I still have some remaining bitcoin, from the olden days when mortal man could mine it themselves. My advice to everyone I’ve ever talked to regarding bitcoin is to avoid it. I have been slowly divesting my holdings.
My rationale is that while both the dollar and bitcoin are fiat currencies, bitcoin is far, far less anchored to reality than most ‘normal’ currencies. The dollar and the euro at least have people trying to keep monetary levels somewhat tied to physical economic value. The value of bitcoin, meanwhile is largely driven by three things:
propaganda / marketing / bubble behaviour
money laundering
a belief that using bitcoin for transactions has the potential to be cheaper than transactions in the normal financial ecosystem
#1 is basically fad investing. It can yield huge returns, but is equally likely to yield losses and ultimately just moves money from people who are bad at predicting fads to those who are less bad at predicting fads.
Basing your holdings on #2 is going to be subject to diminishing returns over time, as governments get cranky about it and find ways to crack down.
Basing your holdings on #3 ignores how expensive bitcoin transactions have become, and how you have to either build what amounts to a miniature “normal financial system” on top of it in order to arbitrage the cost, or only do transactions that are sufficiently large that the costs aren’t important.
Given that there’s a competive mining market these days there’s nothing that’s cheap to mine unless you have access to very cheaper electricity then the average miner.
I still have some remaining bitcoin, from the olden days when mortal man could mine it themselves. My advice to everyone I’ve ever talked to regarding bitcoin is to avoid it. I have been slowly divesting my holdings.
My rationale is that while both the dollar and bitcoin are fiat currencies, bitcoin is far, far less anchored to reality than most ‘normal’ currencies. The dollar and the euro at least have people trying to keep monetary levels somewhat tied to physical economic value. The value of bitcoin, meanwhile is largely driven by three things:
propaganda / marketing / bubble behaviour
money laundering
a belief that using bitcoin for transactions has the potential to be cheaper than transactions in the normal financial ecosystem
#1 is basically fad investing. It can yield huge returns, but is equally likely to yield losses and ultimately just moves money from people who are bad at predicting fads to those who are less bad at predicting fads.
Basing your holdings on #2 is going to be subject to diminishing returns over time, as governments get cranky about it and find ways to crack down.
Basing your holdings on #3 ignores how expensive bitcoin transactions have become, and how you have to either build what amounts to a miniature “normal financial system” on top of it in order to arbitrage the cost, or only do transactions that are sufficiently large that the costs aren’t important.
I don’t hold Bitcoin, friends.
What would your advice be on other cryptocurrencies, like Ethereum or minor coins that aren’t as fad-prone and presumably cheaper to mine?
Given that there’s a competive mining market these days there’s nothing that’s cheap to mine unless you have access to very cheaper electricity then the average miner.