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“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

• slekker 2y ago
  I'll share this every time someone asks me about crypto, beautiful!
• ein0p 2y 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.
  • klipt 2y 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.
    • ein0p 2y ago
      You forgot to say "so far". One of my managers was also flying high circa 2000 - multiple lakefront properties, Porsches you name it, the guy was living the life. In 2002 he was bankrupt - didn't sell his tech stocks in time, thought they'd "bounce back". But I'm not talking about stocks. I'm talking about cash here. Cash is literally an article of faith and nothing else. It's not backed by any asset.
      • klipt 2y ago
        > multiple lakefront properties Let me guess, bought on credit, he over leveraged > Cash is literally an article of faith and nothing else. It's not backed by any asset. The US dollar is backed by the federal government, a behemoth that handles more assets than any other entity on earth. For example we know they target 2% inflation on average. So US dollars are much more stable than if I were to issue my own "klipt bucks" currency.
        • ein0p 2y ago
          US dollar is also constantly and arbitrarily diluted by the Federal Reserve, to the tune of $2-3T a year. If it was a stock, you'd run away in horror.
          • selectodude 2y ago
            Cash isn’t an investment. It’s a temporary store of labor value. Since work now is worth more than work later, of course cash has value decay. If it didn’t, it wouldn’t be very good at its raison d’être.
            • LudwigNagasena 2y ago
              The main reason the value of cash decays and the main reason central banks target 2% is downward wage rigidity. If you reduce wages of people, they get angry, sometimes very angry to the point of strikes. If the value simply drops, they don’t get as mad. It’s as simple as that, a matter of psychology and social institutions. There is no reason why payment for labor should be a “temporary store of labor value”, whatever that means. There is no reason one cannot receive wage in productive assets, commodities, credit and whatnot.
              • selectodude 2y ago
                >There is no reason one cannot receive wage in productive assets, commodities, credit and whatnot. You're right about that. It's called the barter system and we don't use it anymore because it's inefficient and sucks shit. >The main reason the value of cash decays and the main reason central banks target 2% is downward wage rigidity. If you reduce wages of people, they get angry, sometimes very angry to the point of strikes. If the value simply drops, they don’t get as mad. It’s as simple as that, a matter of psychology and social institutions. No, it's because if cash has a fixed value, then the "temporary" part of labor storage goes away and the economy grinds to a halt.
    • cantSpellSober 2y ago
      For discussion, what's wrong with the statement "if you hold a money market cash position [you hold] the same thing as Bitcoin [or a crypto ETF]"? Or, say, you hold one of Vanguard's Gold ETFs. (Good faith)
      • seanhunter 2y ago
        You don’t own the exact same thing as bitcoin. A money market cash position is backed by money market instruments whereas bitcoin is bitcoin. A gold etf is backed by gold holdings. That’s not the same as bitcoin either. It’s like saying a baguette is the exact same thing as a mac and cheese. It just isn’t the same. You might like them all equally, like some but not the others or like none of them. Any of those positions is fine because it’s your money - but it makes absolutely no sense to think they’re the same.
      • bluecalm 2y ago
        Money we are using now is backed by obligation of people to pay it back and very well developed institutions that enforce it. If you hold 100$ you know someone, somewhere needs it to pay their debt. If you hold Bitcoin no one ever needs to buy it from you unless they hope they can find a bigger sucker later. Instruments in money market are of the kind of: "give me 100$ now and I will give you 101$ 3months later". Bitcoin is not backed by such contract. It's only backed by the hope of finding a bigger sucker later.
      • Glyptodon 2y ago
        I don't think Vanguard offers a gold ETF. (Gold ETFs do exist, Vanguard just doesn't do it.) I'm pretty sure there's a lot of evidence that gold is a great inflation hedge but otherwise doesn't offer much in the way of returns on a long run basis. Which is a reason in various cases to hold or diversify into it over a money market fund (essentially over cash). That said, currently crypto has not proven itself to be either much like cash or much like gold.
    • lostmsu 2y ago
      That doesn't address the spirit of the argument you are replying to. Vanguard is 1. what they mention in their anti-cryoto thesis, all the real value makers that you don't need Vanguard to get into + 2. a casino on top of 1. They sold you the idea, that their casino on top of 1. brings you money. I sincerely doubt it. You are making money on 1, true, and probably losing them on Vanguard. Also, in BTC your Vanguard funds went down significantly on average.
      • B-Con 2y ago
        This is incoherent nonsense. Vanguard is a service that manages your portfolio so you don't have to. Literally the definition of providing an economic service. Owning the portfolio does come with risk, but it's not fixed odds, rather the odds track the literal economy. If you buy index funds, your ballot tracks the value of the country you invested in. When society does well, so do you. And guess what? Everyone, including the government, spends their life trying to generate value and wealth. It isn't a casino. Likening the US economy to a casino is perhaps the most disingenuous nonsense I've heard from the church of crypto.
        • lostmsu 2y ago
          > Vanguard is a service that manages your portfolio so you don't have to. Literally the definition of providing an economic service. How is it different from Bitcoin conceptually? Bitcoin reflects financial markets overall just as well as any Vanguard-managed fund. It does not matter that Vanguard intention is precisely that while Bitcoin's isn't if the outcome is the same. Just in case I'll explain what I mean by an analogy: Imagine we are sailing an ocean in a small ship, and consequentially the ship rocks really hard. There's a table with two straight sticks on it in everyone's room, and the sticks constantly slide around the table due to rocking. And for whatever reason the parent comment author is tasked with keeping them as parallel as possible, while not stopping their movement alltogether. To do so he makes a contraption with electric motors attached to one end of each stick and sensors that detect when sticks are not parallel, which causes motors to align them. In the mean time in my room I took my sticks from the table and attached them to the ceiling instead because they look nice there. Here despite the lack of intention on my part my sticks will tend to stay parallel without much effort.
  • RandomLensman 2y ago
    Do you think the daily volatility of purchasing power of the USD domestically is similar to that of bitcoin?
  • harimau777 2y 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.
  • pjc50 2y 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.
  • Glyptodon 2y 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 2y 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 2y 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...
  • loeg 2y ago
    I think the unsatisfying answer is that Bogle was a bit of gold bug -- he had a 5% gold allocation.
    • tcbawo 2y ago
      Gold was historically uncorrelated to other asset classes, so there was a portfolio theory reason to allocate in gold. In times of uncertainty and fear, people would flee to gold. Afaik, this effect has been muted in recent years. I don’t know if it has been fully explained, but it’s likely due to the highly available and interconnected investment products of today. Bitcoin has been shown to have a high beta with credit and other investment assets. So from a portfolio theory perspective, it is functionally more like a leveraged ETF than a hedge. This doesn’t mean that neither deserves a place in a modern portfolio. As they say, past returns are no guarantee of future results.
      • wbl 2y ago
        If all you give me is leveraged beta I can replicate that more cheaply.
      • rsynnott 2y ago
        It’s arguably a _bit_ of a myth that people flee to gold in times of uncertainty. It’s something that many people believe happens, and it does seem to happen to _some_ extent, but not to the extent that people believe. Adjusted for inflation, gold has never reached its 1980s peak again, and may never do so, despite a number of greater economic and social shocks since that peak.
• enether 2y 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 2y 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.
    • TeaBrain 2y ago
      Buybacks are functionally accepted as an alternative to dividends, but are not really equivalents. An important distinction is that buybacks not only benefit the shareholders like dividends do, but also benefit the perception of the company's performance by boosting per share financial figures, due to less shares remaining following the buyback. This incentivizes the leadership of a company more towards buybacks, as it not only potentially increases the value of their largely stock based compensation, but it also makes their performance look better.
      • bornfreddy 2y ago
        Off topic, but I wish finance sites published "buyback yield" metric or equivalent (what percentage of total stock value was bought back in last quarter / year / TTM. If buybacks are treated as dividends, investors should be able to assess their returns in a similar way, imho.
  • strix_varius 2y 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.
• rainsford 2y 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 2y ago
    Satoshi Nakamoto is actually a Trisolaran alien who came to Earth to hasten climate change and have humanity kill off itself.
    • koakuma-chan 2y ago
      Every civilization reaches a point where they invent cryptocurrencies, burn through all their resources mining imaginary coins, and that's why the universe is so quiet.
      • antiraza 2y ago
        The universe is a dark mint.
      • oblio 2y ago
        Hey, at least they're not making paper clips.
      • ryandvm 2y ago
        "Crypto is one of the great filters" is a hilarious take.
    • mistercheph 2y ago
      How much energy are we spending to try to summon stochastic parrot but world-ending doomsday edition?
      • 1659447091 2y ago
• ggddv 2y 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 2y 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.
    • dnamlin 2y ago
      https://www.blackrock.com/institutions/en-zz/literature/whitepaper/bii-investment-perspectives-december-2024.pdf https://www.blackrock.com/institutions/en-zz/literature/whit...
  • deleted 2y ago
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  • ascorbic 2y 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".
    • dnamlin 2y ago
      That was so funny they left out "and returns" Like, it's valid to point to its historical volatility, but it struck me as intellectually dishonest to say it's been (historically) risky without also acknowledging that holders have (historically) been well-rewarded for their risk appetite. High Sharpe ratio, etc.
    • erikpukinskis 2y ago
      If you’ve got a lot of working years left (and therefore can survive losing a large % of assets any given year) it’s generally a good thing to drastically raise your risk profile. Assuming you’re also raising your expected returns.
• thegabez 2y 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 2y ago
    There's a potential for them to produce value. Not the case with crypto.
    • LudwigNagasena 2y ago
      Being a store of value and a medium of exchange provides value by itself.
      • globular-toast 2y ago
        Yeah but that's the network, not the Bitcoin itself. Money as a system is valuable but that doesn't mean it's worth holding cash.
    • everfree 2y ago
      Blockchains can potentially produce value by receiving transaction fees and burning them. This is similar in some ways to a stock buyback. Both Ethereum and Solana are currently coded to do this, though AFAIK neither of them are currently cash-positive due to their burned fees not being enough to offset issuance yet.
    • bornfreddy 2y ago
      Ability to send vale across the world, to anywhere, for relatively low fees, could count as providing value, don't you think? A lot of people do. Bitcoin got labeled just a "store of value", but with Bitcoin Lightning it can be used for low fee payments too. Pity about mining though, I wish they followed Ethereum into staking. It doesn't matter how much value you provide if you burn the planet along the way.
      • 2y ago
• lifty 2y ago
  I think they are consistent. They also don’t have an ETF which invests directly in gold.
• puntium 2y 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 2y 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.
    • bornfreddy 2y ago
• bryanhogan 2y 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 2y 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-funds/profile/vcmdx#performance-fees https://investor.vanguard.com/investment-products/mutual-fun... * https://corporate.vanguard.com/content/dam/corp/research/pdf/commodity_investing_and_its_role_in_a_portfolio.pdf https://corporate.vanguard.com/content/dam/corp/research/pdf... It's not really their thing either.
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• wooque 2y 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.
• peterjohn014700 2y ago
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