Bitcoin is bullshit, Part 48234: Still crashing, still funny

 This morning, we take a break from politics and turn to the financial markets, which are often volatile, rarely violent, occasionally rational, and sometimes as funny as the wingnuts and moonbats who are now the centers of their respective parties.  Inflation may finally be coming down, and Powell is looking towards slowing the interest rate hikes.  These are the things that truly matter for those of us who live in the real financial world, but in the cartoon financial world of cryptocurrencies and batshittery, we can also appreciate the stories of Sam Bankman-Fried, the crashes of various companies, and oh, yes, bitcoin is still bullshit.  I started the "Bitcoin is bullshit" series back on The Unmutual Political Blog, and one of these days, I'll re-post those original clips, since I wrote them in word processing files before uploading them, but anyway, yes, bitcoin is bullshit.  Still, and not forever, because one day it will pass from bullshit to history.  When?  I do not know, but since it is a pyramid scheme, my advice is that you do not buy it.  You may turn a profit, but you also risk being at the bottom of the pyramid.

So what's going on?  As the various high fliers and businesses around cryptocurrency collapse, the most famous of the cryptocurrencies has actually become less volatile in at least one sense of the word.  Take a look at the one year chart for bitcoin.  A year ago, it was trading at about 50,000, which is nuts, of course, but since then, it has just collapsed.  There is some short-term volatility, day to day, with a long-term downward trend, and the collapse has been a sort of step function, but the trend is definitively downward, ending now at about 17,000, which is a far cry from the all-time high of about 64K.  Even in the last month, bitcoin took another step down.  As I mentioned, if you zoom into any short period, you see volatility of the colloquial, up-and-down form, but zooming out to the long-term trend, it is downward, unmistakably.  So I guess it isn't a stable alternative to the dollar amid inflation!  Oopsies!  I'd like to say I'm a bigger person than to say 'I told you so,' but a) I'm not, and b) anyone bothering to read my blathering is here for the snark anyway.  So I told you so.

So what is happening?

As we come towards the end of the year, the S&P has had a wild ride.  It hit bear market territory-- 20% down from its recent high-- and it is coming back.  If you did the smart thing and just put your money in a passively managed S&P index fund, you lost some money, but it is coming back.  If you bought and held bitcoin, you lost fuckloads.  Will you get it back?  I do not know.  Maybe, but if you don't time it right, you'll lose it again.  And here's the problem.

When I started that "Bitcoin is bullshit" series back on The Unmutual Political Blog, I posed the following problems that would prevent the cryptocurrency, and really, any cryptocurrency from becoming anything more than a vehicle for speculation.  First, you cannot pay your taxes with it.  This is the big one.

That means any legal transaction with crypto-- bitcoin, or otherwise-- adds multiple unnecessary transaction costs.  You get paid in dollars, which means you have to convert your dollars to crypto, and that conversion costs money.  Then on the other end, the seller needs to convert your crypto back to dollars to pay income taxes, which involves another currency conversion fee.

All because... why?  Because Itchy & Scratchy Money is fun?

That makes crypto intrinsically inefficient as a medium of exchange.  Dollars are efficient because you can pay your taxes with them, crypto is intrinsically inefficient.  That's why, when you go to the grocery store and pay increasing prices for high fructose corn syrup and more high fructose corn syrup, you pay with dollars, you fat, American fuck.

You're still not buying anything with bitcoin, or if you are, you are paying extra for the privilege because you want to make an ideological statement.  The store will gladly take your extra money, you stupid, American fuck.

But because the fat American fuck factor appears to win out over the stupid American fuck factor, you're mostly paying with dollars, which leaves crypto as a speculation vehicle.  People buy it with the hope that they can sell it to the next stupid American fuck at a higher price.  Pyramid scheme.

Maybe the price goes up because they found dumber American fucks (or potentially, dumber foreign fucks).  Maybe the price goes down, because we found the bottom of the pyramid, made of the dumbest American and foreign fucks.  They're probably fat too, making the best base of the pyramid.  Hey, when you're going for it, you may as well fat-shame too.

Anyway, either way, the price changes.  That's price volatility.  That makes anything useless as a currency, because any currency must be a stable store of value.  When the price goes down, that's inflation.  So, stores don't want to take it because it keeps going down in value.  If the price goes up, that's deflation, so if you have it, you don't want to trade it.  You want to keep it, in the expectation that it will be worth more later.  Either way, volatility in the price of a "currency" makes it useless as currency.  And if a thing has no use as anything else (gold is far from an ideal currency, but it can be used as such, and it is also useful in electronics, jewelry, and other stuff), it's just useless.

Down, it goes!

Is this the end of bitcoin?

So here's the thing.  There are so many people attached to the idea of cryptocurrency that for the time being, there is a market, consisting of people who want to trade crypto.  But which cryptos, and at what price?

To do what?  To sell to the next sucker, of course.  This way to the great egress!  64K, down to 17K.

There are a lot of things in the world I do not get.  Sports.  Pop music.  Lots of stuff.  People spend money on such things, but I spend money on a goddamned cd collection like someone still living in the 1990s, and they're obscure remasterings of old jazz and blues, and shit that nobody else likes.  The glory of the market is that I can enjoy what I like, and you can enjoy what you like.  As I have repeatedly explained, my true objection to sport is that those who obsess over sport object to my desire to live without it in my life.  If they would stop trying to push their obsessions on me, I would be indifferent to sportsball, rather than hold it in bilious contempt.  If you do not share my appreciation for jazz, don't listen.

Yet people put money into crypto believing that they will turn a profit on it.  Like betting on sportsball.  You'd honestly be better doing that, and I do not recommend gambling.

But I'll laugh if you lose, because I look down on gambling and sport with similar, superior self-righteousness.  But let us all laugh together at the idiots who lost fuckloads of money on bitcoin.

I missed jazz again yesterday, so here's an all-time classic.  Duke Ellington, with Charles Mingus and Max Roach.  The title track from Money Jungle.