Tuesday, December 20, 2022

How tangible should it be?

Recently, Don and I were discussing the intricacies of cryptocurrencies. We agreed neither of us really understand these assets, and therefore (even if we had the money to do so) they would make lousy investments for us. But, it being winter and therefore since he's spending more time at the computer, Don decided to try and get a handle on cryptocurrencies in expectation of justifying our initial thoughts.

In the wake of the whole Sam Bankman-Fried scandal, there are a lot of others questioning the wisdom of investing in cryptocurrencies. But, like every other financial bubble in the past, many people got caught up in the frenzy, tragically sunk their life savings into it, and got wiped out. (Remember the tulip mania bubble?)

That's the problem with non-tangible investments, you see. At least tulips are real; but what is a Bitcoin, really? Or an Etherium or Dogecoin or any of the literally thousands of other cryptocurrencies out there (over 9,000 varieties as of a recent count)? Do they truly exist and have actual value, or are they simply  computer algorithms that people became convinced are actually worth something? I mean, fiat currency (like the dollar, created and guaranteed by the U.S. government) is only valuable because there is a group-think agreeing it's valuable; but at least such currencies have a long history as a means of exchange.  But with cryptocurrencies, any "value" seemingly comes out of thin air.

There are other problems associated with cryptocurrencies. Aside from the fact that their only value rests on finding someone who will buy them from you (hopefully for more than you paid), they represent ... nothing. They're not "backed" by anything (labor, precious metals, or even "the full faith and credit of the United States government"). Their continued existence depends upon the indifference of controlling legal authorities, and that indifference can be shattered pretty quickly as soon as a government decides it's not getting its "cut."

The prime example of this – and the model for the coming regulation-to-destruction of the private crypto market – is the actions of China, which has made the trade, transfer, creation, and holding of all cryptocurrencies illegal. Why would China do this? For the same reasons that will soon be coming to your neighborhood: too much undocumented financial freedom in the hands of the citizens and not enough fiscal control for our public servants.

The other shortcomings of cryptocurrencies are important, such as the wild booms-and-busts that can occur when someone like Elon Musk says that Tesla will accept crypto, then changes his mind a few months later. Or that fact that crypto-mining uses more electricity per year that the nation of Finland. Or that something like 80 percent of all cryptocurrencies have failed, leaving tens of thousands of investors broke.

This is why we've never liked the idea of cryptocurrencies or other intangibles, and have always been keen on tangible investments. As the saying goes, you can't eat gold or silver; so our preferred tangible investments involve things that reproduce (cows, chickens) or can be saved and regrown (fruits and vegetables). Among these tangible investments we include owning our small farm and the woodworking business. Each of these assets can (and do) produce income if managed correctly – something that cryptocurrencies simply can't do.

Don and I have always been outside-the-box thinkers. Our notion of "investing" is far from conventional. During our younger years, we were so busy building the woodcraft business that we had no spare income to "invest" in traditional options such as retirement plans and the stock market. Now that we're more financially stable, we know nothing about these intangible investments and don't feel comfortable putting our hard-earned money someplace we don't understand (and, in the wake of the Sam Bankman-Fried scandal, apparently a lot of other people don't understand it either).

So what, to us, is a "tangible" investment? Quite simply it's something that allows us to cut our expenses still further. Cows, for example, will cost money at first, but then they'll save us money (on meat and dairy products). Ditto with chickens. We invest in lumber and other building supplies against future projects that will contribute toward self-sufficiency. We invest in fruit trees and blueberry bushes so we won't have to buy fruit. We invest in materials for garden beds so we won't have to buy vegetables.

In short, anything that allows us to stay home and provide for our own needs is a "tangible investment" in our book.

How about you?


  1. When I reroofed my home some years back I bought pallet of plywood. It was still banded as delivered from the mill. I remember thinking at the time that it would be a good investment. You could set it on the floor in the corner of your storage shed and just pile stuff on it until someday when you needed plywood. Since then plywood prices are up 400%. I should have done it.

  2. I would suggest a small amount of silver coin for trade for those things you cannot make or grow.

  3. Hey Patrice - like most "beginners", you’re conflating a lot of different things, and it’s impossible to cover down on all the specifics in your post. Last winter, I was in the same boat: confused, bewildered, and overwhelmed, so I spent a few months getting grounded. It was daunting, and I made many missteps. If I could do it all over again, I wish I had found Michael Saylor sooner. His interview with Tucker Carlson (whether you like him or not) was a seminal moment in history. After that, google "Saylor Academy Bitcoin for Everybody" - it’s a free course that takes you from zero, to grounded in a reasonable amount of time. After that, it’s up to you to determine how far down the rabbit hole you want to go. Just be careful: you might get "orange pilled". I will leave you with this statement: Bitcoin (specifically. not 'crypto'. yes, they are very different) is the most tangible asset the world has ever known. Now, go find out why, and attempt to change my mind. ;) GL!

    1. What happens to this most tangible asset, if sun decides to send huge EMP, and we are out of electricity for months, or years? Or if that huge volcano under Yellowstone goes BANG?

      In both cases you can still milk your cow (as long as you have food for her) and eat your dehydrated beans.

    2. In that case there are bigger things to worry about than means of trade. Your statement is valid for ALL forms.

      Putting that aside, there are some misconceptions in this article. to say it is not "backed" by anything shows lack of understanding on what really makes Bitcoin work. Other cryptos you are correct, most are garbage. Study Bitcoin and learn more. If you understand it you will change your mind.

  4. When my kids were younger, they played with "Pogs" and Pokémon cards. Certain cards and Pogs were deemed more or less valuable to the kids. When it was all said and done with though, they were only worth their weight in compost, as that's exactly what they are now, in some landfill somewhere. You hit it on the head when you said fiat currencies like the Dollar "...have a long history as a means of exchange." There's an agreement amongst a group of people that that presidential portrait in you hand is worth the milk... or the cow... one of those people is going to trade it for. Crypto doesn't even EXIST. You can't hold it in your hand. You can't put it in a safe. In my mind, anyway, Dollars make more... cents... That, and precious metals. There has never been a time in human history when gold and silver have had no value...

  5. I think so many things are changing so fast, tangible things like livestock are the best investment.
    My next investment, I hope, will be something basic for solar, to keep the fridge going a few hours every day during power outages. Improvements keep being made and most can be recharged a number of ways. But especially with all the stuff going on, like everything else, prices are zooming. My eye is on something basic that can be added to. Because power bills are going up up up as well, and I think we'll always find the convenience of power very helpful.

  6. Basically, the ONLY thing to use "crypto" currency for is to transfer funds OR buy something from somebody that has been cancelled, OR, your purchase is NOBODY's business.

  7. I've always thought of investing in crypto the same as investing in Bennie Babies, but with out the Bennie Babies. Hummmm. Kind of like putting your money in nothing? The one commenter that watched the sales gimmick that gave validation to Bitcoin I have to think has been CONvinced by a very CONvincing con man. There's several concepts that have to be accepted as real, that are anything but real, before believing in this stuff. It's only as real as your imagination.
    Frogwater Willie (My first writ under this nom de plume.)

  8. To me, the bottom line for cryptocurrency is like anything else: "If you don't physically possess it, you don't really own it." Tractorguy

  9. How will anyone use cryptocurrency if the power goes out? You can put it on a flash drive, but how do you "buy" anything with it? If you have 10K on a flash drive, how do you pay for $100 of food? I just don't trust cryptocurrency.

  10. You teased me with the beautiful, sunlit photo of what looks like two sets of books. What are the two sets? You had previously mentioned collecting the Harvard Classics. I have been seeing some of them, various editions, periodically, in my local (Florida) library’s used books-for-sale section, usually for 50 cents each. If you’re still looking for any volumes, and have a post office box (I’m sure you don’t want to give out your address) I can keep an eye out for them.

  11. It's a red pill blue pill kind of thing. Those that believe crypto currency is anything more than a bad gamble simply are too naive. Now if they were to say I know the risks but I'm just riding this wave taking as much as I can from the fools before it all crashes then I would say they get it but they are simply dishonest.

    It's kind of like what we are seeing in Twitter. Everyone who was red pilled isn't surprised and everyone who wasn't red pilled and isn't shocked is all in with the government taking away our constitutional rights.

    Another example that is yet to prove itself is "the cloud". It's secure, right? Right? LOL Yeah! I'm sure that there isn't a backdoor into it. In fact I would assure you that there are more back doors than even the FBI and CIA know about.

    Nothing is safe, especially nothing on the internet.

  12. If you can't physically hold it in your hand, it isn't
    tangible. Silver, or gold, coins will always have value, paper and crypto or bitcoin, not so much.

  13. I measure my wealth in mason jars with preserved food, canned and packaged food and five gallon buckets with vacuum sealed mylar bags of food inside.

  14. My thoughts exactly. Well said.

  15. Our family lives currenlty in a small flat, so most tangible investments are out of question. So, we invest in ammunition. Both my husband and father hunt, so there is plenty of use for it. If TEOTWAWKI happens, we can also use it as a tool of exchange with other people.

    There is interesting book trilogy, Metro 2033, by Dmitri Gluhovski. In that book, post-nuclear war humans live in the metro tunnels under Moscow, and they ammo as currency (and as ammo, obviously.) I got that idea from that book.

  16. My barber accepted a box of 22shells for a haircut back when ammo was hard to get. Basically any "thing" you would purchase is a tangible & the more demand that there is for that "thing" , the better chance there is that it classifies as an investment... I bailed on paper investments decades ago & never looked back. Emperor's new clothes...