Are we allowed to talk about Bitcoin?

If I buy a barrel of oil or a silver coin, it doesn't pay a dividend. It doesn't mean that those things have no worth or that they are pyramid schemes (using his reasoning).

Not paying a dividend just means that in a rising rate environment, theoretically it is going to look less attactive relative to whatever risk-free rate of return you can get. But that's true of lots of things in a rising rate environment.

Bitcoin may or may not have worth. That remains to be seen. You can argue that it has no intrinsic value currently, because nobody has been buying bitcoin for any purpose other than speculation. Not for some other utility or for the sheer joy of owning a digital asset that sits on a blockchain, the way someone might buy a Van Gogh to hang on their wall and enjoy even if there was no prospect of being able to sell it for more money later on. But that could change.

I was on the idea of bitcoin very early, as a possible alternative to a world of fiat currencies that were being crapped all over. But as the price ran up on the back of the devaluing of those currencies, I saw all the hallmarks of a speculative bubble. It still needs to pop. Then, we will find out the true value (or worthlessness) of bitcoin. It is yet to be determined.

 

Just to expand on that, FWIW.

Lots of stocks (that pay dividends, choose not to pay dividends, were buying back stock to return money to shareholders, etc) have been in speculative bubbles too. Many of which have bled 70, 80 percent of their market cap since they peaked. The aren't ponzi schemes either, at least necessarily.

This is what happens when you disort the lending markets to the degree they have been for the last decade and half. It destroys price discovery, which sends bad signals to people. Interest rates are just a price. They are the cost of money. When you price fix the market for something, there are consequences. Money was made way too cheap, and the mechanism that the idiots who have been doing it used, created whacked incentives that punished savers by robbing them of their risk-free rate of return, to reward debtors. They took it to such an extreme -- because the more debt they enabled, the bigger the interventions required to prop it up to keep defaults, or failures from happening -- that they went from forcing those savers farther along the risk curve to get what they were being robbed of, to going full-fledged stupid and blowing the riskiest assets up so much on the back of all the the mispriced debt they unleashed during the pandemic that it took on a life of its own. To the point that companies that don't earn anything were able to borrow billions of dollars, keep rolling over the debt, and finding themselves with valuations based on wishful thinking stories (not earnings). A lot of people got sucked in without understanding valuation and the macro factors that were causing the dramatic price increases of assets. It sucks.

 

Congrats. But you didn't buy shares. It's not a stock.