:16 pm

      The idea is that once all Bitcoins are mined, miners would be paid transaction fees in order to continue validating transactions. In fact, miners are paid transaction fees now in order to prioritize a transaction, since the number of transactions are now bogging down the network. It’s hard to say what the fee might end up being to make things worthwhile to maintain the system. Obviously if it’s too high it would create a significant drawback to using Bitcoin over other payment methods.

    • Leon January 4, 2018, 12:13 am

      Consensus rules the forks. IF a fork doesn’t get enough consensus to be deemed a worthwhile development its just left behind and forgotten. There is a reason why only one fork(BCH) from the 30 you quoted is so far ahead of the rest and that’s because of its the only one, arguably, that has advantages to its model over original Bitcoin to be considered a good, co-existing to it, alternative.
      For your secondary question, miners are also paid the transaction fees of the transactions they included in that block they “found” , along with the block’s reward.

  • Daniel Clough January 3, 2018, 8:23 am

    I agree with a fair bit of what you say. I still own cryptocurrency though.

    That said, I still live below my means, save each month, primarily invest in indexes for the long-term etc. 95% of my money is either in indexes / property.

    But, my 5% is in cryptocurrency as a well known high risk bucket. Yes, it is a bubble, but that’s not to say there isn’t money to be made from it if you consciously know what you are doing when you buy it (don’t bet the farm on it, be fine with losing the money if it were to go tomorrow, don’t get caught up in the daily checking etc.).

  • Carl January 3, 2018, 8:29 am

    What is this “stable democracy” of which you speak?

    Rome was once incredibly prosperous and had strong rule of law. Roman legal ideas still have force in the West today. But the Roman Empire went the route of unsustainable government debt, currency debasement, and price controls. Commerce in Western Europe shut down for close to a thousand years, and civil engineering didn’t return to Roman levels until the 1800s.

    Are we immune? This country went the route of debasement starting in the 30s — which can be sustained as long as there are zeroes to add to currency. But I grew up in the 1970s, when Richard Nixon repeated the idiocy of Emperor Diocletian. Shortages were the result. And I have seen gasoline shortages here in North Carolina three times in the past decade due to anti price gouging laws. Republicans are not immune to the financial idiocy that rules in Venezuela today. And Democrats are often worse.

    As for those zeroes, remember Thurston Howell III, and his suitcases of money? Today he would be arrested for money laundering. Despite dramatic inflation during the past century, higher denomination bills are less available than they were in the past. A scenario that was once a paranoid fever dream in a Ron Paul newsletter has already come to pass.

    The U.S. dollar is backed abroad by Saudi Arabian desire to buy our weapons. If they opt to buy Russian, French, or Chinese weapons to guard their buried treasure, Fed notes are going to take a clobbering.

    All this said, I have not “invested” in Bitcoin. While a certain level of paranoia is justified, I’m not convinced that Bitcoin is the solution. It could become real due to network effects, but you are dead on right about the incredible waste of energy.

    • isaac January 3, 2018, 10:19 pm

      Saudi Arabian desire to buy our weapons? Saudi Arabia doesn’t have the military budget to make that much a difference on it’s own….. but if Saudi Arabia stopped taking USD for oil they’d suffer the same fate as Iraq and Libya.

  • Andy January 3, 2018, 8:37 am

    Speculative, yes. Bitcoin being a badly managed token, yes. All other tokens being empty, worthless wastes of energy, no way. There are many dozens of companies and entities in the crypto sphere with real value worthy of being invested in. But, the price is shooting up so we have to be aware of the possible bubble like nature of what’s happening.

    Personally, I put in three weeks wages 1-1/2 years ago. It rose in value 20x. I harvested 12x and put it into traditional index funds. Left 8x in. That 8x has gone up so from my original speculative investment so I have 48x in cryptos. Now that the new year/ tax year has arrived I have harvested another 12x of my original investment. All that is to say, the sphere is going up like crazy. A person can double their money in a month or two. It’s happening.

    If you put a weeks wages in and lose it, a person will not be destroyed. But a person who didn’t put a weeks wages in, who could have harvested out that original investment after a month or two, and could have continued to harvest, because they are conservative, monthly for who knows how long in a sphere that was happening right before their eyes and may go very long, and may even never pop, will have to count themselves as having missed something big that is happening in the whole world.

    The reason it’s going up is because there is real value in the blockchain (I don’t have bitcoin, as it is very poorly managed, but rather hold 25 other, researched, valid company tokens), as MMM said. When the internet sprung up in the 90’s it took a long time to gain mass adoption. And then, only with the affluent in the world because the entry meant owning a computer. This crypto craze has not really seen more than probably 1% of the world population adopt it yet (actually use it). Plus, it’s available to anyone with a cell phone, which pretty much includes everyone on the planet. It has to increase in value a lot to get even 10% adoption, forget everyone on the planet.

    Reading posts on social media like telegram, or twitter of idiots talking about “crypto xxx going to the mooooon!!!!!” is really dumb. Hype is dumb. I approach the cryptos with an interest in seeing the token and it’s purpose being utilized. I have to say it’s speculative because the price is going up fast, but I treat it as a normal investment. I try to use them, help them and make them valuable.

    MMM, I am really glad you wrote the article. I told my girlfriend last night I am disappointed in the nay sayers because they generally don’t have intelligent things to say, generalizing and just poo-pooing on them. You have some good insights. I like to have a cautionary attitude about their speculative nature. However, I am not throwing the baby out with the bathwater. I am investing my time and energy in the space.

    Thanks much!!

    • Mike Sandrik January 3, 2018, 1:21 pm

      The reason it’s going up is because there is real value in the blockchain

      I agree there is value in blockchain technology but I don’t see how this translates to creating value to the coins themselves. There’s tremendous value in the Visa credit card network but having debt on that network or being a creditor on that network doesn’t give you a piece of the value of that network, only owning stock in Visa does.

      In the end, I don’t see how a cryptocurrency should have much more value than a 1:1 relationship with the currency it’s replacing, plus maybe a premium for anonymity. What’s the premium for anonymity? 1.5X? 2X? I could see that. 14,000x doesn’t make any sense to me though.

      • Scott January 17, 2018, 4:14 pm

        The blockchain doesn’t run without the cryptocurrency, that is its value. The two necessarily go together. That doesn’t address the fact that a given token can be replaced and thus go to zero value. However, I’m not sure that will happen with some of the current cryptocurrencies (though it certainly could). The best analogy I heard was that the token (bitcoin) is like a car on a track and you can use it to transport something between two parties, securely, without trust, without intermediary 3rd parties and with immutability. As long as what that particular blockchain does has value, then the actual token does too. From that perspective, I can’t understand how one could argue that there is nothing of value underlying the asset. I’m not saying it’s not overvalued currently, that this isn’t a bubble or that a lot of these will fail and lose people a ton of money. It’s not that easy to wrap your head around what this is, take some time before dismissing it completely, even if you never put your money into it.

  • Sean January 3, 2018, 8:43 am

    Thanks for a great article! I learned long ago that if others are getting rich on something and I know about it it’s too late for me. I’ll continue to save and invest in the boring stuff.

    • isaac January 3, 2018, 10:17 pm

      I’ve been following bitcoin from before it was worth $0.003

  • Smart Risk January 3, 2018, 8:57 am

    Mr. Money Mustache,

    I want to preface my response by saying I’m a big fan and long-time blog reader. I respect your
    advice very much and have used much of it to improve my financial life. In the spirit of “putting my money where
    my mouth is”, my retirement money is invested in the style of MMM (index funds) and none of it is involved with crypto. I agree with a lot of what you say, but the reason I’m posting is because I want to present an alternative viewpoint.

    You are absolutely correct to recommend to your readers not to invest in Bitcoin. If you go into this market with an investment mindset you’re going to lose.

    Big picture: Bitcoin is a stupid investment, but investing rules don’t apply! If investing rules don’t apply, then what does? The rules of the particular game!

    A historical quote: Benjamin Graham himself says that there is intelligent speculation the same
    as there is intelligent investing.

    A thought: If we compare crypto to gambling, we all know the house has the edge but there are still
    people who make a full-time living beating casinos at their own game. How do they do this?

    I have jumped into the crypto speculation “game” understanding the following things:

    – I see cryptocurrency markets as a game, and I’m learning the rules of the game.
    – You don’t get anywhere in life without taking a risk.
    – I’m willing to risk a small amount of money vs regretting 30 years later not taking a chance.
    – Use risk management principles.
    – Have an entry and exit plan.
    – Risk/reward ratio: is this worth the potential reward?
    – Use principles from other areas, like investing to improve my odds (diversification for example).

    This is not index-fund investing. You can’t stick money in the crypto market and leave it, expecting to come out ahead. So yes, I do agree with you that one should not invest in Bitcoin. I partially agree with you that nothing becomes a good investment just because it’s going up in value. However, if you wait for a rational reason, you’ll miss the opportunity.

    There is money to be made if you understand the rules of the game. Don’t treat crypto as an investment, learn the rules of the game, make and follow a plan.

    • Mr. Money Mustache January 3, 2018, 9:40 am

      Hey SM,

      Yours is a great example of the “Informed Casual Speculation” approach that many people are using to justify a cryptocurrency gamble.

      The reason I object to even this approach is that it is a form of Financial Vandalism, or at least Financial Littering.

      It only takes a trend of casual “just in case” bets from a tiny percentage of the world’s population to start a pretty spectacular bubble, in a limited commodity like Bitcoin.

      Once these bubbles form, they become self-reinforcing because they gather attention and trigger the greed and Fear of Missing out instincts – from participants ranging from casual to “this-will-change-the-world” evangelists.

      It becomes a HUGE misallocation of capital, and directs human energy and money into something that is a complete waste.

      In the Bitcoin case, the high speculative price raises the value of mining, which raises the competition, which causes the algorithm to automatically raise the difficulty of the ledger hash puzzles.


      So, speculation, whether you win or lose, is causing harm to other people. If you’re already privileged enough to be able to earn a living through your own achievements, I argue it is not strong behavior to try to profit from this type of speculation, which transfers money from the lottery losers to the lottery winners.

      (Note: I’m also highly opposed to speculating on price moves in oil, gold, or other things. Investing – allocating capital to things that improve the world on average – is a better path. All our actions should be taken with the bigger picture in mind. It sounds boring and altruistic, but it also benefits you directly with a happier, richer life.)

      • Jon January 3, 2018, 10:26 am

        Flaw in this logic is that I’m almost certain you’ve made capital gains off real estate in the past. Do you refuse to accept a higher selling price than your buying price? The house is still just a house, but you’d be insane to sell it at the exact same price if the perceived value is way higher than when purchased. If I paid $5000 for a ferrari in the 60s and sold it for $3million in 2018, I wouldn’t feel like I was doing the world a disservice. People will pay $100million+ for a horrific Pollock splatter painting my toddler nephew could make. I wouldn’t fault the seller, if the buyer thinks $100mil is fair, the market has made an agreement. Basically what I’m saying is there’s no reason to get mad or discourage others from buying & selling stuff for tremendous gains. This has been a historic time and I’ve been happy to participate.

      • Anton January 3, 2018, 11:16 am

        MMM I get what you’re saying about wasting electricity. An electrical team is working outside my window right now to cut my household over to 100% solar power. I understand and adequately value the cost of energy. However the perspective of “waste” assumes that cryptocurrencies are ultimately going to fail. Because if they don’t fail, then electricity isn’t being wasted, it’s being put to good use to better humanity by providing a better currency. Agreed? If you do agree, you are also speculating, sir. Or do you think it’s impossible that a computer network based currency can offer an improvement to the current mainstream fiat currencies?

      • Chris Muller January 3, 2018, 12:46 pm

        I respect conscious consumption, thank you for that. As an environmentalist myself, I also became concerned about the electricity consumed by bitcoin miners when I saw a news story about it. However, I’ve also noticed the incipent unsavory hype (and, doom!) lavished on
        cryptocurrency by the dramatic MSM. It’s a huge turn-off. However, looking past that, consider that it’s the Proof-Of-Work algorithm itself which enables humans to do something they’ve never been able to do before in history: *agree on exact the contents of a digital

        The number of use-cases that arise from this capability is astounding. Trans-formative and possibly revolutionary. Things that simply were not possible before. Bitcoin is just the first example, and its capability has touched many lives all around the world (esp in the
        third world), and in many different ways. This drove up demand and the price which attracted more miners into the space. So it’s the human-condition (economic inequality) which has determined how much electricity we put into it, not the cryptocurrency technology itself.

        It _has_ incentivized the development and use of the _most efficient_ electricity production possible. Until now, merely our air and water quality hasn’t been enough of an incentive to improve efficiency. Now there is a direct economic coupling, inefficient miners can no longer
        make a profit. I hope this will help accelerate a very necessary worldwide transformation of energy production.

        Electricity demand and production will go up in the future to accomodate all manner of things, whether its charging up our electric cars or using cryptocurrency, we all get to decide whether its a waste.

      • Justin C January 4, 2018, 6:19 am

        Mr Mustache. Why are you not similarly against speculating in stocks?

        US stocks are currently priced their second highest in history based on long term price to earnings. To assume they will do anything other than lose you purchasing power over the next ten years (and lock you in for lamentably low returns over the next thirty) is wildly speculative.

        I imagine you’d say that buying a house with little to no cash flow is speculative. Why would it be any different here?

        (Don’t say “diversification”. Buying 30 houses with little or no cash flow is also wildly speculative.)

        • Mr. Frugal Toque January 4, 2018, 9:14 am

          Except, of course, that he was explicitly against speculating in stocks in the article.
          “…1999 dotcoms without any hope of a product plan…” are specifically mentioned as speculative.
          The overall stock market, meanwhile, is a reliable investment vehicle when taken as a whole, which is why we advise the use of index funds.
          For the last several months, however, a lot of people have been attempting to call the top. I’m up at least 8% since the first calls.

          • Justin C January 4, 2018, 12:06 pm

            This is simply incorrect though. The bubble now is not in a few stocks with crazy valuations.

            The bubble is in the entire US stock index, which has almost uniformly crazy valuations.

            (Though admittedly, some are even crazier than others.)

            US stocks as a whole are so incredibly overvalued that there are next to no “pockets of value” at this time.

            Not to mention that now, just as in 1999, you’d have to abandon MMM’s passive indexing strategy and make individual stock picks to try to find stocks that weren’t insanely overvalued and only buy those instead.

            Just buying the index in 1999 would have guaranteed that you would go down with the ship and have suffered abysmal 10- and 30-year returns.

            Had you bought passive US stock indexes in 1999, you’d only have just recently gotten back to even after factoring in CPI “inflation”.

            Priced in gold, you’d still be down more than 60% to this day:


            • Mr. Frugal Toque January 4, 2018, 12:48 pm

              Your evaluation of evaluations *might* be true.
              But people were making the same arguments at the beginning of Sept 2017, saying that market valuations were crazy, we’ve hit the top and it’s time to get out of the market before the big correction.
              I made something like 8% over the following month or two.
              I’m not convinced this round of doomagoguery is any more accurate.

            • Justin C January 5, 2018, 6:29 am

              Right. And many people noticed that we were in a housing bubble in 2003 or 2004 and in a stock market bubble in 1996 or 1997.

              Just because the bubble can keep on going a while longer doesn’t mean it’s not a bubble.

              I’m sure you’d agree with that around Bitcoin. Why the emotional block around stocks?

            • Mr. Frugal Toque January 5, 2018, 7:05 am

              “Why the emotional block around stocks?”
              Because I invested right through the dot com bubble, ignoring all the doom and gloom.
              Next, I invested right through the U.S. housing bubble, ignoring all that doom and gloom.
              And here I stand, feet firmly planted with a sizable ‘stache, despite all that.
              If I’d invested my money in tulip bulbs, Bre-X, bid.com or Bitcoin, I don’t think it would be quite the same.

      • Scott January 17, 2018, 4:27 pm

        I wonder if not for the electricity aspect if you wouldn’t be more open minded about this MMM?

        The electricity is a problem for sure, but may not ultimately be necessary for a blockchain to function. If we can get around that, then would you admit there is potential good that the development of this new layer to our digital universe doesn’t have tremendous potential to be a net good for humanity? Price speculation and wasted electricity are major issues, but this could get worked out in the long run and I think we are just scratching the surface of what this could accomplish. I think that is the point at which people get kind of obsessed with the idea, in realizing all the potential ways this could change the world. A major problem with popularizing this seems to be the mistaken idea that it is all only about replacing currency or gold… It’s not, that’s just the most obvious thing that COULD happen.

  • SMM January 3, 2018, 9:11 am

    I’m investing a very small portion of it, primarily to learn more about it. If it makes money, good, if not I won’t lose sleep over it. Just like with everything else evolving (e.g., smart-cars, smart-homes, smart-phones, robotics), so should currency and the way we do commerce. I can’t fully say bitcoin is the answer, but maybe it is a step in the right direction.

  • Michael January 3, 2018, 9:31 am

    Can we at least stop the nonsense that this is the “biggest bubble in history”, because the entire value of the crypto market is still less than Apple itself, it is a blip on the radar in the wider Forex, Comex, Derivatives and other financial markets.

    The reality is any new asset class that started from a value of $0 is going to look like a bubble at $1 just as much as it at $10,000, it is impossible for it to NOT look like a parabolic chart when starting from absolutely nothing.

    Trust me this is not bubble territory, the amount of people actually in the crypto market is still very small (ask yourself how many of your friends and family are in it). When a baby boomer can actually get on the phone with his broker and order $50k worth of Bitcoin and not deal with any of the business of creating a wallet and verifying his identity with an exchange himself personally, then we can talk about it being a bubble.

  • Grant January 3, 2018, 9:36 am

    I’ve got to say, I’m repeatedly disappointed in the closed mindedness of people who consider themselves to be financial investors and ‘investors’, which by definition should hold with it a level of current trends, politics and social psychology.

    People that say there is nothing behind Bitcoin are ignorant and uninformed to the space itself of cryptocurrencies and the blockchain and none of the facetious commentary in this post about “toe nail clippings” or other snarky jibes can take away the progress that is being made in this space, so much in fact that Disney themselves (along with other big companies & ex members of big tech companies) have been incubating blockchain technology into new projects (www.dragonchain.com, go check it out) to try and leverage the blockchain in valuable, functional ways.

    In many cases, it solves very real problems, specifically with human error, greed, corruption and complacency. This can be said for health records, for financials, for internet of things unification, for storage of online assets, for the distributed web and many other fields and all of these can now be trustlessly interconnected thanks to the blockchain.

    What none of you seem to understand is that Bitcoin is currently the entry point into this huge club, it is the door token to the ecosystem of all of these new technologies that are being intertwined directly with finance, to act as a singular point of entry for anything you could possibly want in a safe and ‘ruled’ way. The blockchain is here because time and time again the PEOPLE that you have so wonderful detailed as ‘trustworthy’ have proved themselves exactly the opposite. If people were trustworthy, why is there vast financial inequality, where the rich can choose whether they pay tax, where the banks completely own the general public whilst profiteering off of everyday savings simply because they have been historically endorsed to do so, where people are allowed to gamble the livelihood of others away out of greed and then get bonuses for doing so and collapsing the entire economy.

    The cryptocurrency movement is a revolution, make no mistake, in a very similar way to how the industrial revolution freed up independent thinkers and workers from the grip of the Church. You say it has no value and that we should just trust the governments and the bankers and the exact people that have been screwing us over time and time again, but that’s EXACTLY why Bitcoin was created. The governments tell us their money has value at a local level, but at a WORLDWIDE level, people are telling the governments that Bitcoin and cryptocurrency has value. That’s a much stronger, interconnected and flexible system than what we currently have financially. I can move to another country and move money, very quickly and as for getting your money out, what year do you think we are in? Billions and Billions dollars of trade is moving in and out of crypto currency everyday, you act like there are no buyers out there for this stuff….. there are buyers everywhere and there are companies building on blockchain now in increasing numbers.

    Cryptocurrencies are often ‘stocks’, banks, ledgers and an incorruptible wealth management system all at the same time and yes, in many of these coins, you CAN get dividends. Look at Proof of Stake, look at Delegates, look at Masternodes. Please educate yourself before writing. As for the comments about tulips and the dot com, it’s just hot air, the same sound bites and regurgitated nonsense that is just spouted by those with zero knowledge about any of this. The dot com bubble was regional, 5 trillion dollars and heavily built upon favorable capital gains taxation on non dividend paying companies (i.e start ups) between 1997-2003… actual legislative grounds underpinning reasons why it went into ‘mania’ stage and then burst once the tax rates were switched back.

    And tulips? Come on, don’t be that guy. If you actually read into the history, rather than regurgitating generalized statements, you’ll see the Tulip bubble has become a ‘fable’, a romanticized second hand account of mania that wasn’t even have been a bubble at all (https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/), but a reaction to incredible low supply and then over supply due to bad harvest years and massively manipulated by Calvinism.

    All of these things are lazy journalism, people that simply don’t like Bitcoin, or crypto because it’s different, because they have been sold a lie that the only people using it are drug dealers and people trying to hide their money (it’s actually a very bad way to do so) by the exact people that don’t want any kind of wealth redistribution.

    Does this mean Bitcoin will never ‘burst’? No, but you need to define what you mean by burst. It’s not going to have a cataclysmic end where everyone just loses everything and no token has any value anymore. I’m sorry, but that just simply isn’t happening. Bitcoin dipped 33% two weeks ago and has dipped 30% at the end of every quarter, but it’s rising simply through worldwide adoption. It’s been totally predictable by just measuring adoption levels in the past year (if you don’t believe this, go and find Rev Nissan’s predictions of where the price would be 0.1-0.5% adoption back in the summer) and the amount of money floating around in crypto is peanuts compared to other financial markets in the world.

    I’ve been in crypto for years, I’ve seen Bitcoin burst, Ripple burst and plenty of coins crash and burn in the course of the last 3 years. It happens all the time, things over pump and then they correct and sometimes they completely lose all of their profits in very short periods. Ripple lost $10bn dollars in a couple of weeks earlier this year and not a single person batted an eyelid. The money lost during that period was akin to the Mt Gox fiasco, yet nobody ever mentions it and all we hear is ‘Mt Gox’ this, ‘Mt Gox’ that. 2 weeks ago Bitcoin lost half it’s value and dropped from $20k to $10k in a couple of days. Crypto assets are volatile, they are risky and they are frequently expanding and contracting, but thing they will never be is devalued at the flick of a switch, because there are reasons underpinning why people are buying and investing. Sure, there are a LOT of bitcoin fanboi’s too & dumb money only in the space to make a quick buck, but that exists everywhere and crypto is nowhere near to over-saturated at a global level. There are waves and waves of individuals and institutions waiting to enter, even banks themselves like JPMorgan and Morgan Stanley sitting there waiting to enter and strengthen their positions when prices drop and guess who was buying the most into crypto derivative assets the day China tanked the market in September? That’s right, banks.

    It’s taken 9 years for crypto to achieve a decent consensus, to show that it works, to build infrastructure for it. It’s had years of being in the wasteland, of suffering the fall out from centralized hacks and dishonest exchanges and to this date those places are the most dangerous parts of crypto, but even those are being phased out now with decentralized exchanges this year. Back in 2013 90% of a single coin was being traded by card traders on a website some kid made in his basement and even back then it was worth a couple hundred dollars when it was at a reasonable price.

    For all you people waiting patiently for that ‘I told you so’ moment as the space evaporates into nothing and people are all crying as their houses burst into flames and their family disowns them I have both good and bad news for you. The bad news is, the market isn’t going anywhere, get used to it. There are companies building products and applications with road-maps that lead into the early 2020’s with partnerships, invested money etc. The good news is, you don’t need to wait for a mythical apocalypse to enjoy the collapse of stupid traders, it’s happening all the time already.

    https://twitter.com/bitmexrekt?lang=en – Go bask in the glory of margin traders losing thousands, or just browse twitter/facebook groups whenever there is a Bitcoin/Altcoin crash. There’s a lot of people out there already making money, but for smart people, who are good at seeing 6 months, to a year ahead of the game, you can literally change your life right now as a new economy is built before your eyes.

    There are hundreds of trillions of dollars in the world and most of it is in cold banking and owned by a tiny proportion of people and here we are complaining that 0.5% of the population have found a way to get a slightly fairer hand in the game in a market that is a drop in the ocean compared to how much money exists worldwide.

    If you think it’s all dumb and you sneer at it because you think you know better and are above the people trying to use this as a catalyst to change their situations, than you are deeper into the rabbit hole than I think you realize.

    • SR January 5, 2018, 1:57 pm


  • Mike January 3, 2018, 9:41 am

    So this might be a dumb question, but what difference does it make what bitcoin is values at? If it ultimately lands at 300K or ultimately lands at 1K it’s basically the same (IF it stabilizes). I guess the argument is that it won’t stabilize at a high price because people will be constantly taking withdrawals?

    Like MMM stated unless the price stabilizes and people can set goods and services based on that price it can’t be a real currency. Let’s say 1 bitcoin is 15K. I happen to be selling widgets at 15K each and decide I want to make them available to buy for 1 bitcoin. If the BTC market moves and BTC is only with 10K, I end up getting ripped off. If the market goes up, no one wants to buy a 15K product for a BTC that is “worth” 20K. It’s useless as a currency at this point.

    • Scott January 17, 2018, 4:43 pm

      At this point you are correct. This whole replacing currency thing is a bit of a red herring though I think. Certainly things would have to change substantially for it to be used the way you describe. On the other hand it’s worth remembering that bitcoin is already superior for some types of financial transactions. For example, if you had to move a large amount of money to a foreign country like Argentina or something. My understanding is that in order to do this now it’s got to move through several intermediaries who all take a cut and it can take weeks to do. Also, if you needed to convert the money into that country’s currency there could be similar problems if the currency is highly unstable (e.g. convert 100K into pesos and then the peso suddenly drops in value). Also whoever converts it takes a cut. Bitcoin is currently far superior for this hypothetical transaction.

  • Diogo Augusto Pereira January 3, 2018, 9:53 am

    I really appreciate your work and agree with most part of this article. But it seems you’re underestimating or ignoring the cryptocurrencies’ potential. Of course, there is a lot of speculation and an incredible number of cryptocurrencies being released nowadays. Most of them will fail, but eventually some of them may be adopted. Bitcoin is not a good example, it’s technologically obsolete and it’s impractical due to its high fees and slowness, but there are other good projects in the market.

    However, there is one point that it seems you’re contradicting yourself, when you say “putting the wisest and most respected people in a position of Adult Supervision is a useful tactic” do you really believe this? Do you really think it’s smart to let governments to control the money? Do they take the best decisions?

    I don’t think so. And you also write a lot of articles about money being wasted. And this is true not only for poor countries, where governments eventually mess up all the economy like Venezuela and Brazil (my country). This is also true for big economies. For example, if US decides to go to war against NK, where do you think they’ll get the money from? Probably raising the debt printing more money. So, if can prevent governments from doing things like this, it’ll be awesome for the whole country (and world). The less power they have, better for everybody.

  • StevenJ January 3, 2018, 10:00 am

    MMM, do you really have such a high level of unwavering faith and trust in the Federal Reserve and the central banks?

    I know it’s easy to question the often loony-sounding hardcore extremists who rail against those institutions 24/7 and blame them for everything, but..

    ..is complete faith and trust, the other extreme end of the spectrum, really wise? Wouldn’t some degree of second guessing and questioning be a good idea?

    A great deal of global power is concentrated at those levels of ‘Adult Supervision’, and with little transparency to the operations. Do you feel this power is incorruptible and always has and always will be benevolent? And that we should relax and not give it another thought?

  • Don January 3, 2018, 10:05 am

    I just retired thanks to being in crypto for five years now. For the rest of my days on this planet, those who work for fiat are essentially my slaves. I do nothing and get whatever I want. Thank you, slaves…. Truly, Your Master.

  • Michael Bacarella January 3, 2018, 10:06 am

    Thank you for tackling this! I’ve been making a lower quality, hastily written, crankier version of this argument in a number of different chat conversations with friends for weeks. Now I can link them directly here.

    I’d also like to add something!

    Even if you think Bitcoin will become *the* way people transact in the future, that *still* doesn’t mean you need to load up on them today for fear of missing out.

    If Mr. Monopoly Fatcat buys up most of the Bitcoins and tries to hold them hostage for one million dollars ransom per Bitcoin, the remaining few Bitcoins can be infinitely subdivided to provide liquidity. There’s nothing to gain by buying and holding, other than to try to place the speculative idiot game which has, as has been established, is for idiots.

    • Mike January 3, 2018, 10:25 am

      244 Wallets control 95% of the bitcoin out there.

  • Stavros January 3, 2018, 12:00 pm

    I just recently finished this excellent book by a journalist who shreds the history and tech behind Bitcoin and cryptocurrency. EXCELLENT and comedic read on all of the idiots and criminals behind this mess. It’s very sobering to have an intellectual and objective look at this mania.

    Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts by David Gerard

  • Daniel January 3, 2018, 12:13 pm

    I am a big fan of Mr. Mustache, but this article does not go far enough. It’s not enough to rebut bitcoin – there are hundreds of currencies being traded many of which do not have the weaknesses you’ve suggested are fatal to bitcoin. In addition, the value proposition behind bitcoin is not as simple as what is described above. I would challenge Mr. Mustache to take a shot at learning about other currencies and even trading them some (just a small amount if he is skeptical), similar to the Betterment experiment from earlier this year. I think that will lead to a more informed post that addresses the actual question, which is about cryptocurrency more generally, not just bitcoin.

  • Marco January 3, 2018, 12:15 pm

    I think it’s crazy not to have 1% of your portfolio in crypto. I’m not going to be out on the streets when my 1%, which is now 6%, has gone to 0%. Only put in what your ok with losing. I agree with MMM it’s all speculation, which makes it high risk and high reward.

  • Rebecca Pedersen January 3, 2018, 12:21 pm

    I wish I had read this before my Christmas Eve dinner! I heard my cousin talking checking my the rates of Bitcoin before he slipped out the door. But I didn’t have anything to add.

    I am sending this article along to him! Thank you!

    I enjoy trying to convert my generation of cousins in to Mustachians so we can all retire young together.

  • CryptoBull January 3, 2018, 12:24 pm

    Say what you want but when you have bought cryptocurrency and sold for huge profits, it was a good deal. There have been gains of 450x (thats 45,000%) on Ripple within the last year. People have made real money on this.

    No one should fill their portfolio with cryptocurrency. But putting a few percent of your portfolio into cryptocurrency is a calculated risk

  • Mattheus January 3, 2018, 12:32 pm

    Thanks for this article!

    You have a wide audience and people in the personal finance/early retirement field look up to you for your ideas (Betterment, real estate, etc.) so I’m sure your voice will carry some weight on whether people dip their toes into bitcoin or cryptocurrency speculation. As a crypto speculator, I appreciate you discouraging people and keeping people out of the field so I can enjoy the current prices longer. I can’t wait for Bitcoin to crash back to 5k so I can buy more. :)

  • Chris Muller January 3, 2018, 12:36 pm

    If a “company” could just come along and provide people all over the world the ability to transact across political borders with no currency-conversion overhead, why haven’t they done it? Bitcoin is so much more than the software, it’s the decentralized network and market penetration, as well. No “company” is going to simply throw their money into the air and think they can replicate that decentralized infrastructure and decentralized trust is fooling themself. It’s past the point-of-no-return for becoming baked-in to the world economy. People want it. Even if Lightning _wasn’t_ just around the corner, any company’s “better mousetrap” at this point will be too little, too late, anyway.

    One problem I see with newcomer’s is they only think about bitcoin in the context and constraints of legacy financial systems. When they can’t peg Bitcoin as “gold”, nor a “currency” in the traditional definitions, they can’t cope with the fact that they’re staring at something new and actually different. In fact, it’s the hybridity of bitcoin that defies legacy categorization which boosts its intrinsic value — e.g., being “like” gold, but without its downsides, or being “like” currency, but without the deflationary property. Together, these combinations of properties makes bitcoin valuable to me.

    I’m not the only one.

  • George Georgopoulos January 3, 2018, 12:41 pm

    Well, while the whole cryptocurrency market may in fact crumble someday, my $2000 investment in it has given me $2000 cashed out profit, a current income from mining of $700 a month, and I still have $2000 of cryptocurrency.

    Thank you bitcoin insanity.

  • MH January 3, 2018, 12:44 pm

    Bitcoin is a lottery. Some people are going to cash out big. Most people are going to fall on their face.

    I suppose gambling can be fun. Never bet more than you can lose.

  • Derin White January 3, 2018, 12:47 pm

    MMM of old! It’s been a while since I’ve read one of your articles with a face-punch induced grin on my face. I don’t care at all about bitcoin, it was simply the spirit of badassity (that drew me to mustacianism in the first place) that made this article a joy to read!

  • JP January 3, 2018, 12:49 pm

    I tossed $2,500 into “alt-currencies” due to a strong fear of missing out. It’s play money that I am OK losing. I am not impressed that it is worth 8 times that a month later, because it is driven by only hope and speculation. I think any time you go too far pro or con, you end up missing potential opportunities or throwing too much money away. Find balance and have some fun if your budget allows it. My net worth is 1.7 million at 32 years old because I have taken chances on things that experts thought were crazy at the time. Dogma ain’t the answer.

    • Kyle S January 3, 2018, 1:00 pm


      I share the same attitude. I do see some potential value in “alt-currencies” and threw some money in because “Hey, maybe it’ll actually become a viable technology”, but you’ve got to be ok losing it all.

  • Josef Stalin January 3, 2018, 12:53 pm

    This is my favourite line: “It also helps to have wise, centralized humans (the Federal Reserve system and other central banks) guiding the system.”

    Pravda couldn’t write a better pile of horse dung. Lol

  • BryanG January 3, 2018, 12:53 pm

    As a Mustachian, there is a very safe way to take advantage of any benefit cryptocurrencies and related tech (e.g. Blockchain) might happen to bestow upon humanity: Invest broadly in publicly traded stocks! There are few things better suited to monetize new technologies and make work of any newly discovered financial efficiencies than the sum total of the US economy – most notably in the massive financial sector. Holding a diversified stock portfolio across a range of industries guarantees that you will benefit from any earth-shifting changes to the financial system or tech industry, and you’ll do so in a relatively stable, or at least near-certain-to-always-go-up-in-the-long-run, manner.

  • Mike Sandrik January 3, 2018, 12:55 pm

    Mr. Money Mustache talked about one of the big reasons having a fixed currency limit is a very bad thing, which is the inability to control the money supply in booms and busts. Having the ability to do this is a very good thing. The people espousing the horrors of hyperinflation are often too narrowly focused on the worst case scenario examples, such as Germany post World War 1 or Zimbabwe.

    One additional reason a foxed currency limit is not a good thing is that long term, you need your currency growing at the rate of population growth. If you don’t, you get deflation. Imagine an island with 10 people and a $1 million money supply,. You pay each person $100,000. Now one extra person moves to the island. In order to pay him you have to reduce the amount you pay the others, creating wage deflation (or you have to lever up, which can’t happen indefinitely). In the US, there were half as many people in 1950 as there are now.

  • Marco January 3, 2018, 12:56 pm

    Regular people will never use electricity.
    Regular people will never use cars.
    Regular people will never use computers.
    Regular people will never use cell phones.
    Regular people will never use the internet.
    Regular people will never use bitcoin.

  • Kyle S January 3, 2018, 12:57 pm

    I’m definitely on the Bitcoin is a completely overvalued, non-returning asset. If you buy a Bitcoin, it does not produce any value to society or a return. It’s simple understanding of value and scarcity, and what a true asset is.

    However, I do believe that blockchain will revolutionize society in some ways. The value blockchain provides is that it allows peer-to-peer transactions, cutting out the middleman in many of common industries (banking, money transfer, energy transfer, etc.). These middlemen collect fees to process transactions, and these fees could be eliminated by blockchain technology, providing a monetary value to society.

    I’ve placed a small bet on a few blockchain technologies whose goal is to create a “smart economy” that allows large transactions to be done via blockchain, saving users money by eliminating middleman fees. There are a few cryptocurrencies whose value is tied to the userbase and transaction volumes of these “smart economies”, but it is still a speculation as it is in the early stages.

    If you don’t understand the technology, DO NOT get involved.

  • CD January 3, 2018, 1:02 pm

    “When even shoeshine boys are giving you stock tips, it’s time to sell”

  • Steven January 3, 2018, 1:16 pm

    The only point I really agree with in this article is that crypto’s may be over priced. But that doesn’t make them wrong. I get that the hype can make people nervous, and for good reason, but it doesn’t mean the technology isn’t going to transform and help evolve countless industries. It’s curious that you blame people for waisting their time/money/energy with this new technology but yet you write an entire article about how it has no value vs looking at really how it can and will help the world in the long term. Think internet 1990’s or a cancer pill, to use your own example. An article in the early days of these about how these things were “over priced” seems useless vs how these technologies can help to drive innovation or support developing countries. Especially coming from someone living outside the US.

  • Hassledloafer January 3, 2018, 1:25 pm

    Bitcoin screams Bullshit Mountain. Pick your metaphor. Mine: All sizzle, no steak.

  • Brian January 3, 2018, 1:29 pm

    pre-emptive note: I do have money in cryptos, very little in actual Bitcoin.

    I think it’s important to to separate the technology from the irrational increase in price. I’ve bought into cryptos that have a development team and an actual roadmap for a product/service. Hard pass on the “coin only” offerings.

    Are cryptos stupid (important to separate Bitcoin from the rest as it gets used as a catch-all)? I don’t think so. My personal view is they are going to be immensely important for machine-to-machine and micro-transactions. They’ll have their role in human interactions, but I don’t think that’s where the power truly lies.

    Is the increase in price or calling these things “investments” stupid? Hell yes! I don’t know how anyone can look at a chart of the price history and see anything other than irrational B.S.

    To the credit of the crypto community, for every hype man there are 10 people saying don’t buy what you don’t understand.

    I never put money into a crypto that I wasn’t prepared to lose. I would never pull money out of a long-term investment or redirect my regular IRA contribution to cryptos.

    To me it was a fun experiment to try out and it shouldn’t be anything more than that for anyone else.

    I think everyone got caught up in the “if I only bought XX months ago I would be a millionaire.” FOMO and it’s gotten blown out of proportion.

    One thing I would like to see is more oversight—some cryptos are fake, there’s a hefty amount of market manipulation happening, and more. This is a barrier to making cryptos legit.

    I’m not surprised to see this rant-y response from MMM. It’s against the entire ethos here.

  • Greg hunter January 3, 2018, 1:34 pm

    Long time MMM subscriber/fan here, but this is the most uninformed article I’ve ever read here.

    Honestly you just come across as a bitter nocoiner and should have really got some external input from your contacts before putting this out.

  • Stephen January 3, 2018, 1:42 pm

    MMM are you surprised that so many of your readers seem to have invested?

    I’m not, and I’m one of those investors (or “investors” if you will). I bought XRP two months ago with approximately 0.2% of my net worth. I tend to think it solves some of the things you dislike about Bitcoin but I digress.

    The reason I’m not surprised is that it’s almost like the lottery but for well off “sophisticated” people. The people who read this blog like to think of themselves as advanced financially and kind of above it all, myself included. Really we’re not above the rush people get when they play a big lottery, it just somehow feels better to do it when we’re “investing” in a tech based industry that has a dream of a real world application. Basically, some people play scratchers, some play the slots and others play the bitcoin/Ripple craze, but most all of us play something.

    I’m probably within 2-3 years of FI and I think I’d have put money into this even if I was already there. I’d like to think there’d be a day when I look and say I don’t care about potential gains because I have all the money I need, but in reality while I’m good at controlling my spending I feel I’ll always look at little chances to make more. Again, like the lottery jackpot winner that still buys a weekly ticket.

    tl;dr – XRP is going to the Moon

    • JP January 3, 2018, 3:34 pm

      Stephen, I bought 2500 Ripple a few months ago as well and I plan to make a comical amount of money. There are 1.4 Million backlog registrations on Bitstamp and Bittrex is no longer taking registrations. You don’t have to be a genius to know what this means for Ripple. To MMMs point, Bitcoin at it’s current price may be stupid, but as people search for the next bitcoin, they may look to alt currencies, like Ripple, that has real world use and is faster than BTC, LTC and ETH. I dropped $2,500 on 8 little guys and that will be my total “investment.”

      • isaac January 3, 2018, 10:05 pm

        Ripple the network isn’t about Ripple the crytpocurrency (XRP). Ripple is a generic ledger and XRP is used to pay transaction fees that are supposed to serve as spam control (make a bunch of transactions in a short period of time and the fee increases), based on what I read a few years ago the value of XRP should be around $0.001 and $1.00, less than that it doesn’t sufficiently deter spamming the network and more than that and it starts to inhibit legit transactions………

        • Stephen January 4, 2018, 7:00 am

          ” based on what I read a few years ago the value of XRP should be around $0.001 and $1.00, less than that it doesn’t sufficiently deter spamming the network and more than that and it starts to inhibit legit transactions”

          They’ve addressed this but long story short this isn’t the case. You can use fractional parts of XRP just like Bitcoin, litecoin, etc. If the price of XRP was $1,000,000 and a bank needed to move $5MM they’d just use 5 XRP instead of 5MM if it was priced at a dollar.

          This is probably the wrong place for a debate on the value (or lack thereof) of XRP but there’s some misinformation here.

          • isaac January 6, 2018, 12:21 am

            ….. xrp may have similarities to btc or ltc but Ripple the Network is pretty much completely alien to the Bitcoin and Litecoin networks. They are all crypographically enforced shared ledgers, beyond that they have very little in common.

          • isaac January 7, 2018, 8:00 pm

            and it took me awhile to look up “MM”, for fucks sake “MM” in roman numerials is M+M, not M*M, ergo it’s 2000 and not 1,000,000. If you’re going to use a fucking suffix use fucking metric, so $1,000 is $1k; $1,000,000 is $1M; $1,000,000,000 $1G, etc…… what the fuck is this, the middle ages.

            No, you have absolutely no fucking clue what you’re talking about. Like, zero fucking clue.

            If you XRP trades for $1 and you want to move USD$5M via Ripple you don’t trade USD$5M for XRP5M and then transfer XRP5M so that the recipient can then exchange that for USD$5M on their end, you just transfer USD$5M via the Ripple Exchange Protocol (or whatever the fuck they call it) because Ripple supports arbitrary units of account including USD. XRP is used to pay transaction fees, and the amount of XRP that a transaction costs is independent of XRPs exchange rate with USD or any other currency, ergo if XRP costs more than transactions cost more. It’s like, for some reason BTC is worth more than BCC right now even though you’d have to be legally retarded to think that unforked BTC is going anywhere other than the trash; but hey no one ever went broke underestimating the intelligence of Americans.

            • Stephen January 8, 2018, 8:06 am

              “and it took me awhile to look up “MM”, for fucks sake “MM” in roman numerials is M+M, not M*M, ergo it’s 2000 and not 1,000,000. If you’re going to use a fucking suffix use fucking metric, so $1,000 is $1k; $1,000,000 is $1M; $1,000,000,000 $1G, etc…… what the fuck is this, the middle ages.”

              Followed by this:

              “No, you have absolutely no fucking clue what you’re talking about. Like, zero fucking clue.”

              was pretty funny. MM is a pretty standard abbreviation for million. It can also be written as M, but then so can thousand. I typically use MM as there (should be) no confusion over what number I’m talking about.

              Btw- if it did in fact take awhile, I’d recommend using “Google” next time. It’s a pretty neat website that’s built into my browser’s address bar. By typing in “MM Abbreviation” you’d have had your answer in under 3 seconds, depending on typing speed.

              You seem angrier than it’s worth being over something like this. My intent wasn’t to get into an argument over XRP when I commented and I can’t really see this going anywhere.

      • isaac January 3, 2018, 10:07 pm

        the Ripple network isn’t about trading XRP, anything can be used as a unit of account on the Ripple ledger; USD, BTC, frequent flier miles, cell phone minutes, stocks, bonds whatever. That is what Ripple is about……

  • Annie January 3, 2018, 1:46 pm

    Thank you for writing about Bitcoin! After sharing this post on my Facebook feed, a lot of my die-hard Bitcoin loving friends are now reconsidering because they know of you and respect your opinions!

  • David January 3, 2018, 2:01 pm

    I’m disappointed that you have treated Bitcoin solely as an asset and not as a telecommunications network. It’s the first of its kind–a way to transfer value in a p2p fashion without trusting a central authority. Bitcoin is the token representing that value. The network’s value is based both on the size of the network (see Metcalf’s law) and the trust that people have in the network. Bitcoin’s long development, the size of its community, its transparency, and the algorithmically-defined issuance of bitcoin gives the network value. Dollars are backed by the full faith and credit of the US government–trust. This has been the case for only the last 45 years, before which dollars were exchangeable for a scarce resource. It was the Vietnam War that brought our country near bankruptcy and the tie between gold and the dollar was severed in ’71. Currencies’ values are based on trust, as illustrated by the Venezuelan bolivar losing the vast majority of its value because the creditworthiness of the country has declined significantly, like you mentioned. For the time being, people trust national currencies, but past performance does not necessarily reflect future performance.

    Bitcoin works in an entirely transparent way and is operated democratically. Neither of these traits apply to currencies that are issued by central banks. People trust the protocol. You emphasized trust as an important aspect of a successful currency.

    The recent Equifax hack highlights the need for systems that secure sensitive information is a way that, for those who are concerned about the trustworthiness/security of banks and credit rating agencies, is entirely trustless. Cryptographically secured p2p value transfer networks that cryptocurrencies enable are a means of doing this.

    Bitcoin is still in its infancy and the recent hype has outpaced the technology. There aren’t second or third layer solutions added to the network, which will make transactions effectively free through the Lightning Network (disruption of remittance industry and wire transfers) and allow smart contracts (disruption of escrow services among many others). The internet first began to be developed in the 1950s, but any people arguing that the internet had no utility in the 60s, 70s, 80s, and early 90s were short-sighted.

    From a geopolitical standpoint, which you don’t analyze at all, much of the world has an interest in destabilizing the dollar. The dollar’s status as the dominant reserve currency gives the US an enormous economic advantage in the world. Dollars are in high demand because of its use to stabilize national currencies and it’s the currency that is used to buy and sell oil in international markets. High demand for dollars allows us to run up enormous deficits. As the world depends less on oil, demand for dollars ought to decrease. As interest rates continue to fall to levels that haven’t been seen in the last 500 years and as central banks run out of tools to combat another recession, faith is central banks isn’t going to get better. But in the short term, the dollar is doing well. The Euro is doing fine. In a lot of the world, though, where faith in government is and has always been low, currencies are not stable.

    The full utility of Bitcoin has not been realized and bitcoin is going through a long period of price discovery. Its recent price growth is totally nuts, but if you put it into perspective with a decade-long logarithmic plot, (https://blockchain.info/charts/market-price?scale=1&timespan=all) then it doesn’t seem as insane and its growth as a network is illustrated. (It’s still insane, though). LocalBitcoins, which enables person-to-person exchanges, has had exponentially increasing volume throughout its life. This reflects small trades–not trades by large financial institutions or whales (https://coin.dance/volume). The number of Bitcoin wallets has increased exponentially throughout the network’s life, too. These aren’t recent phenomena; they’re long-term trends that have been consistent for the nine years of Bitcoin’s life.

    The Shiller CAPE for the S&P 500 is currently higher than it was before Black Tuesday and before the economic crisis of 2008. Historically, the current valuation of the US stock market is insane. By historical standards, it’s a bubble. Parking your money anywhere is speculation. Investing in the stock market is speculative, though admittedly the stock market has a longer history, has much greater volume, and is backed by tangible assets. Something being speculative doesn’t say anything about that thing’s value. Heck, the stock market is built on the false assumption that economic growth can occur exponentially ad infinitum, but you have enough faith in the system to trust your money within it.

    Just hoping that you address these points.

    • Scott January 17, 2018, 5:09 pm

      This is something I’ve been thinking about. I get the difference between speculating and investing. On the other hand it seems like there is a continuum between these two possibilities. What I mean is that all investing is to some degree speculative and these are not completely binary categories. I’m not saying bitcoin and index funds are the same, only that there is a false dichotomy being espoused that intellectually dishonest on some level. Curious about anyone’s thoughts.

  • Bill January 3, 2018, 2:01 pm

    I’m not sure what was more fascinating, MMM’s well reasoned post, or the, at times, cogent arguments against his position. I’m sure I burned more electricity reading all the responses than can reasonably be justified by what I learned, but it was interesting none the less. Still at the end of the day I’m going to stick with low fee Vanguard funds and I’m perfectly ok with others becoming billionaires off of Bitcoin. I’m satisfied with my mere millions.

    Thanks for the entertainment.

  • NoStache January 3, 2018, 2:22 pm

    MMM, I disagree and would offer an opinion that I have not seen in any other comments. Bitcoin as a modern “store of value” has tremendous intrinsic value because it is / soon will be an ideal mechanism for exchanging wealth. And modern civilization RUNS on exchanging wealth. We simply need to do it in order to live in this world. It is the FUNCTION of bitcoin that matters, not the output. Fiat currency is highly manipulated in all countries on earth and subject to devaluation. Gold is heavy. But crypto with a limited supply, publicly stored all over the world? Problem solved. That’s why everyone will use it for store of value. Bitcoin is simply the first and the biggest and will probably win. Same way we could have predicted 10 years ago that Google would be the dominant search engine today… Because 10 years ago they were killing it in an industry where being ahead means a lot. Facebook, etc. Talking about your fingernails is like saying hey, Facebook is a stupid easy idea, I’ll just create my own social network site! Good luck with that. Anyway, Bitcoin is a tremendous “store of value” tool. So I predict that everyone will need more of it as time goes on, in order to conduct trade. The smartest folks around saw this and bought it years ago. Now the rest of the world is figuring it out and with automatic limited supply, the price going ballistic is the only possible outcome. Who knows how long the volatility will last as the speculators have a field day, but I’m confident it is here to stay and will continue to increase in price as adoption increases. Focus on what it enables us to do, not what it “is”. That doesn’t really matter. Buffet’s analysis of gold is spot on… But it’s still worth a shit ton of money, and this is why.

  • JC January 3, 2018, 2:27 pm

    Good article. The other day I found myself wondering what the new features in Bitcoin 2.0 might be, hmmm. Since software upgrades tend to make earlier versions obsolete, I figure I’ll stay clear of the crypto currents for now :-D

  • Frederico Silva January 3, 2018, 2:33 pm

    What about the $133,552,000,000 in remittances was sent from United States to other countries in 2015? And the estimated worldwide 582 billion U.S. dollars sent by migrants to relatives in their home countries in 2015? How much was lost in time and charges?

    Blockchain is changing remittance business upside down.

    Blockchain could be a really cheap and straightforward bank alternative for the bankless people worldwide.

    “So, Bitcoin is a protocol invented to solve a money problem that simply does not exist in the rich countries, which is where most of the money is.”

    This was really regrettable, so narrow and self centered :(

  • Joe January 3, 2018, 2:37 pm

    Hello MMM. Clearly you know plenty about this subject, but if you want a concise and entertaining read, check out David Gerard’s book “Attack of the 50 Foot Blockchain.” It’s absolutely hilarious and contains a sane look at the anarcho-capitalist/libertarian roots of these crypto charlatans, which, as you suggest, is the key to understanding what the hell cryptocurrencies are all about. Loons! Gerard is a good Twitter follow, too. Toodles.


Leave a Reply

To keep things non-promotional, please use a real name or nickname
(not Blogger @ My Blog Name)

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. Complaints and insults generally won’t make the cut here, but by all means write them on your own blog!


welcome new readers

Take a look around. If you think you are hardcore enough to handle Maximum Mustache, feel free to start at the first article and read your way up to the present using the links at the bottom of each article.

For more casual sampling, have a look at this complete list of all posts since the beginning of time or download the mobile app. Go ahead and click on any titles that intrigue you, and I hope to see you around here more often.

Love, Mr. Money Mustache

latest tweets