I wrote this piece on the same day that I wrote the first piece….and decided to make you wait for some extra time to test your patience, that is all.

Ask Yourself the following questions:

  1. Can I afford to lose this money? Are you putting an amount of money that you can afford to lose? Does your wife know what you are doing? Are you sure it is not money in bucket 1 or bucket 2. This has to be clearly free money and you should be reaching your goals easily.
  2. Do you understand this thing? I can stand in a podium and talk about many other subjects but this does not interest me. Are you sure that you have understood this? Do you understand the thing you’re planning to allocate your money into. Warren Buffett reminds us never to invest in things we don’t understand. Don’t play Bridge with experts. They need a ‘bakra’ and it would be you if you are not as good as they are. So, when it comes to something like Bitcoin you have to really immerse yourself in understanding it since it’s pretty new. Of course, you’ll never understand it as well as some experts do but understanding it will at least set the table for understanding how not to be too much of an idiot with your money. You shouldn’t own Bitcoin if you’re unwilling to invest some time in understanding it. I am too dumb to understand Bitcoin, and I will happily stay away.
  3. Is it FOMO? Yesterday Ekta Batra said it was FOMO for her with Bitcoin. It’s true for most of us. We have seen a train leave Mumbai and headed south…at Pune you do not know whether it will go to Chennai or derail at Pune itself. That is the worry. One of the main reasons why millions of people jump on investment manias and get crushed by them is because of a simple Fear OMissing Out. Your brother-in-law made Rs. 100,000 investing in Hdfc Standard Life IPO, and now he also has some Bitcoins! Your wife feels you are a coward and hence you are getting Index returns on your equity. If FOMO is the main driving force behind your decision then wait 2 months, sober up and find a new hobby. Do not chase your relative’s return!
  4. You KNOW it is really different this time? Well it could be but…A mania like Bitcoin isn’t like the Tulip Mania? The Bitcoin mania is a technology mania sold on the premise that this is a world changing technology that will become self fulfilling to some degree. It is hoped that like FB and Google as the number of users increase, its value will increase.As with any mania the ONLY question you have to ask yourself is whether it’s really different this time. Try answering this before you put in your money.

    If you cannot answer that your money is better off in a mutual fund.

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  1. Americans know how to fool people. Other day I was reading, all the coins market reached 300 USD billion. No product, No service, No coupon rate, No regulations and just software, americans created 300 billion USD market. Hats of to them.

    Imagine how long a product/services company would take to reach 300 B USD mark. There is no company in India yet with this market cap.

  2. Bitcoin is virtual – true. But what else has real value – nothing!!! Currency can lose value like Zimbabwe and Venezuela.Stocks can lose value. Gold and property can be confiscated. Any new govt rules can render a persons assets to no value. Animals are wiser than humans – only things u consume and skills u possess cannot be taken from you.

  3. USD, Euro, Yuan and AUD still has value. Why to compare dictator ruled currencies. Stocks has dividends. Gold can be used as Jewelry. Hard to believe virtual coins created by companies can fetch USD 10000. Let’s wait for all hell brake loose situation.

  4. Bitcoin will not have a happy ending. You can compare this to the money chain business (Amway etc), it is growing in the similar pattern. It might even touch 50,000$ but not sustainable, it is indeed a bubble. The block chain algorithm used to generate this Crypto currency is going to stay here for long time, can be used in many sectors. Had something about this in my previous blog as well (themoneycrib.in). Subra as always spot on.

    Regarding Americans know how to fool people, even we Indians are not far behind 🙂 What say!

  5. Bitcoin etc. are not same as fiat currency. The latter has sovereign backing of the respective nations. If I hold a dollar bill, I possess some of the leverage that the United States of America enjoys over the entire planet. The USA becoming Zimbabwe is highly unlikely. May be if a meteor splits the earth into two, may be even then The USA will probably continue on Mars. What value does bitcoin give me? The only value is it’s ability to bypass control. Nobody can control bitcoin. It’s a distributed ledger. No government can “attach” bitcoins. But it is some sort of a “parallel economy”. Unless the mainstream accepts it, it will always lack credible value. But why will mainstream accept it if they cannot control it? Bitcoin is such a scary nightmare situation for governments and banks. May be in the dark net, where illegal stuff abounds, may be it will be valued and that’s whats perhaps is inflating the bitcoin bubble.

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