The Big “Buy & Hype” Bitcoin Casino

Bitcoin was trading at $57,000 when I recorded and posted the podcast on Sunday, February 21. Now, as I’m posting the transcript of that podcast, bitcoin is trading at $46,000. So the numbers in the podcast are a little off. But it makes one of my points.

By Wolf Richter. This is the transcript of my podcast last Sunday, THE WOLF STREET REPORT.

So bitcoin is trading at about 57,000 bucks at the moment. Its market cap is over $1 trillion. This glorious moment jogged my memory, so I dug up that old email. Back in August 2012, I was contacted via my website by some guy about bitcoin. At the time, bitcoin was at 10 bucks.

He wanted to buy my book and pay with bitcoin. So for the paperback, which sells for about 15 bucks on Amazon, he would have had to fork over 1 and a half bitcoin. So today, the proceeds from the sale of that paperback would be around 85,000 despised fiat dollars.

He called bitcoin a “monetary revolution.” He wrote, “There is a large and growing community of bitcoin users, who are migrating away from the dollar and euro, because those currencies are being inflated away to nothing.”

And he said, “The value of a bitcoin has doubled in the last 4 months.” Which is the monetary revolution, apparently, that money keeps doubling every few months.

He offered me a deal. If I listed my book on a site called CoinDL, he’d buy my book, and he said he would “recommend it on the bitcoin internet forums.” And then, on my site, I would need to encourage people to buy bitcoin. I would have to post my bitcoin address, ask for donations in bitcoin, etc. to let people know that I was endorsing bitcoin, and that I held bitcoin, so that they too would pile into it.

Maybe I could have sold one book to him, plus three more books to some other folks on the internet forums he frequented, four books in total, for six bitcoin in total. Today, those six bitcoin would have amounted to 342,000 despised fiat dollars.

What was striking about the deal he tried to draw me into: He offered to buy my book for bitcoin and help me sell a few more books for bitcoin, and in return I would leverage my site to hype bitcoin to my readers.

Ladies and gentlemen, this is exactly how it worked universally, and even today the same principle is in effect, but now big players have jumped into it, and they quietly bought bitcoin, and then they used their global megaphones that the mainstream media amplified for all to see, and they hyped bitcoin, and it’s on the front of the mainstream media, and bitcoin has soared.

Buy and hype. This is the principle on which bitcoin has operated from day one. Everyone getting into it would become a hype artist. And there would be no metric by which its price could be judged. These two factors were the true genius behind bitcoin.

So obviously, I didn’t go for the deal. I didn’t need to participate in a “monetary revolution,” where the value doubles in four months.

This has nothing to do with monetary anything, but is a form of gambling that relies on ever more new gamblers entering the casino and bidding up the price, with more and more gamblers selling each other the bitcoin, all united in the singular purpose of driving up its price so that everyone could get rich.

The first part of this I understood back then: That this has nothing to do with monetary anything, but is a form of gambling. That was clearer than daylight.

The second part I didn’t fully understand: That this form of gambling relies on ever more new gamblers entering the casino and bidding up the price, and that it would be everyone’s job to draw in new gamblers, like a giant pyramid scheme.

And the third part I didn’t fully understand either at the time, but it has now been proven beyond a reasonable doubt: That all these gamblers in the casino are all united in the singular purpose of driving up the price so that everyone could get rich.

These gamblers would not bet against each other or against the house. They would enter into a special gamble where they all would be on the same side, where each would do what they could to drive up the price to make each other rich.

I told this guy – Brian was his name … are you out there, laughing off your butt, Brian? – So I told him: “Thanks for your interest in my book. At this point, I’m still hung up on the US dollar, while it lasts.”

After bitcoin came the other cryptos. There are now over 4,000 cryptos out there, including some that started out as a public joke. Anyone and their dog can start a crypto and hype it and hope to get some traction.

The whole crypto space combined now has a market cap of nearly $2 trillion. Over half of which is bitcoin.

Sure, it would have been nice today to sell my 6 bitcoin for 342,000 bucks to some hedge fund and wash my hands off it. But it’s unlikely that it would have ever gotten that far.

One scenario is this: The six bitcoin at the time would not have ranked high in my consciousness. We’re talking 60 bucks here. I would not have paid a lot of attention to it or worried about it or taken a lot of security measures to protect that $60-stash.

So I might have lost the password. This happened a lot, apparently, to early owners that had straggled into a few bitcoin. There is no hotline you can contact to request a new login. If you lose your password, the bitcoin are gone. For me, that might have been a realistic scenario.

The other scenario is that I would have sold the bitcoin as soon as their value reached some kind of critical amount, something that was worth jumping through hoops for. So if bitcoin hit a 1000 bucks, I might have sold.

There is almost no way that I would have held on till today. It’s totally illusory to think that I would have made $342,000, because I wouldn’t have. I would have either lost the password or sold the six bitcoin long ago. Or maybe a hacker would have stolen them.

I would have sold because bitcoin doesn’t represent ownership of anything other than of the digital entity, it’s not equity of a company or of real estate or of anything else. Bitcoin doesn’t produce anything. It doesn’t have a physical presence, such as gold has. Bitcoin doesn’t have revenues or earnings, and it doesn’t pay interest or dividends, and it doesn’t have any other metric by which to judge its value.

And that’s the key to its price.

No one can ever say bitcoin is overvalued or undervalued. It doesn’t have a value. It just has a price, and what the price is from one moment to the next is determined by gamblers trying to drive it higher by hook or crook, and by some of those gamblers cashing out while they can.

There is therefore no theoretical limit to the price. The theoretical range is between zero and infinity. The price is beyond the idea that something is making or not making sense. It’s just a number. It’s not related to anything. There is no dividend yield or any other yield, no earnings per share, no P/E ratio, no cap rates… none of the performance metrics we might look at apply.

And unlike gold, which doesn’t have performance metrics either, bitcoin has no physical presence. You lose your password, the bitcoin are gone.

There is no yardstick as to where the price should be. So the idea is that this price could go to infinity.

People say that because the supply is limited to 21 million bitcoin, and because demand is unlimited, this will drive its price to infinity.

Yes, maybe, theoretically. But there is no need to have bitcoin, and demand can go back to zero and this wouldn’t impact anything in the real world, except the perceived wealth of the bitcoin holders that haven’t sold. No one needs bitcoin. It’s just a gambling device. The demand is artificial, and that artificial demand can vanish in no time.

The big obligation is that all gamblers in this casino have to use whatever megaphone they have to drive the price higher. And it appears that the big players have now ganged up, the biggest Wall Street players, and creatures like Tesla, and a bunch of hedge funds, with huge global megaphones.

And it’s always the same principle. Buy some bitcoin quietly, then make a big announcement and hype it to high heaven.

There is, however, a problem that reasserts itself periodically. Every now and then someone tries to get out from the position and get some despised fiat currency, such as dollars. And when there are not enough new gamblers willing to buy at that price, the price drops until there are enough gamblers willing to buy. This has eviscerated bitcoin in the past. When this artificial demand vanishes, the price can plunge so fast it makes your head spin.

Now the gamblers are huge outfits with billions of despised fiat dollars tied up in bitcoin. They couldn’t care less about the “monetary experiment.” These are not true believers in bitcoin. They’re in it to make a huge profit denominated in despised fiat dollars.

They know they can rig the bitcoin market with their big megaphone, at least for a while. And they have done it loudly and clearly. But when they want to take profits and get some despised fiat dollars for their bitcoin, as they all will, because that’s what they’re in business to do, who will be there to buy?

These are big positions, and they’re tough to get out of without blowing a huge hole into the price, that then triggers a cascade of selling. And when this happens, there is suddenly no liquidity, and the bottom falls out. Bitcoin has become legendary for this.

But now the amounts are much bigger. So maybe they’re hoping that, when demand suddenly vanishes, the despised Fed will step in and bail them out of their bitcoin by buying their bitcoin and handing them billions of despised fiat dollars in order to prevent their highly leveraged and interconnected funds from taking down the financial system or whatever.

And that day, ladies and gentlemen, the day that the Fed bails out the biggest most leveraged bitcoin gamblers because the price collapse of bitcoin is threatening to take down their highly leveraged funds, thereby threatening to collapse the entire financial system – that will be the day bitcoin has truly arrived.

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  289 comments for “The Big “Buy & Hype” Bitcoin Casino

  1. Jack says:

    I don’t understand how there are still so many sheep to sucker into investing in virtual currencies.

    Didn’t enough people get burned from the 2013 & 2017 pump and dump cycles to know not to get caught up in the hype?

    • Old school says:

      Yeah. Bitcoin and Tesla market values are both worth more than Berkshire Hathaway. BRK operations earn $20 billion plus each year plus $280 billion equity portfolio plus $100 billion walking around money. Same happened in 1929 as well when people valued what might be over what really was. Just read annual report, BRK has more real capital investment in USA than any other company. AT&T is second.

      • rich says:

        Central banks will “mint” there own digital currencies, and they won’t allow these currencies to be used to buy bitcoin.

        • rich says:

          Does Satoshi Nakamoto actually exist? If blockchain exists, can it be hacked?

        • Michael says:

          Yes you are correct apart from bitcoin being a severe criminal offence

      • char says:

        You should count only the bitcoins of which the password is known. This is likely much smaller so it is not worth more than BrK

    • I spent 10 years staying away from bitcoin because I always feared that I would buy at the peak. Last week, just as bitcoin got to around $58,000, I finally got my first bitcoin. It turns out that you can get $5 in free bitcoin by signing up on Coinbase. You can also earn another $25-30 or so by taking lessons on other cryptocurrencies. There is no official requirement to spend any of your own money, but I actually spent some of my own money before I received any of the free money. I expect to make a $20-25 risk-free profit this year trading cryptos on coinbase. My advice to all skeptics is to get your free stuff while you still can. It’s easy money and the people we think of as “suckers” are paying for it.

      • Javert Chip says:

        Orthodox Investor

        No disrespect, but you have demonstrated you speak fluent “sheep”.

      • char says:

        I find the idea that a company gives away a lot of Disney-dollars while being in an not so profitable industry fishy, but it could be me.

    • Rob says:

      You are not investing in the “currency”, your are investing in the “technology” and this is what so many people seem to forget, if you could have had a chance to invest in the internet back in the 1980’s and it was possible to invest in the internet, you would have been a multibillionaire today. Do yourself a big favour, spend a few months researching this “technology” and forget about all the media hype, you will be surprised what you will find.

      • nick kelly says:

        Bitcoin is not the technology, it is a user of it. All the other cryptos also use it.

      • intosh says:

        It’s like saying investing in Pets.com is investing in the Internet’s TCP/IP.

        The “technology” is called “blockchain”, by the way.

      • Javert Chip says:

        Rob

        You’re fooling yourself if you think people are investing in “currency” or “technology”; they’re investing in greed.

        A big bunch of people have gathered together to drive Bitcoin (aka: all crypto currency) prices.

        This is exactly what happened & is still happening with the Robinhood gang & GME.

        The early buyers have made fortunes (when it wasn’t stolen and they remembered their 812-digit password), and the pumping will require more & more sheep to join in.

        There are no fundamentals in play here; it’s all tooth-fairy stuff. However, I have every faith there are enough greed & sheep to keep this turd rollin along for a while longer.

      • Laser says:

        If I start dixcoin right now based on blockchain theory (which is what blockchain is – theory, implemented through technology) are you going to buy it? The only way investing in Bitcoin is investing in blockchain technology is it Bitcoin, as some sort of company, which it’s not, owns the intellectual property rights to blockchain theory. I swear to god I feel like there are 99 idiots for every 1 intelligent person, which is exactly why Bitcoin is priced the way it is now

      • Mark Urbo says:

        Yes, you are correct. What I see in these posts is a complete lack of understanding to what crypto platforms bring in the way potential. This is not about some “coin” like Bitcoin (BTC) or hyped joke of a “coin” like Dogecoin (DOGE), this is about a revolutionary way to digitally transact any where in the world. You control your money and the old financial system decreases in significance.

        • Oakman says:

          Finally, one commenter speaks the truth. The author only shows his own lack of knowledge, bemoaning the ‘idiots’ who are laughing all the way to their crypto wallet and then fiat currencies. Let’s talk about sheep.

        • Wolf Richter says:

          Mark Urbo,

          “….revolutionary way to digitally transact any where in the world.”

          😂😂😂

          Either perfect and superbly elegant sarcasm or clueless hype.

    • buda atum says:

      I hear my own country is heavily involved in Bitcoin. Second largest Bitcoin involved nation, I heard somewhere. So involved our Central Bank banned its use though my country people will find a way round the ban. We were heavily involved in Sergei Panteleevich Mavrodi’s MMM ponzi scheme too. And some of you have been spreading rumours we had something to do with unemployment payments. In California, was it?

      I shall not name the country just so you do not all pile in and offend me. Just know that I am not a prince of anywhere.

    • Joan of Arc says:

      I shorted Bitcoin in 2009 at 9 cents. I am still waiting to cover.

    • Bobber says:

      People aren’t as dumb as you think. They know bitcoin is a pumped scheme that will likely go nowhere. They know they may lose 100%, but they also know they may make 500% before the scam ends.

      The big names getting into Bitcoin know this too.

      • intosh says:

        Very true.

        “The big names getting into Bitcoin know this too.”

        Today, Citi says “bitcoin is at a tipping point and could become the currency of choice for global trade”.

        They are the latest traditional financial firm pumping this. You wouldn’t be wrong if you think most of Wall Street already have chips in the game.

        What they don’t tell you is that global trade wouldn’t be using bitcoin since its inherent serious scaling issues — it would be using another network layer (called Lightning) on top of bitcoin. Guess who will control that layer.

        • Wolf Richter says:

          You’re only citing the ZH headline, which reflected only half of the phrase. What Citi actually said was that bitcoin was at a “tipping point” between mainstream acceptance or a “speculative implosion.”

          That “speculative implosion” was left off the ZH headline, on purpose.

        • Zantetsu says:

          The Lightning network is a farce and will never be used beyond the enthusiasts currently using it to try to “prove” its so called validitiy.

          It requires every party who wants to use it to become ensnared in a very cumbersome agreement where they sequester bitcoin (and therefore pay a large bitcoin transaction fee) just for the privilege of establishing the ability to transact with the other party. Supposedly you can chain relationships and pay others through your directly established relationships, building a kind of mesh network of payers/payees but the maintenance of that is ridiculous.

          You have to basically watch the blockchain all the time to ensure that the parties you are peered to do not end the peering, and you also have to watch that all of the parties they are peered to do not do the same, etc. It’s a huge pile of garbage that does not work and will never work, at least not for end users. Maybe it will allow financial institutions to do bitcoin transactions on behalf of end users (even then with significant caveats that come with sequestering), but it will not allow end users to trade bitcoin without a custodian.

        • intosh says:

          Wolf,

          Actually, I was citing CNBC. :)

          The article there didn’t mention “speculative implosion” either. The article definitely uses a positive tone, citing examples of other banks’ optimism with bitcoin. Of course, to avoid it being called a total shill piece, they did say there are still some technical issues.

        • Wolf Richter says:

          Here is one that mentions “speculative implosion” in the title and in the text — in the text as a quote in quotation marks from Citi.

          https://www.marketwatch.com/story/bitcoin-is-at-a-tipping-point-between-mainstream-boom-and-speculative-implosion-says-citi-11614601727

        • intosh says:

          Zantetsu,

          “Maybe it will allow financial institutions to do bitcoin transactions on behalf of end users”

          I think that is exactly the (unannounced) goal of the people behind Lightning.

          Financial institutions (but more likely new fintech companies) will relieve the users from the agreement and sequestering nightmare. It will pretty much work like traditional banking but with a Bitcoin brand cachet and some new actors.

        • sunny129 says:

          Wolf

          ‘Speculative implosion’

          Definitely when US will adopt the Gold standard for the currency or Fed/treasury stops their PRINTING presses for good!

    • nodecentrepublicansleft says:

      “I don’t get how there are so many sheep….”

      There are bigger con-men than bitcoin in ‘Murica.

      Some have lengthy records of mob ties, lawsuits, stolen $, corruption, lies, violence, rape, etc.

      Yet some ‘sheeple’ cant get enough. It looks to be an empire in a steep decline.

      Go look at the FB page of a Q-Anon person if need your jaw to drop. Insanity is normal….

    • c1ue says:

      That’s just it: few people put real money into bitcoin in 2013 and 2017. When the price tankedx they just stopped looking at their bitcoin accounts much as retail investors stopped trading in 2001 and 2009.
      Yet those people have been coming back in the past few months and selling.
      It is far less clear that the “big” megaphone is the pump and dump as implied by Wolf vs the spread of bitcoin as yet another asset to be held in a CUSIP account. In this sense, bitcoin is no more or less worthless than a stock.
      IMO, Microstrategy and Tesla are doing something different: they’re taking their bitcoin gains and leveraging them to be able to raise funds and act as bitcoin funds as opposed to actual businesses. But that’s not something actual companies that make things or provide services do.
      The bitcoin price drop in the past week isn’t large by bitcoin historical standards; It is also not clear that this really means a sea change has occurred either up or down.
      I can say that there are people paying real money on anticipated bitcoin price jumps- the new bitcoin futures market shows all kinds of ridiculous call premiums.
      But time will tell.

      • Old school says:

        There is one theory that when the everything bubble bursts that half of financial assets will disappear (From $520 T down to around $250 – 300T.) This will include 90 – 100% losses in the most speculative investments like bitcoin, SPACs, leveraged loans, junk bonds and negative cash companies. People are going to sell what they can to come up with cash to keep their stuff is ho We will see how it plays out.

        • By expanding the monetary base (inflationary) the number of dollars to buy a dollar of S&P earnings increases, (without any concurrent economic benefit), When inflation becomes a problem they will shrink the MB, and that would include cancelling bonds the Fed holds on IOU from Treasury.In point of fact the money has already been printed from the sale of those bonds, but that would have an effect on asset prices, (fewer dollars to own a dollar of S&P) and it would probably have the a symmetric effect of depressing economic growth) while the dollar would gain value.

    • btc says:

      Nope, the majority of us are still holding our bitcoin and counting our 650% gains. How is your best investment performing comparatively in the last 4 years?

      • phusg says:

        It’s advisable to only count your gains after you sell, not all eggs hatch.

        • Tankster says:

          I sold my stake and now play with the House’s money…about the only investment I ever did that with so don’t do what I do. I waddle 5k’s with a shirt that says: “Race Official-Do Not Pass”

    • Tang says:

      There are sheeps in everywhere..but the price hardly affordable..so sheeps in mink coats. But front runners are bigger in numbers than sheep..they ever ready to pounce than quickly run. But at those prices not easy to run.
      Majority of players are those who are already members of the syndicate. As members you sit at the table. Each time you are given thousand dollars worth of chips. Your name, your presence etc is broadcast time and again. You willing collaborate as you have everything to gain eg the Ark..liquidity injection..telsa 1.5 billion letting others know they can afford to throw away billions….than the morgan stanly..the Citi…the Mellon etc…..benefits maybe personal.
      Look at CNBC. they have a separate webpage for crypto..
      with bitcoin first column..www.cnbc.com. And the goodies news on bitcoin…they are the first to the megaphone. You know their benefits. And youtube hosts their videos readily without a care or thought on the snake oil message.

    • al says:

      a sound overview, Wolf, imo.

      bitcoin can and probably will fall under control of central banks, under pressure from govts.
      really, btc is no different to fiat. in reality,there is most probbly nothing to stop more than 21 million btc being mined- to infinity, either. the protocol(s), could having been subverted, globally. that ‘fake’ btc, whilst unrecognized and circulated, would doom btc, because it’s price would revert to its itrinsic value: zero. when recognized, as panic selling starts, it would doom btc, all confidence in it having flown, same effect. now, that IS a gamble.

      have a nice day. buy max physical gold on dips, & store it safe. sleep at night.

    • Cliff says:

      Yeah I am SUCH a sucker! Held on when it was $3500 and now it’s over 50K. Poor poor sucker that I am…When will I learn? 😂

    • Mike says:

      There’s lots of money to be made in pump and dump by the pumpers and dumpers, works every time.

    • ram says:

      Well, now you can kiss all of the so called cryptocurrencies and their digital wallets goodbye, the underlying RSA cryptosystem has been broken. The math is here:

      https://eprint.iacr.org/2021/232.pdf

      It doesn’t look real good for online banking, securities trading, and e-commerce in general. Doesn’t do much for “tech stocks” either.

    • Andre Estes says:

      I see comments like yours all the time. A cursory dive usual points to the following weaknesses in the commenter, in this case, you:
      1) lack of understanding of cryptography, and the blockchain
      2) lack of vision or possible delusion that blockchain tech will change the world forever …. many times I find people in industries that will be disrupted in this category … I get it! No one wants to become obsolete
      3) lack of understanding of asset, or in this case, commodity valuation
      4) lack of understanding of basic technical analysis
      I am an OLD FART, but, I subscribe to endless learning. I suggest all of you do to. In the meantime, you sound childishly naïve when you comment on something you know nothing about. Good luck!

  2. BrianC - PDX says:

    Sorry – I am not the Brian you were looking for.

    Way back when bitcoin came out there was a guy in the midwest, on an email group I was a part of, that had a bunch of bitcoins. Maybe a 100 or so? Can’t remember. He was pretty much a hard luck, blue collar, working class guy. Never had a break and seemed to be just hanging on. Every so often I think about him. I hope he held on and got something good from his bitcoin stash.

    Me – I avoided it like the plague. Like Tesla and FANG stocks it’s been fun to watch.

    • Brian says:

      I’m also not the Brian you’re looking for but I do have some after mining them back in the beginning. Sadly, I sold almost all of them in the $10-30 range of the first runup. Seemed like a windfall at the time.

      BTC could go to $1M or it could go to $0. Both seem equally likely to me so I simply sell 40% of my gains and hold what remains. It’s worked out pretty well.

      I don’t brag and I don’t hype, or even talk about it except to those who ask.

      I don’t know what will become of Bitcoin but I don’t think anybody truly understands what we’ve got here. It’s a bit like having just invented the wheel and we’re all laughing about how it bounces down a hill.

      • Cas127 says:

        “I don’t know what will become of Bitcoin but I don’t think anybody truly understands what we’ve got here. It’s a bit like having just invented the wheel and we’re all laughing about how it bounces down a hill.”

        Brian, I think you have it right 100%.

        1) Bitcoin per se really isn’t the issue…hopeless US dollar debasement is the issue.

        So, if Bitcoin with whatever individualized flaws it has, fails…the underlying impetus to an alternate “store of value” currency will remain.

        Because it isn’t about Bitcoin…it is about the debasement of the USD.

        2) The soaring value/volatility of Bitcoin/AnyCoin may be an intrinsic (intended?) aspect of the *adoption phase* of any alt currency.

        For instance, if 100% of people believed that in the future 100% of US wealth would be manifested in BC (goodbye USD), then each Bitcoin would = aggregate US wealth/21 million BC (the fixed final supply of BC – its fixed nature being the whole of its appeal to final users).

        So, in theory, each of those final BC might be worth a *huge* amount *if* BC fully/largely/significantly supplanted the USD.

        But…between now and that theoretical apotheosis…faith…and the number of the BC faithful will rise and fall, significantly…leading to large BC volatility

        The exact same dynamic applies to any of the thousands of AltCoins that Wolf points to.

        2)a) And this interim soaring value of BC *may* be an intended aspect of AltCoins’ design from the start…because soaring values create a “popularization/hype” phase that draws attention to a ReplacementCandidateCoin in a way that nothing else could.

        And AltAwareness has to precede DollarDeplacement.

        3) But, again, it really isn’t about any specific AltCoin…everything is driven by DC’s gross mismanagement and the habitual, desperate recourse to USD debasement DC must employ to save itself…until *that* ends…the search for a StableCoin (ahem) will never stop.

        • Joe Wazzzz says:

          I can’t get over how people have such a blind spot for the “crypto” part of cryptocurrency. The blockchain is fantastic. It will give governments all over the world the ability to see everything and control everything people do with respect to their money. People, being the sheep they are, will love it too. But the crypto part has fatal flaws. No government will allow “crypto” money. No government is going to allow its people to avoid taxes, hide illegal usage, and export capital effortlessly and in secret. They only allow it now because it is playing into their hands. It gets people used to the idea of blockchain currency and makes for an easy transition to Fedcoin. Hey when they outlaw it, fiduciaries and vendors must abandon it and it will crash overnight. The government will buy out the losers and look like heros. Win-win-win (failing dollar transition, intelligence gathering, monetary control) for the government. Lose, lose, lose (wealth, privacy, freedom) for the idiot pubic.

        • sunny129 says:

          Cas127

          ‘Because it isn’t about Bitcoin…it is about the debasement of the USD.’

          You nailed IT! which many here are conveniently ignoring this!

          People collect are STAMPS, COINs and also PAINTINGS from different artists. Some even collect rare ‘artefacts’ (furniture, clocks++) of all kind, which will look foolish to many.

          Any rare item has inherent STORE” value. Yes. Some are ‘speculatating’, that their value goes up over time.

          Yes there over 1000 (if not 10,000) crypto currencies out there. BITCOIN stands apart from all other. Besides the STORE value, there is no other redeeming feature with it. No different than a a RARE coin, stamp or a painting!

        • ru82 says:

          Good info. I like good discussion on both sides otherwise group think can lead to bad investment decisions.

          Your right, BTC has gained a lot of popularity. More than I had imagined. It might have staying power.

          I doubt it could supplant the USD. This would cause some serious issues. Because if people start selling USD and buy Bitcoin, than all things priced in USD would skyrocket. Not everyone could make the transition to Bitcoin, specifically older people. All cash or pension funds that pay in cash or cash savings accounts or CD for retirements would be wiped out. Banks would have a run as people would want to pull cash out and buy Cryptos.

          Would we even have a need for banks if people pull their USD out of banks and put into BC wallets. No more fractional reserve lending? Who would make home and car loans. Liquidity would dry up. Recession most certainly. The people who made the transition first, would be wealthy, the rest would not.

          Since cryptos are not really regulated, Wall street would be like a fox in a hen house. How protects against hackers. It takes a of money for banks to build up network security…etc. Most people leave easy passwords on their home routers.

          From my understanding, once the BC leaves your wallet, it is non reversible. It is gone. No legal means of reversing the transaction except to ask the person to return it.

          Just my 2 cents and they could be wrong.

        • Zammo says:

          @sunny129 What you said really struck me at first and I bought into the comparison to stamps, coins and art. Demand for those items is necessary to drive price up and the certainty of future scarcity is required to avoid price drops.

          But on second thoughts there is a fundamental difference between all those artefacts and bitcoin – you can hold, see and feel stamps, coins and art. They are pleasing to look at. The very reason gold has been a store of wealth for generations and the argument people use against crypto for a long term sustainability.

          So while the scarcity box will always be ticked, the demand box (due to desirability) can be erased very easily if it falls out of favour.

          When comparing bitcoin to stamps or art, just think of white stamps and blank canvases that you can’t ever see other than a list of the quantity you own. The comparison falls down at that point imo.

          But always like reading your comments so it gave me food for thought!

      • Cookdoggie says:

        I read the 287 comments (and counting) and came back to this one as the one best matching my feelings on Bitcoin. I brushed off btc until this year when two things changed…(1) wide institutional involvement, most notably MasterCard and (2) a way to invest using existing avenues, GBTC Grayscale Bitcoin Trust. I purchased half of one percent in a Roth IRA; using the Roth means any gains are tax free and no messy trust tax forms to worry about. I bought at near peak and if (when) it drops 90% I’ll increase the allocation to 2%. If it goes to zero I lose 2%. Big whoop, I’ve had worse years! This has nothing to do with hoping to get rich; for me it’s just a tail risk hedge against Weimar-like money printing.

  3. Dan says:

    Another genius of the Buttcoin Ponzi scheme is that Buttcoin puppet masters have taught the low level Buttcoin fans to HODL since allegedly “Buttcoin will go to $1 billion a coin”; this serves 2 important purpose:

    a) Since low level Buttcoin fans won’t sell, then it makes the Buttcoin market a lot less liquid.
    b) low level Buttcoin fans won’t discover that no one wants their Buttcoin since they HODL, and won’t even try to sell it.

    • Rowen says:

      I think this is how TSLA worked to destroy the hedge fund shorts. The early adopters wouldn’t sell at any price, making TSLA shot to the moon on a series of short squeezes. Then it got so big it had to be included in the SP500, and the institutional index funds were forced to buy. Bagholder of last resort.

      lmao.

    • c1ue says:

      That’s incorrect. The little people absolutely do sell.
      It is the whales that don’t, generally.

  4. Rowen says:

    Sure it’s gambling, but what isn’t these days. As long as the music’s playing, you’ve got to keep dancing…

    Way back when, still in the heart of the global financial crisis darkness, on an online forum like this, I came across this very very very angry poster, who was sick of the corruption on Wall Street, so he said he converted his life savings into bitcoin. Unlike your Brian, this guy wasn’t trying to sell his book; he was a true believer. Out of camaraderie, although I only knew him online, I bought 100 BTC. The forum even had a joke when the BTC finally “broke a buck” (to pay homage to the Vanguard MMF “breaking the buck”). I sincerely hope he kept all of his BTC’s.

    So here’s to you, one-currency-yogi!

    • cb says:

      Don’t leave us in suspense. How did your 100 Bitcoin work out for you?
      Where are you with them now? How have they changed your financial life?

      • Depth Charge says:

        Almost all of the early adopters sold out long ago, and most for a pittance. Nobody holds on for the whole ride up. That’s why the cost basis for most speculators goes higher and higher as the price climbs into the stratosphere, and why maximum pain will be exacted with a price collapse.

    • Depth Charge says:

      “Sure it’s gambling, but what isn’t these days. As long as the music’s playing, you’ve got to keep dancing…”

      This is so stupid, quoting one of the biggest fraudsters of the last bubble as if that’s good reason to be participating in the current environment. This entire situation, the everything bubble, is absurd. Comments like yours just cement that fact.

  5. Nathan Dumbrowski says:

    I know that the cryto market has crushed the availability of video cards. This is actively impacting people wanting to build/buy a new gaming computer. And people that mine the coins are very clever and are building amazing setups to create/mine these coins. These architects are elaborate and take advantage of the fact that if you have an EV car you get better pricing for home power. Have a friend who lives in the Dakota’s and doesn’t pay for direct heating since his mining operation melts the snow and keeps his home toasty. Waiting for this phase to peter out like all the other get rich quick schemes

    • Beardawg says:

      I guess I should learn to be a miner. I have an OTG house with unlimited power (during the day only). Hee hee. ;-)

    • buda atum says:

      Its so annoying. I can’t find an Rtx30 anything for my new rig!

    • Winston says:

      Last I heard, bitcoin mining is using the same amount of electrical power as is being used by Argentina. The electrical Ponzi scheme.

      • Few years back MS analysts did some work on Bitcoin as a utility industry concern. They predicted that nations with low cost electric would attract mining centers and wealth would shift accordingly. I surmise that some nations or regions would subsidize electricity to attract mining and tax the wealth benefit to pay for the subsidy, and that by inference if you lived there you would enjoy free power and ultimately no one anywhere would pay for electricity. The cost would be passed on to consumer through the currency, or seigniorage The makers of EVs may have this in mind. Such a seismic change would restucture the grid, with mining centers near sources of electricity. It was really after the industrial revolution that people moved away from industrial centers and the grid became over extended, causing problems with both physical losses and security. The transfer of wealth to bitcoin is following this projected outcome. If enough money is involved, and there is, technology to burn coal cleanly in places like WYO and WVA will come about. Auto battery technology may evolve into an LNG like solution, where electricity is made at the north pole, using nuclear power which can utilize the natural cooling. Mining centers make bitcoin, and the product is exported in battery container ships. Then of course AI helps reduce the amount of electricity that bitcoin mining requires.

        • ru83 says:

          That is one of the flawed designs of Bitcoin IMHO. Why even mine it and use all that power that could be used for growing food or making cloths for poor people.

          I thought 1 billion ripple coins were created in one month with minimal power. Compare that to the aggregated cost of Bitcoin mining up to date.

      • James says:

        How much electricity does Wall Street and credit card processing use?

        • Dan says:

          Talk about per transaction; they do billions of transactions while bitcoin does thousands.

        • Wolf Richter says:

          Dan,

          You need to stick to what bitcoin is called, such as “bitcoin,” or “BTC,” or even “crypto.” I fixed it for you this time. But I’m not going to fix it each time. I’m going to delete the whole comment going forward if is has this word in it. Thanks!

        • char says:

          Credit cards are a payment service. You can’t pay with bitcoins just as you can’t pay with gold. Bitcoins are ponzigold.

          But the answer who uses less: All of wallstreet, the banks, their local offices, credit card services etc. or Ponzigold. Ponzigold

        • Not sure how much electricity it takes to create a bitcoin, but the electricity to complete a transaction is substantial. I also understand that if you enter a transaction that any bitcoin miner can assume that transaction, but the only one who gets paid is the one who completes the transaction. Hence there must be a lot of wasted time and energy. The only thing that matters is the transaction. Not at all sure what would happen if everyone who had bitcoin made a transaction at the same time.

    • c1ue says:

      Wrong.
      Bitcoin mining long since migrated to FPGAs.

      • Winston says:

        Wrong. Graphics cards absolutely skyrocket in cost during every cryptocurrency bubble and this time is no different. Professional mining clusters are more likely to be using FPGAs whereas your average Joe is using graphics cards. Check YouTube for the computer channels griping about this. Cards are selling for twice their retail price.

        • Winston says:

          Oops, just noticed you are specifically referring to bitcoin mining in which case you are correct. Graphics cards can no longer cut it.

    • Zantetsu says:

      The effect of cryptocurrency on graphic card availability is maddening. It’s almost exclusively Ethereum that is to blame though. Bitcoin mining is not practical when done on graphics cards, the miners have moved to custom ASICs that out compete graphics cards. But Ethereum is still mined with graphics cards.

      I am putting my bet on Proof of Stake systems over Proof of Work. Proof of Work systems like Bitcoin will eventually fall out of favor when the maintenance of them is so costly in energy terms (already true really) that they fall victim to political and social will to put an end to the energy burning madness. Proof of Stake however doesn’t require much energy although it often requires a lot of network bandwidth, but that is a much less resource intensive overall.

  6. Nick B says:

    I really enjoy your articles but can’t help to think you are missing the boat. Bitcoin is the highest returning asset in history and to write it off seems wrong. I’ve owned it a couple times over the last 5 years. I think it’s an interesting gold alternative and don’t see much difference between the two. Bitcoin does have a cost to mine it and has a finite supply. It’s been a interesting to watch and I haven’t seen the pump show you mentioned. Mostly people have no idea what bitcoin is or how to actually buy it. Thanks for all that you do.

    • Dan says:

      Since you know what Buttcoin is, then show us a Buttcoin; if I’m paying $50K for anything, I want to see it. Show me a picture of a Bitcoin.

      It’s mind boggling how ignorant Buttcoin fans are, and yet they call everyone ignorant, boomer, … Most of you don’t even know what Bitcoin is. You just know that you bought something called Buttcoin on some site.

      Buttcoin is nothing but a randomly generated string; it’s NOTHING. The greatest Ponzi scheme in human history. The only reason it keeps going is because the elites want it to keep going.

      • Jacklynhunter says:

        Bitcoin is the only decentralized network. Your screaming at the sky is misplaced. The whole point is the ledger is accurate. The accuracy is the value.

        Wolf, if the intellectual exercise is unavailable at $10 and $50,000 it definitely won’t not be a scam at 100k, 500k ect..

        If people like the stock they are going to buy it but more importantly it’s a computer protocol that doesn’t require people to know they are even using an auditable ledger.

    • Thomas Roberts says:

      An unopened 50 dollar Pokémon core set from the late 90s is last I heard, selling for over 100k and going up. Though, opening it up is a gamble and could return well over that.

      Many things over time have had and will have insane returns. They can make you money or broke. I almost bought bitcoin a couple of times, but not because I thought it was the future of money, but because I could sell it for more. The fact I discovered that for an average person to buy it, they want your personal information like ID cards and sometimes bank information, scared me away. Just like Pokémon cards and various other things, I do kick myself for not buying in when it was cheap. But, I do not except these items to always hold value or be the future of things. I would have sold both off about now. They both might shoot up more or crash at anytime and may or may not ever enter the general publics mind again. Pokémon cards at least exist physically and I would say hold more intrinsic value than bitcoin

      Gold is a physical item with intrinsic value for all of humanity. It is a core element and will always hold some value. Bitcoin is virtually indistinguishable from other alt coins and could easily be replaced by some new alt coin. Bitcoin has no intrinsic value and instead gets its value from confidence (which can be lost) and capital flight from China. Bitcoin can be replaced by something new for both of these purposes.

      • Anthony A. says:

        My wife is still waiting for the return and run up of Beanie Babies so she can cash in BIG!

        • Thomas Roberts says:

          Unfortunately, Pokémon cards were the correct investment :(

          With all the kids on tablets and phones these days, I’m not sure if any specific toys in 20 years will jump up in value or not.

      • Zantetsu says:

        Gold has minor intrinsic value so small relative to its price that it is basically irrelevant. The fact that you would say that gold has intrinsic value and that Bitcoin does not I think indicates that you don’t truly get it.

        The intrinsic value of Gold is based on its physical properties that make it very good in certain applications – of course also having competitors in every application that are nearly as good and much more available.

        The disadvantage is that it is cumbersome to own and store. I thought about buying gold many times but to actually own it is a real difficulty. Where do I store it? How do I move it?

        The advantage that Bitcoin has over gold is that all I need is a piece of laminated acid free paper to store it anywhere secure that I want to. I can print out my public/private key pair, put it on a piece of paper, and as long as I can securely store that, I know where it is and can move it easily. And I can easily hide it too — I could scatter the text within some other text using a method only I know and someone could look at it and never even realize that it’s my bitcoin there.

        So I see advantages and disadvantages to Bitcoin and to gold. But fundamentally they are both the same thing — a store of value priced at a value vastly exceeding their actual intrinsic value, that price being determined by confidence that other people will continue to value them at that price.

        People who don’t see that parallel or understand it, just don’t get it.

        I have exactly 1 bitcoin, I bought it for $30 in 2011. I actually bought three at the time, but used two to buy an office chair in 2013 when those two were worth $600. I wish I had gotten more into Bitcoin back then and had just held them, but like many people who have the same fantasy, I must recognize that the chances that I would have held for this long are vanishingly small. For me the evidence is in that I sold two in 2013. Let’s say that I had bought 1,000 bitcoin in 2011 instead of 3. I probably would have sold them all for something in the low hundreds of thousands. A great return, but not enough to live forever on like I was hoping.

        I still have that one bitcoin only because I had made a mistake with some files and thought I had lost that bitcoin. I continued to think it was gone until just a couple of weeks ago when I went through some old files and found it again. That’s the only reason I still have it – because had I had easy access to it, I guarantee I would have sold it back then.

        Now I am never going to sell it. I have decided that I will just hold it until it either somehow becomes worth at least 5 million dollars (which I don’t think will *ever* happen – a single bitcoin at 5 million!) or becomes totally worthless. Or I die. Whichever comes first.

        • ElbowWilham says:

          The main difference between gold and bitcoin to me is that gold is a store of value of previous work/energy. Bitcoin requires constant energy to keep the network functioning. Without the network your string of numbers is worthless. Since most energy these days is derived from debt instruments, bitcoin is basically a debt based currency.

        • tonofbricks says:

          I haven’t had much trouble storing gold. I can carry $50k worth pretty easily.

        • Zantetsu says:

          tonofbricks — how do you know that the gold is pure? Do you pay someone to test it before you buy it?

          How does the person you are selling to know the same? Do they pay someone to check it too?

          Can you keep your gold in 10 locations simultaneously (not 1/10 in each location – 100% in each location) to prevent loss?

          I just think there is friction with gold purchase, storage, movement, and resell that is not there with bitcoin.

          Gold has advantages over bitcoin in some areas too – practical utility, a much longer and more proven track record of holding value in people’s minds, etc.

          I’m not saying one is definitively better than the other as a store of value. I’m just saying there are arguments to be made for and against each.

          But some people on here refuse to see it rationally and just dump on cryptocurrencies without considering any of the upsides.

        • Thomas Roberts says:

          Zantetsu,

          There are handheld machines that tell if gold is real or not. Any substantial gold place that sells or buys gold has one. That machine checks other metals and jewelry too. There are cheaper home ways to test for genuine gold as well.

          Yes, you can own gold or other precious metals in multiple places, but it’s pricier. I think a valid, own your gold by serial number vault, is a hundred something dollars a year and you can store quite a bit for that price. An average person can keep some on hand for transactions if desired or keep it in a safety deposit box. It is possible to exchange ownership of actually serial numbered gold quite easily and cheapily. While, currently not exactly a big occurrence today, there’s no reason it couldn’t be.

          Bitcoin and other cryptos can have fluctuating exchange costs and times to complete transactions. And at certain volatile times, many places have suspended taking cryptos.

          Bitcoin and alt coins are too unstable for everyday use in major economies by the general population. In order to get bitcoin, an average person must buy it from an exchange (without privacy) using fiat before exchanging it for what they are going to buy. In a society where bitcoin was more commonly used, what benefit would this serve? It would be more expensive, complicated, less anonymous, and more time consuming than simply using a credit or debit card. If traveling, for a smaller fee, you can use a credit card in far more places than, would ever accept cryptos. In either scenario, a bank is doing currency exchanges, but bitcoin requires 2 exchanges, USD to bitcoin, bitcoin to euro; credit cards only requires one, USD to Euro. And there are actual protections for bank and credit card accounts. Cryptos have no such protections.

          Gold and precious metals are literally basic elements of the universe that have always had intrinsic value whether as jewelry, industrial uses, or a store of value for all of humanity. A tiny amount of gold can be used on connecters to power your phone or laptop. Among many many other uses. What actual industrial applications can bitcoin be used to produce physical items for? Nothing. Can bitcoin be jewelry? Nope.

          Why is bitcoin valuable, but doge coin is not. Confidence, that’s it. If people ever lose confidence in bitcoin, it’s value dissolves. Fiat is actually backed by something, the interest of major economies. That isn’t always enough, but at least it’s something. Bitcoin, on the other hand is truly backed by nothing.

          Bitcoin is not the same as gold, it has more in common with Pokémon cards or beanie babies, but bitcoin has less intrinsic value than Pokémon cards or beanie babies. Decades from now, even if Pokémon cards that are properly taken care of (similar to how bitcoin passwords must be protected) have lost their value; beanie babies and Pokémon cards will be able to entertain some kids. Bitcoin is similar though to Pokémon cards and beanie babies because, these items don’t have long standing reasons why they would retain value, unlike precious metals or stocks. Any of these things could have large returns or have a price crash, but bitcoin derives the entirety of its value from confidence. Gold is a basic element (and has other uses) and stocks can give dividends and are an actual ownership of something that has property and things backing it.

          Not being a physical item means bitcoin is easy to exchange, but bitcoin in almost indistinguishable from almost any other alt coin. The only major difference is confidence.

          As I’ve said before, I’m not telling people to not buy bitcoin, but be aware of what it is and very simply that it’s not the future. Right now the only practical application for bitcoin is capital flight from China (and other capital flight), it’s not clear, how long that can continue though. Because of China, and whether China will eventually ban bitcoin for real or not. Any country can very easily do a crackdown on the exchanges or mining or the bitcoin network itself, so bitcoin cannot escape the government. Maybe bitcoin will eventually hit 500k, but probably not and eventually it will hit zero. When (maybe this week, maybe a decade)? Nobody knows, except for maybe, chairman Xi. All I’m doing is describing it. You gotta figure out your actual savings and investment plan on your own.

        • Engin-ear says:

          The big adavantage of physical gold is that it not suitable for high frequency gambling – precisely because of its physical properties.

      • Nathan Dumbrowski says:

        The Twilight Zone – The Rip Van Winkle Caper. Gold in the future according to one episode. One of those that stuck in my memory bank from those Thanksgiving all day Zone times

    • CRV says:

      Only the fact that BTC is too difficult to grasp for most people, will make it useless as future money.
      For something to work as money it must be simple to understand what it is (physical versus digital), what is needed to get and hold it (mine for it or pay for it with something else), what it’s use case is in society (medium of exchange, store of value, and actual usage in real things), and maybe most importandly, what it can’t: vanish into nothingness for instance.
      See for ourself if BTC ticks the boxes.
      And don’t forget you always need elektricity and access to the network to make a transaction, or to check the validity of the digital code.

      • MiTurn says:

        CRV, while you make a good point, I think that most people (obviously not the sort of folks that visit this site) find fiat money conceptionally as “too difficult to grasp.”

        It just exists and they want it and work for it.

      • Jacklynhunter says:

        Internet protocol and bitcoin protocol can travel over any other communication protocol including sign language. Do you remember dial-up? Copper dial-up works when your power doesn’t. Copper phone lines are electrified. If you have zero communication, zero electricity you can still manually mine blocks by paper. The calculations are easy but the faster you do them the more the network has to compensate. Without electricity you aren’t competing with a computer and the difficult falls to new zero. Hash rate of the network work be secured by the best mathematicians. The whole concept of bitcoin is “worst possible scenario”. If you are thinking of worst possible situations you are a bitcoin developer. Welcome to the club.

      • sunny129 says:

        BC is no different than a RARE coin, stamp, painting or an unusual artefact of any rare kind, which has a STORE value over time. Many cannot grasp this!

        Now in 21st century, it appeared in response to INSANE fiat currency with credit creation from CBers lead by Fed. No one can deny that US $ is losing purchase value everyday.
        Either one gets it or NOT!

    • Winston says:

      “Bitcoin is the highest returning asset in history and to write it off seems wrong.”

      Are you sure? Compared to Tulip Bulbs?

      And their true “value” depends entirely on being able to convert them to the less imaginary paper wealth of fiat currency or, far better, gold.

    • max says:

      Charlie Munger, vice chairman of Berkshire Hathaway and Warren Buffett’s longtime business partner,

      Asked about bitcoin’s price and Tesla’s market cap, Munger said, “I don’t know which is worse.”

      During an interview at the Daily Journal’s annual shareholder’s meeting, Munger was asked whether he thought it was crazier for bitcoin to hit $50,000 or for Tesla to reach a $1 trillion fully diluted enterprise value, he said: “Well I have the same difficulty that Samuel Johnson once had when he got a similar question, he said, ‘I can’t decide the order of precedency between a flea and a louse,’ and I feel the same way about those choices. I don’t know which is worse.”

      “Bitcoin reminds me of what Oscar Wilde said about fox hunting. He said it was the pursuit of the uneatable by the unspeakable,” he added.

    • char says:

      MMM had a higher return, until it blew up like all pyramids.

      Storage costs of gold are free if you want to. Ponzigold needs the mining to stay alive. Without mining it is worthless. Sorry wrong term, it does not exist anymore when mining stops

  7. Marvin T. Paranoid says:

    The obscene amount of electricity going in to “mining” Bitcoin is one issue that isn’t covered well. The carbon footprint is horrendous, and yet it produces nothing substantial at all. It’s like putting a dollar value on calculating pi to an extra hundred digits.
    The Alberta tar sands pollute like hell but at the end of the day there’s a barrel of crude, not just an entry in some digital ledger.

  8. Tom Stone says:

    There’s been a Bitcoin kiosk at my local Safeway store for more than a year.
    And of course you pay with plastic and yes you can buy fractional Bitcoins…

    When I look at the risks people are taking in a clearly rigged game I’m a little surprised that there isn’t a shortage of airplane glue.

    • Turtle says:

      Honest question.

      Is it next to the lotto machine?

      • Fat Chewer. says:

        Another honest question. Will they hand over the 50 grand if you hand over a BC?

    • Cliff says:

      I hear you Tom! I tried to get some money from that Bitcoin machine but it only had $20,000 inside. Had to find two more Bitcoin ATM’s just to pull out ONE Bitcoin! It was rough. 😂😂😂

  9. MonkeyBusiness says:

    Bitcoin, the only coin in the realm that relies on people losing access to their passwords to maintain its value!!!

    • Dan says:

      👍👍

    • Thomas Roberts says:

      True, it’s believed that upwards of 20% of bitcoin is lost forever. That number will rise over time. The founder “Satoshi Nakamoto” whose real identity isn’t known, is believed to hold over 1 million bitcoin and it’s believed he never spent any of it. Did he forget his password? Did he die without passing on his password?

      The way bitcoin works is that, the earliest bitcoin were super fast to make and it takes exponentially more computer power to make each bitcoin as more get made. The max bitcoin there can ever be is 21 million.

      • Thomas Roberts says:

        Realistically, I think alot more than 20% of bitcoin has been lost. Also, remember that alot of bitcoin is held in the exchanges, someone could hack them and either take it or basically just make it unretrievable.

        • ru82 says:

          With all the forks, there will be at least 80 million BTC. They just call them different names like BTC Cash?

        • Jacklynhunter says:

          Why stop at 80 million btc? Encryption breaks at 21million so there is no difference between 80 million counterfeit btc and 80 trillion counterfeit btc. Counterfeit btc doesn’t transmit on the bitcoin network.

  10. Kentucky says:

    What’s the quote? “Strategies are for amateurs and logistics are for professionals.” Napolean didn’t think about logistics when he invaded Russia. That did not end well.

    What are the logistics behind the bitcoin strategy? It’s like a game of Jenga. The higher it goes the more wobbly it becomes. And when it falls it’s never a graceful fall. The truth is there are no logistics behind the strategy of “hype and buy”. It’s just a strategy. To be fair to bitcoin, this same “strategy” is rampant everywhere. At some point soon, people will have to start working for a living.

    • Dan says:

      Oh, my god, you infidel; “working for a living?” That’s blasphemy.

      All I want to do is to trade Tesla and Buttcoin in the morning; watch and drink beer the rest of the day, and occasionally cash out my stimi check so that I can gamble some more. Government also has the obligation to send a maid to my home to do the house chore since I’m too busy watching Netflix.

    • fajensen says:

      Why?

      Machines do the work and, assuming we don’t want poverty showing up on our own doorstep, “society” has to provide substitutes for “working for a living”.

      Inflation of Asset values, Infinite Credit and Infinite Opportunities for Speculation, is what financial capitalism has come up with for us, there are other models. Those requires a mental shift, which many people are not quite ready for, so we have what we have, and if we don’t bilk it, we are just going to be sad losers.

  11. scott ellis says:

    When the lights went out in Texas your friendly neighborhood Ace Hardware could open up, the old guy could actually do math, and supplies were sold for cash. Maybe junk US silver if the guy knew it. Lotsa luck spending your Bitcoin or even your credit card. For those who think is a rare anomaly we see it here in Florida every few years with hurricanes.

    • Harrold says:

      You can buy/sell Bitcoins thru an app on your phone.

      • Lisa_Hooker says:

        Sure. And, you can recharge your phone thru and app on your phone.

      • Anthony A. says:

        I wonder if during the recent Texas freeze and blackout would I have been able to pay the Hispanic contractor with Bitcoin from my cell phone for fixing my broken water pipes?

        He barely spoke English, but did take my greenbacks.

  12. Alan says:

    No one puts a gun to anyone’s head to buy an investment, Ponzi or not. Today, almost everything in every market is subject to hidden risk or control, especially fiat which we all need to use. We all choose what other casinos in which to speculate. Bitcoin is a unique asset which is a new paradigm not understood by most but available to all.

    • ru82 says:

      You are correct. BTC could keep going higher.

      Something better will come along as far as a crypto currency. BTC is over 10 years old and that is a long time in the technology world.

      What keeps me out is 1st it was proposed as a currency. Now a store of value. i am worried the narrative will change again.

      But i did read that 84 % of Trading BTC is under 40 and 64% are under 30.

      This age group may really adopt BTC and do not care if the have to pay as low as 1 or up to 29 dollars in a transaction fee when they use it to buy a cup of coffee?

      • nodecentrepublicansleft says:

        I should have kept all my gorgeous, near mint silver age comic books I bought for hundreds of dollars in 1982-84 that are worth a small fortune today (X-Men #1, Avengers #4, Iron Man #1, etc,).

        Speaking of today’s youth, some 18-yr old kid who was dating my niece just lost his ass on a bitcoin type thing called “XRP”.

        He even convince his Mom to invest…..

        • ru82 says:

          In the 1980s, my uncle who was born in the 1920s found out I liked baseball cards. He said, you know what, I have a Babe Ruth card from when I was a kid. Do you want it? I about fell out of my chair. I said yes. He want over to his mothers house who was in her 90s to find it.

          Come to find out, his mother threw all his old baseball cards away a few year earlier cleaning house. :(

  13. Dan says:

    By the way, have you noticed that Buttcoin is pumped up every single Sunday, starting from 11:00 AM to Monday morning?

    • MonkeyBusiness says:

      Satoshi only works during that period.

    • Zantetsu says:

      If you truly have noticed that, why don’t you use that “fact” to make some guaranteed money?

      I think you don’t because you can’t because you made it up. You sound so butt hurt about bitcoin it’s not even funny. My guess is that you had the chance to buy a long time ago, did not buy, and now regret it and crap all over cryptocurrency at every chance to vent your frustration with yourself for missing out.

      I have some of that same bitterness, but I am trying to channel it into thinking rationally about what is happening instead of standing there “shouting at the sky” as others have called it.

      • Dan says:

        Who said I don’t. And thank you for your contribution 😈😈😈.

      • Lisa_Hooker says:

        The only thing that keeps me from purchasing Bitcoin is a lack of faith in the future supply of suckers. Notwithstanding P. T. Barnum’s admonishment.

  14. Anthony A. says:

    I remember when gambling was done at a casino or by the shyster who was pushing a great deal who had to do the pitch in person. When I worked in manufacturing, we had “Willie” who ran the daily numbers bets out to the bookie. Now we have the internet to host the Ponzi schemes and the rest of the “get rich quick” stuff.

    Some day, the great bitcoin folly will be a one hour TV show on American Greed”.

  15. breamrod says:

    “buttcoin” is here to stay folks. Corporate America is slowly buying into it and it slowly is going more and more mainstream. The government will eventually endorse it and try to control it. It’ll be interesting to see if they can.

    • Dan says:

      Nope; since Tesla bought Buttcoin, Tesla has lost $165 Billion in market cap. This whole mainstream adaption is another fallacy pushed by Buttcoin fans to get new victims into the game.

      So, funny, for each $1 Elon Musk put into Buttcoin, Tesla share holders have lost $110 👿👿👿. That must be the greatest blunder in the history of all Ponzi schemes. 👿👿👿

      • Photon says:

        Wow, Dan. You are, quite honestly, equally as tiresome as all the annoying bitcoin fanboys.

      • Gordian knot says:

        I read an article a couple of days ago from a anti bitcoiner talking about the puny 18 million dollar fine put on tether. This was the equivalent of the TPTB endorsing the bitcoin ponzi. They could have driven a stake through the heart of crypto but chose to let it run.

  16. Maximus Minimus says:

    There’s a lot of mostly young people out there who do not know or care about monetary history, they just see that something is seriously screwed up with the system. Trillions of dollars are being tossed around as if some monopoly money. Bitcoin is an escape from reality, or escape into new reality.

    • Dan says:

      So, you are saying we should go from the dollar scam that inflates 5-10% annually, to Buttcoin Ponzi scheme which inflates 10000% a year. What a great strategy, and is controlled by con artists such as Saylor and Musk.

      • Earl says:

        It’s not just them..every bank,most of the smaller central banks( there’s something like 175 currencies) , insurance companies, etc. are buying bitcion..and only bitcoin. It is the international, instantaneous means of settlement..since the only thing the US exports is raw garbage & sowbeans how long do any of you thing the dollar ponzi will last. Believe in what you want ..but the earth is not flat

        • Dan says:

          Your pumping for bitcoin won’t work on majority of people reading Wolf’s articles. So, keep wasting your time advertising bitcoin.

      • Cliff says:

        Buying power of the Dollar is around 3% of its original value.

        Bitcoin buying power is around 62 MILLION % of its original value. (50,000/0.0008 so you don’t have to hurt your head doing the math).

        Tell me again about inflation?

        History may not repeat, but it sure does rhyme. Inevitably societies who adapt quickly to new technologies, such as improved farming practices, new healthcare advancements, or, yes, digital currency, end up far ahead of the others. Stop being afraid of this, stop whining because you didn’t get in early, and watch the Fed absolutely panic when more people realize the Dollar is WORTHLESS.

  17. WES says:

    For something that is not real, it sure takes a lot of energy to keep it alive!

    • nodecentrepublicansleft says:

      Just an anecdotal observation, but I used to know a guy who makes them and he told me a little about it. I think it was about 9 yrs ago.

      His operation is in SW Florida and he’s known to be a bit of a crook. He ripped me off once and I know of at least 2 attempts on his life (probably a result of ripping people off).

      One attempt was a stabbing and the other was a car bomb. I can’t recall which one was in the paper. Hopefully he’s not representative of the average person who creates BC.

  18. Patrick F says:

    “The government will eventually endorse it and try to control it.” How might that work (question not an accusation)? Dear Mr Jones, we are alerted to the fact you have $20m in bitcoin. Please complete the attached form and return. I bring your attention to item 3(b) where supplying your bitcoin PASSWORD is OBLIGATORY. Yours, The Government.

  19. Stan Sexton says:

    Bitcoin will be around until the first EMP.

    • MiTurn says:

      THAT is funny!

      And probably prophetic.

    • nodecentrepublicansleft says:

      Haha! My early 90’s Nissan 300ZX will hopefully still run.

    • Nathan Dumbrowski says:

      Bitcoin would not be impacted by an EMP. As the foundation is distributed network ledger model. Now if the users PC is zapped and that is where they stored the password then you have a point. But if an EMP hits we have way more problems then figuring out currency. Things that will matter IMO would be food, water, medicine, cigarettes, shelter and bullets

  20. Rcohn says:

    Two questions for the bitcoin experts
    1.When you pay for something in bitcoins ,is the price for that item in bitcoins the same today as yesterday or the same as it was an hour ago
    2.When you buy a bitcoin , where do you keep it. What happens if the counterparty that is holding it goes bankrupt or just plain disappears. What is your recourse?

    • Antwan says:

      I have transacted with Bitcoin only a few times but:

      1. Prices are always up to date and priced in whatever fiat currency the seller operates on.
      2. Your bitcoins are usually held on a marketplace like Coinbase when you buy. To avoid counterparty risk, you should transfer to your own bitcoin wallet but this requires a fee of roughly $10 in bitcoins as compensation to miners to get the transaction through the blockchain. This is a big problem for Bitcoin as a currency. The only way to do many transactions is internally (think Paypal moving money from one account to another instead of via the banking system) rather than over the blockchain. But those bitcoins can be easily stolen and gone forever.

    • stan6565 says:

      3. What happens when the maid unplugs your mining pc in order to plug her vacuum in?

  21. BuySome says:

    If all the bitcoin holders don’t need dollars then why don’t they value this stuff in jujubes? Or is it that when the coin hits a peak, the guys behind it are going to go to the Fed and buy their printer…then they can open BitBank and cash out all the coins for the people who don’t like jujubes. I’m holding out for BananaCoin in case the apes make a monkey out of me.

  22. SpencerG says:

    Amen to this ENTIRE column! Particularly the last sentence… Bitcoin will not be a real thing until the collapse in its price requires the Fed to bail someone out… for the good of the “system” of course.

    • Petunia says:

      I always thought of bitcoin as a test run for a fully trackable spending system. It was always a scam because it was sold as a privacy tool and there is nothing private about it. Open ledger means everybody gets to see who holds the coins and how they travel through the system. There’s nothing private about it.

      I haven’t looked at the code yet, but I know the encryption is breakable, just based on what I know about blockchain. All those lost and not lost coins will start to move in strange ways one of these days.

      • Dan says:

        I agree. Look at the shady history of Bitcoin. Some guy named Satoshi Nakamoto has invented it, but he doesn’t exist. If tomorrow Satoshi Nakamoto shows up, he’d be a hero of millions; why is he hiding? Simple answer is that there is no such person.

        The whole thing smells like a black psyop of some spy agency or banksters to do a control test and see how the world would react to digital currency.

        • Craig S. Wright claims to be Satoshi Nakamoto, but I’m not smart enough to know if his copyright claim has any merit. The Bitcoin community understood from the beginning that Satoshi was an alias.

          There are two things that happened in recent history that I consider far-fetched:

          1) That bitcoin would achieve legitimacy and widespread acceptance.

          2) That COVID-19 would have a noticeable impact on the economy (I never thought they’d do lockdowns and close businesses).

          The implication seems to be that with the right advertising and media coverage, nothing is too absurd to gain widespread acceptance. If Mickey Mouse becomes president of the United States, what are we gonna do about it? Maybe it’s simply time to admit that the world is a simulation.

        • cb says:

          @ Orthodox Investor – “If Mickey Mouse becomes president of the United States, what are we gonna do about it? ”
          ——————————————–

          celebrate that we got an upgrade?

        • Petunia says:

          Dan,

          I got interested in the UFO movement decades ago because of the psyops aspect. My conclusion, after reading extensively on the subject, was that it was a psyops operation run to see how long it would take to inject an “idea” into the mainstream. The horrifying aspect is the number of medical professionals involved in making it possible.

          We are getting more of the same with covid and bitcoin.

          BTW, the guy wanting to get credit for bitcoin can prove he is real by moving one of the first bitcoins minted. It’s easy, he can say he is moving the 1st, 2nd, or 3rd bitcoin and then does it. But I don’t think this will be happening, until I decide to do it myself.

        • Dan says:

          Petunia:

          Good point about moving the first minted Bitcoins.

          Yeah, I used to be so interested in UFO, NASA, and space in general when I was a kid; NASA was my Mecca.

          Then I learned about all the fake images by UFO community, all the fake Moon and Mars photos of NASA, and that completely me turned off; now, I don’t believe in anything NASA says.

          I think you are correct about the whole UFO thing being a psyop experiment.

      • Bitcoin is electronic barter. There should be no store of value, if you have extra bitcoin after the transaction you move it into something like gold. The global network isnt’ nearly integrated enough, as long as nationalist central banks outlaw the process. A chicken in China and a chicken in the US in theory have equal value. To implement the system Forex has to be trashed. There goes sanctions, reserve currency, carry trades. Bonds would have to be issued backed by gold, or some other asset. There would be no fiat debt, all debt would have to backed with assets. Hard to imagine a peaceful transition, but the endgame is probably supported by libertarians, advocates of economic democracy, and the freedom to do with your assets as you choose.

    • Felix_47 says:

      Agree. I anticipate the bailout but the problem is that only GS or Citibank or Chase or Steve Cohen is going to get the bailout. I would not be suprised if our lawmakers hold a lot of Bitcoin given to them by the big investors to guarantee their bailout. It would be a wise investment by our captains of finance. Buying our politicians is pretty cheap compared to the anticipated returns. We muppets will get the wipe out.

  23. Michael Gorback says:

    This confirms what I said in a previous post. If I provided a service a week ago and accepted payment in bitcoin I’d be down 20% today.

    Maybe I’ll start up an honestly named coin – roulette coin. I have to give it more thought, like red roulette coin and black roulette coin. If you’re gonna gamble go big or go home.

    Meanwhile, I am still offering gambling-debt backed securities paying a 20% yield.

    There are also opportunities to get into my South Sea 2.0 fund.

    • lenert says:

      Yahbut, if you’d gotten the job done a month ago you’d be up 45%. /s

    • Lisa_Hooker says:

      Perhaps the “00” (zero zero) coin, because the “exchanges” always win?

  24. fred flintstone says:

    The US dollar is a fiat currency that can be inflated to any level.
    Bitcoin is supposed to have a limit to its numbers.
    What is not discussed is that the dollar is backed by the largest most productive, best weather farmland area in the world.
    The largest military force in the world.
    The third largest population in the world.
    The largest GDP in the world.
    The most stable government in the world.
    The most advanced technology in the world.
    The largest and most sophisticated arms making nation in the world.
    Bitcoin is backed by a promise that an individual or small group in some place that you may not have jurisdiction over makes to you.
    Good luck with that.

    • ru82 says:

      The United States Government owns over 200 trillion in assets we call government forest and parks, government buildings, and mineral rights. Assets to debt ratio is pretty good still.

      • eg says:

        ru82 and fred flinstone get it.

        $USD has value because it is the ONLY thing that the various levels of the US government will accept in payment of its taxes, fees and fines.

        Bitcoin is an electronic gambling token.

      • Brant Lee says:

        It looks to me like all these assets are already as good as hocked and waiting to be sold off to the highest bidder when the cows start coming home. You can’t keep borrowing and printing to infinity then expect to hold on to your material property.

        It seems to me that the next step to keep the loans coming from other countries and to keep interest rates low, to afford the debt, will be required collateral in some form. It may already be happening.

        Is the national park’s combined value worth 1.9 trillion? The amount of money that is about to be thrown into the wind? This free money has to start costing property someday.

        • Kerry says:

          Sadly, most people will not realize the epic collapse to come. Honest money ( gold & silver ) is not replaceable with gimmicks…

    • cb says:

      @ Fred Flintstone –

      Good points, but I have to question “the most stable government in the world.” We seem to be suffering a lot of internal pressures.

  25. JWB says:

    Does one buy cyrpto currency with cyrpto currency or with government-backed currency? And who ends up with the loot?

  26. roddy6667 says:

    Some people bought Bitcoin and scored bigtime. My (ex) mother-in-law bought a lottery ticket and won a million dollars in the Connecticut Lottery. I don’t see buying lottery tickets as a prudent path to a secure future. I put crypto in the same category.

  27. Klaus Kastner says:

    Warren Buffett once said something like: You can get all the S&P 500 investors into a conference room and have them bid up the prices sky high. But the only thing that matters is how much money eventually leaves the room and that will be no more than the earnings of the underlying companies.

    • fajensen says:

      Which is wrong. Warren Buffett ignores that stock prices and turnover can be used as collateral for borrowing: Therefore, Everybody will leave the room with whatever they have borrowed and the lenders will be left with their pants down (or made whole by the FED, depending). Nobody goes to jail, so, Why Not?

  28. polistra says:

    I understood it was SOME kind of fraud from the beginning, though I didn’t see the chain-letter or Ponzi aspect.

    Two basic facts:

    1. Bitcoin runs on the web, which runs through NSA. NSA knows all encryptions because it developed them. This means that Bitcoin is NOT independent or decentralized or government-proof. It is government.

    2. Satoshi’s “biography” is openly CIA. The format of the story is familiar. Agents who stir up “conspiracies” and “organizations” are often quite open about being “retired” CIA or “retired” MI5.

    Why are they open? Sucker Filter. It’s better to advertise up front that you’re getting into a crazy scheme that can’t possibly work, a scheme that violates all the ideals it’s supposedly pushing. This saves work for the scammer, who doesn’t have to waste time cultivating rational non-suckers. Everyone who responds to the pitch is a solid candidate for this particular cult/scam.

    • Zantetsu says:

      Bitcoin does not “run on the web.” But that initial falsehood made it easy to know to just skim/ignore the rest, so thanks for that …

      • Lisa_Hooker says:

        How do I accomplish my Bitcoin transactions without any use of the internet? Which exchanges use pen, paper and carrier pigeons?

  29. Kenny Logins says:

    Wolf you’re wrong on the motives of your book buyer.

    Why would they pump and dump over a book? To save $10?

    To make it really worth thur while they’d have bought when it was 50 cents.
    But then if it was going to double in 6 months why not wait?
    Then wait more?
    That book bought off you would have cost them $300,000 today.

    The reality is early users were into the coolness of it, not subversive pyramid schemers.

    A friend was an IT geek into it very early on mining it. He’s not a billionaire now. He’s just working in IT still.
    A bright guy just into something cool.

    I bought some in 2015 to tinker with, not to make money.
    I tried to give mine away just to play with it in wallets, not to try make money.

    It’s genuinely interesting and cool.

    Sadly it’s been undermined by pump and dump and yes it’s working like a pyramid scheme for many.

    But that doesn’t mean it’s bad, or people are only into it because they’re pyramid schemers.

    As much as I highly rate your articles for their emotional detachment, being clean and high quality… I do think your reaction to bitcoin is emotionally driven.

    Right now Tesla is a pyramid scheme but no one appears to mind.

    Cripes, the entire economy, and especially pensions, are a big pyramid scheme.

    • Dan says:

      Wolf is quite correct. Look at Buttcoin fans on Twitter, on YouTube, or anywhere else. They would gladly argue with you 2 days with you to convert you to a Buttcoin investor. I’m talking about wasting 2 days of valuable time just to convert one person into Buttcoin investor. Who does that? Refer to Ponzi schemes; in all Ponzi schemes, each member knows that it is in his/her interest to work hard to acquire new blood, a.k.a. new victims into the Ponzi.

      If Buttcoin fans have no ulterior motives, why waste 2 days just to convert one more person? Out of the goodness of their heart you’d say 😈😈😈?

    • buda atum says:

      “Right now Tesla is a pyramid scheme but no one appears to mind”.

      Are you new Kenny? Then read the comments minding when Wolf posts you links please.

    • nodecentrepublicansleft says:

      What is a “pension”?

      • Lisa_Hooker says:

        A pension is somewhat like a chain letter. You keep sending out your money every day in the hope that someday in the future you will start receiving more money than you sent.

  30. David Hall says:

    One guy accidentally threw away a hard drive with a bitcoin key that is now worth $300 million. Authorities will not allow him to dig up the landfill.

    Hackers have stolen billions of dollars worth of bitcoin. Once they broke into a bitcoin exchange and looted it.

    An investment that could drop 20% in a week is risky business.

    • fajensen says:

      Not only Once, Many times, although there is some discussions about the operators of BTC exchanges “hacking” themselves or colluding with the hackers for a part of the loot.

      There was a Danish guy who was so terrible, Terrible, unlucky that his exchanges got “hacked” four times. He has probably changed his name and is on his 5’th project :).

    • soapweed says:

      This is why folks should have their own backhoe and enough ground to have their own small dump. Save 50 bucks a month on a dumpster and also your bitcoin…..simple.

  31. Victor V says:

    This thread reminds me of how much upside there is.

    Out of curiousity all the money that’s historically been allocated to commercial real estate (equity/debt) where is that going to be re-allocated to….. bonds? At 1,2,3%…. so insurance pensions are going to further their spread of how much they need to make up……stocks? At all time highs?

    Or a network that’s growing at a exponential rate, internationally that has a growing value as the network grows.

  32. KapnKrunch says:

    Wow, Wolf! You’ve just written THE best article about Bitcoin I’ve ever read. Kudos!

  33. Dan says:

    Also read this article and the articles it lists in the References section:
    https://seekingalpha.com/instablog/48665243-kristian-johansson/5555686-tether-bitcoin-domino-effect

    All these articles are explaining how Tether has been used for years to print out $USDT out of thin air to buy bitcoin to pump it up; this is also how they pump up bitcoin every single Sunday afternoon and night.

  34. Mira says:

    “the despised fiat dollar”
    “because those currencies are being inflated away to nothing”
    “hung up on the US dollar while it lasts”

    Are we emotionally hung up on money ??
    And the love of “GOLD” .. who gave us these idols to worship, it could have been anything instead.

    Two flies up a wall .. The Australian passion for gambling:
    Man is bit by it.

    You could have lost your password & found it again yesterday.
    Haven’t you ever put down a few hundred dollar notes, placed a book & then another on them & forgotten them, only to lift the books off a few years later, it’s like you have been magicked.

    • Mira says:

      I’m talking about the conscious intelligence of the universe here & not apparitions & poltergeist activity .. ok.
      I sat in my book room & asked a question ..I stood up & took a book off the shelf.
      I placed the book on its spine on the coffee table.
      I let it go & it opened.
      The page on my right had the answer.
      We are the AI the robots are out toys.
      Tell me nothing funny has ever happened to you.

  35. mike oxbig says:

    Bitcoin is a taxable event every time you buy something with it. When central banks introduce their digital currencies, it will not be a taxable event when you buy something with it.

    I can see that blockchain has value. But bitcoin has no value. Just whatever they can get someone else to pay for it. It’s nuts.

  36. MiTurn says:

    “Buy and hype.” = a hustle

  37. billytrip says:

    I’m amazed at those who think that “the blockchain” is some kind of miracle magic that justifies the value of bitcoin. As a retired software engineer, I am pretty sure it is a digital auditing system. One that apparently doesn’t scale well making it useless as a high-transaction-volume “currency”. Something that can be done, albeit slowly, with a stack of notebooks and a pen.

    Bitcoin is a classic Ponzi scheme. The early adopters will make bank. The bandwagon jumpers will lose their asses. It is inevitable.

    • Winston says:

      “Bitcoin is a classic Ponzi scheme. The early adopters will make bank.”

      FAR better yet, someone who STARTS a hypecoin is guaranteed a FORTUNE.

      So, how many different hypecoin varieties are there now?

      • Winston says:

        “According to CoinMarketCap, the total number of cryptocurrencies is 7,812 with a total market cap of $324.716 billion (as of January 20, 2021).”

    • Winston says:

      Analysis by another programmer (he’s more that just a financial blogger):

      Karl Denninger says digital currencies are all a scam
      19 Jun 2017

      https://cryptorum.com/threads/karl-denninger-says-digital-currencies-are-all-a-scam.217/

      • Winston says:

        After his long technical analysis, here’s his concluding sentence:

        “So go ahead and play if you wish folks, but just recognize that you’re riding a ponzi scheme — and that all of them, without exception, eventually collapse.”

      • cb says:

        Denninger, like Wolf, has a crystal clear, excellent mind and is generous to share his insights.

  38. Winston says:

    80% (perhaps more by now) of bitcoins are mined in China. During the last major crash of the pump and dump hypecoin, note how close the “value” came to the estimated $3,000 cost to produce each hypecoin before it once again began to rise. Interesting “coincidence.”

  39. John says:

    Wolf,
    I can relate, I also would have sold it early also. I did a lot of reading with google searches on negative interest rates. Many other countries have negative rates to spur consumerism and stop hoarding of currencies. That’s what it said. The other part of Bitcoin is getting away from fiat currencies which you mentioned early in your article. There is also the digital aspect of it with the fear of negative rates taxing consumers or savers. Corporations would be taxed also, so buybacks are justified instead of holding cash. Owning Bitcoin would keep one away from a cashless digital society taxing fiat currencies with a negative rate on money.
    The digital currency would come into play when people withdrew their money from banks with a negative interest rate. So the assumption would be central banks or governments would go digital and cashless.

  40. Brad Tifman says:

    Blockchain (Bitcoin, etc.) is a trap; A bubble, too. It’s not an alternative to their grifting fiat-currency, but the next step in enslaving us.

    A murky arrival and enthusiastically embraced by the same tyrannies that ruthlessly shutdown American Liberty Dollar. And a “distributed” ledger whose centralization is already under discussion by the same tyrannies.

    Thinking separates mankind from the beasts, yet much of mankind refuses to think.

    • Nathan Dumbrowski says:

      Whoa whoa on the blockchain trap. Blockchain is a technology that has massive global implications for transactions that are not Bitcoin. Totally different technologies Brad. Might find a good book or audio book like The real business of blockchain.

  41. boikin says:

    I got an email this past week from my favorite local BBQ place saying that they would now except crypto currency(a list of excepted cryptos was included) at both of their locations. Does this mean that the owner has decided that crypto investing pays more then BBQ, or is this just a sign of desperation? When ever I drive by there drive through line is quite long so I have to think that business has been doing ok, outside of catering. It worries me that a place that sells an item called the “working man’s plate” is taking crypto. I guess it could also just mean I have missed the boat on the future.

    Wolf, I wanted to say that as a first time commenter and someone who teaches people about data visualization, I have used your site on multiple occasions as examples of how to present and describe data in ways to let the audience know both what the data says and what the day does not say. Keep up the great work.

    • SnotFroth says:

      I see that and chalk it up to topical marketing.

      When something like BLM is trending in the social consciousness, they want you to know that their BBQ is inclusive and diverse.

      When crypto is trending, they want you to know that their BBQ is blockchain-ready.

  42. Sea Creature says:

    Watching the news – it is all clear now, bitcoin will ultimately be the big hype that tops out and blows out this cycle’s market ‘everything’ bubble.. bitcoin will be the pets.com of the 2020s..

    Once your grandma, brother and their dog all have bitcoin (and it is at over $1 million, or $10 million, or $100 million (who knows?)), it will be the top… and then it will crash. And that will be the end of the ‘everything bubble’..

    Just wait… you’ll see ;-)

    • Winston says:

      “bitcoin will be the pets.com of the 2020s”

      But over and over again because, as shown in Las Vegas, the supply of greater fools is endless.

    • Trailer Trash says:

      I wonder how much money has been borrowed against various assets to throw at Bitcoin.

      When Bitcoin drops and the loans are called and the forced selling of everything unwinds all the derivatives and financial bets, it will be hard to miss. I’ll (bitterly) laugh like hell if the imaginary Bitcoin starts the fire that burns the whole system.

      Meanwhile the Fed has lost control of prices. I speculate that home building will crash and burn due to material prices. Yesterday a neighbor said he was quoted a price of $65 for ONE sheet of 1/2″ A-C plywood. A sheet of 7/16″ waferboard sheathing is THIRTY DOLLARS. He said 2x4s are $7-8 EACH.

      I find those prices shocking because I am surrounded by commercial woodland, sawmills, and “engineered wood” products mills. There is plenty of wood to cut and people to cut it. The mills are all running; we are hardly affected by the virus. No big power failures or ice storms here.

      Companies can not justify these prices except on the basis of charging whatever the market will bear. Since we can now borrow infinite amounts of cash for nearly free, the market can bear infinite price increases, apparently.

      Only the very wealthy can build at current materials prices. And they already have lots of houses.

  43. joe2 says:

    Fairy Tales for Grownups
    1. Banks receive and protect deposits to lend to business developers for productive new products for the benefit of all. Or to assist homeowners in acquiring a residence. The difference in interest rates is passed to the depositors as their reward for frugally postponing their spending.
    2. Stocks are sold as shares of a profit making company to allow all to share in the profits of the company and provide investment for growth.
    3. Government sells bonds to acquire funds for capital investments to improve infrastructure to aid commerce.

    So WTF is wrong with Bitcoin conning people?

  44. Robert says:

    “And unlike gold, which doesn’t have performance metrics either, bitcoin has no physical presence. You lose your password, the bitcoin are gone.”

    I wouldn’t put gold in the exact same camp as Bitcoin, although I get your point.

    Gold’s value has tracked inflation over the long term (hundreds of years), largely due to the necessity to buy land, find gold then refine the gold. All of these factors require energy and labor. External metrics can apply to an extent. And Gold does have real world uses in electronics and jewelry. There is a real limited supply of gold, unlike digital currencies in which the supply is infinite.

    Now a Bit-coiner would use this same argument to say Bitcoin has value because it requires energy to mine and computing power to solve the block-chain equation. The logic here is circular, because you’re mining it to give it value, but still it is a form of reasoning in which a metric can be created.

    You can also create a Hamster based currency in which every 100 spins of the hamster wheel get you 1 hamster coin. Now you must only use the rare Mongolian lion hamster in the wheel, of which there only a handful, otherwise it’s not a genuine Hamster coin.

    I’m very wealthy by this standard. Would someone like to trade gold for Hamster coin?

    • Xavier Caveat says:

      Gerbilcoin: The industry standard since early 2021.

      • don says:

        At least you could see and smell a tulip during the Tulip Mania of the Dutch golden age of free trade, but I don’t think Gerbilcoins lack of use value would make it, even in that consciousness raising New Age era of long hair decked with flowers and free love in bell bottoms before the HIV monkey virus epidemic from Africa. Remember, never trust anyone over thirty and revolution for the hell of it, Abbie Hoffman.

      • Robert says:

        See, hamster coin already has compeition!

        But it’s a fact that hamsters can spin a wheel faster and require less food than gerbils.

  45. nick kelly says:

    All of the above prove it’s not easy to nail down or agree on what BC is, so let’s look at what it ISN”T.

    It’s not a currency, root word ‘current’ as in normally currently a medium of exchange. BC price fluctuates wildly so any two parties wanting to use BC as a currency would need identical views on its direction.
    The transaction suggested to WR was a barter, the most inefficient way to transact.

    This applies to any currency, which is why (apart from currency traders) a currency can’t also be an investment vehicle. If it is fluctuating wildly, the usual
    way is to transact in US$ or euros etc. Before the euro all Italian real estate was priced in US$ not lira, which not coincidentally, had just come out with a 500,000 lira banknote.

    Another point about BC as a currency: it is very slow and can only get slower. The distributed ledger has to check for a ‘double spend’, about a trillion operations. Right now it’s about ten minutes but it can be days. Needless to say the network has never been as busy as Visa’s, which processes a payment in fractions of a second.

    • Xavier Caveat says:

      I always felt so rich in Italy of old, blowing 50,000 lira on lunch, but it was nothing compared taking a taxi from the airport in Istanbul to the city around the turn of the century, which cost a few million Turkish lira. (about $25 at the time)

  46. EJ says:

    Not a fan of this article, even though I agree with it.

    Cryptocurrency is an revolutionary invention, with amazing features. Look at the ecosystem built around Ethereum’s smart contracts, its in-progress 2.0 update, and the various stablecoin schemes, for instance.

    *BITCOIN*, on the other hand, represents everything wrong with cryptocurrency. The volatility, the transaction difficulty, the huge compute power waste, architecture instability, the brainless hype from leaders who can barely operate a computer… cryptocurrencies don’t have to have any of these things. Which is why its so unfortunate that unmodified Bitcoin has become the face of crypto.

    • Xavier Caveat says:

      What if I had 21 million pieces of paper all serial numbered 1 through 21,000,000, with each stating that it was worth 1 Bitcoin.

      Would anybody care?

      • Zantetsu says:

        No, because you can easily force a piece of paper. You cannot, however, forge a bitcoin. Not sure if what you’re asking is what I think you’re asking though because the answer is so obvious as to make the question pointless.

        • Xavier Caveat says:

          It would be of the same scarcity, and that is what is driving the Bitcoin market, not what you can purchase with the latter.

        • Robert says:

          “You cannot, however, forge a bitcoin.”

          I’ll start up a new crypto currency called bitcoin 2 (the better bit coin). It will be identical to bitcoin in all respects. So, there you go, I just forged a bitcoin in any practical sense. Or does your bitcoin do something mine doesn’t?

          See how silly bitcoin is?

        • Zantetsu says:

          Robert you moved the goalposts. You can create another cryptocurrency but it won’t be bitcoin. So you’re not even postulating the same premise that I responded to.

        • Zantetsu says:

          So Xavier your actual point is that all things have equal value because all things are equally scarce?

          I don’t find that very compelling.

        • ru82 says:

          Rare or scarcity. I sort of wonder why gold has not risen like BTC. Someone told me over 90% of the gold has been mined. So soon it will be rare too but there is 2.5 Billion ounces. What if we would measure gold by the lbs instead. There would only be 156 million lbs of gold. After all an ounce is 1/16 of a lb. This would make gold more rare and a better store of value…because there is less of it.

          Let divide BTC by 8 and now you have as many BTC as Gold lbs. Lets call them Better Bitcoin. To make this happen lets change the code so there is 160 million coins similar to gold. Thus the $48k price of BTC divided by 8 equals $6k. Thus if there was as much BTC as gold ounces the price would be $6k.

          But now the price of gold lbs is $1700 x 16 ounces = $27k. what did we do, we just change the unit of rarity.

          We just made gold more rare by pricing it in lbs and the price will be $27k a lbs.

          Anyway…..my whole point of this is just to show every thing is just a unit. A unit that can be changed.

          Bitcoin is supposedly finite, but the code can be changed. Never say never, especially when there is greed, self regulation, and lots of money to be made.

          I personally don’t buy the something is rare or finite argument when really there is a way to make more. Mona Lisa painting is rare. Bitcoins are just a mathematical equation used to create a file. It is finite right now because someone said it is finite.

          I will never be able to buy a bitcoin because it cost $47k. How may people have $47k to buy a bitcoin. But wait, I can change the units of Bitcoins. I will sell you a coffee for $5 usd or .0001 BTC.

          Well I just created 9000 pieces of one Bitcoin. What is so rare about that?

          If I chop up the mona lisa painting into 9000 pieces. It is a rare painting anymore? Maybe I should say the hope diamond.

          Bitcoin can go to infinity. Pricing things in a fraction of a Bitcoin is like when the Romans used to shave coins to devalue the currency. Bitcoin is rare only if they keep the 21 million coins as a one piece coin.

          Maybe I am missing something.

          How about instead of printing more dollars, we just cut up a dollar into 9000 pieces. It takes 5 pieces to buy a $5 dollar cup of coffee. That would make a $1 dollar bill soon worth $47k?

          Gold will always be rare because it’s intrinsic value as a metal and it cannot be replace as you cannot make more. It is not a currency and it may or not be a store of value but it is rare.

          Any day in the future, someone such as a government or an inventor can say I have a better blockchain. Let use this as a currency or a store of value. It has happened all the time throughout history and it will happen again.

  47. roddy6667 says:

    Bitcoin is the modern version of The Emperor’s New Clothes.

  48. The offer to buy your book was probably tied to the number of bitcoin sales your site would generate. More sales, more books. Politicians do this all the time, they write down a few thoughts, hire a copy editor. A group wants to donate a couple million, quietly, buys that many books divided by the selling price. The books go directly from the publisher to the landfill, or more likely the contract is to print on demand, with a preagreed minimum, paying only for those actually printed, and no delivery request is ever sent. Most of the books are never published, the publisher takes a cut and the money changes hands without going through channels. It’s all a form of second level marketing, franchises selling franchises.

  49. NICHOLAS M MAIER says:

    A wise and seasoned investment advisor summed it up. ” Everyone is going to own Bitcoin. It just matters at what price”. Anyone who pooh-poohs Bitcoin has not taken the time to understand the technology, the incentives and the network effect. The “network effect” powered Amazon, Facebook and Netflix to their current dominant positions. There are millions of people invested in the Bitcoin network. Bitcoin promises honest money to millions of unbanked world citizens. It is a bet on humanity and honest money. Dismiss Bitcoin at your own financial risk.

    • Wolf Richter says:

      You have no idea how silly this sounds. “It is a bet on humanity and honest money.” This is just hilarious, one of my all-time favorites. I had to read it twice to make sure you weren’t being sarcastic.

      • ru82 says:

        Exactly Wolf….once greed enters…..aka wall street……into a non regulated entity with Billions of wealth sloshing around. Good luck. Even worse…who trusts the Chinese. Not me.

        Now will Bitcoin got to $100k or higher because of the network effect. It sure could and probably will. The problem with serving the unbanked of the world is they have no military to back up their Bitcoin bank. Look what happened to Saddam Hussein or Omar Khadafi when they tried to sell oil in something other than USD.

        The little anarchist standing on my left shoulder wants to see Bitcoin as a disruptor…but the realist standing on my right shoulder has doubts.

  50. matt says:

    “And that day, ladies and gentlemen, the day that the Fed bails out the biggest most leveraged bitcoin gamblers because the price collapse of bitcoin is threatening to take down their highly leveraged funds, thereby threatening to collapse the entire financial system – that will be the day bitcoin has truly arrived.”

    Or it will be the day the government, in concert with the governments of all the industrialized nations, decides to regulate exchanges, systematize the reporting of trades for tax purposes, slap transaction taxes on bitcoin and the like. Just as they did with the sharing economy and internet sales taxes once they became too big to ignore.

    Although you would still be able to trade your bitcoin on an exchange based in some place like Burkina Faso and deal with their court system when they become the next Mt. Gox.

  51. fred flintstone says:

    Anybody remember pet rocks?
    Some stores ran sales. What a deal.

  52. A says:

    Wolf’s last paragraph really hit hard.

  53. lenert says:

    What would happen if the “mining” metaphor was replaced with “printing?”

    • Wolf Richter says:

      lenert,

      Holy moly, you’ve got to retract that question. You’re going to have the bitcoin trolls all over you, and they’re going to bombard you with whitepapers and gobbledygook about “technology” until you turn blue!

  54. hedge says:

    So many comments here about bitcoin which is a good sign.

    Not here to pump or dump but here is my short and personal experience with it.

    I read the original paper about a year after it was made public and really liked the math, tech and general purpose. Busy with work and family, I didn’t do much about it. Years later, I got some as a small hedge / diversification.

    Like a piece of art from a lost artist, I stored it away but glanced at it periodically on my digital wall. It always made me smile and I still admire it’s author today. I’m not rich but I’d imagine that’s why some people like owning pricey paintings which they can hold, savor and own in private.

    In the years since, financial games and political extremes have increased while bitcoin has been a calming counter for me (when viewed from a longer time frame). Diversification using traditional avenues also helps.

    My humble advice to younger savers today is to invest a little regularly, in things they know or use or live in, and hedge/diversify more as they get older. Most importantly, stay active, healthy and make time for friends and family.

  55. BuySome says:

    Be careful of all that is offered in exchange for money of any form, backed or pure fiat or solid metal. Would you give up $2 in paper at the market to recieve an empty bread wrapper with a promise to deliver slices in the future? If a seller says they will accept only checks, plastic transfers, or any other digital junk, aren’t they really saying they want you to give up your cash to a bank rather than your cash is no good at all? If dollars are devalued, aren’t they really just pushing up asset prices to extort more of what they want that is under your control (serial numbered notes or credits that can call for these deposits)? They do what they can to get you to panic and trade reserved spots in the lifeboats in exchange for air filled life vests. That’s real rain out there folks, and the water is cold. Thank God we’re in Wolf’s bowling alley. The balls don’t shrink just because the price of umbrellas went up.

  56. MarkinSF says:

    Throughout this thread and many others I hear the term “fiat currency” thrown around. So what is “fiat currency” exactly? Currency no longer attached to gold? And then, what currency is NOT fiat?

    • Kerry says:

      All currencies are fiat if not backed by true money. Only gold & silver fulfill the definition of money. They have thousands of years of proof, too…

      • VintageVNvet says:

        Don’t forget copper and bronze and lead and sea shells in your definition of money K,,, all of those too have been used for thousands of years.
        That the definition of money is likely the same as the definition of beauty, all in the eye of the beholder is certainly one aspect of this crypto currency that is common to all of those things kinda sorta supports the possibility of this movement being a test run for an all digital basis for money going forward.
        I do all or almost all my banking and payments digitally these days as it is definitely much more convenient and somewhat less costly, and I think more and more folks do so also,,, and that makes the transition to an all digital currency seem less threatening, so far…
        Biggest challenge I see going forward is the probability of an EMP or CME or Carrington Event being certainly not zero.

        • Lisa_Hooker says:

          I also note that quality wampum has maintained value for several centuries.

        • Robert says:

          Wolf’s point is that what is being valued here is the price itself, not anything intrinsic to Bitcoin since everything that Bitcoin is can be easily reproduced.

          The argument I hear is “Bitcoin is useful because the price of Bitcoin is going up in price”.

          Ask yourself, “Would you buy Bitcoin if you didn’t know anything about its price?” Answer- no, because it has little usefulness(utility). If you were dying of thirst in the desert with a satchel full of money would you give anything to get that glass of water? Yes you would because water fulfills a need.

          This fits nicely with the marginal utility definition of value.

          To quote wikipedia.

          “The marginal utility of a good is derived from its most important use to a person. So, if someone possesses a good, they will use it to satisfy some need or want, starting with the one that takes highest priority.”

          Unfortunately the Bitcoiners use the ‘subjective theory of value’ in which anything can be worth anything. If this is true then eventually the supply of crypto competitors will expand and bring bitcoins value back to zero.

    • nick kelly says:

      ‘Fiat’ in Latin, literally means ‘a command’

      The US commands that the ‘greenback’ (Federal Reserve Note) has value.
      The power of a fiat, or order, depends on who issues the command.

      Shortly after Dec 7 1941, the US issued a fiat, that the Empire of Japan would cease to exist.

      Shortly after August 8, 1945, it no longer did.

      • nick kelly says:

        To continue a bit since so many confuse ‘fiat’ with fake. All measurement systems: temp, weight, power, work ( centigrade, watt, dyne etc.) are fiat. They are human inventions.
        The ‘foot’ you will notice, is roughly the length of your foot and very close to the length of the English king’s foot who issued a fiat: this will be THE foot.

      • VintageVNvet says:

        nah, FIAT means, “Fix It Again, Tony.”
        Everyone who owned one in the fifties and sixties knows that truth very well.
        Only vehicle I ever had that took more and more constant maintenance than my first car, a ’56 Triumph TR-3!
        Any other use of that word is plagiarism and should stop immediately, if not sooner.

        • Anthony A. says:

          You think that TR-3 was tough to keep on the road, I had a Jensen Healey which was also a fine product of the UK and Lucas. LOL

  57. Double D says:

    “No one needs bitcoin. It’s just a gambling device. The demand is artificial, and that artificial demand can vanish in no time.”

    Absolutely wrong!

    Everyone at some point in time will wish they had an alternate source to store their wealth when the “despised” fiat paper schemes eventually collapse. Cryptocurrency is an investment sure, but it’s also a mechanism for storing & protecting your hard-earned capital. Do you want all of your wealth stored in Crypto? Hell No. You want to be diversified in other stores of value as well i.e. gold, silver, land etc.

    Smart people are investing in cryptocurrencies because they see the writing on the wall with what the U.S. government has done & is doing to debase the USD. Not only that, these same smart people realize that the FED & the rest of the corrupt CB’s see crypto as an existential threat to their ponzi schemes. They want to bad mouth it at every opportunity for this very reason. They also want digitize money, so everyone can be surveilled & tracked.

    What most who don’t understand the inner workings of crypto is that Bitcoin is a surveillance coin. All activity can be tracked much like it will be with digital currency. Eventually those who bought into BTC will realize that there are a few Alt Coins far superior that were designed to maximize security & privacy. A fantastic example is XMR – Monero. Monero was designed to be everything BTC isn’t.

    Passwords (called Keys in crypto jargon) are designed to keep your value safe. We live in a world of very sophisticated thieves. So we need maximum security safeguarding our wealth. If you want your money stolen or lost, just keep downplaying the importance of password security until it happens to you.

    Believe me, the true intent of cryptocurrency is the farthest thing from gambling. $XMR right now is trading at $220 ($26 last March). Eventually when the smart people realize what a far superior technology it is, the value of it will rocket into the stratosphere. But for now, only those in-the-know in the crypto world know how undervalued it is , and it’s massive potential.

    Anyone interested in learning more look up Dr. Daniel Kim PHD & his explanation of what XMR is, how it was designed & the Monero community moving forward.

    • Tom S. says:

      If BTC is valuable as a hedge against inflation then it would stand to reason it would not be very good to hold during a deflationary period.

      Two things here…the Fed even with all their BS probably has it right. I agree there will be a period of some inflation as covid subsides. They do not know how long or how bad, but they are using 10 years of sub 2% inflation as a counterweight, so it could get pretty bad. What has yet to be seen is a period of high inflation and high unemployment. That is the uncharted territory of this monetary policy in the US. It will be clear to the public (in critical states for both parties) when they review the fed mandates and see a big 0fer who the source of the problem is and congress will have to respond. This will be the end of this round of the liquidity experiment and the start of another long sub 2% inflationary period with slow but consistent job growth. If we’re lucky to avoid another crisis over that time.

      The second thing is…then…What is your timescale for BTC? Will you hold your secret string of characters until you die so it’s lost to the world forever? Or will you panic sell when the inflation subsides and we’re facing another decade of weak growth? Will you time your gamble correctly? All of the momentum traders love seeing green everyday and rooting out the shorts, it’s getting to peak cultishness. Until one of the chosen dieties (Musk maybe?) is foaming at the mouth from believing their own lies I don’t expect people to change their philosophies on the matter.

    • nick kelly says:

      Some very unsophisticated thieves have stolen crypto by the simple method of pointing a gun at the owner and demanding his password or key.

      Once done, this crime is virtually impossible to prosecute OR even prove a crime has happened.
      It’s a he said, they said.
      With cash or valuables an alarm can summon police who find them with the thieves. But where is missing crypto?

      I guess the biggest thing missing from the idea of BC as a currency: who making a large payment does not want a third party record of same?

      If a car is for sale for 50K and LO! BC just happens to be 50K that day, who would send the guy their BC?
      What if he denies receiving it, or gave the computer info of an accomplice? Where is the record? The police might not laugh in front of the victim but they sure would later.

      The whole thing sounds like an ingenious math curiosity with zero use for commerce, a beast closer to a limited edition chain- letter.

  58. Cas127 says:

    Wolf,

    Because these kind of discussions always seem to mostly focus on the shortcomings of the AltCoins (whereas I think the real issue is accelerating USD debasement *creating the impetus* for AltCoins) I am interested in your personal take on the future of systematic USD dilution/debasement going forward.

    DC has always been comfortable with some non-trivial level of systematic inflation going on (if for no other reason than it helps to “solve” DC’s own intractable debt problems).

    But what has been going on for the last 20 years (ZIRP) and especially the last 10 (QE) is of a different order entirely.

    Since those factors are what is foundationally driving AltCoin explorations, how do *you* think savers should respond to DC’s accelerating USD dilutions, used to cope with the accelerating consequences of DC’s failures?

    • sunny129 says:

      Thanks cas127 for popping this important question to Wolf.
      I am all ears(eyes!) for his response on this issue!

    • sunny129 says:

      Apparently you got NO response for your question!?

      My comment re BC being of a ‘store’ value just like a base ball card or a rare clock was conveniently erased, although this is factual and NOT fake.
      Why not put a rational response instead of ‘delete’ button!?

  59. Xavier Caveat says:

    Yes, an invisible item of which just 21 million exist is just like a Red Skelton painting of a sad clown.

    • SnotFroth says:

      People will pay millions for a canvas onto which a popular artist snorted paint then sneezed it back out in a disordered spray.

      Stuff is worth what people are willing to pay. Nothing has intrinsic monetary value, not even gold. It’s all based on psychology in the end. Fundamental analysis is used to rationalize the prices others give to something, but it doesn’t set the price. Buyers and sellers set the price, using whatever psychological process they see fit.

    • Cas127 says:

      Xavier,

      Do you think that the 10+ trillion in US Bank USD deposits exist in physical form…like a Scrooge McDuck comic?

  60. James says:

    I love that certain comments made several hours ago are still waiting moderation because they don’t agree with the article whereas others that support the authors viewpoint are approved already.
    Are they censored???? Asking for a friend……

    • Wolf Richter says:

      James,

      BS. I was busy and couldn’t get to a computer. I might tell you in a few days what I was busy with. Since then, the few comments in moderation have been released, including yours.

      • joe2 says:

        I kind of like the personal moderation. I know at least one person will read my comment.
        Sometimes I writer comments for Wolf knowing he will probably block it.

        • Wolf Richter says:

          joe2,

          Many thousands of people read these comments every day!

          Some don’t even read the articles, they just read the comments, including yours :-]

        • VintageVNvet says:

          good point about some not reading the article, as seen clearly enough in some comments, eh Wolf?
          maybe you could derive some sort of quiz re each article that one must answer before being qualified to comment?? LOL
          on the other side of that, I sometimes do not remember the salient points of the article because some points made by the commentariat are or seem to be more important/funny/etc., by the time…
          BTW, Wolfstreet.com is the ONLY site to which I send dollars of support!!!
          Please keep up the good work.
          Thank you,

      • James says:

        If you were busy and couldn’t get to a computer, how were the dozens of comments made after mine approved? Looks like those other comments supported your article whereas mine might not have supported your article.

        • Wolf Richter says:

          James,

          All your comments automatically go into moderation due to prior issues in your comments. Your complaining about moderation twice in a row just locked down that decision.

        • Trailer Trash says:

          James, it’s not polite to insult a host, in his own house, while he’s serving you dinner.

          I very much appreciate Mr Richter’s work, especially his efforts to keep the forum civil.

    • nick kelly says:

      Kids: I have been a contributor to WS, a 1000 word piece around Oct. 2018 where I said Canadian pot stocks including poster child Tilray were wildly overvalued. (Tilray has lost 90+ since)
      I have also ‘crossed swords’ with WR several times and he has never censored me just for a different point of view.

      I get moderated all the time and no longer worry about it. It will show up. The ‘narrow columns’, where something goes back and forth are more liable to delay.

      BTW: that guy has quite the work ethic. It surprises me that he produces something almost each day, let alone answering questions.

  61. Depth Charge says:

    Watching all of these reckless gamblers try to legitimize and justify their reckless gambling is pathetic. Nobody ever has an answer for the question: How can something be worth so much when it is infinitely recreatable? It’s like speculating in air.

    • SnotFroth says:

      Isn’t a dollar infinitely re-creatable?

      Bitcoin actually isn’t unlimited. Yeah I know anyone can create a new crypto, but it won’t be bitcoin and so people won’t value it as such.

      If YOU had a hard drive today with 1000 bitcoins, would you throw it away because they’re just worthless tokens with no intrinsic value, or would you sell them for millions and millions of $$?

      I suspect the latter, which is the sane thing to do, but it implies that you do in fact recognize value of bitcoin, even if you don’t agree with it.

      It’s volatile, speculative, and dangerous, but be that as it may, today a bitcoin is worth about 50k in a public market for all to see.

      • Depth Charge says:

        You just posted a strawman argument. Don’t do that.

        If somebody gave me a bunch of Bitcoin of course I’d sell it. It would be stupid not to. But that doesn’t mean I recognize anything other than some idiot is going to pay me for something that I think is stupid.

    • Cas127 says:

      DC,

      Read above.

      I suggest that you read a book about BC before making sweeping statements.

      And if you are simply making reference to the array of AltCoins (you don’t say that though) then the analogy is to the 100+ currencies that already exist in the world.

      There is absolutely no reason why the thousands of AltCoin types cannot consolidate into a few hundred, dozen, or a handful.

      • JB says:

        Big rationalization of why Mr. Wolf couldn’t drop a few bucks when it had little price value. And more rationalization of how he would have lost it or sold it.
        You had the chance and didn’t take it. Cling to your cold metal tokens.

        • Wolf Richter says:

          Nah. I sold Amazon in late 1999 and made a return of several 100%. Obviously I sold WAY to early. Or I should have bought it back after it crashed. That stuff happens all the time. But then there were other stocks that I had ridden up all the way, and then had ridden them back down three-quarters of the way. I know myself. If something makes me 10,000% — say bitcoin going from $10 to $1,000 — I would have sold for sure for sure. There are tons of other things that I missed on the way up, but then I also missed them on the way back down.

  62. Depth Charge says:

    Except you can’t reproduce that rare coin. But you can infinitely reproduce crypto. Are you that dense?

    • Cas127 says:

      “But you can infinitely reproduce crypto.”

      Actually, no.

      Unless you believe you know how to break BC’s algorithm.

      (And the more you understand about how blockchain verification works, the more nearly impossible BC systemic fraud appears)

      And you are positing an apparently remote possibility against a habitually repeatedly reality (decades of systematic USD dilution/debasement).

  63. SnotFroth says:

    I appreciate quasi-libertarian themes behind bitcoin but it seems like a castle being constructed on sand.

    Aside from the liquidity, hype, and ponzi-esque points that Wolf made, I am personally worried about two things in the long run:

    First issue is the power consumption of transactions. It doesn’t seem sustainable to create a worldwide distributed network that’s actually designed to waste electricity.

    Second issue is far off but vaguely on the horizon: quantum computers. If Shor’s algorithm is ever realized incarnate at scale, it’ll be a problem for all cryptography but the value of bitcoin should get kicked in the teeth like nobody’s business. People will cope as TLS version 99 or whatever is rolled out for e-commerce, but I don’t think they’ll wait to escape bitcoin.

  64. Saylor says:

    As a small note of interest…,
    A market in my ‘hood’ has a machine that allows you to buy bitcoin.

    However, it is only a one way transaction. You can’t redeem it there.

    Curious

    • Lisa_Hooker says:

      Bitcoins are like tinned sardines in the San Quentin “hotel.” They are for trading, not for eating.

  65. Doc Holiday says:

    4-5 years ago, I had about 1 million to invest. I bought a commercial building with an NNN lease at a cap rate of 10% for 800K. Value is now close to double that. I invested 100K in the stock market, and the value is up about 45%. I invested in crypto coins the remaining 100K (80% in bitcoin at 4k on average, the rest in some other coins).
    Number one rule of investing – diversify

    When friends ask me when I will sell my coins, I tell them always the same – when the sale’s money could significantly change my life.

    I also tell my friends that investing is similar to gambling; if you cannot afford to lose the investment, do not invest.

  66. Mars says:

    The dogs bark but the caravan moves on in the night…

    Made three round trips with btc and eth since Nov bot more last Friday for another trade.

    :)

  67. Bitcoin is a vice indicator.
    Sobriety kills it.

  68. Sea Creature says:

    Did you know that only 21 million “Pets.com” shares (we call them ‘coins’ for short) have ever been created?

    As there is a permanent limited supply, who knows how high they will go? To the moon! Far better than ‘fiat’ that will decline in value every day as the fed goes ‘brrrr’. Get your “Pets.com” coins now, before they are at $1 million for each!

    (hint to solve the question above, currency is a debt or a promise to pay based on the trust and value of the backer. Otherwise, its just paper. The US Dollar has the military behind it and the knowledge / infrastructure of its economy. Confederate Dollars on the other hand are worth zero, they lost the war and have nothing to back up the (former) currency.

    Yes the US has problems and there is too much money printing – so the US dollar will lose value). If the US were to say, lose a naval war with China in the S.C. Sea or Taiwan, then yes, that military backed trust falls sharply and the US dollar will suffer (greatly). That is what gives a currency power.. military and soft power in the world.

    But what backs Bitcoin (or pets.com?). Basically nothing..thats the problem. And bitcoin transactions are very slow..and very expensive and very energy intensive. What is it actually useful for if it cannot do these things?

    And what stops someone with a military (China, US, other countries) from banning bitcoin and its mining infrastructure if it so chooses since it is such a drag on energy infrastructure and other political / economic aims?

    nothing.. the miners get shut down, and bitcoin will cease to exist.

    Even gold is useful and cannot get ‘shut down’ or ‘disappeared’..

    That is the problem with Bitcoin.. it is just a pets.com with a new shiny name.. nothing backs it up and it is too easy for any major sovereign to kill..

    I sometimes wonder if bitcoins wasn’t originally a scheme by the Norks (DPRK) or some other state psyops to get some western cash or something, it is all so dodgy. Why is Satoshi ‘secret’, and no one from the CIA..etc. ever been able to find him given that pretty much every bit that goes across the internet is now spied on and recorded by those guys…

    And just create a bitcoin2, or a doggycoin, or a webvan.com coin. It is all so sketchy in so many ways.. eventually most people will lose their money with this..

    BTW, want to buy some pets.com coins (‘shares’)?, they aren’t making anymore you know :-)

    • MarkinSF says:

      Would have been nice if this was the first post on this story. Couldn’t have said it better myself.

    • Robert says:

      “I sometimes wonder if bitcoins wasn’t originally a scheme by the Norks (DPRK) or some other state psyops to get some western cash or something, it is all so dodgy.”

      I don’t think you need to go that far. Bitcoin is a pure ponzi scheme.

      What will happen next it that many of the ‘paper tiger’ businesses of the world will begin investing in bitcoin for the sole purpose of inflating bitcoin.(Tesla..Airlines?) They’ll offer discounts on products if you use bitcoin in order to inflate their valuations.

      Once the US govt sees real competition from bitcoin then it’s bye bye to bitcoin.

  69. AdamSmith37 says:

    Has anyone actually studied the tax consequences of owning cryptos? It seems I read that one has to declare profits at year-end and pay taxes on the paper increase/profits even if there were zero transactions on that account. This spells an accounting and tax nightmare if that is the case. Are there any cryptos that are backed by real things like precious metals? Just curious. My only experience is that I was early on offered 500 bitcoin for $500 and I fully intended to do this except the busy-ness of life choked it off the agenda. Then too, even at that I might have lost the password, etc.

  70. Absur Ditty says:

    “despised fiat dollars”

    Wolf your rhetoric is getting out of control here!

    Just think where we’d be without fiat currency!

    The government wouldn’t be able to deliver much needed stimulus and welfare.

    The government wouldn’t be able to finance important military campaigns on deficits.

    The USA wouldn’t be able to do fractional reserve loans so people could spend 4X (or more) their annual household income on houses.

    Think of those three and the many other benefits of fiat currency before you go off criticizing it!

  71. Chris says:

    Crypto currency is gambling just like the stock market. The value resides in how many people are playing the game. Also the barriers to entry have a huge affect on the game. This is why the app Robin Hood exists, it makes the barrier to entry much smaller. Crypto makes that entry even smaller than stocks.

    For the small investor crypto is one of the best places to make money. As an example I invested $1,000 in January 2021 and as of March 1st I have $3,500. That may not seem like a lot of money to the people here, but that is a lot of money for me.

    You can also move your money very quickly between crypto and cash or cash and crypto whenever you want. With stock there is often a 3 day delay. People who have large amounts of money also use it to transfer between countries with low fees or to avoid the limits on moving money between countries.

    Lots of players like Coinbase and now Visa, Mastercard and Citi Bank are all getting involved because one of the big revenue streams for making money off crypto is fees. Also many of the wealthy have made tons of money during Covid and want some place to play with their money so the look to crypto.

    • Happy1 says:

      Stock is ownership in the future earnings stream of a business. Businesses create wealth. Owning stock is not gambling unless you choose to treat it as such. Cryptocurrency is pure gambling, no intrinsic value, no dividends, just hoping for a “greater fool” to buy it at higher value in the future.

  72. CreditGB says:

    Wonder how the $57k buyers are feeling this morning.

  73. Tankster says:

    Wolf, I read and respect you very much. Loved Testosterone Pit, kind of reminded me of my days in the auto junkyard, and am 2/3 through Big Like. But But But as Axios says, why are smart respected people like Raoul Pal and Lyn Alden writing about it? Gold only has “value” because people agree that it does. Who can explain the green paper in your pocket a Fleck calls it? It represents nothing and the supply ios exploding. lucky the velocity of spending is so low. I have about -0- confidence in the “Full faith and credit” of the US. The decimillionaire Janet Yellen and centimillionaire Jay Powell. Clarida at $10 million is a piker. Quarles worth between $25 and $125 million. These people have no clue how to buy a gallon of milk, yet they imposed NIRP on us for 12 years. I see BTC as a store of value. It’s easier to trade than gold and has much less friction. Spot bid and ask is narrower, and you can send a million dollars in seconds as opposed to the SWIFT system, or wiring it, or lugging around 35 lbs. of Tungsten. er, I mean gold bars. The friction in wiring $250k to buy a small condo is a pain and to wire $1500 is ridiculous. Reasonable people can disagree. BTW BTC is back over $50k

    • nick kelly says:

      ‘Gold only has “value” because people agree that it does’

      Gold has a number of applications for which there is no substitute. Even your local London Drugs or other consumer electronics supply will have cables with gold plated contacts. Moving into high tech, so do the higher quality relays and switches.

      Everyone has had the experience of an older appliance not working because the prongs are corroded. This can be fixed by a quick sanding to expose clean metal, but this is not an option in aircraft, satellites etc.

  74. Randy says:

    Yea I can remember when it showed up on some article I read on 321gold back in 2009 or around then. It wasn’t worth nothing but had a pic of a gold coin. I thought it was bullion till I read the article. I’m totally convinced it was invented by a government, most likely ours. Proof why hasn’t the inventor ever sold any of his. He’d be a billionaire. It was a test to see if the public would except it. It appeared right at the height of the financial collapse, coincidence I truly doubt that. That’s our next fake money digits in a computer lol. I don’t care what it sells for. It’s just digits in a computer and has no intrinsic value. The only value it has it to sell it to the next sucker down the line that falls for all this crap. Just like the fiat ponzi scheme it’s worthless. And by worthless, I mean it has no real value, just because some moron will buy it for $57,000 doesn’t mean it has value other than a scam. I also have Rolex I’ll sell you for a bargain lol. That don’t mean it’s real. The world is now so brainwashed its pathetic. My generation had mostly high school dropouts but there IQ’s were higher than today. When today everybody has a college diploma. Now explain that one to me? How can people be more educated, and more ignorant? Y’all can keep your digits in a computer, I’ll stick to something that not taxed, not known I have and has a 5000 year history. Gold is money and everything else is fake, not worth anymore than monopoly money. I can take gold anywhere in the world and use it. Even if I have to trade with natives in the jungle. And guns are getting as good as gold too. There flying off the shelves like they did when Obama got elected. Ammo too it’s coming in and going out the same day. Good luck with them paper assets and digits in a computer. The end game will make me the winner and everybody else will be stuck with worthless paper or digits in a computer.

  75. fred fraction says:

    There are not 21 million bitcoins mineable because the fraction is infinite.

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