Bitcoin & Beanie Babies – The Gilmer Mirror

by James · September 4, 2022

By Jim “Pappy” Moore

Bitcoin is all over social media. For some, it is the wave of the future, which stretches across borders and around the world, and dominates the world’s economic affairs. It is digital money, with a Bitcoin of whatever value a seller will sell it for and a buyer will buy it for. In this sense it is similar to gold or silver, with one important difference: gold and silver both have actual commercial value in the world. They are minerals. They must be extracted, refined and put into usable forms. They have production applications. They have markets like jewelry. They are a worldwide commodity sold daily on an ounce or gram basis.

Bitcoin is more similar to currency, such as dollar bills, than it is to gold or silver. It is not a product that has any real economic value beyond the scope of the agreement of those who operate it. Currently, Bitcoin sells for around $20,000 each in US dollars. About 9 months ago, Bitcoin was selling for about $67,000 each in US dollars. Two and a half years ago, Bitcoin was selling for around $3,000 each in US dollars.

What else have we seen in the last thirty years that has experienced such volatility? Beanie babies. Small stuffed toys that originally cost a consumer $2.50 US dollars became sought after items. Demand went off the charts for some of them. They were traded among those who invested in thousands of dollars. The increase in values was part of a brilliant marketing plan by the man who made them. Ordinary people started investing their savings in Beanie Babies. Many spent thousands of dollars buying up all the Beanie Babies they could find. An industry of Beanie Baby buyers was created on the fly. I personally knew someone who owned hundreds of them and thought they had turned their savings into something that would increase their returns by thousands of percent.

There are still Beanie Baby collectors and some items sell for thousands of dollars. But the boom is long gone. Many people ended up with Beanie Bears that retained little value. Sizzle only goes so far and often doesn’t last.

Bitcoin has been a hot item for the past two years. It has caught on among a certain segment of the world’s population. Millions of people are interested in it. As Bitcoin has fallen in value by 70% in the last eight months, the proponents have been proclaiming “buy the dip!” Ask yourself: Why would people who have invested in Bitcoin strongly encourage others to get into it if such people really believe it is severely undervalued? Wouldn’t such people gobble up Bitcoin sold by merchants at much cheaper prices? Wouldn’t they be encouraging sales and buying whatever they could get at the “cheaper” prices? But what if their goal was to get others to stay in Bitcoin, not to sell out? Can we conclude that such Bitcoin owners are just trying to stop the bleeding of their investment?

I’m not impressed with investments that require owners to join a club of true believers, and from that rainbow and unicorn world they see values that aren’t really there. To me it has the feel of a pyramid scheme, where early entrants make money but late entrants don’t.

This is my opinion. Yours may be much different.