No Bitcoin ETFs at Vanguard (2024)

https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/no-bitcoin-etfs-at-vanguard-heres-why.html

by mooreds • 1 year ago

398 475 1 year ago

corporate.vanguard.com

leishman5• 1 year ago

"We do have a lot of interest in blockchain, the technology behind cryptocurrencies. We believe its application to a number of other uses besides crypto will make capital markets more efficient, and we’ve been actively involved in research to use blockchain technology."

The exact opposite is true. Blockchain "technology" is useless beyond its ability to enable Bitcoin - a monetary innovation. Using it for anything other than that is simply trying to find a problem for a solution. Crypto beyond Bitcoin is also largely useless beyond serving as a democratized casino.

MuffinFlavored• 1 year ago

What about ETH/SOL stablecoin USDC and the whole "the blockchain validators/stakers can run programs/smart contracts/instructions"?

leishman5• 1 year ago

stablecoins are useful but you don't really need a blockchain. you just need enough of a rube-goldberg machine to claim it's "decentralized". The most popular "blockchain" for stablecoins is Tron, if that tells you anything about why the technology itself doesn't matter

tyre• 1 year ago

None of the smart contracts have done anything materially useful without huge risk of scams, rug pulls, or enabling criminal activity (e.g. mixers for money laundering.) After a decade, there are no examples of widely used smart contracts or even long-running projects that haven't been fueled by boom and bust speculation cycles (e.g. NFTs.)

Every time there is a "code is law" gone wrong with large $ at stake, people immediately fall back to real life police. Because "code is law" is either a bad idea or immediately has to compromise to meet real human uses (for example, people forget their passwords all the time and not supporting password resets—which right now requires a centralized key store—is a non-starter.)

There is both a ton of money in crypto and it has completely failed to reach its promised potential.

The largest uses in the next half decade will continue to be scams, pump-and-dumps, speculative frenzies, and money laundering. We'll see shockingly open corruption with the president of the United States having a coin for on-chain bribery.

Jasper_4• 1 year ago

The blockchain can't do anything with stablecoins, because that's interfacing with a financial system that's out of the reach of smart contracts. Even if we assume that a stablecoin is backed by real USD sitting in a bank account, there's nothing stopping anyone from just taking money out of the bank account, and the smart contract is none the wiser. You still have to trust someone at the end of the day.

Ekaros5• 1 year ago

Problem with stablecoins is that in reality they are just extremely fancy IOUs or namely debt. Issuer promises to give money back. And if they don't well best you can do is to sue them.

robjeiter• 1 year ago

Fully disagree. Tokenization enables better financial markets. Bitcoin is the useless asset since it's proven that productive assets (think stocks) are better store of values than unproductive ones (think gold). Ethereum in that sense is productive because you can stake it for a yield and collaterize it natively to borrow against it and you can tokenize anything on top of it.

hocuspocus5• 1 year ago

Why would you need a blockchain for tokenization?

leishman5• 1 year ago

If tokenization requires a trusted party to issue the tokens (think stocks) then no blockchain is needed

oa3354• 1 year ago

Bitcoin is the useless asset since it's proven that productive assets (think stocks) are better store of values than unproductive ones (think gold).

This has hardly been proven. Gold has been recognized as source of value across several millennia and multiple cultures. I would bet that 1000 years from now gold will still have value, whereas stocks are only valuable in as much as the rights that they represent can be enforced by a court and implicitly the state backing it.

oellegaard2• 1 year ago

While I personally don’t believe in Bitcoin or any other crypto currency, I couldn’t stop laughing about your comment on the blockchain.

I have met so many people obsessed with building things on top of the blockchain and when you ask them what it is they need it is essentially a database and they don’t want it to be public. Fortunately the recent years this has been a decreasing trend. Only now a days the requests are to replace developers with 10x AI agents.

matwood3• 1 year ago

Yeah. The reality is that we enter into very few zero trust transactions. I don’t need a blockchain to guarantee things when the law and contracts have handled that fine for a very long time.

SteveNuts• 1 year ago

I’ve always wondered why there isn’t a general purpose blockchain ledger for businesses. It seems like it would make auditing simple since all of the entries would be cryptographically guaranteed to not be manipulated.

Almondsetat2• 1 year ago

Guaranteed by what mechanism? This is the fundamental problem.

zdw• 1 year ago

This assumes ideal, perfect data entry before reaching the ledger, and having immutable history doesn't prevent historical errors.

leishman5• 1 year ago

There is a general purpose ledger for business. It's called a SQL database

hocuspocus5• 1 year ago

Append only, immutable and signed ledgers do exist actually.

pintxo• 1 year ago

It’s just not an actual problem for most businesses.

Zanfa• 1 year ago

It would only ensure entries haven't been manipulated after the fact, but not whether they were valid in the first place or if they reflect reality.

Analemma_2• 1 year ago

Actual businesses don’t need any trustless, decentralized storage solution, because they already heavily rely on the state monopoly on violence and state recognization of the “business” as an entity in order to function. They gain nothing from using a blockchain ledger instead of a trusted source enforced by laws and contracts.

mutatio• 1 year ago

I've worked on such a platform: Hyperledger from IBM et al. It was generic enough we could deploy our own "smart contract" / business logic layer via a Lisp dialect built in Go.

everfree14• 1 year ago

The major problem is that private solutions (like consortium chains) offer privacy but no standardized interoperability or neutral root of trust, and public solutions (like Ethereum blobs) offer interoperability and neutrality but no inbuilt privacy.

I believe this will change either when consortium chains figure out the interoperability problem (so they can bridge seamlessly with public chains) or public chains figure out the privacy problem (allowing consensus over entirely private transaction zones).

To me it seems like the latter is more likely than the former. We've finally got both featureful/performant Ethereum roll-ups and private Ethereum roll-ups. Now the trick is to combine all those properties and bundle them into a business ledger that's high-performance, with customizable privacy zones, with consensus and data availability provided by a credibly neutral setup such as the Ethereum validator set.

This seems to be the direction some firms are going, for example Ernst & Young with their Nightfall product, and more recently their OpsChain Contract Manager to try to bring it to enterprise customers.

plsbenice34• 1 year ago

"cryptographically guaranteed to not be manipulated."

That is only achieved with bitcoin because of a security model that has financial value to the blocks, and a distributed system of nodes and financially-invested miners. As soon as you remove the valuable digital token from the system it all falls apart; people could just rewrite the blocks and back-date the timestamps. It's like a machine that needs all of the parts to make sense.

quercusa• 1 year ago

Wasn't that AWS Quantum Ledger, which is closing down at the end of July?

miohtama4• 1 year ago

There was BigChainDB that tried to combine blockchains with SQL database, but it failed as it was too early.

The trick is that it must be triple accounting and the counterparty needs to share the ledger, which cannot be done without PK.

nradov3• 1 year ago

How would it make auditing simple? Auditors would still have to go out and count things to verify that the blockchain contents match assets and liabilities in the real world.

tim3334• 1 year ago

seems like it would make auditing simple since all of the entries would be cryptographically guaranteed to not be manipulated

Just because you write that you own 5 million litres of olive oil or what have you on a chain doesn't prove you actually have it.

dboreham• 1 year ago

Thought experiment: if you were tasked with creating an eventually consistent distributed database where the nodes were to be run by different organizations that didn't trust each other, with predefined validity constraints on the data of some sort, and a scheme for incentivizing the operators of said database to keep operating it long term, how would you propose doing that?

Hint: if you look at similar systems such as those used for certificate transparency logs, they look quite like...a blockchain.

axlee• 1 year ago

Thus, a problem in search of a solution. Who has asked for that exactly ?`It's been more than a decade and still no one has found an actually useful real-world application for blockchain besides gambling and money laundering.

Almondsetat2• 1 year ago

You cannot reply with a thought experiment to someone asking what real purpose a technology has. Provide a real example where this is needed/done

Analemma_2• 1 year ago

Sure, but that’s not a thing any actual business needs, except in rare, esoteric situations. For all actual business purposes, a centralized database is better fit for purpose (note that pretty much all finance runs, eventually, on centralized databases like the Fed’s ACH system and the Depository Trust Company. It’s fine.)

c0redump• 1 year ago

Tasked by whom? In pursuit of what goal?

ghoshbishakh• 1 year ago

I would not say useless. But blockchain has very limited use outside cryptocurrencies. Although, some of the innovations that happened around blockchains are useful in many other scenarios.

P.S. I do have a Ph.D. in trying to fit blockchain for other use cases.

Calavar• 1 year ago

What are some good noncrypto uses of blockchains that you've seen?

unboxingelf• 1 year ago

The rare, correct Bitcoin take on HN.

irln• 1 year ago

So interesting how your conclusion (which I strongly agree) is a bit of knowledge that can be obtained with diligence and research, however, it's a limitation of Bitcoin that it requires that level of diligence and research to understand.

npoc4• 1 year ago

Not really. I just means that it doesn't grow too fast for itself and gives people chance to accumulate it - its kind of poetic.

Ultimately it will just keep going up in price relative to everything else and people will invest simply based on that without understanding why - similar to the real estate investment market.

losteric• 1 year ago

This comment is peculiar - among technologists, for years the common refrain I’ve heard is “Bitcoin makes no sense but the underlying block chain ideas are very useful”.

Of course the combination of signed transactions, common visible ledgers, introducing computational challenges to forgery, resiliency through consensus (kinda)… all the bits and pieces can be remixed into really interesting ideas.

Bitcoin, I still don’t get. More public, slower, more expensive, no fundamental utility, and still subject to nation-state interference?

leishman5• 1 year ago

This comment is peculiar - among technologists, for years the common refrain I’ve heard is “Bitcoin makes no sense but the underlying block chain ideas are very useful”.

That's because they have no idea what they're talking about. At a certain point you have to ask yourself why Bitcoin is worth $2T and no enterprise blockchain has ever taken off. How many years more of this trend is required to prove the "technologists" are wrong? It's already been 16 years.

And while I don't believe in appeal to authority, it's worth mentioning that I have been working in this field for pretty much my entire career and TA'd the first Stanford CS course on blockchains and crypto currencies in 2015. I very much know what I'm talking about and the people at Vanguard are blindly parroting what Deloitte and McKinsey are telling them about "blockchain".

npoc4• 1 year ago

It's all down to how money is issued. The tokens we have to work for are created effortless by bankers from nothing whenever they issue a loan, and then they charge interest on them. This value of the new tokens they create is sucked out of the ones in your bank account, pension etc. It's theft and it's about 7% year.

Gold didn't have this problem because it's issued through proof of work - you have to put in N kgs of gold worth of work to mine N kgs of gold. But it's a rock and in today's world we need a digital form.

lawn• 1 year ago

Typical Bitcoin maximalistic bullshit that pretends that the only worthwhile cryptocurrency will ever be Bitcoin, ignoring the fact that for example Monero is a superior currency (being actually fungible, a requirement for a currency).

I do agree that cryptocurrencies are the killer feature of the blockchain but other use cases do exist (like trustless timestamping).

wheaties• 1 year ago

TL;DR - We think it's essentially gambling and not fit for a long term portfolio.

I agree.

Ekaros5• 1 year ago

In sense investing is gambling. But at least you can make informed decision on what you think go up or down in value based on real world. Where as crypto is purely speculative with no actual tie to economy or anything.

afroboy3• 1 year ago

What does make it different than let's say Gold?

Bitcoin has a really good and nice use case, you can move millions of dollars between countries with words in your head. No customs will ever find out. Can Gold, diamonds or even paper dollars do that?

You can hit met with the ethics subject but another matter.

lr4444lr2• 1 year ago

I don't often get a chance to commend a financial company for making a decision true to values and a long term view of the mission over making a quick buck, but Vanguard in this instance is such a chance.

I've been a customer for over 10 years, and am ever more proud of their commitment to promoting long term average investor goals.

BadCookie2• 1 year ago

Same. I own a mix of ETFs, some from Vanguard and some not. I will be even more inclined to buy Vanguard ETFs going forward.

I am so, so tired of trying to explain to my retired mother why she should not buy any more bitcoin … with money that she really cannot afford to lose.

eric_cc2• 1 year ago

Are you willing to live with the fact that you may be wrong and she’s right?

strix_varius2• 1 year ago

I've also been a customer for over 10 years, and recently moved everything to Fidelity purely based on convenience. As far as I can tell, Fidelity is better equipped to be a full bank replacement (consolidating my various accounts held in various places & opening a brokerage line-of-credit).

This blog post, along with the fact that Vanguard is the only one of my accounts that immediately transferred my funds with no bullshit slow-walking the move, trying to keep them (looking at you, Schwab & E-Trade!), makes me sort of regret that transfer. I want to support companies like Vanguard!

dehrmann4• 1 year ago

The general consensus is Vanguard is amazing for how they revolutionized investing with index funds, its ownership model really does put investors first, but as a brokerage, it has quality-of-life issues with its website and apps. Spending an extra $10M per year on designers and UI engineers would change the game for them.

kiba• 1 year ago

Vanguard is owned by its investors/customers which is you.

teitoklien2• 1 year ago

And assets in hedge funds are owned by investors, yet the shady games they play with that money…

Good financial managers decide how a portfolio gets managed.

baxtr• 1 year ago

Aligned incentives at their best.

lr4444lr2• 1 year ago

People still need to make executive decisions.

And frankly, I suspect a lot of Vanguard customers DID want crypto. There are greater objectives at stake, and so I am glad Vanguard held the line.

I'm not utterly opposed to a possible future scenario for certain cryptocurrencies maturing into a more integral asset to the economy. But we ain't there yet, and their current volatility and novelty should not be promoted under the Vanguard reputation.

eric_cc2• 1 year ago

I left Vanguard over their decision to restrict investments into Bitcoin and moved to Fidelity. I view investment platforms as tools to express and communicate my investing theses. I do not want to be censored and unable to express my investment theses by a paternal company that “knows better” than me.

Gshaheen• 1 year ago

“Jackson: In Vanguard’s view, crypto is more of a speculation than an investment. This is at the root of our decision to not offer crypto products, whether our own or others. With equities, you own a share of a company that produces goods or services, and many also pay dividends. With bonds, you get a stream of interest payments. Commodities are real assets that meet consumption needs, have inflation-hedging properties, and can play a role in certain portfolios. While crypto has been classified as a commodity, it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.“

Well said, this has been my own thinking on crypto, nice to see it so succinctly summarized.

slekker• 1 year ago

I'll share this every time someone asks me about crypto, beautiful!

ein0p4• 1 year ago

What do you own if you hold a money market cash position? The exact same thing as Bitcoin - faith of other people that currency is worth something. Look, I'm not a crypto bro or anything, but Vanguard talking about speculation is the absolute comedy gold. They operate a casino.

klipt4• 1 year ago

They operate a casino.

On average you lose money at a casino because it is a business designed to make you lose money.

My vanguard funds on the other have gone up very nicely on average. Because they are invested in businesses designed to make shareholders money.

RandomLensman2• 1 year ago

Do you think the daily volatility of purchasing power of the USD domestically is similar to that of bitcoin?

harimau777• 1 year ago

I think the difference is that the US dollar is actually used regularly as a currency and has the power of a government (and in particular the world's most powerful government) working to make sure that it operates as a useful currency.

On the other hand Bitcoin doesn't seem to have significant use as a currency outside of crime. Meme coins are even worse in that they don't have any use at all other than speculation.

pjc503• 1 year ago

It always gets me when people are like this about, of all things, the US dollar. You can argue that there are faith problems with, say, the Turkish Lira, but the USD is the hard currency that people flee to when others fail, and is accepted unofficially as hard currency in a lot of countries that have currencies of their own.

Even bitcoin is priced in USD and operates trades via a Tether/Circle "stablecoin" "backed" by USD.

Glyptodon2• 1 year ago

In all fairness a money market cash position is basically accepting central bank interest while you decide what actual investment you want to put your money in.

People use it as part of an allocation, sure, but nobody plans to retire with interest from a checking account, which is pretty much what you'd be doing if you invest in a money market fund.

You may have a point that since fiat currency has no inherent value compared to physical commodities there's no reason that the right crypto couldn't function as a fiat currency, which seem true. But if crypto were fit for use as a fiat currency, you wouldn't expect it to be an investment at all - at least no compared to stocks, bonds, etc.

brap• 1 year ago

While I’m not a fan of crypto, I don’t really understand how bitcoin is different from other commodities.

Would you say gold’s value is determined mostly by its practical use? Because it seems demand is largely driven by speculation as an alternative currency.

arccy• 1 year ago

an alternative currency because humans have a long history of treating it as a valuable item, mostly for jewelry / decorative purposes. crypto only copied the speculative currency part, but it's not useful even for showing off...

loeg5• 1 year ago

I think the unsatisfying answer is that Bogle was a bit of gold bug -- he had a 5% gold allocation.

ksd482• 1 year ago

Bitcoin has no intrinsic value. It is not backed by anything real.

Gold has its uses. It’s a pretty metal and has practical uses in engineering and medicine.

It has been a choice for jewelry for thousands of years.

jazzyjackson• 1 year ago

> Commodities are real assets that meet consumption needs

Granted a commodity's value may be driven by speculation, but at the end of the day it's a material that is consumed by various industries.

tcbawo4• 1 year ago

Besides practical use, gold also has aesthetic use: jewelry, as an external status symbol of wealth. That is not possible for crypto currencies in the same way. Of course as online presence and social structures mature, this might change. Maybe not in my generation’s lifetime, but who knows.

rainsford2• 1 year ago

I honestly don't know how much of gold's value is driven by practical uses rather than speculation, but I think there's an important difference between "some practical use" and "no practical use" when it comes to commodities. The practical uses mean gold is unlikely to ever be worthless, but the same can't be said for a cryptocurrency.

Even from a speculative standpoint, gold or similar commodities have the advantage of being actually support limited. Now obviously the supply of an individual cryptocurrency can be limited, such as with Bitcoin, but the supply of cryptocurrency in general is essentially unlimited with very little barrier to entry. That's not great for even speculative investment, since you're essentially betting on the continued popularity of whatever currency you invested in with relatively little history to support that trend.

selectodude8• 1 year ago

Gold has a commodity value above zero. It’s used industrially. Even if everybody decides it’s not worth its precious metal value, it’s not worthless. Bitcoin has zero intrinsic value. None.

EliRivers2• 1 year ago

Other commodities have a physical existence. That's quite a big difference.

carlosjobim• 1 year ago

Gold is the single best thing that exists in the world and that has ever existed. That's where the value is.

mrtksn3• 1 year ago

You can't eat or burn bitcoin, therefore doesn't need to be balanced or made sustainable through economical instruments.

You know all those economical instruments? They actually serve a purpose(like making the price stable or making the supply and demand predictable. This is important because it usually takes months to years to produce these things and you don't want to destroy your producers or production capacity for a glitch) and they're not just a gambling machine with strength rules.

RandomLensman2• 1 year ago

Taking an investment position in a commodity vs a speculative position indeed could raise some non-trivial questions (if you believe in/subscribe to some sort dichotomy there).

I seem to remember in the past, commodity investments where viewed with an eye towards diversification benefits, for example.

vishnugupta• 1 year ago

In India gold demand is driven by its use as jewelry. It is also used as a safe asset that can either be pledged or sold in time of need. This has been the case for hundreds of years if not more.

Demlmlm• 1 year ago

Gold is also no longer a good thing but still better than crypto.

In an apocalypse gold s still usable and gold has other uses. Like industrial and as jewelry

cyberax7• 1 year ago

Gold looks nice, golden jewelry can be beautiful. This is not going to ever change. Even if it does, gold's ductility and chemical resistance will still be important for industrial applications.

And the scarcity of gold is not likely to decrease in the near future, unlike with diamonds that can now be cheaply manufactured and bought on AliExpress.

keymon-o• 1 year ago

This will not be an argument but my perspective as an amateur investor.

Main difference between gold and bitcoin is in its history. Gold as a type of investment instrument has already earned its reputation and status. It’s not just a commodity, it’s a financial instrument that had its use in building and making of history and it’s well integrated, recognized and supported by most government and societies.

We still don’t know what Bitcoin really is and how it behaves. It could be valued 10k times up or down next year and there could be no clear reason why that happened. Bitcoin is not in hands of most powerful companies, people and governments and change of its value would not affect anything but net worth of certain individuals or organizations.

By no means, I think bitcoin is here to stay and it has a very clear future as an investment and payment instrument. But I think it’s really silly to say Bitcoin is speculative as much as other investment instruments.

icegreentea2• 1 year ago

Gold is also not like other commodities. No one treats gold the way you treat iron or lithium or even platinum/palladium.

And for what it's worth, Vanguard doesn't have a pure gold ETF.

tim3334• 1 year ago

Gold's fundamentals are it is mined and used for jewellery. Speculation and hoarding can cause it to fluctuate a fair bit but long term the price is driven by the mining cost. See the 200 year inflation adjusted price https://www.marottaonmoney.com/wp-content/uploads/2013/05/st... It's remarkably constant in the long run.

Bitcoin is different. Although it's mined, the mining difficulty constantly adjusts to keep the block time at 10 minutes. The price is set by the people in the market buying and selling it and so fluctuates all over the place.

stouset9• 1 year ago

Gold is also a generally terrible asset to hold as a long-term store of value.

enether• 1 year ago

The modern stock market is largely fuelled by speculation.

Companies don't pay dividends, so even if you have a claim on the underlying cash flow - you aren't really getting it in practice.

Further out, some pieces of equities are so overvalued that you're basically paying for 99% speculation rather than the underlying cash flow.

It's a spectrum.

graeme• 1 year ago

A buyback is functionally equivalent to a dividend except it is more tax efficient. Much of the decline in dividends has been the rise of buybacks.

strix_varius2• 1 year ago

It's true that the modern stock market is a spectrum ranging from highly speculative "growth stocks" to blue chips / income stocks. Bonds are even further down the safe-claim-to-future-money spectrum.

While your argument is technically correct, there's a world of difference between cryptocurrency where the inherent value is definitionally $0, and stocks/bonds/commodities/real estate where the inherent value is almost always above $0 and can, if you want, be a large percentage of its total price. That allows an investor to determine their own level of speculative risk.

rainsford2• 1 year ago

It was well stated, and I'm glad to see Vanguard explicitly stating the lack of inherent economic value as part of their reasoning. It's actually worse than that, since creating cryptocurrency requires investment of things of real inherent value (capital investment, energy, etc) but only provides a purely speculative asset as an output. Cryptocurrency is basically an economic sink.

lelandfe• 1 year ago

Satoshi Nakamoto is actually a Trisolaran alien who came to Earth to hasten climate change and have humanity kill off itself.

loandbehold2• 1 year ago

Exactly. Capital investment is a positive sum game. E.g. you build a factory and over its lifetime it produces more than what was the cost to build it. That's the root of economic growth. Bitcoin is a negative sum game. All money that has even been invested into Bitcoin - total cost of mining = all money that investors will ever get back.

beepbopboopp• 1 year ago

It's unpopular but, crypto as it exists looks a lot like sports betting with "prop bets" "Futures bets" and "lines." They basically. found a way to sell sports betting to STEM people.

DennisP5• 1 year ago

Proof of stake doesn't require that kind of investment. Ethereum for example has a large decentralized set of validators like Bitcoin, but runs on regular computers with the energy usage of a few hundred average American households. It's similar to any other internet protocol.

Economic value is whatever people are willing to pay for, and I do mean "pay for," not "invest in." If you want to use applications on the Ethereum network, you have to pay ETH to do it and the ETH gets burned. As long as people keep doing that, the economic value is demonstrably there. Whether that equates to any other kind of value at this point, I won't try to argue, but for significant periods after proof-of-stake rolled out, ETH has had a P/E comparable to some high-growth stocks. This does not apply to Bitcoin, which doesn't have the burn mechanism or much in the way of applications.

ETH and BTC are the two cryptocurrencies with ETFs available. It's unfortunate that even now, so many investment professionals don't understand their differences.

akimbostrawman2• 1 year ago

but only provides a purely speculative asset as an output

i would expect this kind of technical ignorance from the news or my mom but not "hackernews". there is real value in exchanging value/currency P2P globally relatively quickly and cheap. you know "internet money" people dreamed about decades ago...

conradev• 1 year ago

Gold is an economic sink, too. It is primarily used to preserve capital, even though it has unique atomic properties. Mining gold also takes real inherent value.

Gold as a store of capital isn’t accessible to a lot of people, though, because it is easy to steal and thus hard to store. So instead, I can buy a gold ETF.

It does make sense that Vanguard doesn’t have a Bitcoin ETF, though: they don’t have a gold ETF either, for the same reason

ggddv• 1 year ago

I bought bitcoin, I hate it, I think conceptually it’s really dumb, but the first rule of investment is to diversify. I just can’t ignore the fact that it’s a store of value like gold it is very bizarre why it is prioritized, but it is.

andsoitis• 1 year ago

first rule of investment is to diversify

That does not mean buy anything. Intentionality matters. Diversification is a risk mitigation strategy, but holding bitcoin increases a portfolio’s risk. So if you want to diversify to reduce risk, purchasing bitcoin is the exact opposite of what you want to do.

ascorbic• 1 year ago

As the article points out, bitcoin is so volatile that having it as even 5% of your portfolio will "drastically raise its risk profile".

rsynnott21• 1 year ago

I mean, diversify, sure, but not into _everything_. Like, there are plenty of old fax machines around, but you probably shouldn’t add any to your portfolio. You have to consider whether the diversification is into something sensible.

thegabez• 1 year ago

I never understood the argument against speculation. Many stocks are losing money or do not yet have a working product, so how is speculating on these kinds of stocks any different from speculating on cryptocurrencies?

niij• 1 year ago

There's a potential for them to produce value. Not the case with crypto.

gosub100• 1 year ago

Aside from that, wouldn't the same train of thought preclude buying overvalued stocks?

Even if BTC was determined to have value, wouldn't the risk of tether be enough to avoid it (if - aside from giving BTC value - speaking from verified facts only. Meaning it's an established FACT that the people who control tether have not proven it is or was ever backed by an equal amount of capital).

NAHWheatCracker2• 1 year ago

Vanguard says it's more of a speculation than an investment. Vanguard isn't saying speculation is bad entirely.

Stocks are ownership of a tiny part of a company that has assets, cash flow, and does something in the world. Stocks are a speculation as well, some more than others, but the balance of speculation to investment is weighted differently.

Bitcoin on the other hand is almost always only purchased for speculation that the exchange rate will go in your favor. You don't own a tiny part of anything.

From my perspective, a big issue with Bitcoin speculation is that it's inherently zero-sum. Investing in a company is usually positive-sum (even if it you don't profit).

chpatrick• 1 year ago

I think it's just not what Vanguard is about if you look at their history.

rsynnott21• 1 year ago

If you’re buying stocks in a company which _doesn’t have a working product_, then, er, yeah, that’s not a million miles away. You probably shouldn’t do that. Arguably those stocks should never have made it onto the public markets; where this happens it’s generally due to SPACs, which arguably should never have been allowed in the first place.

“Losing money” is a bit different; if a company is, deliberately, investing in growth rather than generating a net profit, that _can_ be a _good_ thing, as it implies greater future profits. Amazon, say, _could_ have become profitable far earlier than it did, but it would be a much smaller company if it had. If they’re buying something for $20 and selling it for $10, then yeah, not so much, but again that’s in the class of companies that you should not invest in, that most people do not invest in (they’re not in the major indexes), and that arguably should never have been allowed to float.

When people talk about investing in the markets, they’re usually talking about either investing in an index, or in some approximation of an index (whether through active management or cobbling together their own portfolio of real companies which will generally more or less mirror the top 10 of at least one major index). They’re not talking about buying shares in weird scam companies; _that_ is speculation.

andirk4• 1 year ago

Seems like a lot of HN is bitter about not buying a tech-centric in-their-face asset when it first started that they thought about but didn't grab a bag and could have changed their lives from great to giant multi-millionaire. Stonks are traded at some > 40x their company's worth, but somehow's not laughed at on here.

lifty• 1 year ago

I think they are consistent. They also don’t have an ETF which invests directly in gold.

puntium3• 1 year ago

This shows a fundamental misunderstanding of how money works.

Historically all kinds of things have served the role of money. In recent examples, prison environments consistently give rise to people using "commodities" like ramen packs or cigarettes as a unit of money.

The reason why gold has been the choice over most of human kind's history is that it has properties that make it suitable for money. It's scarce. It's difficult to make more of it. It's difficult to fake (until recently). It's easy to "hold". It's durable. But above all, it has a history of social consensus that it is the asset that is globally agreed upon to serve this purpose.

If you think prisoners ascribe value to ramen packs as money because of their ability to eat it, you have a fundamental misunderstanding how money works and how moneyness gets assigned to physical objects.

It's difficult to understand what an introduction of a new type of money looks like, because most people haven't experienced that in their lifetime. That's ok. But as a crowd of people here of who frequently espouse first-principles thinking, it's unfortunate to see people repeatedly falling for the "it has industrial uses" argument for gold. Yes industrial use creates a demand floor and a price floor. But if you think most of the price of gold is driven by it's industrial use then I have a bridge to sell you.

bryant• 1 year ago

The reason why gold has been the choice over most of human kind's history is that it has properties that make it suitable for money. It's scarce. It's difficult to make more of it. It's difficult to fake (until recently). It's easy to "hold". It's durable. But above all, it has a history of social consensus that it is the asset that is globally agreed upon to serve this purpose.

"It's easy to 'hold'" is literally true for precious metals, without quotes. And unless someone taints your stash with radioactive fallout or atomizes it, it's also relatively difficult to lose via Act of God.

Crypto?

It might just be the hardest asset class to "hold."

---

Also, all it takes for Bitcoin to lose literally all value is for miners to stop. While you might think the risk of this is zero, the risk is most assuredly higher than the risk of gold going to zero, which would only happen if all utility for gold disappears even outside its use as a store of value.

omnee2• 1 year ago

I agree with you on how many different objects, such as seashells or even certain types of stones have been used as money by some cultures. However, the point of this article is about real returns, and the real return of Gold over centuries - for example - has been zero, and this is with it having aesthetic and intrinsic values. Hence, Gold is not an investment class that Vanguard supports. So, why would Bitcoin give a postive real return, whether as a wealth preserving asset or currency?

bryanhogan• 1 year ago

While I agree with the quote, I also believe that Bitcoin can have value as a currency with unique properties. The fact that it is driven by flat hierarchies and is not limited to national borders (decentralized) makes it an asset that could have overall value. Thus it's something people may see as worthwhile and want to invest in, whether for personal financial gain or to support its broader vision.

throw0101d• 1 year ago

“Jackson: In Vanguard’s view, crypto is more of a speculation than an investment. […] While crypto has been classified as a commodity […]

While Vanguard isn't against commodities completely (e.g., VCMDX):

* https://investor.vanguard.com/investment-products/mutual-fun...

* https://corporate.vanguard.com/content/dam/corp/research/pdf...

It's not really their thing either.

wooque• 1 year ago

Bitcoin is useful commodity, it's used for money laundering, sanction dodging, various criminal activity, etc. It infinitely more useful in modern world than gold for example.

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xyst• 1 year ago

As the price of digital currency goes up, the number of hit pieces from banking industry increases proportionately.

paulgb• 1 year ago

I know it's more fun to believe there is a sinister conspiracy among the financial industry to keep bitcoin down when it starts to go up, but occam's razor here is that these firms get asked more about bitcoin/crypto/etc. when retail interest is up which also tends to be when the prices go up.

bongodongobob• 1 year ago

Yeah what would they know about risk analysis. You're defo smarter.

gist• 1 year ago

So generally I agree with this. But I will note the following:

1) Vanguard offers Gold ETFs. Now they would say something ike 'oh that's because gold is used as an actual product ie has a purpose'. But most people accept that gold is also speculative and is the way it is simply because it's been that way for such a long time vs. it's inherent value or purpose. Yes the swings are not as wild and not as easily manipulated (there was the situation with Silver that was years ago) but still it could be done.

2) Stock investing is by and large gambling and whatever income the stock owns in no way really flows measuably to the person who owns stock in the company but seems to drive some type of accepted value going forward. No it's not entirely chance (like traditional gambling) but there are many players and much skill level and 'the regular guy' is not in a position to compete so they must interpret signals and they don't have access to all the signals that a higher level investor does.

3) The entire 'long term' for stock is similar mantra to HODL with crypto.

4) The 'problem' with both crypto and stocks is not really when to buy but when to sell.

loeg5• 1 year ago

Vanguard offers Gold ETFs. Now they would say something ike 'oh that's because gold is used as an actual product ie has a purpose'. But most people accept that gold is also speculative and is the way it is simply because it's been that way for such a long time vs. it's inherent value or purpose.

Bogle was kind of a gold bug. It's unsatisfying and inconsistent and I agree you could make a similar argument for excluding gold if it wasn't already kind of grandfathered in.

Stock investing is by and large gambling and whatever income the stock owns in no way really flows measuably to the person who owns stock in the company but seems to drive some type of accepted value going forward.

No, stock investing and gambling are absolutely incomparable. Income clearly and directly flows to owners; it's not obscure.

teitoklien2• 1 year ago

that gold is also speculative

gold has stayed as a value of store that is tradeable, longer than any civilization has existed.

USD or Stocks or Bonds for that matter any other currency is 1000x more speculative than gold

Gold is also a “commodity” which vanguard stated has inflation protection properties

If Satoshi Nakamoto’s Dormant BTC wallet wakes up tomorrow it’ll burn down the whole market…

titanomachy• 1 year ago

Investing in a company is not the same as gambling. It looks like gambling, because like gambling it carries risk, and the stock market is so liquid that the fact that you're investing in a business is abstracted away. But it is fundamentally different from gambling, because you are providing capital for activities you expect to be productive.

Imagine you know a skilled chef, whose new restaurant is losing money, but you believe he can turn it around and start being profitable if he is able to keep operating for another few months. You buy 10% of his business for $100k, so that he can keep paying rent and wages. Your thesis is correct and his restaurant becomes popular and profitable, and you share in the profits. New value is created (a thriving business, providing food and jobs) that would not have existed without the capital you provided.

Did you take a risk? Yes. Were you just gambling? No. In contrast, there's no scenario where betting on a sports game or memecoin creates new real-world economic value.

r33b339• 1 year ago

You can touch gold and take it in your hands.

afroboy3• 1 year ago

Yoy can't touch Facebook too, but damn it's expensive.

r33b339• 1 year ago

Stock investing has upward bias due to productivity. Also inflation offset. You can check long term S&P growth since inception. Stock market has positive EV on average. It's a positive sum game.

Sports betting or gambling has nevative EV and you lose more (on average) than you win.

So they are like night and day.

Even if the diffrence is 49.9% odds versus 51.01% odds that is worlds apart when it comes to laws of large numbers.

afroboy3• 1 year ago

Tesla stock is worth more than the top 14 auto makers around the world, speaking about gambling speculative assets.

sowbug• 1 year ago

As the post says, Vanguard also missed out on Internet funds in the 1990s, and they're OK with that.

I am, too. Nobody puts their money in Vanguard to jump on the latest thing (or in the case of Bitcoin, the latest 16-year-old thing). If you really want to speculate, move some of your money elsewhere from Vanguard.

yieldcrv4• 1 year ago

Nobody puts their money in Vanguard to jump on the latest thing

Most people that I've met who use Vanguard did not have an objective view on finance, or their risk-profile, the concept of a risk-profile, and were completely surprised to find that they had such a handicapped custodian

If you really want to speculate, move some of your money elsewhere from Vanguard

Yes, this is the solution. You would be surprised how crazy of a thought that is to people. The idea of opening another bank or broker, despite how simple it is, just blows so many people's minds and is pretty controversial or involved to them.

They would prefer that Vanguard had all trading options.

zemo• 1 year ago

The idea of opening another bank or broker, despite how simple it is

I would wager that there are a lot of people that have money in Vanguard because Vanguard provides their employer's 401k, and their choice was "Vanguard or no 401k", not "Vanguard or something else of your choice".

Razele• 1 year ago

The real reason: there are 7 other ETFs to pick from and Vanguard has no way to differentiate itself.

loeg5• 1 year ago

Do you think Vanguard has any reason to lie about their motivations here? Do you think their S&P500 MF/ETF distinguishes itself in any way from Fidelity's or is a motivating factor for having one? This is just a bizarre conspiracy theory to espouse on the basis of no evidence.

andy81• 1 year ago

Being anti-cryptocurrency as an organisation really is an important differentiator.

Fidelity knows that investors in their cryptocurrency products will lose money in aggregate, but offers them anyway. It's a black mark against their integrity.

syntheticcdo• 1 year ago

If it were that simple, Vanguard wouldn't have taken the additional step to prevent trading in these products on their brokerage. Telling customers "you can't buy Bitcoin because we can't sell it to you at a profit" would be ridiculous.

breadwinner• 1 year ago

John Reed Stark, former Chief of Internet Enforcement of SEC on 60 minutes:

Crypto is a scourge, it is not something you want in your society. It has no utility. It is pure speculation. There is no balance sheet to crypto, there is no financial statements. There is no audit inspection, examination, net capital requirements, no licensure of individuals involved, and there is no transparency into it. That creates real systemic risks, not just risks for investors.

But the other part people don't talk about enough is the dire externalities that are enabled by crypto. Every single crime you can think of, is easier to do now because of crypto. Especially ransomware, human sex trafficking, sanctions evasion, money laundering. North Korea is financing their nuclear program using crypto.

---

Meanwhile, crypto investors, companies and executives accounted for almost half of corporate donations in the 2024 election cycle, with some contributing tens of millions of dollars to help Trump win a second term in office. See https://www.cnbc.com/2025/01/23/trump-signs-executive-order-...

loeg5• 1 year ago

Jamie Dimon:

Bitcoin itself has no intrinsic value,
It’s used heavily by sex traffickers, by money launderers, ransomware. So I just don’t feel great about Bitcoin.

dnamlin6• 1 year ago

https://www.blackrock.com/institutions/en-zz/literature/whit...

ArtTimeInvestor2• 1 year ago

    no inherent economic value

I wonder if they mean the technology or the tokens.

As in: Do they mean that the existence of the Bitcoin blockchain has no economic value, or that owning Bitcoin tokens has no value?

Both have value though. If you want to store data publicly and tamperproof for a long time, the Bitcoin blockchain is by far the best solution. So the Bitcoin blockchain has value. And the Bitcoin token lets you use the Bitcoin blockchain. Without Bitcoin tokens, there is no way you can write anything to the Bitcoin blockchain.

pbhjpbhj• 1 year ago

If you want to store data publicly and tamperproof for a long time, the Bitcoin blockchain is by far the best solution. //

Don't you get 80 bytes per transaction? That seems like about $7M per GB... maybe storing hashes is reasonable but storing data actually on the bitcoin blockchain itself doesn't seem great?

ArtTimeInvestor2• 1 year ago

Hashes are a good example of a very small amount of data that is very powerful. By storing a single hash, you can notarize an infinite amount of documents.

Another very powerful type of data is transaction settlements. With a single onchain transaction, an infinite amount of second layer transactions can be settled.

loeg5• 1 year ago

Not mentioned but a good reason is Bogle fucking hated crypto (some might say, with good reason).

I would say avoid bitcoin like the plague. Did I make myself clear?

mmoustafa• 1 year ago

Can we get a (January 2024) tag on this?

Bitcoin ETFs had barely debuted a week before that statement. The offerings and even many institutional stances have largely changed since then.

dang• 1 year ago

Ah thanks! Year added above.

linsomniac4• 1 year ago

Misleading: "Over just the past three years, the price of bitcoin has increased by as much as 150% and declined by as much as 77%. Double-digit percent price drops are routine among cryptocurrencies. Remember that you need a 100% return just to make up for a 50% decline."

I agree with the article that Bitcoin isn't an investment, it's a speculation, but...

They are mixing an overall return with a time-period return to promote some fear. That 100% return you need is from the bottom, but they are quoting the 150% return from before the drop.

Specifics: Jan 1 2022 @ $47K to Nov 2022 @ $16K, Jan 2025 $98K. At $16K, yes you need like 150% return just to get back to where you started. Actual return from the bottom was over 600%. If you got in at $47K, you do not need a 150% cumulative return to recover from the big drop.

The average investor shouldn't have the majority of their money in speculative instruments. However, my FIL gave me some great advice: Take a little of your money and invest it in something you like. Say, 5%. It makes the investing a little more fun. Of course, I love it because after he said that I invested in something I liked and it went up 15x...

kgwgk3• 1 year ago

Misleading: "Over just the past three years, […] They are mixing an overall return with a time-period return to promote some fear. Specifics: Jan 1 2022 @ $47K to Nov 2022 @ $16K, Jan 2025 $98K.

The article is dated January 24, 2024. It was roughly in the $40-$50 range.

olddog22• 1 year ago

The problem is that if btc is a once in a 200 year “creation of a global reserve currency” event, those with bitcoin exposure (even 1% of portfolio or whatever) will be minted and those without will be fighting over the scraps.

You can buy insurance to ensure you’re not left behind this very cheaply, for just 1% of your portfolio. Yes, it is coordination dilemma with ponzi characteristics. Yes, sticking to your principles may feel like the intellectually correct thing to do. But its a big coordination dilemma which so far is only going in one direction, and the risk that anyone not getting involved ends up having fun staying poor increases as btc ascends.

olddog22• 1 year ago

Also, the “blockchain not bitcoin” talking point in 2025 is cringe.

soared• 1 year ago

I don’t really see how/why/etc Bitcoin would achieve that use case. If governments and financial institutions aren’t bag holders then they are extremely financially motivated to stop that from occurring, and afaik those groups aren’t holding huge Bitcoin reserves (maybe fidelity is, or at least was).

dnamlin6• 1 year ago

This seems like a comment from 10 years ago. In 2025, Larry Fink just announced he's a "big believer" at Davos, and the President of the United States ordered his team to evaluate creating a huge reserve.

dutchbookmaker• 1 year ago

Meanwhile, Huawei Harmony just embedded the digital yuan at the system level.

All the ETFs mean is that it will be so much easier to get out of the position and cause even bigger cascades of selling than before when the next shock happens.

You can't have a reserve currency with an asset that has so much volatility it can't even function as a currency.

rsynnott21• 1 year ago

those with bitcoin exposure (even 1% of portfolio or whatever) will be minted and those without will be fighting over the scraps.

Why? There’s no way to derive value from that use.

There actually would be if it were, say, Ethereum (which is proof of stake, with fees accruing to holders). However, let’s say Ethereum were to become a global reserve currency. This would be essentially a tax on all financial activity, and governments and companies would be _strongly_ incentivised to create an alternative which they controlled and which did not have that tax. Something a _bit_ like this, incidentally, has already happened. Prior to the creation of SWIFT, international bank transfers generally went through what is now Citibank. Governments, and banks other than Citibank, generally saw this as unsatisfactory (even though AIUI Citibank was doing it extremely cheaply and not deriving all that much value from it; the mere threat that they _might_ was enough) and thus SWIFT was born.

saos• 1 year ago

Sounds like they are more interested in Ethereum

ankeshk• 1 year ago

Christopher Columbus reached the Americas in 1492. He traded colourful beads and small mirrors. In return he got gold. Both the indigenous people and the Spaniards thought of each other as fools.

Value does not arise out of usage or cash flow or how something is classified or even its history. Value arises out of perception. Its all a narrative. It always has been.

People thinking crypto is useless is a narrative. People thinking money will always lose value due to inflation is a narrative. Both are true based on your point of perception.

dennis_jeeves24• 1 year ago

There are plenty of scams in the cypto world, in fact mostly anything related to crypto is scam/speculation. But I believe there is also a quiet revolution.

As far as mainstream financial organizations/economists/experts etc. are concerned, they have really no clue on the underlying revolution and transformation that is secretly underway because of crypto. Either that, or it dawns on them that the status quo will be disrupted, and then have a very predictable outburst: cite every imaginable crime being preferentially enabled by crypto.

svara2• 1 year ago

Could you show us examples of that secret revolution?

It does seem to be very secret because I've been waiting for it for fifteen years, first excitedly, then frustratedly.

dennis_jeeves24• 1 year ago

It's mostly happening in the 3rd world with unstable/high inflation currencies but who have internet access. We here in the 1st world have relatively stable financial systems so most people do not feel the need for crypto, except the anarchists.

pimlottc• 1 year ago

*quiet

dennis_jeeves24• 1 year ago

Thanks.

currymj• 1 year ago

to the extent that executing transactions on a fully decentralized, trustless database or distributed computer is something people demand, and transaction fees must be paid in Bitcoin or Ethereum or Solana or whatever, cryptocurrencies do have some amount of actual use value, so are sort of like "commodities".

I believe this is a correct argument in theory. In practice, at the moment, everything is exclusively driven by speculation, and if you took the degenerate gambling out of the system, I don't know what would be left.

It's just gambling at all levels. There are legitimately "useful" services on blockchains, but the useful services they provide are mainly facilitating more gambling on stupid garbage coins. And even such useful "picks and shovels" services often still choose to make their own token for people to speculate on, because crypto people aren't interested in anything else. And then the L1 cryptocurrencies also have their prices driven by speculation.

there is a core of actual technical innovation, which is almost totally irrelevant to the phenomenon of "crypto" today. But there may be a future world where cryptocurrencies provide real value. In that world where all the true believers have their wildest dreams come true, the price of a cryptocurrency would be much higher than zero, but even then, it might be much lower than they are right now.

vincefutr23• 1 year ago

If you’re saying “blockchain, not crypto” in 2025, you need to revisit your research process

627467• 1 year ago

Hey, speculation <> investment is a spectrum, it's fine to not care about the full spectrum.

But let's not pretend (for example) that gold price reflects it's industrial value more than it's speculative value. The same can be said of venture backed tech companies (ie. Wework?) early in their public lives.

skybrian2• 1 year ago

It's not something Vanguard would do, but I'm wondering if there's a good way to trade on Bitcoin's volatility?

Matt Levine has written about how buying convertible bonds from Microstrategy is sort of doing this [1] but it seems complicated to do.

This is the more practical meaning of hedging your stock-price risk. It means that every day the stock moves around and you rebalance your hedge. When the stock goes up, you sell some stock at high prices. When the stock goes down, you buy some stock at low prices. Hedging the convertible means buying stock low and selling it high.

...

a convertible bond is a bet on volatility: The more the company’s stock bounces around, the more money convertible arbitrageurs can make.

[1] https://archive.is/S9kOi

oa3354• 1 year ago

Yes, you could trade options on Bitcoin futures, or options on Bitcoin ETFs. You could buy calls and puts, which would make you "positively exposed" to volatility - i.e. if people's expectation of volatility goes up, the price should go up. By "delta" hedging them every so often you could "realize" some of that volatility - you would be buying when the price goes down, selling when the price goes up. Of course, this is all baked into the option price itself, so its not "free money" - its a bet.

skybrian2• 1 year ago

I'm certainly not going to do that, but I'm wondering if there are ETF's doing something like that. Aren't there ETF's for everything these days?

clamprecht• 1 year ago

I'm wondering if there's a good way to trade on Bitcoin's volatility?

It is with options on MicroStrategy (MSTR). I think one strategy is holding MSTR and selling calls (i.e. covered calls). There are probably other strategies that don't require holding MSTR shares, like selling a call and buying a put, but I may be messing that up.

Check out the youtube channel called "Quant Bros" (cringe name, I know), and the /r/MSTR subreddit.

rsynnott21• 1 year ago

You can buy options. Though one thing to be aware of is counterparty risk. If bitcoin were ever to go to its true value (ie ~0), then you might find that your put options have also become valueless, because the providers of such options are, by and large, horribly exposed in such a scenario.

It is also likely to be very _expensive_, and the market can of course stay irrational longer than you can remain solvent.

tim3334• 1 year ago

Check out the rainbow chart https://www.blockchaincenter.net/en/bitcoin-rainbow-chart/

Buy when it's blue sell when it's orange.

svara2• 1 year ago

Do you think cash will still be a thing a hundred years from now? Do you think the cocaine trade, tax evasion, illegal gambling, money laundering etc. will still be a thing in a hundred years?

Personally my "bull case" for crypto is that I am pretty confident about answering no and yes to those two questions, respectively.

I'm being cynical, but I also think that's true.

I haven't owned any crypto in a long time and won't going forward.

r33b339• 1 year ago

Do you think cash will still be a thing a hundred years from now?

Do you think you will be alive hundred years from now?

janderland• 1 year ago

No, but their children or a worthy inheritor will be. There’s reasons to make investments which exceed your lifespan.

Ekaros5• 1 year ago

With that in mind, I would certainly say the choice for those won't be pseudo anonymous currency. As one sting operation and someone keeping too many records will get plenty of people discovered.

ltzkcH• 1 year ago

Who would be buying bitcoin right now? The price steadily went up after sanctioned countries removed from SWIFT started settling their transactions in Bitcoin.

It exploded after the US election after it became clear that the crypto bros are in charge. It is now theoretically possible to buy a president by launching a new coin and have the "lobbyists" buy the coin. Previously this needed to be done using high speaker fees and book deals after the presidency.

If the wars and sanctions stop and if more people are aware of the oligarch influence, Bitcoin will drop.

Trump is continuing the Blinken policies in Gaza (make the Palestinians leave to Jordan and Egypt and build Kushner seafront properties in Gaza) and the Bolton policies in Greenland. So perhaps he'll continue the Blinken policies in Ukraine, too, despite election promises to the contrary. That is the only hope for the Bitcoin scam.

r33b339• 1 year ago

Who would be buying bitcoin right now?

Senile laggards.

fchollet• 1 year ago

Who would be buying bitcoin right now?

Well, maybe the US government? What if the US starts dedicating 10-15% of yearly federal receipts to serve as exit liquidity for Bitcoin holders?

yieldcrv4• 1 year ago

meanwhile my self-custodied solo 401k roth funds 2x'd on Unicorn Fart Dust - a meme coin that's supposed to be making fun of how people in this community view crypto - and 3x'd on $TRUMP, and then 2x'd again LPing on $TRUMP as a market maker on Meteora. all tax freeeeee

it isn't important to me that this is speculation versus some form of financial game that's put on a mental pedestal

it is important to me that this fits my risk profile

generic advice gives generic results

r33b339• 1 year ago

Good. Reaffirms my trust in Vanguard's indices. People behind funds that chase trends cannot be truly genuine. They give rotten grifter vibes...

SALCKIN• 1 year ago

cypherpunks012• 1 year ago

The killer use cases of crypto are not visible to HN readers living in relatively stable North American or European countries. Take a look at the the "Global Crypto Adoption Index Top 20" [1] for the past years and ask yourself, "do Vietnamese people love trading monkey gifs? Are Ukrainians especially susceptible to Ponzi schemes? Is Venezuela laden with techbros?" [2]

No. It's that people in many of the countries in the top 20 live under unstable governments and monetary systems, with extreme debasement, inflation, inability to store value without seizure, transfer value without controls, accept remittances, etc. Crypto absolutely has use cases in these situations, and these extremes inform the means.

"If you’re in a developed country, and you’re happy with your banking system, and you’re not a sex worker, and you have zero concerns about your country being taken over by fascists, you probably don’t need cryptocurrency and shouldn’t worry about it. If other people say they do need it, don’t call them liars and say you know with certainty that nobody has ever used crypto for anything besides Ponzi schemes and monkey pictures. Just let them use it!" [2]

[1] https://www.chainalysis.com/blog/2024-global-crypto-adoption...

[2] https://www.astralcodexten.com/p/why-im-less-than-infinitely...

pjc503• 1 year ago

I'm anti-crypto and this kind of crypto advocacy I actually agree with. It's not as sound as the US dollar, but there are much less stable currencies.

concerns about your country being taken over by fascists,

.. do not record all your transactions on a permanent public leger!

r33b339• 1 year ago

The actual use case of crypto is censorship resistance, money laundering and sanction evasion. In a multipolar world, none of those are going away anytime soon, so crypto is here to stay.

patall• 1 year ago

Why is this the case? I mean buying crypto via a ?local? exchange is possible, but it is not possible to buy a more stable currency. How is the crypto bought, does someone sell it in that local currency? Because if not, you still need zo transfer your currency to (in >90% of cases) USD and then buy crypto. So why not just use those (the same way everybody else does).

dnamlin6• 1 year ago

If you mean to hold USD-denominated deposits in a local bank, the local government can easily confiscate or convert them. Numerous such examples.

If you mean to hold USD paper notes, that does happen a lot all over the world as you say; and not necessarily legally. Many advantages to digitization (and some disadvantages).

omnee2• 1 year ago

Bitcoin is commonly compared to Gold and I agree with BTC proponents who state that most of Gold's value is driven by speculative investment, however in the long term (over centuries and even millenia) it has a demonstrated real return of zero. So Gold has preserved wealth.

Bitcoin might do the same, but for this to occur it will always need new liquidity as it lacks intrinsic value. But this also implies that the real return will be zero over the long term, like with Gold. Moreover, as it's value comes entirely from its price, the door to the 'price value' of Bitcoin (or any other similar asset) reaching the Moon or zero will always be open.

However, Gold does have intrinsic value (10% annual use in industry) and has, over millenia and at present, an aesthetic value (40% in Jewellery). Which would probably classed under Sign Value in semiotics. So it has intrinsic, exchange, symbolic and sign values too.

Note that over the long term, most commodity real returns have been zero or even negative. Unsurprising, as we have gotten far more efficient at extracting them.

satvikpendem3• 1 year ago

Sometimes I think I shouldn't have listened to Hacker News and certain subreddits like r/buttcoin over these past 17 years and should've just bought and held Bitcoin, I would've been a multi-millionaire by now like some stoners I know, who did nothing but buy Bitcoin early and sat on it until today.

Sometimes it's worth it to believe in an irrational market, depending on how long you (and it) can hold out.

zcar2• 1 year ago

I remember in 2013 when I first heard about it and didn't do anything. The question is: Will your friends know when to quit?

There are many bitcoin evangelists who think it will lead to freedom. The truth is that it will most likely lead to cbdc, that is why all banks, government and financial institutions are building blockchain technologies.

satvikpendem3• 1 year ago

It already led to their freedom, at least. Even if Bitcoin went to zero, most of them have pulled out enough into fiat to be set for life.

andirk4• 1 year ago

All valid points, but let's remember that most other stonks trade at some 40x of the value of the company.

Rafuino• 1 year ago

And this is why I'm glad I mostly invest with Vanguard

liontwist2• 1 year ago

I’m shocked to see that most criticism here is not about bitcoin being funny internet money run by self interested people, but is instead that stable currency and storing value are bad.

yuvadam• 1 year ago

"In a traditional portfolio with a mix of 60% stocks and 40% bonds, those seven stocks [Mag 7 stocks] each account for, on average, about the same share of overall portfolio risk as a 1-2% allocation to bitcoin"

- Blackrock, December 2024 [1]

[1] https://www.blackrock.com/institutions/en-us/insights/portfo...

polyomino• 1 year ago

We do have a lot of interest in blockchain, the technology behind cryptocurrencies. We believe its application to a number of other uses besides crypto will make capital markets more efficient, and we’ve been actively involved in research to use blockchain technology

Well, they clearly have no idea what they’re talking about. Next!

anonymousDan• 1 year ago

One thing I recently discovered that gave me some pause for thought is what happens if you buy a vanguard ETF and either the provider or vanguard itself somehow gets into trouble. For example, what happens if the ETF provider is actually loaning out the underlying stocks and gets caught by market movements. Apparently in the UK at least there are quite a few scenarios in which the FSCS 85k guarantee would not apply (in contrast to a cash savings account). See e.g. discussion here: https://monevator.com/physical-etf-risks/

wmf4• 1 year ago

I don't think this kind of situation could occur in the US because rehypothecation of shares underlying ETFs isn't allowed. See also https://www.bogleheads.org/wiki/Vanguard_safety And worst case if something did happen it would be bailed out.

kerkeslager• 1 year ago

Bitcoin and most other cryptocurrencies are not producing any product, collecting any interest, etc, with which to buyback or pay dividends. As such, investment in Bitcoin is a zero sum game: in order for you to make money off Bitcoin, someone else has to lose money on Bitcoin. As such, if you don't have a solid understanding of cryptocurrencies, and perhaps more importantly, market principles, you probably shouldn't buy cryptocurrencies because the odds are against you given you're playing this game against some very large, powerful, expert players.

It's actually worse than that because it's being diluted (albeit slowly). The only way around this is for more and more money to be invested in Bitcoin, forever, which obviously isn't sustainable, at least not at historical rates of growth. If world GDP continues to grow, Bitcoin can continue to grow by sucking up that growing value, but that's limited, ultimately by GDP. And there's a limit to how much of GDP people will be willing to put into Bitcoin: for example, 100% of corn farmers aren't going to take their profits from farming corn, and stop putting them into the next year's corn crop to buy Bitcoin instead, because the more corn farmers did this, the higher the price of corn would go, so at some point it would become obviously more profitable to farm corn than buy Bitcoin.

It is quite possible that we will continue to see new all-time highs for Bitcoin in the next few decades--there's still lots of wiggle room between global GDP and Bitcoin market cap. But Bitcoin growth will slow to less than GDP growth at some point. It's simply impossible for that not to happen.

npoc4• 1 year ago

Yes, at some point bitcoin will stop growing in value, I'll agree with that. Personally I think it will be at a market cap of $100T-200T (in today's dollars), but time will tell.

If you measure its value relative to dollars though, it will go up forever and faster than GDP (dollars are historically devalued by money supply inflation at 7%/year)

franczesko• 1 year ago

And yet it still grows

kapad• 1 year ago

AI seems like a better use case for all the GPU and energy that goes to bitcoin mining.

nojvek• 1 year ago

Bitcoin at its fundamental is a large pyramid scheme where you need new fools to keep on buying at an ever higher price.

The current newest fool is President Trump who wants to take a portion of Federal reserve and put it in Bitcoin. The greatest fool one would say.

And when Bitcoin has a 50% decline due to a scare pullout, the federal reserve also has a pullout and ……… the entire economy tanks.

The market is so hot right now with absurd P/E ratios. One bad nvidia earnings and we’re gonna be in bearish mode.

No Bitcoin ETFs at Vanguard (2024)

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