The Achilles heel of bitcoin and other cryptocurrencies


I’m not invested in cryptocurrencies (e.g. Bitcoin, etc.) at all, and have no plans to do so, because of one fundamental reality.  As Phil at Bustedknuckles points out:

Now you can use it.

And now you can’t.

With the state of our aging and completely vulnerable to sabotage power grid in this country my thinking is that you gotta be out of your ****ing mind if you think crypto currency is going to take over for cash around here.

I couldn’t have put it better myself.  I’ll add to power outages the safety and security of our computer networks.  Take down the Internet, even for a short while, and any cryptocurrency transactions grind to a halt as well.  There’s also government intervention.  Any government, anywhere, anytime, can pass a law declaring cryptocurrencies to be illegal.  Where’s your investment then?  You may say you’ll cash out of cryptocurrency before the bill becomes law.  I have news for you.  Everybody else will be trying to do the same thing, at the same time as you.  What are your chances of getting back more than a penny or two on the dollar?

If I have gold or silver coins, or something of that sort, I can always trade them for what I need.  They’re physical, tangible stores of value.  If someone comes to me in an emergency, and offers me a few 1oz. silver coins in exchange for a tank of gasoline, I know what’s on the table, and we can make a deal.  If someone else comes along with an offer to pay me so many bitcoin for the same gasoline, “and I’ll pay you as soon as the Web’s back up – I promise!” . . . not so much.

Cryptocurrencies only have value because people have persuaded themselves that they have value.  There’s no hard, tangible reality underlying that belief.  If it’s shattered, so are cryptocurrencies.  I continue to believe they’re yet another attempt to make – or, rather, sell – something of value out of nothing at all.  The world’s been full of such ideas for centuries.  (See the Tulip Mania or the South Sea Bubble, to name but two examples.)  I don’t trust them.



  1. "Cryptocurrencies only have value because people have persuaded themselves that they have value."

    One could say the same thing about the US Dollar.


  2. All of which is exactly why I've paid no attention to crypto, and know next to nothing about it. Gold/Silver is REAL money. Even my Real Estate is real only as long as I pay the property taxes. I prefer Morgan dollars personally, as they're a readily negotiable quantity, gold is a bit more cumbersome, except in tiny and easy to lose pieces. Selco pointed out once that the time to acquire your gold is AFTER SHTF, when desperate people will trade grandma's wedding ring for a square meal.
    My current dilemma is when and how much to convert my fiat currency to durable goods and metals. The IRA/401k is even more fiat than the dollar.

  3. Crypto would be ok if I'd recognized it or what it was right at the beginning – a ponzi scam. Now, in my opinion it's too late to get on the scam wagon.

  4. It's Sunday night, the country is collapsing, towns are being destroyed, everything is burning, and there has been no electricity or internet for months.

    You're leaving the country ahead of the mob, carrying your 75 lbs of silver and 2 lbs of gold, trying to run with your wife and kids. You struggle hard to keep everything, but it's the kid or the silver, and you have to drop the silver and keep running, but at least you've got the gold. You use the gold to bribe a few guards at checkpoints, and finally get to the border, where they search you and the family and find the gold. They confiscate your gold, phones, and everything else of value, but laughingly let you cross the border.

    You walk with all the refugees until you finally get to the ForeignCity, where you have friends/family. Fortunately, they have electricity and the internet, and you step into the restroom, where you dig the thumb drive out of your prison pocket. You have copies of all your documents, and your digital wallet on that thumb drive. You quickly get online, connect your digital wallet, cash out some of your Ethereum crypto that has been sitting there for a year, appreciating, while the dollar crashed, and send it to your trusted family member/friend. Now you can go shopping, get new clothes and food…

    The thumb drive with the remaining Ethereum crypto gets a new condom protector and is put in a safe place.

  5. Gold and silver only have value because we believe they do. All forms of currency are an illusion we mutually enter into to make it easier to trade.

    The only things of any real worth are your time and effort.

  6. An old-timer told me years ago: "If you can't hold it in your hands, it isn't really yours." Maybe not 100% accurate, but pretty sound advice as a general rule.

  7. I mean, I wouldn't put all my money into crypto. Or gold. Or silver. Or ammo. Or real-estate. Or stocks. It's all about hedging your bets and trying to make sure you have something available. .Gov has seized private precious metals before, I have to believe they'll do it again. Real estate is a bubble. Ammo is heavy. Stocks are gambling with a veneer of respectability.

    Unless you've got a secret Bunker (yes, with a capital B) in the middle of nowhere with food, water, air purification, spares, and fuel to last the next 100+ years, then it's all about spreading out the risk, so that no single thing or collection of things will entirely prevent you from taking care of your family. So don't go jumping into crypto with everything you have, but tossing a ten or a twenty at it here and there? Why not

  8. Crypto reminds me of "Pogs" and "Pokemon" cards. My kids were always saying "This one's worth a lot!" and "This one's not worth anything!" Truth is, the one that was worth a lot was because one of "the cool kids" said it was; that was it. They were pieces of cardboard, and nothing more.

    Whiskey Priest, what you say is true, but gold and silver have a pretty damned good track record of perceived value. Pogs and Pokemon cards, on the other hand; where are they now?…

  9. I am offering to trade some of my prize tulips for bitcoin. Contact O.O.Box 79. Serious inquiries only. Free shipping. Thank you.

  10. @Jackinhopper: "You're leaving the country ahead of the mob, carrying your 75 lbs of silver and 2 lbs of gold, trying to run with your wife and kids"

    Why on earth would you be trying to run? With that kind of money (about $85K at today's spot – would be considerably higher in an end-of-days scenario), you'd be on a chartered flight, with Gurkha escorts, while sipping perfectly chilled top shelf champagne with the missus, while your kids learn the joys of doing blow off a supermodel quality call-girl's tits. Bribes in precious metals can go a long, long way, though the amounts will be higher if you are a specific target, as opposed to just somebody getting out of Dodge.

  11. As has been pointed out, the US Dollar (or other "money" has little value unless you can get someone to give you something else for it. To a lsser extent gold or silver, or even ammo…

    Nothing has any real value unless you can purchase something with it in trade.
    There is essentially no vlaue in paper money, really. It is only what you can purchase with it. The actual value of an American banknote is something like $0.0002. A bar of gold is only woth something if you can purchase food, or shelter, or transportation, or safety with it. If no one is trading, it is just a piece of metal.

  12. You can go anywhere in the world and find someone who will trade your gold or Silver for goods and services. Even the smallest village in the most backwards country anywhere. It has been that way for over 5000 years.

    1. @dogsledder

      What was the price/value of gold in Ukraine during the holodomor? Zero, unless you knew a Soviet official who was willing to take it in exchange for food, instead of simply killing you and taking it anyway.

      Gold (etc) has been valuable "…for over 5000 years" when times are relatively good. When times are bad, and everyone's starving, gold is worthless. It might be worth something, somewhere, but if it's worthless where you are, it's just a pretty, heavy lump of metal. Crypto currency is worse, obviously, but gold is far from a panacea.

      In a serious disaster scenario, I'd rather be the man with enough ammunition to supply several armies, and no gold, than the man with enough gold to fill Fort Knox several times, and no ammo. Just an example. Ammo is no panacea either.

  13. That "electric power" is a good metaphor for not just "crypto", but "credit cards".
    Back in 2008 (yeah, I know, ancient history) Hurricane Ike blew through the country and even through my state of Ohio.
    While it didn't last forever, I live near enough to Columbus to recall the almost a week power outage in some places.
    There were lines for ice so people could keep food from spoiling.
    Also, gas stations were running off generators and most shops were closed down (no phone line? No credit card transactions) for at least a few days.
    Even with big plywood signs saying "cash only" there were people who'd roll in and say "hey your pump isn't taking my VISA what gives?"


  14. Bit coin / cryptocurrency seems to me to be the ultimate fiat currency. Not backed by a sovereign nation. (not even backed by the full faith and credit of Zimbabwe!) Count me out. Seems to be a pyramid scheme. early adopters did well I heard. People at the peak (possibly now) will lose their investment.

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