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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’

#171

Post by kamaal »

thucydides wrote: post #110
jorblumesea wrote: post #79

Earlier quoted context omitted.

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 w…

>>How is the might of the US military relevant here?

Say tomorrow, a large portion of poor in the US, decide to teach the top 0.1% a lesson. They decide to stop trading in dollar, and start their own currency. They would also make it impossible for the current wealthy to liquidate their existing wealth in the new currency. What do you think will happen to the US economy in this situation?

What we are talking about is basically a group deciding to decimate the entire economy and start over. The only way to stop these people is using some kind of police/military kind of a force.

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

#172

Post by kamaal »

rebuilder wrote: post #63
HarryHirsch wrote: post #15

Earlier quoted context omitted.

At least gold is used in jewellery and electronics. What is bitcoin used for, except ransomware?

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.

>>How big a market is that?

The Black market in countries like India is large enough beyond our comprehension. Large enough that its mixed so well into everyday life, taking action on it could cause massive economic distress.

Bitcoin is the next step in the game for these kind of things. Its like a dream come true.

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

#173

Post by kamaal »

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.

>>Any normal criminal would think it's too risky.

Actually a simple Perl script would do. Plus if it comes down to that, those criminals can run their own exchanges.

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

#174

Post by gfodor »

siglesias wrote: post #51
gfodor wrote: post #46

Earlier quoted context omitted.

Large public companies that are unlikely to ever issue dividends or be acquired also fit this description. For those companies, there is no legit expectation of an investor capturing the underlying cash flows, other than on the capital gains from the market price of the stock being gauged against the current P/E consensus (or valuation metric of your choice.) But yet there AMZN, GOOG, and others sit, responsible for…

This is slightly specious. There is an expectation that AMZN or GOOG will eventually issue dividends or repurchase shares, and there's noting fundamentally preventing them from doing so. There's no way to form a valuation otherwise.

"Expectation" means that there is some probability If you knew with 100% there will never be a buyback or dividend by AMZN while you are a holder of their stock, arguably you are making the same trade as someone buying bitcoin or gold: expecting someone else to come along (who perhaps expects to have a longer lifespan) to pay you more for the stock than you did.

Note: I am not arguing that buying AMZN is a bad idea, I am saying that the argument that there is no "underlying rate of return" for bitcoin is a poor argument coming from someone who is also telling investors to buy those stocks, many of whom will certainly never see direct yield on their investment, just capital gains.

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

#175

Post by totalZero »

cs702 wrote: post #94

> There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it. Not everyone agrees with that statement. For example, see: https://news.ycombinator.com/item?id=15797380 https://news.ycombinator.com/item?id=15796880

The second link does nothing to refute the idea that bitcoin, as an investment instrument, is purely speculative. The author simply argues that bitcoin is unique among money-like assets.

The first link describes the hypothetical utility of bitcoin, but does nothing to explain a natural reason that bitcoin should have returns or appreciation. In fact, since the author describes bitcoin as a "medium to store wealth," the assumption should be that every buying transaction has an opposite selling transaction, which means there would be little to no overall price impact from any of the described activities.

I wouldn't scramble to dismiss what Jack Bogle says. He may be 88, but he has earned a reputation as a clever, knowledgeable, and decent fellow.

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

#176

Post by chiaro »

candiodari wrote: post #170
kelnos wrote: post #139

Earlier quoted context omitted.

Cherry-picking two dates doesn't really tell us much. Volatility year-over year would be useful to see, and, as they say, past performance is not an indicator of future earnings. A decision to invest (or not invest) in gold should be based on your current expectation of the future.

Ah come on. We both know that the basic claims about gold are true: 1) Gold returns, over the very long term, are roughly in line with S&P500 returns (but ... we're talking decades, as in plural). 2) in the short term Gold returns are essentially zero. With both the good and bad that comes with: almost no volatility, and when there is volatility, it's sudden large jumps up. The one that isn't well known: 3) Most gove…

1) is hilariously off base. S&P500 has averaged about 10% nominal return, annual, since 1928. Gold returned a little under 5% nominal over the same period.

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

#177

Post by econner »

lostsock wrote: post #122
econner wrote: post #100

Earlier quoted context omitted.

Ok, "most" was the wrong word, but Roger Ver and Gavin Andresen were instrumental in the success of Bitcoin and they now support BCH.

Gavin Andresen maybe, but what has Roger Ver done?

In April 2011 Roger Ver bought enough bitcoin to drive the price up from $1.89 to $3.30. His company was the first to accept Bitcoin for payment. He paid for the first radio and billboard advertisements for Bitcoin. He funded BitInstant, Blockchain.info, BitPay, Ripple, and Kraken. He helped found the Bitcoin foundation. He started an online store that accepted only bitcoin. He essentially became a spokesman for Bitcoin.

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

#178

Post by monort »

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…

Imagine you are living in the past, when gold had only industrial, probably jewelry use, and you invent the concept of money. Would you buy the gold then? Hint: industrial use accounts for maybe 1% of the price of gold.

That is what is happening with bitcoin, people realize it can have monetary use and buy it to capture the difference between intrinsic value (zero) and future monetary value. Of course, this can fail badly if bitcoin won't be used as money.

Additionally, there is a positive feedback mechanism that can be deadly for fractional reserve fiat currencies. People get credit, buy bitcoin, this inflates the fiat supply and drives bitcoin price higher, alluring more people to repeat the process. This process is called hyperbitcoinization.

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

#179

Post by pas »

rhino369 wrote: post #140
jozzas wrote: post #29

Bitcoin is becoming a value store. With slow transaction confirmation and high fees, what are the real-world applications for Bitcoin supposed to be now? And for those applications, are there not other cryptocurrencies more specifically targeted at being better at that application?

Nobody keeps bitcoin to store value. They keep it because they think it will appreciate in value. Why? Because of has went up in the past. If people lose faith that it will keep going up, then it stops holding value. It’s pure speculation based on the greater fool theory.

A lot of people do use it to store value, its deflatory nature makes it ideal for that.

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

#180

Post by pas »

jorblumesea wrote: post #148
lostsock wrote: post #120

Earlier quoted context omitted.

How is it clear that the exchanges don't have liquidity?

The way the system works provides little in any sense of a line of liquidity. Unlike normal banking the exchanges operate ledgers where the fiat currency they have on hand is directly tied to how many people have put fiat currency into the exchange network. Given the extremely rapid rise of the price of BTC, it's extremely unlikely they have anywhere close to the amount of fiat currency if large numbers of people cas…

Exchanges are not market makers. They don't have to be able to allow everyone to "cash out", they are not banks.

Exchanges provide a venue for buy-sell to meet. If someone wants to "cash out", someone has to want to "cash in". Lately every time the price dropped folks saw it as the time to buy more, or just "finally buy bitcoin, because it'll go up soon".

A big crash happens when the equilibrium shifts drastically, when more people wants to get out than get in, it'll crush the price (because more people wanting to get out will lead to even more people wanting to get out).

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