It’s been a rough week for Bitcoin enthusiasts.  It was really a rough week for anyone who is enthusiastic about cryptocurrencies.

It was Elon Musk who propelled Bitcoin to its highest high, and it was Musk who seemed to take some of the air out of the bubble.  Like any investment, we can’t be certain of the cause though.  Maybe Bitcoin would have tanked even if Musk hadn’t said that Tesla would stop accepting it.

The reality is that cryptocurrencies are all part of the speculative bubble.  I call it the “everything bubble”.  It’s not that everything is literally in a bubble, but all of the major asset classes seem to be in a speculative bubble.  This includes stocks, real estate, bonds, and, perhaps to a lesser degree, commodities.

On Wednesday, the price of the Dow and Bitcoin crossed paths a couple of times in the 33,000 range.  While I am down on stocks and think most stocks are in a massive bubble, I would prefer to hold the Dow over Bitcoin right now.

If you were gifted one share of the Dow or one bitcoin, and you had to hold it for at least one year, which would you choose?  I would rather take partial ownership of 30 major companies that actually sell things.

Bitcoin is nothing.  All similar cryptocurrencies are nothing.  They are novelties.  Some libertarians hate it when I talk this way.  I don’t want to argue with other people who are critical of the Fed, but I fear that they are doing a disservice to the libertarian cause.

I understand that there are some mainstream (establishment) commentators out there who are critical of Bitcoin and other cryptos.  There are politicians and central bankers who are also critical, if they say anything at all.  Some of these people are bad people.  But it doesn’t automatically make them wrong.  Even a blind squirrel occasionally gets a nut.

The Bitcoin proponents need to read Mises.  They need to understand that money doesn’t just come about because someone announces that something is money.  The quasi-libertarian tech nerds thought they had done it with Bitcoin.  It uses a great new technology (the blockchain), but that doesn’t make Bitcoin in itself useful.  You can’t just make something money out of thin air, unless you are a government that is using the threat of force to compel others to use it.  Even then, they usually have to gradually do it over time by substituting their fiat for real money, such as gold or silver.

Bitcoin is backed by nothing.  It has no use.  You will see Bitcoin represented as some kind of gold coin with a “B” on it.  This is more appealing than putting nothing on a screen or a bunch of computer code.  But you can’t see or hold a Bitcoin, and it serves no purpose for anyone other than speculation.

Bitcoin is just over a decade old.  It is bought and sold for speculative reasons.  Gold has been used for thousands of years for jewelry, industrial purposes, and as a form of money.  It is almost a joke to compare the two things.

On Wednesday, Bitcoin took a nosedive.  This is speaking in terms of the U.S. dollar, which actually is money.  The Bitcoin proponents get really excited when Bitcoin goes up in price (i.e., in U.S. dollars), which is their measuring stick.  I don’t blame them, because I would want more U.S. dollars too.  That is money.  They are excited that they could convert their Bitcoin into dollars to actually buy things.

We were sold a bill of goods on Bitcoin.  We were told it could be used as money.  Even to this day, I will hear people argue this point.  They will say that some companies accept Bitcoin as a form of payment.

But nothing is actually priced in Bitcoin.  They are priced in dollars and converted into Bitcoin.  Tesla was never selling a car for, say, one bitcoin.  Anyone selling a product and accepting Bitcoin is not pricing the product in Bitcoin.

On Wednesday, after the price of Bitcoin tanked to around 30,000 (from over 40,000 the day before), it recovered later in the day and went back to around 40,000.  This is actually a dream come true for a speculative trader.  If you had bought at the bottom mid-morning, you could have pocketed a 30% return in the matter of a few hours.

How could anything that fluctuates 30% or more in one single day ever be possibly used as money?  Bitcoin makes the dollar look incredibly stable.  If the U.S. dollar index (which compares it to other fiat currencies) goes up or down more than 1% in one day, that is considered a major change.

Bitcoin has never been money.  It never will be money.  We were sold a story by the Bitcoin proponents about privacy and about its potential as a form of money.

There are thousands of cryptocurrencies now.  This just shows that almost anyone with some computer skills can create one.  Then it is just about marketing.  It is about marketing to get people to buy, thinking there will be another sucker down the line to buy at a higher price.

I don’t call it a Ponzi scheme because anyone can know the truth about cryptocurrencies who cares to look.  Everyone should know it is mass speculation, and nobody is forced into it, so it isn’t a Ponzi scheme.

Most, if not all, of these cryptocurrencies will end up at zero.  I have no idea if we will see another major surge from here, or if this was the beginning of the end for them.

If you enjoy speculative trading (i.e., gambling), then this market is for you right now.  While I expect a ride down, it won’t be a straight ride down.  There will be a ton of volatility.  But speculators should only gamble with money they can afford to lose.  And when I say money, I mean dollars.