up arrow Bitcoin Bust

Your JoeDog hasn’t spent much time blogging about Bitcoin but it does interest him for two reasons: 1.) He studied economics in college and 2.) The rogue currency has a technology/Internets angle. From an economics perspective, a successful currency must provide a medium of exchange and serve as a reasonably stable store of value. Bitcoin certainly provided the former but the latter was always in doubt.

And doubt won. Since its peak, Bitcoin has lost two-thirds of its value. Its bust was obviously not without victims. From Izabella Kaminska, we hear the story of one of those victims. Redditor Whattodobtc appears to have impoverished himself with bad bets on Bitcoins.  Izabella claims, “Some extremely wealthy libertarians have a lot to answer for if these sorts of ppl lose all due to believing in them.” Your JoeDog is certainly no libertarian but he feels the burden of risks should be placed on those who take them.

Certainly there have been influential libertarians who’ve been pushing Bitcoin as a hedge against fiat money. And if people like Whattodobtc better understood currency, they’d be less inclined to go long on a Libertarian pipe dream. But is this any different than the hucksters who shilled gold as a hedge against non-existent hyper-inflation? If you believed Glenn Beck back in 2012 and sunk your savings in gold, you lost 36% of your investment. That’s not as depressing as Whattodobtc’s story but it’s equally devoid of a happy ending.

Whattodobtc posted to Reddit because he wanted advice. Should he sell or weather the storm? He should have posted a similar inquiry before he sunk his savings in Bitcoin. Personally, I’d sell now before all I had left were some worthless binary numbers.