Thursday, November 7, 2013

Joe Weisenthal: Bitcoin Is a Joke

Joe makes some strong arguments, and some not so strong arguments, to make his case.

These are his strongest points:

A few weeks ago, it was just above $100. Today it's over $260.

This surge has prompted Timothy B Lee at The Washington Post to ask whether those who have called it a bubble in the past should retract and admit that they were wrong.

Well I'm not totally sure if I've called it a bubble, but I have spoken negatively of it, and I'll say that I still think it's a joke, and probably in a bubble.

Now first of all, I find the premise of Lee's post to be hilarious. The currency has been surging several percent every day lately, and that's evidence that it's not in a bubble?

Before going on, I want to be clear that saying something is a bubble is not saying it will go down. It could go to $500 or $1000 or $10,000. That's the nature of manias.[...]it gets worse. Bitcoin is mostly just a speculative vehicle. Yes, there are PR stunts about bars and other shops accepting bitcoins. And there is a Bitcoin ATM for some reason. But mostly Bitcoin is a speculative vehicle. And really, you'd be insane to actually conduct a sizable amount of commerce in bitcoins. That's because the price swings so wildly, that the next day, there's a good chance that one of the parties will have gotten royally screwed. Either the purchaser of the good will have ended up totally blowing a huge opportunity (by not holding longer) or the seller will be totally screwed (if Bitcoin instantly plunges). The very volatility that excited people to want to play the Bitcoin game is death when it comes to real transactions in the real world.

Again, Bitcoin might go up a lot more before it ultimately ends. That's the nature of bubbles. The dotcom bubble crashed a bunch of times on its way up. Then one day it ended. The same will happen with this.


  1. I'm not a big believer in bitcoin and don't own any but I get a kick out of someone who promoted minting trillion dollar coins calling a virtual currency a "joke".

  2. WOW Robert! Using Joe Weisenthal as your intellectual back up to slam the coin again. Sinking to new lows now. Not to mention that you spread some Bithate a mere hour ago, and you were doing so well. Can't you hate on something else that annoys the Fed? Oh wait, nothing else gets under their skin like Bitcoin. Rivaled only by how much it bothers you how wrong you have been.

    Also, this article has already been thoroughly refuted. Not that you'd try to find a refutation to your own incompetence. (Below)

    1. Bitcoin in many ways is superior than the US Dollar. I am a programmer and understand the crypto and concepts behind the currency. I can't find anything that makes it unsound technically. The biggest reason that it is better than USD is that no central bank inflates the currency, and no central authority allows or disallows transactions to approved persons. Even if you don't use it as a savings/storage vessel, it is an incredible way of transporting wealth without be shaken down at borders. Most people who don't like are curmudgeons who don't understand it and cling what is familiar. The big swings in price is a concern, but as more people adopt the technology, the prices will stabilize.

  3. I think Wenzel is only posting these bitcoin articles because he knows they get a rise out of people. In other words, he's trolling for his own personal amusement.

    What Wenzel, Weisenthal, or any other economist thinks about bitcoin is ultimately irrelevant. It is irrelevant because there is no one to lobby that can set bitcoin monetary policy, and it is irrelevant because bitcoin will do what it does regardless of what any intellectuals think about it.

    In the end, I think Wenzel is just going to end up making himself look foolish. People who continue to deny what is blatantly self-evident eventually lose credibility. It doesn't take a rocket scientist to see the potential value of bitcoin. Since the economics of it are so simple and easy to understand, people don't need a PhD to tell them if the product is valuable or not. They can make that decisions on their own.

  4. Bitcoin is not a joke. Many have stated "Bitcoin is going to ZERO!" and it hasn't. It hasn't been hacked and adoption has been increasing. The only allowance I give Joe is the lack of flow of currency, yet he leaves out additional acceptance by the Chinese. There will be other areas of the globe, particularly Latin America and the underbanked in Africa who will likely embrace Bitcoin sooner than later.

    Now it's coming time for a correction in the cryptocurrency. I see the parabola and momma didn't raise no fool. I'm banking at least some of it shortly, but I won't say when that happens. That's for the fellow BTC'ers as myself to decide. So far, it shows a very bright future and Joe will see for himself that the volatility will decrease with greater acceptance, and yes, when more with BTC will begin using it.

    Apparently, he's never heard of BitPay where a merchant isn't as exposed to sudden swings.. Oh well.