No, I do not own any bitcoins, nor does anyone in my family.
In my own case this is because I make it a rule to not own anything I don’t understand. If I don’t understand something it’s either because I can’t spare the time to research + track it, or it’s so complicated I cannot understand it no matter the time I spend. Either way without understanding it I can’t figure out its fundamental value, so I don’t know when to buy and sell. In fact the very best investments in my experience seem to have a simple premise (and easily understood). For example, the company Mastercard basically levies a toll on every transaction for business that use its cards to lure shoppers into buying. You can explain its business model to a stranger in just a few sentences. If it deviates from its simple premise or something changes in the fundamental assumptions, you know right away when to sell.
I too am a big fan of Mackay’s “Popular Delusions and the Madness of Crowds.” It’s one of my favorite books. In the case of cryptocurrencies, we all KNOW we are in the middle of a Tulipmania or South Sea Bubble. There is no doubt at all. It’s not like there’s a fundamentally fair-valued asset that might later become a bubble. No, it’s a bubble right from the start! Right now. As such the only reason to invest in cryptos is to garner as much profit as we can before the bubble bursts; to find a greater fool to buy our coins.
Knowing when to buy and sell a bubble is very hard. It always seems so easy when you look at long term charts in hindsight. You see a big bubble rising up and you think, “I could have just bought there and then sold here.” Easy. However when you’re in the middle of investing it becomes very hard to know when to buy and sell. If we had a gain of 100% in a week, would we sell at that point or stay in hoping for 200%? When it falls 40%, do we stop out and sell or double down to catch the “bargain?” It depends on our personality. Cryptos have no fundamental value so the only way to trade them is by technical analysis, trying to market time buys and sells. That type of approach can make money for a very disciplined stock trader, but for the rest of us it tends to magnify all our faults. We buy high and sell low. We double down and throw good money after bad. We hang on too long and end up losing everything. We act entirely on greed and fear. I think I am a fairly disciplined trader after decades of practice, but I know trading something purely on technical analysis with no fundamental value is way beyond me. I simply cannot manage my emotions well enough.
It is possible, though extremely unlikely, that this is not really a Tulipmania but more of a tug-of-war between competing technologies, that is a fight for market share. Remember VHS videocassette tapes versus Beta? Beta had much better clarity but a smaller market share. Despite its advantages Beta lost and disappeared, and VHS remained the dominant format for years until DVDs were invented. There are >150 different cryptocurrencies. Bitcoin is just the most popular right now. Is Bitcoin Beta?
It is very difficult to watch someone else make 400% in a week. I have been tempted to buy a small (a very small!) investment in cryptos, just because I hate missing out on the bubble of a lifetime. But if I did invest, it would take a huge amount of time to research — which I don’t have — and then I’d be trapped into watching my picks all day long on a computer screen. If there was a single “basket” of cryptos easily available as an ETF stock, I’d buy a little now just for fun. But nothing like that exists yet. (Best estimates says six months to a year.) So even if I wanted to, I couldn’t invest now because I don’t have the time to do the necessary research on which cryptos to buy or the daily time to watch them.
Lastly, be very careful assuming that one of these cryptocurrencies has to “win.” Like I said, there are over 150. New ones are being invented all the time. I do think a true digital currency is inevitable. And I think the use of blockchain technology in that currency is likely. But I have absolutely no faith that one of the present cryptos will be adopted by everyone to the exclusion of the others. They may all go to zero. In fact if you take a long-term view, pretty much every government in the world has been trying to eliminate every form of currency except digital bank transfers and credit cards. Their stated purpose is to eliminate criminal and non-taxed transactions, but really they want every financial transaction to be reported to the government, so they can track your movements and habits, tax everything, and have the ability to decrease the value of your currency at their whim without your consent. This attitude by government is worldwide and has been manifesting recently as a war against cash (Europe, UK, Australia, India + US have all banned large denomination bills in the last few years), various anti-secrecy banking laws, draconian penalties against carrying cash over national borders, and a requirement to fill out government forms to fully disclose all assets. Given this attitude, I don’t see any government allowing any cryptocurrency unless it is one they have designed themselves that includes all details of every transaction being sent to the government as part of the process. So in the long term, I think all the present cryptocurrencies including Bitcoin will go to zero. And it could happen very fast, with a single announcement by a major government.