This was the headline on November 29, 2013: Bitcoin hits record $1,242 as it nears value of ounce of gold.
Today, gold is about $1200. One bitcoin sells for $335.
Here is what I published on November 29, 2013: Bitcoins: The Second Biggest Ponzi Scheme in History. Here is how I ended it.
There has to be an economic justification for a capital investment, and there is no economic justification of buying Bitcoins as an alternative currency. That was how Bitcoins were initially sold, and it was impossible as an economic concept from the beginning. The Austrian theory of money shows why.
I do not invest in capital that has no economic justification other than the greater fool theory. There are too few fools to keep the scheme going.
Bitcoins are not illegal. They should not be made illegal. They should merely be avoided.
The price of bitcoins peaked on November 29, 2013.
Here is what I wrote on December 3, 2013: Bitcoins: The Road to Investment Hell Is Paved With Good Intentions.
We don’t hear much about bitcoins these days. A year ago, they were big news. The bloom is off the rose. So is the boom.
After a crash like this, an investment takes years to recover. It may never recover.
If you want untraceable money that holds its value pretty well, you can get it at your bank’s ATM.
If you want untraceable money that you can buy things with at any retail outlet, get crisp, new $20 bills.
When it’s Federal Reserve Notes vs. bitcoins, go with Federal Reserve Notes.
Money holds it value over time. Bitcoins do not.
You buy money with no commission. You must pay a commission to buy bitcoins.
Money must be widely recognized as money. The public has never bought anything with bitcoins. The public does not sell anything for bitcoins.
Bitcoins are not money. With its track record, it shows no signs of becoming money.
Fads come and go. This one has gone.
"You buy money with no commission. You must pay a commission to buy bitcoins."
Have you ever travelled outside the country? You pay a commission to transfer your money between one currency and another.
"Money holds it value over time. Bitcoins do not."
Yep, no question that it's volatile. Anyone putting their whole fortune into it is an idiot. But it's still many times higher than it was 2 years ago. And it's still useful, and people all over the world are using it all the time.
Gary, you need to shut up about Bitcoins for the next five years. If it dies in that time, you'll have been proved right. But your constant carping on a technology product that you obviously don't understand makes you look as silly as Y2K did.
Just because something may be grossly overvalued, or a bad investment does not make it a Ponzi scheme.
A Ponzi scheme is when someone takes your money and make false claims that the value of your investment is increasing at a high rate of return. In reality they don’t have the money to pay everyone if everyone tried to take their money (and false earnings) out.
Bitcoin does not claim to make any returns or earnings.
Again with this. You keep telling us they're not money, yet they're used as money. Cigarettes were used as money in the (admittedly closed) economic system of the concentration camps. Murray Rothbard wrote that anything can be money – see "What has government done to our money?". Yes, it's not very good money. Its volatility is a strike against it. I certainly don't own bitcoins and have no plans to get any. But for some people, apparently, it is money.
As for volatility, were you advising people to keep buying gold in September of 2011? If so, they've lost just about 40% of their capital since then, and it's only been 3 years. And silver? Spot silver is down how much since then?
I was wondering where you guys were. Normally when Gary laughs at Bitcoins you guys are defending it right away, but he posted this yesterday. It was as if all the Bitcoin supporters had taken Thursday off.
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Right now hackers and scammers are using bitcoin and moneypak as their payment methods (do a google seach on cryptowall / cryptolocker viruses to see how). How long do you folks think that it will be before the IRS, FBI, or Treasury use that to shut them down? The excuse is easy because it is true – Bitcoin is being used in furtherance of criminal enterprise. You know they don't like Bitcoin and would love to have a legitimate reason to stop it.
The day the Feds file injunctions is the day bitcoins become worth $.01 and there is no way to know when that will happen.
“Right now hackers and scammers are using bitcoin and moneypak as their payment methods (do a google seach on cryptowall / cryptolocker viruses to see how). How long do you folks think that it will be before the IRS, FBI, or Treasury use that to shut them down?”
It is not possible to shut Bitcoin down. For Bitcoin to exist only requires that people can communicate with each other. The government is only capable of doing things that might reduce the Bitcoin market price, like making it illegal for banks to transfer money to Bitcoin exchanges. But Bitcoin existed before there were bank-connected Bitcoin exchanges, and it would continue to exist without them.
I am still quite cautious with bitcoins.