Well, it was just a matter of time before I had to spout off on my two cents about the Bitcoin Craze!
(Disclaimer: I’m not a Crypto-currency expert, hater or fanboy. I see many great things in this technology and have spent some of my own time and money on it but I think it is prudent to always evaluate potential risks as well.)
PBS aired Ron Howard’s Beatles documentary “Eight Days a Week” last night and that got me to thinking.
What do the Beatles and Bitcoin have in common? Well, there was a mania for the Beatles throughout the 60s and there is a building mania about Bitcoin (and crypto-currencies in general). I looked up the word Mania and the definition said:
- mental illness marked by periods of great excitement, euphoria, delusions, and over activity.
- an excessive enthusiasm or desire; an obsession
I think the second best summarizes what I’m talking about here but the first definition should not be forgotten throughout the entire discussion.
I actually received my first Bitcoin in 2016 for free. My friend Jack Spirko of The Survival Podcast spent a lot of time talking about it and from listening there I learned a little about block-chain technology. Well, at least enough to know when to take free money. He had an affiliate Coinbase promo that would give you $10 just for signing up for BTC!
I usually hate free stuff because there’s truly no such thing, but free money was hard to pass up. I signed up, funded an account with a monthly contribution from my bank account and cha-ching!, I made $10 in BTC! At that time BTC was selling for about $550. I forgot about it until a few months later when my wife checked our online banking account and asked me “Who is Coinbase and why was I giving her money every month?” Uh oh…
Well trust me, explaining Blockchain technology to an irritated woman is not something you want to do after surprising your spouse with a secret heretofore unknown investment (MY BAD Sweetie!). She’s smarter than me so she understood my lame financial explanation. I did think it’d be a good idea to quit my regular monthly purchases of BTC & ETH, in an additional effort show her I loved her and wasn’t supporting a girlfriend code named “Coinbase”.
I kind of forgot about it all until this spring when the ICO mania started heating up. After checking my balance (Cha-ching-a-ling- dong!!), I then realized I should have freekin stayed on as Miss Base’s Sugar Daddy!…
Before any mania sets in, I’ll stop here and tell you how smart an Investor I am… I even took some profits! DOAH!! I should have followed my own advice:
“Never Sell Ever”
If I’d only followed this advice, I probably would never, in my entire life, sold any gold, silver, stocks, ETFs, collectables, Dell in ’93, that Google stock in ’05, Etc. Alas, I’m good with advice but bad at taking any of my own. If I had every investment I’d ever bought today, I’d probably have more money and wealth than I do now, but maybe not a lot more (its really not much anyway!).
From what I’ve read, we’re just naturally wired to lose. We have to rewire ourselves to win and I’m still working on that one. People love winners and hate losers. Exactly the opposite of how they’re wired. Imagine that.
Back to Beatle Mania, I mean Bitcoin Mania. Instead of talking about whether BTC or crypto is a good or bad investment, lets talk about how long a mania can last.
(Age alert spoiler).. I remember when the Beatles broke up.
I wasn’t a big fan in grade school as I was still listening to goofy kid stuff like Rockin’ Robin, but I remember the sadness in some people. EVERYONE all of a sudden loved the Beatles.. again, for a while. The next time I saw that kind of sadness was when Elvis died in ’77, thank you very muuch.
Bitcoin mania will end. It’ll be replaced or destroyed or something will end it, and when it does, people will be very sad. When BTC is comparable to the Beatles, the mania could easily last 10 years or more. I’d say the dot com mania lasted about 6-9 years or so. I think the midpoint of the BTC mania is probably last year. But what are the most likely risks to stop the mania? Well, here is my short list:
- Technology
- Government intervention
- Scammers
Technology: Anyone who really understands blockchain technology will tell you that BTC is not easily scalable as a widespread currency. This has to do with technical crap I willingly admit I know little about. Lets just say, there is better blockchain technology now that’ll do what BTC was invented to do.
Bitcoin was designed to solve problems. It was not designed as a long term, buy and hold investment, although the designer(s) built it to attain greater value to encourage more growth as its use expanded, it is not an investment. So the problems with all technology will eventually catch up to BTC. Other Cryptocurrencies will dominate the space BTC does today. Don’t believe me? I’ve got a barely used iPod I’ll sell you for 20% off original retail price!
Government: One feature folks seem to like about BTC, and all crypto-currency, is that there is an implied sense of privacy. A decentralized block-chain is a hard thing to control or govern or hack. I’m now going to say something here that is going to make a lot of folks mad. Please don’t shoot the observant messenger here, I’d ask that you just carefully re-read the following a few times with an open mind.
You can’t hide from Governments because you are part of one. Oh sure, you think you can have your bounty of BTC hidden in a paper wallet in your sock drawer and no one will ever be the wiser, but you are wrong my dear friend.
Try to see it from their point. Your Guv works very hard for you. They pass laws that give you better heath care, they subsidize farmers to get you super cheap and high quality food, they provide engaging political dramas for the media to report back to you everyday!, they protect you from God knows what overseas and they even help pay PBS to create great programing like Ron Howard’s Beatles Documentary “Eight Days a Week”!
(Please note, to greatly simplify things, we won’t talk about where they got all the money to do all that nice stuff for you, but trust me, its hard work.)
Here’s another way to see it; If your poor hardworking parents had to slave away at extra jobs, work overtime, go without the basics of a middle class life all to help buy food, provide healthcare and protect you, their darling child, and then you entered an online raffle and won $100,000, but you DIDN’T tell your parents, how do you think they’d react?
We’ll that’s exactly what your uncle is thinking about all this money flying around to buy invisible coins of no intrinsic value. Here’s how he’s going to kill the mania…
In the next piece of legislation dealing with taxes (I think I heard of one coming soon). They will slip in a paragraph somewhere in the back part of the 50,000 page bill. It will contain a new law or rule that inhibits your ability to buy and sell invisible money.
Poof, your parents just crashed your crypto party! I think that’s whats going cause the next BTC meltdown and cool the mania a bit.
Scammers – https://en.wikipedia.org/wiki/Mt._Gox ‘Nuff said..
Go look at the BTC Chart from 2014 after this small-scale hack of one exchange. If you think a lot of crypto-currency was held in exchanges and online wallets in 2014, what do you think the numbers are in 2018??
OK, so these are just my theories and given my track record, odds are I’m half right. So I’ve framed the mania argument and suggested potential risks of purchasing BTC. Now, to finish on a positive note, I’ll leave you with a true story about a sign that used to hang in a real estate agents office in Aspen, CO:
Dear Customer; We’re sorry but yesterday was the best time ever, to buy real estate in Aspen, Colorado. The Second Best time to buy Aspen Real Estate is today…
Having visited and worked in Colorado, and after 25 years in the real estate industry, I can assure you the sign was completely accurate.
Cheers;
M.C.
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MIKE CENTEX LIFE 