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73% Loss on Bitcoins

Written by Gary North on February 17, 2014

For anyone who bought Bitcoins at the top at $1200 in December, he has suffered a 73% loss if he bought from Mt. Gox, the largest American exchange.

If he bought Bitcoins from one of the competitors, he is down by about 48%.


Bitcoins are wildly volatile, as I have warned repeatedly. This is why they are not money. They are crap-shoot investments for people who do not understand either monetary theory or the huge risks of a new, untried technology.

The Bitcoins market is a shambles. The hype is now gone. Economic reality has intruded. Once this happens to an investment that was pumped up by hype, it is hard for it to recover. “Once bitten, twice shy.” The response of potential new investors — the much needed greater fools — is this: “I remember what happened last time. I think I’ll pass.”

Bitcoins are not gold, with 4,000 years of monetary history behind it. Bitcoins are the recent invention of a Japanese programmer who may not even exist.

Bitcoins are for people who are speculators. They are not for people who are looking for a way to get access to an alternative currency. Bitcoins are surely not for older people with substantial capital to preserve who are looking for an alternative to gold or silver. Bitcoins are not for anyone who wants to be able to get his money back from an exchange that goes belly-up for a technical reason. If Bitcoins are for anyone, they are for kids who can recover from investment mistakes because they are young.

There is money to be made in Bitcoins. There is also money to be lost. But what you are losing or gaining is money — dollars. Dollars are money. Bitcoins are not money.

Anyone who bought bitcoins on the basis that bitcoins are money, or will soon become money, bought a dream. The dream has now turned into a nightmare.

Some poor guy blogging at the Washington Post wrote this on February 4: These four charts suggest that Bitcoin will stabilize in the future.  He assured us: “In recent weeks, something interesting has happened to the price of Bitcoins: It hasn’t changed very much. In December, Bitcoin prices gyrated wildly, but since the start of the year it’s gradually gotten less volatile.” The price of Bitcoins collapsed within a week. He assured us: “That volatility mostly reflects the currency’s rapid growth, not something inherent in the technology.” On the contrary, a technical flaw is why the price collapsed at Mt. Gox. He assured us: “If Bitcoin keeps growing, it won’t be long before the currency is so widely known and used that there’s little room for further growth.” In short, Real Soon Now. The blogger is a self-identified expert in technology. He is young. He did not have much to lose. Maybe you do.

For my articles warning against Bitcoins, click the link. (The response may be slow. Be patient.)

Continue Reading on www.garynorth.com

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14 thoughts on “73% Loss on Bitcoins

  1. Getting your money OUT of bitcoins has been getting more and more difficult.

    More than one exchange has imploded, too bad for anyone who had BC on those exchanges.

    Now one of the biggest BC exchanges, Mt. Gox, has not only stopped redeeming BC for currency but you cannot even withdraw your BC.

  2. Yes, we understand, bitcoins are volatile, and anyone buying at the very top is going to suffer losses when it goes down. Last I checked, exactly one year ago bitcoins were trading for $26.81. Which means anyone who bought a year ago (like I did) is still up over 2400%.

  3. "There is money to be made in Bitcoins. There is also money to be lost. But what you are losing or gaining is money — dollars. Dollars are money. Bitcoins are not money."

    I've heard people say the same thing about gold, because the price of gold in dollars goes up and down. There is money to be made in gold. There is also money to be lost. But what you are losing or gaining is money – dollars. Dollars are money. Gold is not money.

  4. Gold is not money, bitcoins is not money… dollars is money.

    Goodluck turning bitcoins into money in a hurry… no such problem with gold., silver and even scrap iron. All I gotta do with a truckload of old pots, pans and car bodies is go to a scrap metal dealer… they are located in every major town in the world. Pretty much the same with gold… but bitcoins? HAHAHAHaaaaa.

  5. Actually, precious metals is available as money… in any coin value you desire. I possess pure gold and silver coins, minted as money.

  6. Anyone who has used BTC for unregulated voluntary transactions (often illegal in the eyes of the state) did not pay the banksters a cut and did not in the process contribute to the fractional expansion of USD by which the state purchases overseas dictators or nations. Their personal details were not auto-appended to bankster logs. I'd say these are libertarian plusses. But strangely, there is no mention of these qualities above.Yet a great many articles. like this one, are intent upon debunking bitcoin as an investment, or a store of wealth, which it clearly isn't. It's as though these authors want to leap to money immediately (with no market process) and decry any first attempt as not good enough for the final race. We sort of know that. I don't know anyone who believes Bitcoin should be used for a store of wealth (most people I know buy it and use it almost immediately). But those I know who use it do understand its applicability, which perhaps is being missed here. Just saying.

  7. Bitcoin is volatile, but it's not a scam and it's real. Bitcoin is GN's next Y2K fiasco.

  8. Thane Eichenauer says:

    Bitcoins are as real as US Dollars. Whether they are any more or less volatile than any given fiat currency is for the buyer to judge. I am rather surprised to read Gary North stating that "Dollars are money." If North chooses to define US Dollars as fiat money maybe the statement is not quite wrong. Neither can I swallow such a sentence without the needful modifier of fiat.

    Caveat emptor folks. That will always be good advice.

  9. Jonathan Blanton says:

    In 1995, Clifford Stoll published an article in Newsweek explaining why the Internet would never fulfill its proponents’ predictions. (“Why the Web won’t be Nirvana”, http://www.newsweek.com/clifford-stoll-why-web-wont-be-nirvana-185306). He observed (correctly) that the Web was clunky and difficult to use, and mistakenly assumed that it would remain so forever. Dr. North observes (correctly) that Bitcoin has many problems and is difficult to use. And he is making exactly the same error that Mr. Stoll made 20 years ago. When Bitcoin becomes usable for the masses, will Dr. North admit his error?

  10. I wonder if the next headline will say "32% Loss on Gold" as Dr. North explains how anyone who bought gold at the peak of over $1900 is now down over 32% on their investment, and how their speculations to get more money (paper dollars) backfired.

  11. Bit coin is a scan similar to the stock scams of the 1920. rich guys would buy up a stock and trade it among themselves to bid the price up and dump it on the suckers. They used their media resources to plug the stock. Even when the scam was exposed the lure of a quick buck still brought them in because they all thought they would get their little piece before the collapse.

    There is nothing behind bitcoin other than the dream that you are the smart guy in the room. That old adage about poker comes to mind. If you don't know who the sucker in the room is, then he is probably you.

  12. The exchanges are part of the scam just like offshore bookmakers. As long as there is a net cash inflow, the window is open. Once the peak is reached, time to close up shop.

  13. Jeff Horton says:

    But Gold has a useful value in manufacturing. what good is a bitcoin. Can you touch it can you hold it in your hand. What exactly backs a bitcoin.? If it has no backing it is worthless. Silver has value in manufacturing as well. Lead has more value than a bit coin. I can tell you something like dirt is very valuable but it is only worth what a person will pay. Like all before mentioned. Who is so stupid to buy something that doesn't exist. Except in the minds of some people. When I can hold my things of value in my hand or things have a use like air and water. In fact the free air you breath every minute that costs nothing. It is worth much more than a bit coin. Because it has a function, where is the function of a bitcoin.

  14. internet dating is considered commodified quite as.