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Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

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Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#101

Post by rifung »

themagician wrote: post #49
non_sequitur wrote: post #11

“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” Didnt quite understand this quote - is he down on gold too?

Sounds to me like he is just rambling a bit there at the end. Gold actually does have some intrinsic value—it's useful. It's stable, nonreactive, resistant to corrosion and conducts electricity. It's been used as a value store since antiquity above others particularly because it is stable and noncorrosive. The conducive properties are just an added benefit we now have a use for. A gold coin from a hundred years ago i…

> Sounds to me like he is just rambling a bit there at the end. Gold actually does have some intrinsic value—it's useful

Actually I think you are misunderstanding him? He isn't saying that gold doesn't have intrinsic value; he's saying it doesn't inherently generate more value.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#102

Post by slg »

jfaucett wrote: post #71
slg wrote: post #30

Earlier quoted context omitted.

Gold is certainly the ideal model for something like Bitcoin but in terms of projectable value gold has time on its side. I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia.

> Gold is certainly the ideal model for something like Bitcoin I disagree. I don't think Bitcoin should strive to be a store of value like Gold is. Today most Gold investing is just based on fear, because people see a government misbehaving and lose faith in its ability to maintain the value of its fiat and then flee to something that still has some properties useful in monies. This is no where near the main usefulne…

>This is no where near the main usefulness of Bitcoin though, which IMHO are: its extremely divisible, portable, efficient and has cheap transaction costs. Its also by far the most free in terms of your ability to enter into a transaction with anyone the world over, regardless of what a particular government thinks about that transaction.

Those were/are all the main uses for gold for much of human history. Bitcoin has improved on or has potential to improve on those, but its relative volatility puts gold to shame.

>The history of Gold as a medium of exchange and store of value has virtually no bearing on whether or not you should invest in it in 2017...There are arguments to be made for Gold but they are in its utility in modern industry, etc.

I would argue the history of gold is the only reason to invest in it. It is extremely overvalued compared to its industrial and commercial uses. However its history shows it is a decent diversification vehicle to protect against loss of value of fiat currencies. This applies to the doomsday scenarios you alluded to in your comment as well as the less drastic economic downturns.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#103

Post by AndrewBissell »

chiaro wrote: post #85
nerdponx wrote: post #59

Earlier quoted context omitted.

There is nothing to support bitcoin That's what I've been realizing latey: there is something to support Bitcoin, and that something is the blockchain. The reason banks and big financial companies are interested in it is not for its speculative value. They are interested in the fact that it is both decentralized and immutable. As long as financial corporations are willing to exchange Bitcoin for USD, then Bitcoin is…

Nah. Banks and big financial companies interested in the blockchain will spin up their own version without tying it to the unstable mess of bitcoin. e.g. https://ripple.com/ And people do by treasury bonds for their rate of return, when the investment must be as riskless as possible.

There's no point to a decentralized database like a blockchain when you run it from a handful of centralized chokepoints which are easily censored or pressured by political actors. You may as well just use a SQL database that everyone syncs up periodically. Bankcoins like Ripple are pointless.

People buy treasury bills when they care more about return OF capital than return ON capital. Bitcoin and gold are also solid assets in this regard, particularly because they are bearer assets that don't represent a liability or promise-to-pay by some third party.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#104

Post by rebuilder »

HarryHirsch wrote: post #92
rebuilder wrote: post #63

Earlier quoted context omitted.

Money laundering. Illicit transactions. Any number of things government money stored in banks is not much good for. How big a market is that? I'm guessing much, much bigger than most people think.

You do ask how people ran their drug-and-weapons enterprises before bitcoin. You'd guess it was through shady lawyers, corrupt banks, tax oases and webs of mailbox holding companies all the way down. That's proven working. But with bitcoin you are stuck with the dozen shady exchanges. Any normal criminal would think it's too risky.

Isn't this like saying Uber can't compete with taxi companies because the old model is proven to work? I'm not able to tell you whether it's true or not, but the claim here is that Bitcoin removes a lot of the friction in illicit markets, so that you don't need to be a Colombian Don to sell cocaine.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#105

Post by leereeves »

jfaucett wrote: post #71
slg wrote: post #30

Earlier quoted context omitted.

Gold is certainly the ideal model for something like Bitcoin but in terms of projectable value gold has time on its side. I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia.

> Gold is certainly the ideal model for something like Bitcoin I disagree. I don't think Bitcoin should strive to be a store of value like Gold is. Today most Gold investing is just based on fear, because people see a government misbehaving and lose faith in its ability to maintain the value of its fiat and then flee to something that still has some properties useful in monies. This is no where near the main usefulne…

> efficient and has cheap transaction costs

I've heard differently.

Vice: One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week

https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mi...

Average transaction fees have gone up substantially.

https://bitinfocharts.com/comparison/bitcoin-transactionfees...

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#106

Post by XR0CSWV3h3kZWg »

berberous wrote: post #26
non_sequitur wrote: post #11

“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” Didnt quite understand this quote - is he down on gold too?

Here is Warren Buffet's similar argument against gold from his 2011 annual investor letter [0]. The argument also applies to Bitcoin and other assets that are driven more by speculation than productive income streams: "The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever…

Now that is well written!

Current price of bitcoin is ~9.9k total supply is well over 17 million. lets call it 10k and 20 million. We're sitting at ~ 0.2 trillion. For that you could buy paypal, square, moneygram and Western Union and still have plenty left over.

That's fairly surprising. Bitcoin alone is within striking distance of the market cap of visa.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#107

Post by ringaroundthetx »

saryant wrote: post #86
ringaroundthetx wrote: post #64

Earlier quoted context omitted.

and what does that have to do with talking about an area with no domain knowledge? there are plenty of esoteric and dubious assets in the vanguard obligatory diversification model. Get bitcoin in the 1% allocation right next to CDO-ABACUS-2007-SENIOR

Vanguard never owned subprime CDO paper in its money market funds.

only the investment grade CDOs of longer terms

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#108

Post by ringaroundthetx »

mathperson wrote: post #84
ringaroundthetx wrote: post #68

Earlier quoted context omitted.

Bitcoin has greatly outperformed tulips.

Is this a joke? If so its really funny. If not...you definitely are missing the point

false dilemma

try to enjoy yourself

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#109

Post by jayd16 »

jfaucett wrote: post #71
slg wrote: post #30

Earlier quoted context omitted.

Gold is certainly the ideal model for something like Bitcoin but in terms of projectable value gold has time on its side. I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia.

> Gold is certainly the ideal model for something like Bitcoin I disagree. I don't think Bitcoin should strive to be a store of value like Gold is. Today most Gold investing is just based on fear, because people see a government misbehaving and lose faith in its ability to maintain the value of its fiat and then flee to something that still has some properties useful in monies. This is no where near the main usefulne…

>This is no where near the main usefulness of Bitcoin though, which IMHO are: its extremely divisible, portable, efficient and has cheap transaction costs. Its also by far the most free in terms of your ability to enter into a transaction with anyone the world over, regardless of what a particular government thinks about that transaction.

This is exactly whats wrong with bitcoin and people who like it. Its certainly very arguable whether its efficient and cheap compared to whats already commonplace but putting that aside... you think tax evasion and tax fraud are features inherent in bit coin.

You can smuggle cash, gold and goods to any country you want and skip out on the taxes and regulations. That's not some futuristic innovation.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#110

Post by thucydides »

jorblumesea wrote: post #79
nerdponx wrote: post #59

Earlier quoted context omitted.

There is nothing to support bitcoin That's what I've been realizing latey: there is something to support Bitcoin, and that something is the blockchain. The reason banks and big financial companies are interested in it is not for its speculative value. They are interested in the fact that it is both decentralized and immutable. As long as financial corporations are willing to exchange Bitcoin for USD, then Bitcoin is…

US Treasury bonds are backed by the military and economic might of a superpower, and the fact that it's an IOU that's almost bulletproof. That's a really big part of their value. It's the safest investment possible which is why governments funnel money into treasuries. Bitcoin just has the power of faith in the network and that liquidity will exist when you want to cash out. Neither of which is certain. Bitcoin reall…

I've heard many people say this, and it seemed sensible enough at first. But on further thought, I sincerely can't make sense of it.

Dollars are just green pieces of paper. We accept them for goods and services because... everyone ELSE agrees to accept them for goods and services. It's circular.

How is the might of the US military relevant here? If you lived in South Korea, would you accept the South Korean won, or would you refuse your salary because their military is too weak compared to the United States? I would take my salary in South Korean won because all of my neighbors and strangers will take it in exchange for goods and services. Circular.

The circular argument that cryptocurrency has value has turned into a self-reinforcing cascade. Ironically, because of network effects, the more users and speculators there are in Bitcoin, the more utility it actually has, because others will accept it as money. This - and the human tendency toward envious imitative buying - causes the price to rise even further.

Cryptocurrencies are easier to secure and transfer than gold, which we only think has "value" because it's shiny and rare. Yet gold is worth $8 trillion. Why not crypto?

(caveat: Bitcoin could fall precipitously in the short, medium, or long term. My argument is that cryptocurrency - Bitcoin, Ethereum, or something else - will be more valuable than gold in 10 years or so.)

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