Lost a decade long friendship because I tried to smile and nod, but just couldn't for too long and told a guy exactly what I thought of his day-trading Dogecoin scheme - that coin is pretty stupid, but not nearly the most stupid coin out there.
I'm sorry to hear this Dandarc. Losing friendships over how another person chooses to allocate their retirement savings seems super sad to me.
And super important to make a good case right now because you really need those greater fools if you want to exchange your crypto for anything useful. So far, the arguments are just not very convincing, particularly to those of us who got to hear all of them back in 2018 or whenever that last big BTC runup happened, and the time before that.
I don't need greater fools to make money in this space. Take, for example, a small investment I've made in VeChain (about 3k). The purpose of this crypto is to use a blockchain as a validator/authenticator. If you are a maker of name brand sunglasses, you may choose to use VeChain to allow consumers to quickly and with confidence know that you are buying the legit product instead of a knockoff. It can be used in supply chain management to track/verify where goods are, that they have been stored at the correct temperature along the way, etc.
Here's a brief quote that I think does a good job of summing up the plans for VeChain: VeChain is a blockchain-enabled platform that is designed to enhance supply chain management processes. By utilizing tamper-proof and distributed ledger technology, VeChain provides retailers and consumers with the ability to determine the quality and authenticity of products that are bought. From product source materials, to servicing history, and spare part replacements, every single piece of information about the supply chain movement of a product can be recorded and verified to bring about a supply chain management ecosystem that is secure for all participants. VeChain plans to achieve this secure supply chain management ecosystem via the method of asset digitization. VeChain enables manufactures to assign products with unique identities to the platform. This will allow manufacturers, supply chain partners, and even consumers, to track the movement of products through their supply chain.
Although the work I've put into studying VeChain suggests to me that they are doing this better than other companies at the moment, it's possible that another crypto or technology could overtake VeChain, in the same way that any business venture can get beat by a stronger company over time. But to say that my success in this cypto depends on someone even more foolish to buy my stake in VeChain is false.
If you want to criticize me for investing in a single company rather than an index, I can see merit for that. Personally, I have been nothing but 100% VTSAX since I started my FIRE journey 6 years ago. We are, after all, on Mr. Money Mustache's forum, where face punches for buying individual ventures is part of the fun. But to hold a position that crypto is just fools looking for even greater fools only hurting yourself in the long run.
Finally, I want to say that this sentiment is WHY I'm venturing out of purely VTSAX. I find that 95% plus of people I talk to and read on the internet seem to share your view that crypto is fools looking for bigger fools. Because of this, my thesis is that groups trying to solve real-world problems using crypto are vastly underpriced in the market. The total market cap of all things crypto is about 2.5 trillion dollars. It will be MANY times that when the world realizes that it's actually pretty straightforward to tell which cryptos are composed of legit teams who are finding ways to solve problems that businesses and individuals currently face. So, while this space is still massively misunderstood and under funded, I will be deviating from my all Index Fund strategy and finding a variety of projects that are solving real problems.
Cheers.
This seems to be almost a space where you can be a venture capitalist as a small guy. I can kinda get behind this explanation and could see allocating money to this with a group of people that are all researching and studying similar trends in the blockchain application industry. Why haven't you stated your stake in something like this before. For the most part people here are talking about BTC i know there are other things out there and a few others have been mentioned but very few things here have been mentioned like what you just did about vechain which IMO greatly changes the entire discussion about investing in blockchain technologies.
Hey Boarder, I haven't stated my stake in this before, because it's all super new to me and I'm learning as fast as I can. Here's the best I can describe a timeline of my growing understanding/mindset since June...
1. At the start of this summer - "This crypto thing doesn't seem to be going away as I thought it would. I think I'm going to dig in a bit and see if I can make sense of what the hell it's even about."
2. Middle of Summer - "Wow, there's a ton of legitimately cool and important stuff happening in the space. There's tons of viable projects, but I don't know enough to tell a viable project from shit project that won't go anywhere."
3. August - "Alright I understand Bitcoin and Ethereum. These things aren't going away any time soon. Bitcoin at worst is an amazing store of value, and at best, can become a currency if the Lightning Network pans out(which appears to be happening). Ethereum, however, has TONS of use cases, particularly in the realm of Decentralized Finance, Non-Fungible Tokens, the gaming community, and the list goes on. I'm ready to stake an amount of money that matters to me on those chains."
4. September/Early October - "I could just ride out Ethereum/Bitcoin, but you know what, studying all the different groups of coders around the world who are trying to use blockchains to solve real-world problems is absolutely fascinating to me. At this point, I'm daily reading the white papers where the founders of projects state their intentions with their coins, watching an hour or two of youtube channels where people smarter than me explain in detail what various blockchains are, what problems they solve, the strength of the team of developers behind them, the established corporations they have contracts with for their services, and so forth".
5. Mid-October - "Ok, my 700k stache back in August is now up to 800k, mostly due to crypto gains. I now have incredible confidence from my growing understanding of the space that Ethereum and Bitcoin have so much more upside than downside. People have no idea how undervalued it is, and until they do, I can buy things at a MASSIVE discount. I feel comfortable putting 400k of my 800k stache into cyrpto. My wife and I are 10 years from a pension that will pay out a combined 100k per year and have a 400k house that is 75% paid off. This 400k will make absolutely no difference in my ability to FIRE in 10 years, but if my thesis is correct, I may be able to justify retiring far before the pensions vest. I have high upside if I'm right, and low downside if I'm wrong".
6. Past Week - It's now time for me to stop just reading about all these cool projects and create a portfolio that gives me some exposure to them. I am still working out a few kinks and executing trades, but here is where I expect my positions to be when the dust settles in the coming days:
VTSAX: 400k
Ethereum: 235k
Bitcoin: 127k
Altcoins (Currently: VeChain, Enjin, Polkadot, Chainlink, Avalanche, Aave, Cardano, Solana, Uniswap): 40k
7. Moving forward: My son is 9 and is very into playing Pokemon Go. Now that I have a portfolio of cryptos that I feel comfortable holding for a year or two, I want to explore the space as a user and not just as an investor. There are videogames on blockchains where you can buy characters (as Non-Fungible Tokens) and use those characters to play video games where you get paid to play. I'm looking to buy some of these characters as a way to help my son learn about the space in a way that will motivate him. I see coding as a possible career option for him, and I want him to feel like a digital native in the cypto space. I expect to make a low hourly rate in doing this, but see it as high value if it provides a way to get my children learning about a growing field. Plus it's something fun we can do together.
So yeah, I don't always post tons of specifics on this message board because there's a lag time between when you understand something, and when you can competently explain it to other really smart people. I'm trying to stay in my lane, and only delve into details when I am confident I can competently explain what the hell I'm talking about.