I’m done with Bitcoin and cryptocurrency as a whole, at least for now. I did fine as far as money goes, so this isn’t a sour grapes rant.
A few threads have come together that have made me reevaluate speculation rather than investing and whether this what I really want to be doing.
Shoeshiners and Bitcoin
The likely apocryphal Joseph Kennedy quote goes:
When even [shoeshiners] are giving you stock tips, it’s time to sell.
Yup. People who have never made a sound investment in their lives have started telling me to invest in Bitcoin or some random altcoin. That’s a red flag.
This is FOMO madness.
Bitcoin and most cryptocurrencies do nothing of value. With stock, I’m getting dividends from a company that’s doing at least something. Bitcoin hasn’t cooked up anything innovative in a decade. While some of the altcoins have some neat ideas, filtering the signal from the noise takes a fair amount of effort.
The stock market has its ups and downs. That being said, if you had thrown a heap of money in right before the crisis, you’d still have come out ahead ten years on. There’s still something being produced, value added and innovation at the heart of the market. It isn’t always pretty — I’m not thrilled at how much advertising companies like Facebook and Google that get people to buy more garbage than they need dominate my index funds, but there’s still something generating some value.
Bitcoin could easily be worthless in ten years. It’s far less likely that my index funds will be worthless in ten or even fifty years.
My Vanguard and Wealthfront accounts require almost zero mental energy from me. Turning a profit trading coins requires time and effort.
Over the past few weeks I noticed that I was constantly checking coin prices. It’s the same dopamine addiction cycle that made me question the use of social media and other dopamine triggers.
In the end, I decided it wasn’t worth it.
I sold all of my remaining BTC and removed price notifications from my phone. Time to relax.
The Ethics of Speculating
I’m not convinced that speculation is an entirely bad thing. The buzz around Bitcoin has raised awareness and could lead to more practical blockchain solutions and smart contracts. If any of the cryptocurrencies get good enough at international transfers or making payments easier, traditional banks will have to compete. Zelle and ApplePay are already signs of this.
It’s unfortunate that people will lose a fair chunk of change in cryptocurrency, and the zero sum game of speculation is a real ethical question. It’s hard to say that the companies in my stock portfolio are more ethical and less wasteful than Bitcoin and speculating with cryptocurrency.
In any case, it’s a fallen world we live in. Trying to impose utopian ideals isn’t ever going to work. Nevertheless, these sorts of ethical questions need to be asked.