[ExI] bitcoin

Sat Dec 16 20:07:50 UTC 2017

I would not recommend doing business with Moon Capital Management.  

This analyst demonstrates his lack of understanding in both 1) the subjective nature of value, and 2) the nature of bitcoin's value. 

It's ok to think that bitcoin is overvalued at US$17K (I disagree, of course). It is not serious to say that bitcoin provides no value and that therefore its current market value is purely speculative.  

C. 

On December 15, 2017 12:10:10 PM PST, William Flynn Wallace <foozler83 at gmail.com> wrote:
>Some of you may be interested in this - bill w
>
>---------- Forwarded message ----------
>From: Moon Capital Management <marsha at mooncap.com>
>Date: Fri, Dec 15, 2017 at 1:59 PM
>Subject: David Moon MarketView 12.17.17
>To: foozler83 at gmail.com
>
>
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>
>*Bitcoin: reasonably risk or gamble?*
>
>*December 17, 2017*
>
>The mounting interest in digital currency such as Bitcoin has
>understandable impulses in an era of prolific money printing by central
>banks. How strong is the public interest? For the first week of
>December,
>Google searches related to the digital currency outpaced searches on
>Donald
>Trump.
>
>Because virtual currencies are tracked and maintained by vast networks
>of
>computers, no government or bank is in control. Call it the “idealist’s
>currency”, a beneficiary of the well-deserved diminished confidence in
>paper money.
>
>While the U.S. dollar is no longer backed by gold, it is backed by the
>largest single financial asset in the history of the world: the taxing
>authority of the U.S. federal government. By contrast, bitcoins are
>lines
>of code generated by algorithms, accounted for as entries in a ledger
>(called a blockchain) and backed by nothing other than the price at
>which
>the next speculator is willing to pay for them.
>
>To be a currency, an asset must be both a medium of exchange and a safe
>store of value. Bitcoin fails both tests.
>
>Few retailers accept bitcoin; if you can’t use it at Walmart or a gas
>station, it isn’t a medium of exchange. Despite a 2,900 percent
>increase in
>price over the past two years, the only increase in bitcoin
>transactions is
>among computer hackers and online drug dealers.
>
>When a person receives a paycheck, he is storing the value of his work
>into
>currency for later use. When you convert the value of your work into
>something that fluctuates 30% on a daily basis, you are betting the
>value
>of your work on the changing demand for a computer algorithm you don’t
>understand and can’t explain. That’s a massive failure of the store of
>value test.
>
>While bitcoin doesn’t meet either test of a currency, it is the
>definition
>of a speculative bubble: sharp price increases, public excitement, both
>a
>business and general media frenzy, and envy-inspiring stories of others
>making fortunes from their trading. For similar characteristics, look
>no
>further than residential real estate in 2007, dot-come stocks in 1999,
>tulip bulbs in the 1600s and beanie babies in 1997.
>
>Bitcoin is by definition speculative. Most people are buying them for
>no
>reason other than that they expect the price will go up. When the clerk
>at
>my favorite Pilot station and my brother-in-law ask me about a new hot
>investment concept, it is almost certainly a speculative bubble.
>
>The fear of missing out is a powerful emotional motivator, but like
>dot-com
>stocks and Beanie Babies, it’s usually advisable to completely avoid
>frenzies. As Warren Buffett notes, "What the wise man does in the
>beginning, the fool does in the end."
>
>
>  *If you would like to learn about David's award winning collection of
>daily devotionals, Thoughts Are Things, visit davidmoon.com
><https://mooncap.us1.list-manage.com/track/click?u=98a3b51043802cfedc170dc6a&id=4754ce5c18&e=5de89497cb>.*
>
>*Did you miss a previous week's column?  Click here
><https://mooncap.us1.list-manage.com/track/click?u=98a3b51043802cfedc170dc6a&id=a69942779f&e=5de89497cb>*
>
>*David Moon is president of Moon Capital Management. This article
>originally appeared in the USA TODAY NETWORK.*
>
>
>
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