I had planned to put out our research on "Will there be an ETF Bubble?", but two things came up:
One: This is so outrageous, I had to write about it. In my mind, the only way you can treat absurdity is by laughing at it. See article, unless you have no sense of humor.
Two: I have a couple quoted comments from experts coming in, that will be weighing in on ETFs.
So, next week: "The ETF Bubble"
Now, about Bitcoins: Here's a quick guide: (italics and bold, mine)
What is it:
What actually is that? A made up name?
Who invented it? Satoshi Nakamoto (an alias)
When did it debut?
2009 - An actual fact.
What's the hook about it?
It's the first decentralized peer to peer payment network that is powered by users with no central authority or middlemen.
Is it a network or a currency, or what? No controls, no backing and no regulations about it.
Who owns/controls it?
Is that anarchy or chaos or both?
Where do you get them? There are about 50 Bitcoin exchanges, 2 in the US, 7 "international," the rest in somewhat civilized countries, including one in China. Comfortable yet?
Where do you use it?
It's hard to tell. It's up to the individual businesses. No directories I could find. About 20 countries may have businesses that take it. There is a Crypto-Currency Foundation in Russia. Um… not much help, there.
How is its use protected?
There's a Full Node. I can't even go there, it's too easy.
Is it safe?
The Royal Bank of India has been repeatedly flagging concerns on virtual currencies like Bitcoins, stating that they pose potential financial, legal, customer protection and security-related risks. In recent cyber attacks, "ransomware'' hackers held victims hostage by encrypting their data and demanding them to send payments in bitcoins to regain access to their computers. (Economic Times, 5-17-17). So the answer is:
Is it widely used?
Between 3-6 million people use them.
That's a lot of dupes.
So, how do I get them, then?
Get a shovel, in more ways than one.
Who "runs" it?
Somebody named Gavin Andersen, formerly Gavin Bell; maybe Satoshi Nakamoto, who knows?
Is it a good investment?
Stanford and Princeton say bitcoin has volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the U.S. dollar. My answer:
Some of the hype tossed by Bitcoin sellers include:
Buy bitcoins with your IRA
Seriously? Sure, reverse mortgage your house while you're at it.
It's a new kind of money
Wait, I thought it was a network?
Buy bitcoins in 30 seconds. So I can lose money at the speed of light. We can double your bitcoin value in 100 hours
You just write it down and give it to me, right?
Earn .025% in daily interest
Is that FIDC insured?
A control against fraud
Low processing fees.
It costs money to use "money."
Fast peer to peer transactions.
Spend it at the speed of light.
If you're a vendor you can sign up to receive bitcoins.
Then what do I do with them?
The Bitcoin network never sleeps.
You can pay for them anytime.
Choose your own fees.
WHAT? How about -0-?
Some effort may be required to protect your privacy
Trust and Integrity, not like banks
So, here's the worst part:
Last month, the SEC trashed an application to list a Bitcoin ETF. Under corporate pressure (from the financial firms, now). NOTE: IF YOU KNOW OF A WORSE IDEA, PLEASE LET ME KNOW. I'M RUNNING OUT OF MATERIAL.
The SEC said they will review that decision.
An ETF that tracks a mythical digital currency bitcoin that has no financial fundamentals, no earnings except for the collectors, and a handful of peculiar markets.
Based on what I read from the proponents, "Bitcoin is a virtual currency that can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government. A fund holding the currency could bring more professional investors to the asset and push its price higher."
All in the name of profits, right. Do you think the description is self-serving?
What about risk? SEE "VOLATILITY, ABOVE. At least with Krugerrands, there was a country involved; and, they're GOLD! I could not find Bitcoinistan on any global map.
It is virtual.
There's nothing behind it.
What about cyberscamming or cyberstealing?
Governments have not rushed to endorse it, although some merchants have.
China is going to endorse it as a currency. Does that give you comfort?
It apparently sells for something like $1250 or so, now. Did I hear "BUT, IT MAY GO UP THROUGH THE ROOF. I NEED TO OWN SOME"?
Still, some people will buy it as an "investment." In my opinion, Monopoly money is safer.
Next week: "The ETF Bubble" (with experts)
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I do have serious exclusive research, analysis and opinions on the Marketplace as: The Fiduciary Sale: In Search of the Ethical Advisor. Also see somebodyelsesmoney.com.