Investor Alert: Is Masterworks.io a scam?
Every once in a while, someone decides to sell shares in “something” new. Today, that something is Fine Art. Let’s explore the pitfalls of investing in this idea.
Investing in Art
Purchasing art has always been about buying a single piece of artwork outright. Meaning, you find a piece of art you like and you buy it. That means that piece of art is yours to display in any way you wish. This type of purchasing of art is (and remains) the most optimal way to purchase art. You buy it outright and you own the entire work in totality.
However, there are exceptions to the above. If you purchase a reproduction of an original work of art, this purchase offers much fewer rights to the buyer. Some rights that you forfeit when purchasing a reproduction include reproduction of that art. Meaning, you can display your purchase in any way you choose, but you cannot photograph it and/or sell photographs of that art. The reproduction rights remain with the original work’s owner. Only the person who owns the original artwork may reproduce the work in any way.
Mass Produced
You may be thinking, “But, mine is painted with real paint on real canvas”. That doesn’t matter. What matters is if the painting is the first and the original. Many painters reproduce their works using paint on canvas, many times over. Typically, these reproduction paintings are painted by employees (in a sort of paint-by-number situation), but is not always painted by the original artist. These are painters hired for the sole purpose of creating a copy of the original. These reproduction paintings are sold typically at a fraction of the original art’s cost. These reproductions rarely become valuable simply because of the total number produced. It’s the same reason why many mass produced items rarely go up in value.
Because the original was painted by the actual artist, this original painting is the one that holds value. That’s not to say that every original painting by every artist will increase in value. Many do not. It depends on the artist, the artwork and that artist’s contribution to the art world. Perhaps in time that artist might be seen in some kind of historical light, thus propelling their artwork values upward.
Because an original art piece might spawn many “authorized” copies, copies that could become very popular in sales, that makes the original work much more valuable. For example, an original Thomas Kinkade painting would be worth far more than one of its many reproductions. That doesn’t mean reproductions can’t increase in value, but they will never be valued the same as the original first painting.
Masterworks.io
Masterworks takes the idea of Fine Art to an “investment” level. By that I mean instead of owning the actual painting / art piece in full, you only own a “share” (or small portion) of the art. In reality, this type of investing is an abstract concept. At the moment, Masterworks appears to focus solely on paintings. You might be wondering, “How does owning a small piece of a whole actually work?”
The short answer to this question is that it doesn’t. Investing in a tiny piece of a valuable work of art doesn’t do anything but ultimately make Masterworks as a company rich. You, in fact, don’t own anything but the knowledge that you “might” own a small piece of a work of art. You also own the knowledge that that investment might, maybe return value IF the painting is (eventually or ever) sold at a profit. In essence, you’re essentially placing a long shot bet that eventually that painting might be sold for a profit.
Let’s understand some of the problems with this idea.
Where is that painting?
Good question. If you’re buying into an investment object, you definitely want / need to know exactly where that “object” is physically located in the world. If you invest in a company, for example, you know where their headquarters are. You know who their executives are. You know their physical address and phone number. You can call and talk to someone. You can even find out their sales plans, the products or services the company sells and how much they make in revenue per quarter. Keep in mind that some private companies may be unwilling to disclose their sales numbers. With public companies, that company’s revenues are public knowledge.
Buying into a Masterworks painting, on the other hand, you don’t know exactly where it is. You don’t know under what conditions it’s being stored. You don’t know who currently has possession of it. Masterworks can “assure” you that that item is safe… but is it? Paintings are particularly susceptible to deterioration if not kept under the strictest of environmental controls. Artwork is also susceptible to theft. Both of these issues are difficult to manage at the best of times.
One might think that paying to invest in small bit of a painting might help protect it from being lost to time. It’s a lofty ideal. It’s, unfortunately, an ideal that when considering the underlying logistics of it all, make the investment seem highly risky. It’s also an ideal that may not hold true.
An investor should always ask, “Who owns the original work?” You must also consider the following:
- Is Masterworks attempting to sell shares in art they don’t legally own?
- Is Masterworks actually in possession of the art they claim to have bought?
- Did Masterworks actually buy the painting or is it under some kind of “lease”?
- Is the art being stored in correct conditions?
Who knows for sure? These are all very good questions. They’re also questions that should greatly concern you when considering “investing” in art through Masterworks.
Paintings as Investments
Art is entirely subjective to every person, but it is also highly volatile in its salability. What I mean is that paintings, particularly abstract paintings, go through ebbs and flows, waxing and waning in popularity and, yes, value. What might seem like an excellent painting today may be seen as outdated and worthless next year. Art’s value comes and goes, sometimes as a result of changing style trends. Painting values are, as I’ve said above, highly volatile. Way more volatile than investing in company stocks, bonds or even precious metals.
Sure, this investment type is yet another “thing” you can put some money into as part of your larger investment portfolio and hope to see a return on investment, but it may not return anything. The problematic issue with this concept is, can Masterworks be trusted or are they simply another Bernie Madoff? This is the ultimate question.
Novel Concept, Poorly Realized
The idea of share investing in art is definitely novel, even Masterworks states as much. However, is it realistic?
First, there’s the idea that you only own a tiny fraction of a painting. How does that work anyway? Are they planning on cutting up the piece of art if the art price bottoms out and there’s nothing left to pay you back your investment? Clearly, no. They’re simply going to tell you that you’re out your money and they STILL get to keep that art even if it’s worthless. Not only do you NOT get the art after investing, you don’t get your investment back if the painting is sold at a loss.
Second, there’s the logistics of where this art is stored. You have no idea as an investor. Unless Masterworks intends to spend boatloads to create a location to store all of this art under perfect archival environmental conditions (highly unlikely) AND they can prove that fact to investors, the art is then completely open to deterioration, decay and possibly destruction or even theft. Some art, in fact, may be produced using non-archival media. This means that no matter how well a piece of art is stored, it may still slowly (or quickly) deteriorate to the point of no longer even being art (or saleable) even within a few months. You can’t stop deterioration, which actually makes some art less valuable every day that passes.
Third, who actually owns (and holds) that art? Are art owners selling the full piece of art, selling it under consignment or are they selling only the concept of ownership as shares, so then Masterworks then manages that “concept trust”? If Masterworks is selling shares in works of art they do not rightfully own and possess, that is very close to a Ponzi scheme. It may also be very illegal. That’s like someone claiming to sell you the Brooklyn Bridge. Sure, anyone can claim to sell it, but they do not own it. They do not even own a piece of it. Giving money to someone claiming to sell you the Brooklyn Bridge is, thus, the very definition of a scam and fraud. With Masterworks, be very careful.
Masterworks needs to also be very careful in what they are doing, making sure their ‘i’s are all dotted and their ‘T’s are all crossed.. Here’s what Masterworks has to say about their own model and art investing:
‣ We have a novel and unproven business model.
https://www.masterworks.io/
‣ Masterworks issuers do not expect to generate revenue, so investors will only recognize a return on their investment if the painting is eventually sold at a profit
‣ No market exists for the shares and paintings are highly illiquid, so you must be prepared to hold your investment for an indefinite period.
‣ Each Issuer owns a single painting and this lack of diversification magnifies risk.
‣ Your ability to trade or sell your shares is highly uncertain.
‣ Paintings may be sold at a loss.
‣ Costs will diminish returns.
‣ Investing in art is subject to numerous risks, including (i) claims with respect to authenticity or provenance, (ii) physical damage, (iii) legal challenges to ownership, (iv) market risks, (v) economic risks and (vi) fraud.
‣ Issuers are totally reliant on Masterworks.
‣ Masterworks has potential conflicts of interest.
‣ Timing of sale of a painting is uncertain.
None of the above (or even their web site) describes how or where the art is actually stored or maintained. It almost solely discusses the risks of investing. The fact that Masterworks also finds the need to call out that purchased shares are “illiquid” says a great deal here. This word means that there are few participants, thus low volume, which ultimately means a very low chance of ever being able to sell out of purchased shares.
Consider stocks and bonds. You can likely sell out of any of these positions in about a day. With Masterworks investments, the low volume and few participants means once you invest, you’re likely stuck holding onto that investment until the painting either sells (at a loss or profit) or fails to sell at all. Masterworks doesn’t really state what happens if you can’t sell your position with a painting that never sells. I guess you’re ultimately out your investment money.
Art Storage
As with any artwork and has been stated above, it’s important to understand how and where the art is stored and who actually owns the art. None of this is explicitly stated on Masterworks’s site. I’m actually taken aback by the fact that for all the deluge of investing information provided, there’s equivalently a severe lack of information regarding the artwork itself, where it’s stored, how it’s managed or who owns it while it’s being held for shares. That’s a big, nay HUGE, problem in my book.
However, Masterworks does say this…
What this ultimately says is that Masterworks locates and purchases art. It doesn’t exactly state what “purchase the work” actually means. Are they taking possession of the work or are they leaving it at the gallery where they found it to remain on sale? They do claim to hold a work of art for 3-10 years. I’m uncertain how this works exactly considering the second half of that “OR” statement. Only questions, few answers.
As I said, for as much information as there is about risk of investing, there’s equally as little about the actual artwork itself… which is huge red flag 🚩.
Any business straddling both the art world and the finance world should be, at once, both engaged in explaining how and where the art is to be stored and handled, but also able to explain the risks of investing. Clearly, Masterworks is only interested in documenting half of this equation.
Volume Investing
Masterworks hopes that as more people jump on board with their share idea and begin investing, a larger and higher volume share marketplace will eventually emerge to allow for easier share trading. At this moment, however, Masterworks has stated that any position you buy is likely to be “illiquid”, thus implying that this is a new market with limited options for selling shares.
In other words, if you invest $100 into a painting and gain 2 shares, those shares in that painting are most likely to remain yours until the painting sells at a profit or a loss. The question is, though, even if the painting sells, does Masterworks have the painting to sell? I’m still skeptical.
Art Galleries
Masterworks, as a company, needs to be a whole lot more forthcoming about all aspects of its business operations, especially surrounding where, how and who stores the art after it’s purchased.
What Masterworks should have planned for is purchasing a number of galleries around the United States (or around the World) to support their business model. Instead of simply attempting to sell the investment share idea, they should have worked this idea full circle.
Here’s where things get a little dicey for Masterworks. Instead of creating a complete sales cycle (or sales funnel as some might call also it), they leave out one very important piece: Galleries. Clearly, they have Acquisition, Investments and Sales. Though, questions about Masterworks’s acquisition process remains, primarily because they don’t have galleries.
To really make this business model complete, Masterworks needs to own and operate its own set of galleries. Why galleries? Owning galleries sets a tone that you know how to properly store and manage expensive artwork in addition to offering a place to actually sell it properly. Though, paintings can be sold through auction houses as well. Masterworks is attempting to sell art for millions of dollars, yet Masterworks doesn’t really state where, or more specifically how, that artwork is managed and stored. It’s an important and necessary piece that’s conveniently missing.
Owning galleries keeps Masterworks honest and allows for auditing. If there is a gallery where a specific investment work lives, investors can visit the gallery and physically see the art they have invested in. This verifies that the artwork exists, that it is genuine (not faked), that it’s in Masterworks’s possession and that it can be verified. Without this piece, verification of the actual art remains an open question. Images on a web site do not verify that anything is genuine. Talking to someone on the phone doesn’t verify authenticity either. Only physically seeing the artwork in person can an investor verify the painting and, thus, verify that their investment is backed by something real.
Questions without Answers
That leaves too many open questions. Questions like, “What exactly am I investing in?” Like, “Where is the artwork stored?” Questions like, “Is the artwork properly stored for a long sales wait?” Like, “Is the artwork in the possession of Masterworks directly?” All of these questions could be easily resolved if Masterworks owns and operates a set of galleries… or at least a showroom at the bare minimum.
Additionally, with Masterworks ownership of galleries, this means you, as an investor, can physically go see the art you’ve invested in. You can see if it’s as it appears in the images. You can see it on exhibit, or at least it can be brought out for a viewing. You can see that it’s being kept and stored in appropriate environmental conditions.
There are so many questions surrounding the art itself, there is absolutely no way I would recommend anyone to invest in Masterworks… unless you absolutely like throwing money away on odd “investment” strategies. Knowing where that art is, how it’s being stored and if it’s being stored appropriately combined with knowing you’re able to view the actual art is extremely important BEFORE investing any money in a share of a painting.
Ponzi Scheme?
While I previously made reference to Bernie Madoff and his ponzi scheme, that statement isn’t intended to suggest that Masterworks runs a Ponzi scheme or that it intends to make off with your money. However, because of so many lingering questions, this business model seems unnecessarily risky… especially not knowing the answer to far too many questions surrounding the paintings.
Additionally, because of the volatility in art sales, as an investor, you must fully trust and be reliant on Masterworks buyers and appraisers to locate “valuable art” that might sell for some amount of money higher than what was paid. However, you’ve no idea if the art they’ve selected will actually sell at all. Because art is so subjective, what a few like, too many others may hate.
It also means betting that some nebulous “whale” will come along and snap up that piece of art (for millions) you just so happen to have invested in. That isn’t likely to happen often. Unless the art is of great historical value (i.e., Leonardo DaVinci or Michaelangelo or even more recent artists like Mark Rothko, Roy Lichtenstein or Marcel Duchamp), art produced by artists living and working today might fetch random amounts, but perhaps not millions. There’s just no way to know what any piece of art might fetch when produced by today’s artists. It’s all a calculated, but a seriously risky best guess.
Unfair to Artists
One thing Masterworks also seems to be attempting is to force art to be sold at far higher prices than it’s actually worth. This is what many collectors attempt to do, usually via auction. That is, Masterworks appears to intend to artificially inflate art prices to make better returns on shareholder investments. The difficulty is that this artificial inflation (nor does the sale itself) benefit the artist at all.
Where Masterworks might “buy” a work for $70,000 from an artist via a gallery, they may attempt to turn it for $1.3 million. That nets a huge profit for Masterworks and a lesser amount for shareholders in that work. However, for the artist, $70k is all they have received. The artist is not fairly compensated from a Masterworks sale.
One might argue that aftermarket sales of art never has benefited the artist. Yes, but here’s a business model that could arguably help bring artists into the fold by making sales on behalf of the artist. This goes hand-in-hand in owning galleries. Instead, it seems Masterworks has chosen an aftermarket sales model that excludes the artist. A model that only makes money for investors and Masterworks, but not for the artist. Intentionally leaving the artist out of this process is entirely greedy and unfair to the artist.
Artists Deserve Compensation
One might think that $70,000 is a lot of money for the sale of a painting. It is. But, it is nowhere near the amount that the artist could have netted if they had sold it for $1.3 million.
Artists shouldn’t be required to invest in their own paintings with Masterworks just to net more profit on an aftermarket sale. Instead, Masterworks should work directly with artists to list the work and then compensate the artist for at least 50% of the sale, either directly or by issuing a 50% ownership stake in the art via shares. The rest of the profits should go to paying out shareholders. This model would not only fairly compensate every artist, but it also fairly compensates the shareholders and Masterworks itself.
Artists are always the one who seem to get the shaft. This problem has existed for many, many years. Masterworks can modify their business model to make sales that directly benefit the artist while also properly compensating shareholders and turning a nice profit for Masterworks. Instead, it seems they have ignored this aspect only to make their sales benefit mostly Masterworks executives the most, leaving out the artist.
Artists vs Corporations
If you’re of the mindset that you would like to see artists fairly compensated for their work, skip these risky investment schemes and buy directly from an artist. If you buy directly from an artist, you are helping that artist, not some random corporate executives operating a more or less faceless and questionable company. If you’re willing to shell out $20 to see a movie actor perform, then why wouldn’t you be willing to pay an artist for the artwork they produce?
Not only can you carry pride in the fact that you purchased art directly from the artist, you also own an original work of art in full, not solely just a share in a work of art that you’ll never see. You can also hold pride in knowing that you have helped the artist produce even more work. Buying art from Masterworks does not, in any way, encourage artists to continue to their craft. In fact, the pittance that the artist might receive in the first sale may be barely enough to cover the time and effort put into producing that painting let alone help them produce future paintings. Art supplies are expensive.
Art Valuation and Secondary Market
Let’s talk about the investing and trading pieces. Masterworks operates a secondary market where shares can be traded. Unlike Wall Street stocks where a stock’s value is based on such fluctuating data points as company profits, company revenue, investor calls, product sales and announcements, analyst recommendations, investor confidence and volume of trading, paintings have no such intrinsic back end data points (other than perhaps trading volume… and even that is drummed up via this questionable investment scheme).
Art valuation is entirely subjective, made solely by a random person appraising its value. What that means is that if you invest in a work that claims to have a $30 “share price”, you’re at the mercy of an appraiser to raise or lower this price. Bid and ask sale prices might influence pricing some, but the pricing seen on the secondary market site is mostly “best guess”. There’s nothing behind that painting to “prop up” its changing value. There are no profit margins, no new product announcements, no analyst calls, no company books to review, nothing. It’s a painting. That’s it. Paintings don’t randomly change value UNLESS they are sold. Anything else purported is a dubious scheme.
Investing in a painting with a fluctuating value is a false equivalence to stock. There’s nothing there to change the value of the share in a painting, yet it seems that the values do change. Why? The painting hasn’t yet sold, so it makes zero sense. As I said, there’s nothing in any painting to justify changes in the share price until AFTER it’s sold. Once a painting has been sold, then the share price will change to reflect the sale price of the painting.
If Masterworks intends to see a painting’s share price fluctuate daily, like stocks, then there’s something seedy, dubious and awry going on. It’s also something that you as an investor need to understand before investing a cent. Intraday changes in painting’s share price prior to a sale is extremely dubious.
One might argue that there are a limited number of shares in the painting. That each share sold makes every share more valuable. I might be willing to accept that argument except a painting can be arbitrarily divided 100 times, 1,000 times or even 1 million times. When does that share division end? You can’t really divide a painting up like that. If you’re going to apply a random investment concept, such as a share, onto a painting, then any division into shares is entirely arbitrary and disconnected and holds effectively a fractional value tied to the current “worth” of the painting. Ultimately, there’s only one (1) painting. Therefore, there should only be one (1) share. When you buy that one (1) share, you buy the painting.
Having this sub-construct of many shares which are separate from the “painting as a single commodity” is not only an odd concept to apply to a physical object, it might be seen as a form of Ponzi scheme. These “shares” are actually an abstract idea applied to a single physical object which cannot be subdivided physically. So, how exactly does this abstract division concept work? That’s exactly what Masterworks is attempting to find out. It’s also why the Masterworks business model is unproven.
Overall
I can’t recommend investing “shares” in paintings via Masterworks for reasons already outlined above. However, let me summarize these points:
- Proper art storage isn’t explained (very high risk)
- Returns on investment isn’t fully explained (high risk)
- Paintings aren’t guaranteed to sell (high risk)
- No sales benefits given to the artist (problematic)
- No galleries to physically view or confirm ownership (exceedingly high risk)
- Art prices are highly volatile (high risk)
- Art sales are solely dependent on subjective criteria (overly risky)
- Art values are solely dependent on Masterworks “appraisers” (highly risky, requires high trust)
- Intraday changes in share prices are nonsensical prior to the painting being sold (dubious)
- Must trust Masterworks for both valuation and truth (overly risky)
- Must trust Masterworks that they actually own and possess the art (exceedingly risky)
- Secondary market attempts to treat shares in a painting like stocks (exceedingly risky & dubious)
Without seeing the painting physically, as an investor, you have no idea if Masterworks truly has that painting in their possession. It’s easy to take a picture and put it on a web site, making claims that they own and possess the work. This then tricks the investor into a purchase. Then, you hold and hold and hold and the painting never sells. In fact, you could come to find they don’t even own the original art. You might find that they’re selling something they don’t even have possession of.
While Masterworks may own some of the work they claim to own, there’s literally no way for an investor to confirm that every piece of art listed is actually in the possession of Masterworks. This problem is exacerbated mainly because Masterworks operate no galleries.
For this reason, Masterworks could be selling you shares in a work that they do not, in fact, own or possess. That’s effectively a form of fraud.
Masterworks would do best to modify their business model to offer a process that can prove they physically own the paintings they claim to own. The only way this is really possible is if they open and operate at least one Masterworks gallery somewhere so shareholders can visit and request a viewing of the art they’ve invested in. This is effectively an audit system which holds Masterworks accountable to all shareholders. Without this change in their business model, investing in any work that Masterwork claims to own is unnecessarily risky. To anyone willing to give money to this company, I say, “caveat emptor!” Let the buyer beware.
Without such basic investor auditing responsibilities, I strongly recommend staying away from this novel, but highly problematic investing concept and stay away from Masterworks as a corporation. That’s not to say this concept can’t be revised to be more functional, but at the moment this concept is just not there. This concept forces an over-burdensome amount of trust and risk onto the investor and off of Masterworks, while leaving too many unregulated, unauditable and manipulable pieces in the hands of Masterworks executives.
Bottom Line: If an employee at Masterworks wished to game the Masterworks system, the lack of proper auditing over this concept would allow any executive far too easy access to game it… thus losing investments from investors and truly turning this into a huge fraud scheme.
Business Concept: B
Business Execution: F+
Scam Risk Level: Exceedingly High, Stay Away
Recommendation: Don’t Invest in Masterworks
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COVID-19: Fact vs Fiction
Detective work is an art, not a science. However, Dr. Sanjay Gupta attempts to be all things to all people, yet fails at being a journalist or a detective. He definitely shouldn’t quit his medical day job, that’s for sure. Let’s explore.
Fact vs Fiction
Sanjay Gupta hosts a CNN podcast that purports to separate fact from fiction when it comes to matters all things medical. However, in his CNN podcast on February 24th, 2021, this podcast does everything except separate fact from fiction.
On this episode, Sanjay Gupta speaks to random person Peter Daszak, a rando with a British accent (which Sanjay seems think lends his words some credibility) who purports to be some level of official on a mission for the World Health Organization. We’ll circle back around to Peter Daszak’s involvement in this shortly. This person claims to have visited Wuhan and then spouts all sorts of rhetoric as to the origins of COVID-19. As this podcast progresses, this guest digs an ever deeper and deeper hole about the wet market origins with Sanjay capping it with question similar to, “Does this rule out COVID-19 having begun in a lab” (paraphrased).
I’m getting ahead of myself a little. Daszak makes a bunch of statements about the wet market as having been the possible origin, but then always qualifying his statements as “coulda”, “woulda” and “shoulda”. For example, he claims that the markets had a lot of frozen meat. I’m sure it did. Yet, none of that meat tested positive. In fact, in every case where he mentions a type of meat, none of it tested positive for COVID-19. Then he later mentions other additional wet markets where some people might have visited as a possible origin. Yet, no mention of testing or of any positive outcomes from those wet markets. Deflection at its finest. Let’s continue, shall we?
“See only what you want to see”
This is where fiction trumps fact. In fact, it seems as this podcast progresses, Sanjay and Daszak both heavily wish to see the wet market as the origin, yet even having over 900 samples from the original Wuhan wet market with none testing positive for COVID-19, that logically and clearly says that the wet market wasn’t the origin. If you want to believe science here, the science of zero COVID-19 samples in any of the food tells us that the wet market was definitively not the origin… at least, not by food.
Because people tend to congregate in markets en-masse to buy their groceries, it may have been an origin only because of a human-to-human transmission super-spreader event.
Of course, both Sanjay and Daszak espouse “follow the science”, yet there is no science at all involved in direct detective work. Science may be utilized as a tool in detective work, but using science as a detective tool has failed to uncover the wet market as a food origin. If any wet market in China had been an origin for COVID-19, at least some food samples should show positive somewhere. Yet, they don’t.
Sanjay and Daszak seem to be in this podcast to sway minds through disinformation, not actual information. Actual information shows proof. Daszak clearly has none, but then there’s subtext for his motives (more on that below). That lack of proof means that this podcast is attempting to spread disinformation by pointing fingers towards the wet market and away from the Wuhan Institute of Virology.
China’s Agenda
China wants to be let off of the hook for the spread of COVID-19. They want this so badly that they’re willing to do or say anything to make that a reality. China doesn’t care about lying or disinformation. In fact, they’re more than happy and willing to see credible “western” medical scientists put their reputations on the line to tow China’s “we’re innocent” line. China is not innocent in the spread of COVID-19, but then neither are other countries.
It’s unmistakable. COVID-19 began in Wuhan, China. It didn’t begin in Singapore or Italy or South America or anywhere else in the world. It began in Wuhan, China. It’s also clear that we have no proof that it began in wet market food… which means that it likely began via human-to-human transmission… which means there is a patient zero.
Patient Zero
Where is patient zero? As a professional medical scientist, THIS is the question Dr. Gupta should be asking. Instead, he’s asking questions about the wet market in an attempt to pin this firmly on animal to human transmission via food. Yet, when all of the samples from that wet market are scientifically tested, nothing confirms that the virus began at the market… or at least it didn’t begin via consumption of a tainted animal purchased at the market. If COVID-19 began in a wet market, it began because of a human super-spreader event.
We already know exactly how transmissible this virus is. We also know that it can live on surfaces, sometimes for days. This means that COVID-19 could easily have begun by patient zero visiting a wet market… which is a common practice for buying food in China.
Again, where is patient zero? We already know the Wuhan Institute of Virology had both been studying and housing animals infected with a variant of SARS-CoV-2 (aka COVID-19). The lab workers had been tending to the animals, including cleanup of their feces and urine. There is some question as to whether the WIV’s safety procedures had been properly followed prior to the release of COVID-19 in early December 2019.
On the one hand, you have a wet market of animals, none of which have tested positive for COVID-19. On the other, you have the Wuhan Institute of Virology which houses animals known to test positive for COVID-19. I’ll let you do the math here.
While Sanjay and Daszak are adamant that it “must” have started in the wet market, Ocham’s Razor disagrees. The simplest answer is that COVID-19 got out of the lab. Let’s understand how.
Lab Release?
Around the time that COVID-19 (or at least an unknown illness) began to show in China in early December, a lab assistant went missing from the Wuhan Institute of Virology. Her name was Huang Yanling. The lab director, Shi Zhengli, has continually disavowed that the virus escaped from her lab. Yet, this missing lab assistant has never been accounted for. It has been assumed that Ms. Yanling was actually patient zero. Through that supposition, she may have been the person who first became infected, spread it around Wuhan in a super-spreader event and then may have died from it… with her body having been burned.
Ocham’s Razor asks, “Why?” Because she (along with others in the lab) worked at the Wuhan Institute of Virology tending to the infected animals. But then, she vanishes without a trace? Is she alive or dead? No one seems to know and Shi Zhengli shrugs this disappearance off as normal.
When you’re dealing with an outbreak like COVID-19, you can’t discount missing lab assistants from the equation. Yet, Dr. Sanjay Gupta and Dr. Anthony Fauci seem to ignore this logic and conclusion jump right over to the diversion of the wet market… which, again, has effectively been proven not to have been the cause of the outbreak.
Again, on the one hand, we have no proof that any wet market animal has tested positive (science). On the other hand, we have a missing lab assistant from the Wuhan Institute of Virology with no explanation of their whereabouts (detective work). Sure, it seems circumstantial, but no one has done an official investigation. Not the WHO, not the CDC, not China and not the United States.
Like a magician who wants your eyes staring at his right hand while his left does the switcharoo so you don’t see how the trick is done, the WHO, China, the U.S. and the worldwide medical community want you looking at the wet market while a young lab assistant, Huang Yanling, disappears from a lab housing COVID-19 infected bats. Yeah, if that’s not misdirection at its finest, I don’t know what is.
Bats and COVID-19
It’s widely agreed that COVID-19 began in bats. Which animals were housed at the Wuhan Institute of Virology? SARS-CoV-2 infected bats, of course. Captive animals don’t just clean up their feces and urine on their own. People must clean it for them. To do this, lab assistants must wear the proper hazard protection gear to avoid accidental exposure while cleaning up the animal waste. Without proper protections, transmission from animal to human can become a reality. Did the WIV fail to properly set up hazard protection? Did this lab assistant fail to wear said protective gear at all times? This lab had already been warned of improper safety procedures years before the incident.
Two State Department cables show that American embassy officials in Beijing made several visits to the research facility and sent two official warnings back to Washington in early 2018 about the lab’s inadequate safety measures. This was at a time when researchers were conducting risky studies on coronaviruses from bats, The Washington Post reported, citing intelligence sources.
https://www.voanews.com/covid-19-pandemic/chinese-lab-checkered-safety-record-draws-scrutiny-over-covid-19
Let me put it this way… which is more likely?
- Someone ate an infected bat from a wet market? or..
- A lab assistant not following established procedures released COVID-19 from the lab via themselves?
Considering that this lab had been warned of improper safety procedures in the past, I’ll let you do the math. It’s not hard math either. Again:
- Are we looking at infection from a wet market, which hasn’t found a food sample with COVID-19?
- Are we looking at infection from a lab with known unsatisfactory safety procedures and a missing lab assistant?
Occam’s Razor is fairly clear here. So is K.I.S.S. (keep it simple stupid). Logic dictates that it’s #2 as the source, not #1. Regardless of what people have stated, it’s fairly clear that the Wuhan Institute of Virology is the most likely candidate. The question, why aren’t more news outlets, the government and other officials like Dr. Fauci and Sanjay Gupta looking in this direction?
Conflict of Interest
Most doctors look up to Dr. Fauci as their guide for all things COVID-19. Unfortunately, Dr. Fauci isn’t as innocent in all of this as he appears. Dr. Fauci headed up the NIH at a time when that organization helped fund the Wuhan Institute of Virology to the tune of over $700,000, perhaps more. This funding was for Gain of Function research.
It gets worse.
“Oh, what a tangled web we weave.”
Who exactly is Peter Daszak? I’m happy you asked that. He runs EcoHealth Alliance, a British non-profit that, in 2018, identified the possibility of SARS-CoV-2 variants, over a year before the pandemic. Why were they able to do this? Because this British non-profit funded research through the Wuhan Institute of Virology. Where did EcoHealth Alliance get its money? From the United States government, of course. Remember that over $700,000 above? Yeah, that’s where some or all of it went.
That money was funneled from the United States NIH to EcoHealth Alliance and then apparently that money landed at the Wuhan Institute of Virology for virus research. It’s not like EcoHealth Alliance is a direct research firm. Nevermind that the Obama administration had banned the use of funds to further Gain of Function research related to viruses in 2014 to prevent this situation from unfolding. Unfortunately, that ban was lifted in 2017 by the NIH (headed by Fauci), leading to further research and perhaps directly to this pandemic. Without that money funneling through outfits like EcoHealth Alliance to such subcontractors as the Wuhan Institute of Virology, the world might not be in this situation.
It takes money to operate expensive research facilities. Without that money, no facilities. Of course, the U.S. Government doesn’t want to get involved in such risky research directly or have that research on U.S. soil, which could backfire on the United States. Instead, it’s fine to funnel money through intermediates so that the United States can absolve itself of involvement through plausible deniability… even though it’s as plainly obvious as it is here. The U.S. indirectly funded research that lead directly to the COVID-19 outbreak.
Is China still at fault? Most certainly. That facility is located in China. China operates it. It is completely on China to operate such facilities responsibly and safely. However, the United States NIH cannot disavow involvement when a very large sum of money landed at that lab, helping them fund SARS-CoV-2 research and possibly leading to the virus’s release. It’s particularly worrying when considering that this research lab indirectly received funding from the NIH, headed up by Dr. Fauci at the time. Dr. Fauci had to know where that money could or would end up. Even still, the NIH could have asked how that money was to be spent by its recipients.
Plausible Deniability and Gupta’s Podcast
I have no idea how culpable or complicit Sanjay Gupta may be in this situation, but it is entirely irresponsible to host a person like Daszak by allowing them to push the wet market disinformation as the source when there has been no actual science proving the wet market’s direct food involvement.
Instead, Daszak’s culpability and possible complicity is evident by his non-profit’s funneling of money into the Wuhan Institute of Virology, which firmly places him, EcoHealth Alliance and its reputation at risk. No. He can’t risk that. So, going on a show like Dr. Sanjay Gupta lends credibility to his assertions that the wet market was the location where it began, never mind that science shows there’s no food evidence. However, a super-spreader event is definitely not out of the question. But then, the question arises, who was patient zero and where began their super-spreader event? I think we already have the answer to that question above.
For this reason, it’s important to read articles and understand the situation for yourself. Don’t take statements from people even who appear well intentioned at face value. You must dig deeper for answers to your questions.
We definitely haven’t gotten the whole answer from China or from the United States. Instead, the media, medical professionals like Dr. Sanjay Gupta and Dr. Anthony Fauci have danced around the issue. With this article, it’s clear to see why they are doing so. To put forth any other narrative about where and how the virus began puts their own careers in jeopardy.
Unfortunately, mainstream media would never pick up such an article like this because it damns not only such people like Dr. Fauci, it damns their own journalistic credibility because the United States government won’t play nice with them after such an article, citing them as “wild conspiracy theorists”.
Being labeled a “conspiracy theorist” is much the same as being accused of sexual misconduct these days. It’s enough to get you fired and labeled as a “nut job”. When, in fact, there’s nothing at all nutty about the statements. In fact, it’s just the opposite. However, even if Dr. Fauci is a “nut job”, he’ll never be openly called that because of his position within the United States government.
For this reason, it’s why we are now facing a political rift across party lines. It’s why Republicans can storm Capitol Hill and most will likely be let off for “good behavior”. Can’t have “well meaning” Republicans being held to justice for damaging property and killing people. Since when is a playing a party affiliation card now a “get out of jail free” card? It seems this, along with the above, is the state of affairs these days.
Dr. Sanjay Gupta needs to rename his podcast. It’s not about Fact or Fiction, it’s about perpetuating disinformation and lies. With Trump, we’ve already had enough lies to last a lifetime. We don’t need yet more lies being spouted from supposed medical professionals. This is why you must question everything.
Update for June 2, 2021
As of June 1, 2021, many of Dr. Fauci’s early pandemic emails from 2020 have been released based on a Freedom of Information Act (FOIA) request. From these emails, there’s much to read. Too much to really discuss here. With the release of these emails, suffice it to say that Fauci’s world is beginning to unravel. FOIA is one of those bane freedoms that people who work in the government would like to see abolished. Thankfully it exists and eventually allows unclassified government documents to be released to the public. I’d suggest reading the emails for yourself. However, as of this update, I’m at a loss to find a site that archives only the text of these emails. For now, you’ll need to visit news sites.
Searching Google for only the emails leads to what I deem ‘spearch‘, a combination of the two words spam and search. It’s when a site like Google chooses to bring garbage listings to the top of the search results rather than the search results you’re actually wanting. Google’s search panel’s AI understands exactly what you want, but instead, it intentionally usurps those results by planting garbage results, which attempts to direct you to those garbage sites with useless information for the sake of more ad revenue.
If I can find a site that simply allows reading only the email test without all of the unnecessary and extraneous garbage content, I will update this article.
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How does Twitter Philanthropy work?
How does all of this Twitter philanthropy actually work? Let’s explore the seedier side of it.
Twitter Philanthropy Exposed
I won’t name any specific accounts simply because there are too many of these accounts preying on people’s needs, but let me expose how these accounts REALLY work. There is one on top of this pile, but I will let you find it yourself. If you search Google for the key words “Twitter Philanthropy“, you will find this specific Twitter account within the first 10 search results. But, don’t go run over there just yet to follow it before reading this article.
Twitter Impersonation
Let’s start this out by explaining how these accounts operate. While some of these large Twitter philanthropy accounts purport to be operated by a single individual, they are not. Instead, they are operated by a team of individuals who have access to this single Twitter account so named for a single person. In fact, this situation is in violation of Twitter’s Terms of Service rules of impersonation.
Impersonation is a violation of the Twitter Rules. Twitter accounts that pose as another person, brand, or organization in a confusing or deceptive manner may be permanently suspended under Twitter’s impersonation policy.
By operating an account as a team, rather than by the single individual named on the account, this is definitely impersonation… regardless of whether the single individual has authorized that “team” for that purpose.
If you are interacting with a Twitter account who appears to be a single person, but unbeknownst to you there are actually multiple people who are not the named individual operating that account, this is entirely deceptive and misleading… and the very definition of impersonation. You are not dealing with the person you think you are. This is in violation of Twitter’s rules. Whether Twitter sees it that way is entirely subjective and based on Twitter’s whims, unfortunately.
Team Accounts
There are many team operated accounts on Twitter. Many celebrities operate such accounts. Since the celeb can’t be at the account 24/7 to answer responses, they hire staff to manage these tweets. Most times, these celebrities are represented fairly and appropriately by their hired staff, mostly because the staffers remain in close contact with the celebrity to make sure the tweets are appropriate to the celebrity’s brand.
With these philanthropy accounts, it seems these are much more loosely operated. The team is made up of people around Twitter who manage this account and have Twitter accounts of their own. They don’t always seem to have direct approval of the account owner. If you read through some of these philanthropic account tweets, they seem to show random and incoherent tweet-to-tweet messaging, espousing differing and hypocritical ideals. Why? Because different people are posting these tweets to that single account under the guise of impersonating a single person.
Philanthropy Exposed
While these accounts may have started out as genuine philanthropy, they have degraded into an odd scam that takes advantage of people’s needs… and mostly exist as ways of gaining followers. Worse, these accounts breed even more scam artists. Scam artists who WILL take advantage of you and scam you in the process. I’ll talk about the scammers at the end and how those work. Let’s focus on the actual purported philanthropy accounts first.
Why a team?
Good question and one that you’ll understand once I explain it. Basically, when more team staffers are attempting to locate money from other contributors, that means more money to share in the guise of philanthropy under that single Twitter account. Looking for contributions isn’t the problem here, though. It’s the scammy WAY that this team goes about looking for contribution money. If this single aspect doesn’t leave a bad taste in your mouth, keep following along as it gets so much worse.
The team that makes up the single top Twitter philanthropy account uses Twitter (and sites like GoFundMe) to gain money first. Instead of actually giving out money from the purported account owner, the team actually solicits money contributions from random people using dubious methods including begging, groveling and outright scamming using sites like GoFundMe. These team members are then adding their ill-gotten money into that Twitter account’s philanthropy fund for giveaways.
Here’s where the deceptive part comes in. This team of people collect these monies using their own personal accounts, accounts not associated with that Twitter philanthropy account. This makes it difficult to trace where that philanthropy money actually came from. Deceptive and a form of money laundering. Dirty. When other people contribute their money to one of these outside accounts for some possibly even fake purported need, this is a huge problem for these larger philanthropist accounts. Any money given out by a philanthropist shouldn’t have been obtained by using a scam. Yet, here we are.
Yes, this means this team is not actually giving out the philanthropy account owner’s money, as is implied by the account owner’s statements. Instead, that team is raising funds using outside means, possibly using deceptive means (claiming to be raising money on behalf of a veteran or claiming to have a high electric bill). Then, they take that money that has been raised and give it out on Twitter. Do they give out 100% of that contributed money? Do they use the money towards the claimed need? My guess to both of these questions is no. These philanthropy accounts might be keeping as much as 50% or more of the money they collect and, in turn, only give out 50% or less of those ill-gotten contributed funds.
It’s one thing to solicit money for an intended purpose and use it for that purpose. It’s entirely another to solicit money for a purpose, not use it for that purpose and give it away to someone on Twitter. Full disclosure here? Yeah, no. Not to mention the tax ramifications of such a setup.
Giving Money Away
While giving away money might seem a good thing, this action actually preys on people in need. Worse, the way these accounts are being managed is dubious at best. Yes, it gets even worse. These accounts have so many followers that they can’t possibly manage what gets written into their Tweets. What you’ll find in most of the Tweet replies consist of people claiming to also give away money. I’d bet that at least 99.9% of these people dropping in Tweet replies are scammers looking to part you from your money. It might even be some of the team running that same philanthropy account looking for money for their next “giveaway”.
This is why this situation is a double whammy for those in need. Not only is there so little money given away from these top Twitter philanthropy accounts (they can only raise a couple hundred dollars at a time usually), the Tweet replies are chock full of scam artists willing to take advantage of you.
The act of giving away this money on Twitter might seem altruistic, but I guarantee you that it is not. There is no altruism going on here. It’s all about gaining followers on Twitter and making it SEEM like the account is altruistic. It’s just a show. The reality is, it’s a business that follows the following formula:
- Team hides behind Philanthropy account (unbeknownst to Twitter followers)
- Team is tasked to raise money (using whatever dubious means necessary) from random individuals, each team member raising money separately using their own individual accounts
- Team places raised money into Twitter account fund for “giveaways”
- Team likely keeps much of that money for themselves as “payment”
- Twitter Philanthropy occasionally awards random folks for random reasons
What if I win?
If you are one of the very few who manage to get picked to receive money from a philanthropic Twitter account, don’t think it’s all roses. To receive any money, you are required to jump through legal hoops before that money is deposited into your account.
“What legal hoops?”, you ask. Good question. You are required to agree to a long, stringent set of terms and conditions before you are awarded any money. These conditions allow this Twitter philanthropy account to do whatever they want with your win while restricting you. What document would I sign? You will need to read and sign a Non-Disclosure Agreement (NDA) and return it to the team operating the philanthropic account before you can take possession of that $20 or whatever small amount they are willing to give you. This is the very definition of victimizing someone in need. Someone in desperate need of money would be willing to sign just about ANYTHING to get that “free” money.
Once you agree to their restrictive terms and conditions, they will send you that money via CashApp or whatever other agreed upon payment system. If you violate these terms, they will sue you.
This is not a no-strings-attached way to get money. In fact, it wouldn’t surprise me to find that some of these “charity acts” might actually be loans which must be repaid at some point in the future. In other words, be very, very careful if you choose to attempt to get money out of these philanthropic accounts. They may screw you on the way in and on the way out… and perhaps even later in the future.
Twitter’s Response
Unfortunately, Twitter (the company) doesn’t monitor or manage any of these philanthropy accounts. They allow them to operate with impunity. Because it seems that these philanthropic accounts “appear” (it’s all about appearances) to be doing good for the community, Twitter (the company run by Jack Dorsey) turns a blind eye and allows this bad situation to continue and fester. Few people actually get anything good out of these accounts. Even more are getting scammed from the tweet replies claiming to also give away money for following and retweeting. Don’t fall for any tweet replies. They’re almost certainly a scam.
Essentially, Twitter is turning a blind eye to these accounts which, in fact, do not perform a “good service” for Twitter. In fact, there are likely more people being scammed out of their money than ever receive money from any Twitter philanthropy. On Twitter, it’s not okay to write about certain controversial topics, but it’s perfectly acceptable to take advantage of people in need and scam them out of even more money? Thanks for looking out for us, Jack!
Scams and Philanthropy
As I stated earlier about Tweet replies in the article, let’s now understand how you can get scammed through fake philanthropy on Twitter. There’s actually more fake philanthropy going on Twitter than there is genuine philanthropy.
In fact, it’s very easy to get scammed out of money on Twitter. This specific scam isn’t what the top philanthropy accounts are using, however. Instead, they use the model described above, which is nearly as seedy. With that, let’s look at how fake philanthropy accounts on Twitter attempt to part you from your money so they can sip champagne on a beach.
This next philanthropy scam is bait and switch and it’s the primary way they scam you. How this one works is that you’ll see someone Tweet replying they’re willing to give you money and all they need is your CashApp tag sent to them over a direct message (DM). You then give it to them. Seems harmless enough, right?
The Scam Begins
Over the DM area, they’ll start by asking you a lot of seemingly personal questions. If you pass all of these probing questions, they’ll explain to you that their CashApp app is broken and that they can’t use it. They’ll tell you they need to switch to using PayPal. Here’s where the scam actually begins. Any philanthropy person who switches the payment method sets up a HUGE RED 🚩. Don’t fall for this. If the person can’t use CashApp, which enticed you in, to send you the money, walk away. CashApp can be used by anyone and it can be set up quickly. Any excuse someone gives for not using CashApp is fake.
When they switch to using PayPal, they can then claim to need you to send them money to cover fees or other such nonsense to complete the PayPal cash transfer. In that goal, they’ll issue you an invoice to pay. This is the scam. First, PayPal doesn’t need money to complete a cash transfer. Anyone making this claim is scamming you. Second, you shouldn’t need to pay any money to get money. If they can legitimately pay you, they will pay you no strings attached. Third, remember that they roped you in by offering the use of CashApp, then inexplicably switched to PayPal (bait and switch).
Anyone who can legitimately pay you money can do so using CashApp. There is no need to switch to another service. You can read more about PayPal scams here, and there are plenty more just like this one.
Screenshots
To attempt to trick you further by making themselves seem legit, they will send over a screenshot showing that they paid someone else money. A screen shot is EASILY faked, let alone found on the Internet. There’s no way to verify that any screenshot they send you is in any way linked to them (or even legitimate). In other words, screenshots are not proof of anything, let alone of being charitable.
If the person is legitimate, they will send you the money without asking you for anything in return. If they ask for anything in return, it’s a scam.
Uncomfortable Questions
Other behaviors they might exhibit is asking a series of deep probing questions you might not feel comfortable answering. Specifically, question like what bank you are using, what credit card companies you have, and so on. That’s none of their business. If they’re willing to send you money under philanthropy, they don’t need any of this information. If they begin asking probing questions like social security numbers, birth dates, actual account numbers or any other deep personal information, this has the hallmark of scam all over it. Remind them that the CashApp tag is all they need to send over money. If they can’t do this simple one thing, then they’re not legitimate.
Philanthropy should be about the good in giving, not finding out as many personal details about a person as possible. If someone begins asking very deep diving personal questions about you, your location and your finances, walk away. Explain to them that they don’t need that information to be charitable. If their charity relies on this information, they can find someone else.
Chances are, the reason they are asking these personal questions is to not only scam you, but take the rest of your accounts for a ride.
The Dark Side of Twitter Philanthropy
Yes, there is actually an extremely dark side to Twitter philanthropy which has now been exposed showing just how dark it can get. No, Twitter philanthropy is not all roses, as some adamantly claim.
For a moment, let’s suppose you do win the philanthropy lottery. Let me ask you this simple question. As a recipient of that supposed good will money, do you really want to accept that money not really knowing if someone behind that philanthropy account scammed another to give you that money?
Yeah, I wouldn’t want to either. Money can be helpful, but not at the cost of someone else being scammed out of it. Be careful and tread lightly when following any Twitter philanthropy accounts. Keep your guard up and watch out for people on Twitter claiming to be altrustic do-gooders. In these especially hard times, don’t fall for fake altruism. If you are really in need of money, head over to GoFundMe and plead your own case with your money raising efforts. The money you raise at GoFundMe will be yours without such underlying strings. If you’re putting your hand out towards someone else’s wallet, particularly on Twitter, expect the worst in people.
In fact, let me point you to this exposé article describing one particular philanthropy account on Twitter. This article is a bit disjointed of a read, but if you can follow it, you will better understand this very dark and seedy side of Twitter Philanthropy in excruciating detail.
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What’s wrong with Quora?
You might be asking, “What is Quora?” We’ll get into that soon enough. Let’s explore the problems with Quora.
Questions and Answers
Before we get into Quora, let’s start by talking about Google. Many people seek answers from Google for many different questions. In fact, questions are the number one use for Google. You don’t go to Google to seek answers you already know. You go there to search (or question) things you don’t know. Such questions might include:
- Where can I buy a toaster?
- How long do I bake a chicken?
- How do I make Quesadillas?
- What’s the value of my 1974 Pontiac T-Bird?
These are full text questions. And yes, Google does support asking questions in long form such as these above. You can also search Google by using short key words, such as “toastmaster toaster” or “pontiac t-bird” (no, you don’t even need to use the proper case).
These short form questions are solely for use at search engines. When seeking answers to long form questions both Google and other sites can offer responses to your questions. One such site is Quora. Another is Yahoo Answers (a much older platform). Even Google got in on this action with Google Questions and Answers.
Quora
Quora is a recent incarnation of the older Yahoo Answers platform. Even before Yahoo Answers, there was Ask Jeeves. Even Epinions, a product review site (defunct as of 2018), had many answers to many questions. Epinions, in fact, opens a bigger discussion around site closures and content… but that’s a discussion for another article.
The real question (ahem) is whether sites like Yahoo Answers and Quora provide valuable answers or whether they simply usurp Google’s ability to answer questions in more trusted ways. I’m on the fence as to this question’s answer. Let me explain more about Quora to understand why I feel this way.
Quora is a crowdsourced product. By that I mean that both questions and answers are driven by crowds of subscribers. Not by Quora staff or, indeed, Quora at all. Unlike Wikipedia which has many volunteers who constantly proof, correct and improve articles to make Wikipedia a trustworthy information source, Quora offers nothing but the weakest of moderation. In fact, the only moderation Quora offers is both removal of answers and banning of accounts.
Quora has no live people out there reviewing questions and answers for either grammar and mechanics, nor trustworthiness. No one questions whether an answer is valid, useful or indeed even correct. Quora doesn’t even require its answer authors to cite sources or in any way validate what they have written. In fact, Quora’s moderation system is so broken that when answer authors do cite sources, their answer might be flagged and removed as ‘spam’. Yes, the very inclusion of web site links can and will cause answers to be marked as spam and removed from the site. Quora’s insane rationale is that if there’s a web link, it must be pointing to a site owned by the answer author and in which the answer author is attempting to advertise. This stupid and undermining rationale is applied by bots who neither read the content they review nor do they understand that the answer author can’t possibly own Wikipedia.com, Amazon.com or eBay.com.
Indeed, Quora’s moderation is so bare bones basic and broken, it undermines Quora’s own trustworthiness so much so that when you read an answer on Quora, you must always question the answer author’s reputation. Even then, because Quora’s verification and reputation system is non-existent, you can never know if the person is who they say they are. But, this is just the tip of the troubles at Quora.
Quora’s Real Problems
Trustworthiness is something every information site must address. It must address it in concrete and useful ways, ways that subscribers can easily get really fast. Wikipedia has addressed its trust issues by a fleet of moderators who constantly comb Wikipedia and who question every article and every statement in each article. Even with a fleet of moderators, incorrect information can creep in. Within a day or two, that information will either be corrected or removed. Wikipedia has very stringent rules around the addition and verification of information.
Twitter offers a verification system so that celebrities and people of note can send information to Twitter to verify who they say they are to Twitter staff. You’ll notice these as little blue check mark’s by the Twitter subscriber’s name. These check marks validate the person as legitimate and not a fake.
Quora, on the other hand, has no such rules or validation systems at all. In fact, Quora’s terms of service are all primarily designed around “behaving nicely” with no rules around validation of content or of authors. Indeed, Quora offers no terms that address trust or truth of the information provided. Far too many times, authors use Quora as a way of writing fanciful fiction. Worse, Quora does nothing to address this problem. They’re too worried about “spam” links than about whether an answer to a question is valid or trustworthy.
Yet, Quora continually usurps Google’s search by placing its questions (and answers implicitly) at the top of the search results. I question the value in Quora for this. It’s fine if Quora’s answers appear in search towards the bottom of the page, but they should NEVER appear at the number 1 position. This is primarily a Google problem. That Google chooses to promote untrustworthy sites at the top of its search results is something that Google most definitely needs to address. Sure, it is a problem for Quora, but it’s likewise a problem for Google.
Google purports to want to maintain “safety” and “trustworthiness” in its search by not leading you to malicious sites and by, instead, leading you to trustworthy sites. Yet, it plops Quora’s sometimes malicious answers at the top of its search results. Google needs to begin rating sites for trustworthiness and it should then push search results to appropriate levels based on that level of trust. Google needs to insist that sites like Quora, which provide consumers with actionable information, must maintain a certain level of trust to maintain high search rankings. Quora having its question results appear in the top 3 positions of the first page of Google search based entirely on weak trustworthiness is completely problematic.
Wikipedia strives to make its site trustworthy… that what you read is, indeed, valuable, valid and truthful information. Quora, on the other hand, makes absolutely no effort to ensure its answers are valid, trustworthy or, indeed, even truthful. You could ask Google for the answer to a question. You might see Quora’s results at the top of Google’s results and click it. Google placing such sites in the top 3 positions implies an automatic level of trust. That the sites that appear in the first 3 results are there because they ARE trustworthy. This implicit trust is entirely misplaced. Google doesn’t, in fact, place sites in the top of its search because they are trustworthy. It places them there because of “popularity”.
You simply can’t jump to this “trustworthiness” conclusion when viewing Google search results. The only thing you can glean from a site appearing in Google results is that it is not going to infect your computer with a virus. Otherwise, Google places any site at the top of its ranking when Google decides to rank in that position. As I said, you should never read any implicit level of trust into sites which appear in the first 3 positions of Google search. Quora proves this out. Quora’s entire lack of trustworthiness of information means that Google is not, in any way, looking out for your best interests. They are looking out for Quora, not you. Quora’s questions sometimes even rank higher than Wikipedia.
Quora’s Answers
With that said, let’s delve deeper into the problem with Quora’s answers. If you’ve ever written an answer on Quora, then you’ll fully understand what I’m about to say. Quora’s terms of service are, in fact, counter to producing trustworthy answers. Unlike news sites like CNN, The Washington Post and the L.A. Times, where journalistic integrity is the key driving force, Quora ensures none of this. Sure, Quora’s answer editor tool does offer the ability to insert quotes and references, but doing so can easily mark your answer as ‘spam’.
In fact, I’ve had 2 or 3 year old Quora answers marked as ‘spam’ and removed from view because of the inclusion of a link to an external and reputable web site. Quora cites violation of terms for this when, in fact, no such violation exists. The author is then required to spend time appealing this “decision”.
Instead, its bots will remove reviews from its site based entirely upon reports by users. If a user doesn’t like the answer, they can report the answer and a Quora review bot will then take the answer down and place it under moderation appeal. There is no manual review by actual Quora staff to check the bot’s work. This work is all done by robots. Robots that can be gamed and sabotaged by irate, irrational, upset users who have a vendetta against other Quorans.
The answer takedowns are never in the interest of trust or making Quora more trustworthy, but are always in the interest of siding with the reporting user who has a vendetta or is simply insane. Users have even learned that they can game Quora’s robots to have answers removed without valid reasons or, indeed, no reasons at all. There’s no check and balance with the moderation robots or takedown requests. Quora receives a report, the answer is summarily removed.
Unfortunately, this is the tip of a much larger Quora iceberg. Let’s continue.
Which is more important, the question or the answer?
All of the above leads to an even bigger problem. Instead of Quora spending its development time attempting to shore up its level of site trust, it instead spends its time creating questionable programs like the Partner Program. A program that, in one idea, sums up everything wrong with Quora.
What is the Partner Program? I’ll get to that in a moment. What the Partner Program ultimately is to Quora is an albatross. Or, more specifically, it will likely become Quora’s downfall. This program solidifies everything I’ve said above and, simultaneously, illustrates Quora’s lack of understanding of its very own platform. Quora doesn’t “get” why a question and answer platform is important.
Which is more important to Quora? They answered this question (ha, see what I did there?) by making the question more important than the answer.
That’s right. The Partner Program rewards people monetarily who ask questions, NOT by rewarding the people who spend the lion’s share of their time writing thoughtful, truthful, trustworthy answers. In effect, Quora has told answer authors that their answers don’t matter. You can write a two sentence answer and it would make no difference. Yes, let’s reward the people who spend 5 minutes writing a 5-10 word sentence… not the people who spend an hour or two crafting trustworthy answers. And this is Quora’s problem in a nutshell.
Worse, it’s not the questions that draw people in to Quora. Yes, the question may be the ‘search terms’, but it’s not why people end up on Quora. The question leads people in, it’s the ANSWER that keeps them there. It’s the answers that people spend their time reading, not the questions.
This is the iceberg that Quora doesn’t get nor do they even understand. The questions are stubs. The questions are merely the arrow pointing the way. It’s not the end, it’s the beginning. The questions are not the reason people visit Quora.
By producing the Partner Program, Quora has flipped the answer authors the proverbial middle finger.
If you’re a Quora answer author, you should definitely consider the Partner Program as insulting. Quora has effectively told the answer authors, “Your answers are worthless. Only questions have monetary value.” Yes, let’s reward the question writers who’ve spent perhaps less than 5 minutes devising a sentence. Let’s completely ignore the answer authors who have spent sometimes hours or days crafting their words, researching those words for clarity and truthfulness and ensuring trust in each detailed answer.
It’s not the questions that draw people in, Quora staff. People visit Quora for the answers. Without thoughtful answers, there is absolutely no reason to visit Quora.
Indeed, Quora’s thinking is completely backasswards, foolish and clownish. It shows just how much a clown outfit Quora really is. Seriously, placing value on the questions at the expense of answer authors who spend hours crafting detailed answers is the very definition of clownish. That situation would be synonymous to The Washington Post or The New York Times valuing and paying readers to leave comments and then asking their journalists to spend their own time and money writing and researching their articles, only to give the article to the newspaper for free. How many journalists would have ever become journalists knowing this business model?
Qlowns
Whomever at Quora dreamed up this clownish idea should be summarily walked to the door. Dissing and dismissing the very lifeblood of your site, the actual question authors, is just intensely one of the most stupid and insane things I’ve seen a site do in its life.
Not only is the very concept of the partner program qlownish, not only does it completely dissuade authors from participating in Quora, not only is it completely backwards thinking, not only does it reward question authors (which honestly makes no sense at all), this program does nothing to establish trust or indeed, does nothing to put forth any journalistic integrity.
Instead, Quora needs to ditch the question Partner Program and fast. It needs to quickly establish a system that not only rewards the best answer authors, it needs to enforce journalistic integrity on EVERY ANSWER. It needs to implement a validation system to ensure that authors are who they say they are. It needs to make certain that every answer author understands that they are in every real sense a ‘journalist’. And, as a journalist, they should uphold journalistic integrity. That integrity means properly researching sources and properly citing those sources. Yes, it’s a hassle, but it means that Quora’s answers will become trustworthy sources of information.
Right now, the answer authors are mostly random and low quality. In fact, most answers are of such low quality that you simply can’t trust anything found on Quora. Since Quora does not enforce any level of journalistic standards on the answers, there is no way anyone reading Quora should trust what any answer author writes. An answer may seem detailed, but in some cases they are pure fiction. No one at Quora ensures that answers in any way uphold any level of journalistic integrity (there’s that phrase again). It’s an important phrase when you’re writing something that people rely on.
Making a statement of fact for something that seems questionable needs to be cited with a source of reference. Show that at least one other reputable source agrees with your “facts”. That doesn’t mean that that “fact” is true. It’s easy for other reputable sites to be fooled by tricksters. This is why it’s important to cite several reputable sources which agree with your facts. I don’t want to dive deep into the topic of journalistic integrity or what it takes to validate sources, so I’ll leave this one here. This article is about Quora’s inability to uphold journalistic integrity.
Quora’s Backward Thinking
Indeed, the Partner Program’s existence confirms that Quora’s site importance is the opposite of journalistic integrity. Quora’s team values only the questions and the question writers. They do not, in any way, value the journalistic integrity required to write a solid, trustworthy answer. Questions are mere tools. They do not at all imply any level of trust. Here’s another analogy that might make more sense.
A question is simply the key to open a lock. A key is a tool and nothing more. You pay for the lock and key together. You don’t pay only for a key. Paying for a key without a lock means you don’t value (or indeed) even need a lock. You can’t lock anything with only a key. The two are a pair and they both go hand-in-hand. If you lose the key, you can’t open the lock. If you lose the lock, they key has no value. However, it’s easier and cheaper to replace a key than it is to replace the lock. This shows you the value of a ‘key’ alone.
Because Quora chooses to place value only the key and not on the lock, they have entirely lost the ability to protect Quora’s reputation and credibility. Indeed, Quora’s credibility was already in jeopardy before the Partner Program was even a twinkle in someone’s eye. With the Partner Program, Quora has solidified its lack of credibility. Quora has officially demonstrated that it is committed to valuing and paying only for keys and never paying for locks to go with those keys. That means the locks will be the weakest, most flimsiest pieces of junk to ever exist… indeed, the locks won’t even exist.
When you’re trying to secure something, you want the strongest, most durable, most rugged, most secure lock you can afford. You don’t care about the key other than as a the means of opening and securing a lock. Sure, you want the key to be durable and rugged, but a key is a key. There’s nothing so magical about a key that you’d be willing the shell out big bucks solely for a key. You always expect a lock and key to go together. You expect to buy both and you expect them both to work as a cohesive whole. If the key fails, the lock is worthless. If the lock is breakable, then the key is worthless. A lock and key are the very definition of a synergistic relationship. In the lock and key relationship, both have equal importance to the relationship. However, the lock itself is viewed by most people as the most important piece. Locks, however, become unimportant if they can’t secure the belongings they are entrusted to protect. Yes, you do need both the key and the lock for the system to function as a whole.
Likewise, Quora needs both the question and answer to function as a cohesive whole. In the synergistic relationship between the question and an answer, neither is more important in this synergy. Of the two, however, like the lock mechanism, the answer is the most important to the end user because it is what imparts the most information to the reader. It is what must be trustworthy. It is what must contain the information needed to answer the question. The question then holds the same functionality as a key. In fact, it is very much considered a key to Google. That’s why they’re called ‘keywords’ or ‘key phrases’. Using the word ‘key’ when in relation to a search engine is intended to be very much synonymous with a real life key you attach to a key ring. A keyword unlocks the data you need.
Valuing both the Lock and Key
Quora needs a rethink. If there’s any value to be held on data, both the key and the lock, or more specifically the question and answer, need to be valued as a cohesive whole. If you value the question, then you must also value the answer(s). This means revenue sharing. The question author will then receive the equivalent % of revenue that each answer author receives based on work involved. Since a sentence might take you 5 minutes to write and requires no trustworthiness at all, the maximum value a question author might receive would be no more than 10%. The remaining 90% of the revenue would be issued to the answer authors based on traffic driven to the site.
Let’s say that $100 in revenue is driven to that Q&A for the first month. $10 is given to the question asker… always 10% of total revenue. That’s probably a little on the high side, but the question asker did kick the whole process off.
Now, let’s say 3 answers are submitted for the question. Let’s assume all 3 answer authors are participating in the revenue program. The remaining $90 is then spread among the 3 answer authors based on total views. Likes might pump up the percentage by a small percentage. If one answer is fully detailed and receives 2.5k views in 30 days and the remaining two answers receive 500 views each, then the 2.5k views answer author would receive at least 72% of the remaining revenue (2.5k + 1k = 3.5k). 2.5k is ~72% of 3.5k. This means this author would receive 72% of the remaining $90 or a total of $65. The remaining $15 would be split between the other two authors. The more participating authors, the less money to go around per answer. Questions that receive perhaps 200 answers might see only a few dollars of revenue per author.
There must also be some guidelines around answers for this to work. Answer authors must be invited to participate in the program. If the answer author isn’t invited and hasn’t agreed to terms, no revenue is shared. Also, one word, one sentence and off-topic answers disqualify the answer from sharing in revenue. Additionally, to remain in the revenue program, the answer author must agree to write solid, on-topic, properly structured, fully researched and cited answers. If an invited author attempts to game the system by producing inappropriate answers to gain revenue, the author will be disqualified from the program with any further ability to participate. Basically, you risk involvement in the revenue sharing by attempting to game it.
This math incentivizes not only quality questions, but also quality answers. The better an answer is, the more views it is likely to receive. More views means more revenue. The better and clearer the answer, the more likely the author is to not only be asked to participate in the revenue sharing program, the more likely they are to receive a higher share of that revenue. The best answers should always be awarded the highest amounts of revenue possible.
Google vs Quora
As I postulated early in the article, does Quora actually hold any value as a site or does it merely usurp Google’s search results? This is a very good question, one that doesn’t have a definitive answer. For me, I find that Quora’s current answers range from occasionally and rarely very high quality to, mostly, junky worthless answers. This junky aspect of Quora leads me towards Quora being a Google usurper. In other words, most of Quora’s results in Google are trash clogging up the search results. They shouldn’t be there.
Unfortunately, Google returns all results in a search whether high or low quality. Google does offer some limited protection mechanisms to prevent malicious sites from appearing in results. But, Google’s definition of the word ‘malicious’ can be different than mine in many cases. Simply because someone can put up a web site with random information doesn’t automatically make that site valuable. Value comes from continually providing high quality information on an ongoing basis… the very definition of professional journalism. Now we’re back to journalistic integrity. We’ve come full circle.
Unfortunately, because of Quora’s lack of insistence on journalistic integrity, I find Quora to be nothing more than a mere novelty… no better than TMZ or the National Enquirer. I’m not saying TMZ doesn’t have journalists. They do. But, a rag is always a rag. Any newspaper dishing dirt on people I always consider the bottom feeders of journalism… the very dreckiest of tabloid journalism. This type of journalism is the kind of trash that has kept the National Enquirer and other tabloids in business for many, many years. It’s sensational journalism at its finest (or worst). Sure, these writers might aspire to be true journalists some day, but they’ll never find reputable journalistic employment dishing dirt on celebrities or fabricating fiction (unless they begin writing fiction novels).
Unfortunately, many of Quora’s answers fall well below even the standards established by the dreckiest of tabloids. The one and only one thing tabloids and Quora have in common is fiction. Unfortunately, the fiction on Quora isn’t even that entertaining. It’s occasionally amusing, but most of it is tedious and cliché at its most common. Think of the worst movie you’ve watched, then realize that most of these Quora fiction “stories” are even less entertaining than that. There may be a few gems here and there (probably written by professional writers simply exercising their chops on Quora), but most of it is not worth reading.
Worse, the trust level of what’s written is so low (regardless of purported “credentials”), there’s nothing on Quora worth extending a level of trust. Reading Quora for sheer entertainment value, perhaps that can be justified a little. Even then, most answers fall way short of having even entertainment value. Even the worst YouTube videos have more entertainment value. Full levels of trust? No way. Quora has in no way earned that.
Seeking Answers
Yes, we all need questions answered, occasionally. We all need to seek advice, occasionally. Yes, I’m even seeking to answer the question, “What’s wrong with Quora?” Of course, don’t expect to read any answers like THIS on Quora. Oh, no no no. Quora is very, very diligent at removing anything it deems to be anti-Quora in sentiment, such at this article. Anyway, if you choose to seek out Quora for this kind of information, Quora’s immediate problems now become your problems. Considering all of the above, Quora is probably one of the worst ways of getting information. Not only can you be easily deceived by an answer author, you can be taken for a ride down Scam Lane. Trust advice from Quora with the same level of skepticism as you would from a 6 year old child. I’m not saying there are 6 year old children on Quora, but Quora certainly acts like one. Seeking Quora for advice means you could, in fact, be taking advice from 13 year old via a Barbie encrusted iPad.
Should I write for Quora?
I’m sure this is the question you are now contemplating after having read this article. This is a question that only you can answer. However, let me leave you with these thoughts. When you write answers for Quora under the current Partner Program, you are doing so for free. Yet, question authors are being paid for YOUR effort, answer and research. You spend the time, THEY get the dime. It’s an entirely unfair arrangement.
To answer this question more definitively… I personally won’t write any future answers for Quora. Quora currently relies on each answer author’s thoughtful, researched answers to make its a success (and bring in ad dollars). If you do not like this turn of events with the Partner Program, say, “NO” and do not write for Quora.
If enough answer authors stop 🛑 writing for Quora, the questions writers can’t and won’t be paid. This will have Quora scrambling for a new fairer equity system. If you are just as disgusted by Quora’s Partner Program as I am, then walk way from Quora and no longer write answers. I have stopped writing answers and will no longer write any further answers for the site until they come to their senses and compensate both question writers and answer authors equally in a profit sharing arrangement.
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Disney Vacation on a Limited Budget
Is it possible to plan a budget vacation to a Disney theme park? That’s what this article intends to determine. Let’s explore.
Vacation Costs
Your primary costs for any Disney vacation include the following:
- Airfare
- Hotel
- Transportation
- Park Tickets
- Food
- Souvenirs
- Incidentals
Airfare, Hotel and Transportation
These costs can be negotiated at the time you book your vacation package. If you purchase these together as a bundle, you can save substantially booking them together. You can also get additional discounts if you utilize AAA or AARP at the time of your booking. You may see better discounts by booking off-season.
If you’re planning to rely on Disney transportation throughout the trip, ensure that your hotel is within walking distance of this transportation or that the hotel offers a shuttle to and from Disney. Any hotel near to Disney is likely to offer a shuttle, but be sure to call the hotel in advance to verify that they offer a shuttle and how often the shuttle runs. You should also confirm how long it will take to get from the hotel to Disney to plan timings. If your hotel is 30 or more minutes away from the Disney by driving, you may want to consider a somewhat closer hotel, but that may cost more money. I always recommend staying as close to the park as you can afford.
Don’t assume that using Disney’s vacation booking system will get you the best pricing. If you have AAA or AARP or Costco or Sam’s Club membership, you should try booking your vacation through their vacation site then compare it to Disney’s vacation booking system. Also compare it to other services like Expedia, Travelocity, Hotels.com, Hotwire and Priceline. You may even be able to insert your AAA or AARP membership number into many of these sites to receive discounts. You should check all of these sites to see what your best cost is.
You can save on airfare if you drive and save on hotel and airfare if you drive a recreational vehicle (RV). See camping below.
Park Tickets
Tickets to any Disney park are a fixed cost. You’ll pay whatever Disney is currently charging for the calendar year you plan to attend. However, you may be eligible for discounts on tickets if you buy them in advance through vacation booking sites like AAA or AARP. Always plan to buy your park tickets in advance rather than at the gate. Purchasing tickets at the gate will cost the most money… so buy them in advance.
However, Disney is constantly changing its arrangements with these membership services. You should always check these membership services when you plan to book your vacation to determine if these sites still offer the most effective discount tickets.
With all of that said, if you have a family of four and you’re wanting to buy 5 days of park access, you should expect to spend over $1200 for four 5 day base passes. AAA typically offers up to a 10% discount which might save you up to $120 on that $1200. A base pass will allow you to enter one park per day. If you want to hop between parks during the same day, you will need to add the Park Hopper option to each ticket (about $100 additional per ticket on each 5 day pass at Disney World). Note, prices are somewhat cheaper for children under 10. To save money, you’ll want to skip the park hopper option and simply plan one park per day. This is the best option anyway because trying to move around between the parks in the same day consumes a lot of time that you could be using at a park.
The Park Hopper option only works between Disney parks including (Florida) Magic Kingdom, Epcot, Hollywood Studios and Animal Kingdom and (California) Disneyland and California Adventure. If you want to visit Universal Studios, Busch Gardens, Knott’s Berry Farm or any other non-Disney parks, you’ll need to pay for access to these separately. You’ll want to plan for access and transportation to any non-Disney parks as part of your budget planning.
Food
Save on food costs by stocking your hotel fridge with sandwich ingredients. You can then make sandwiches to bring with you to the park rather than spending for meals inside the park. A park meal might cost $10-15 where a sandwich and water might cost you $1-2. You can save a lot if you make your own food and bring it with you or leave the park for lunch at the hotel and come back later.
Souvenirs
If you want to buy souvenirs, then you’ll need to budget for them. T-shirts, for example, usually start around $20 and go up from there inside the park. Instead, I might suggest asking the concierge at your hotel if the hotel’s shuttle can drive you to local businesses in the area, like a close Target or Walmart. Because these shops are close to Disney, they likely have a better selection of Disney souvenir merchandise than stores outside the area. These stores know that Disney park stores are expensive and that shoppers will, instead, frequent the close proximity stores looking for better prices on souvenirs. Take advantage of these lower prices at places like Target and Walmart.
Visit these local stores outside the park to buy souvenirs. Sure, you didn’t get it in the park, but you did get it while you were on vacation. The souvenir still counts as a souvenir. There’s absolutely nothing wrong with budget shopping at local retail businesses near the park to save on souvenir costs.
Incidentals
Try to bring as many incidentals with you as you can to save money. These include items like:
- SPF lotion
- Hats
- Coats
- Batteries (bring rechargeables and charger)
- Sunglasses
- First Aid Kit
- Camera
- Medicine (i.e., Pain Reliever, Imodium, Antacid, Cough Medicine, Prescriptions, etc)
- Chapstick
- Phone charger and cable(s)
- Computer power cable
- Power bank for phone charging
- Misting fans / cooling devices
- Bug Repellant
- Towels
- Reading Glasses
If you have to locate any of these items inside or outside of the park, you’re likely to pay more than you expect and paying for these will kill your vacation budget in the process. Shove as many of these into your suitcase and bring them with you to the hotel and into the park as needed.
Choose your Park destination
You can save some pennies by choosing your Disney vacation destination wisely. Many people automatically assume Disney World for their Disney vacation. If you must visit Epcot or Animal Kingdom, then Florida is your only choice. However, Disneyland exists in Anaheim, California and it’s not as captive as Florida. It can also save you some pennies depending on where you live. Southern California offers many options which are as much fun as seeing Disney World. With Southern California, you also have the option of not only the Disney parks, but non-Disney parks, Hollywood tours and the local sights (i.e., Hollywood Walk of Fame).
Choosing Disneyland in addition to all of the parks that Disney offers (i.e., Downtown Disney and California Adventure), non-Disney parks include Knott’s Berry Farm, Universal Studios and if you’re willing to drive a bit, Great America and Six Flags Magic Mountain. Of course, Universal Studios also exists in Florida, but also requires driving. Tickets to Disneyland are a bit less expensive than Disney World because there are less available parks (Disneyland, Downtown Disney and California Adventure). You want to consider this option to reduce costs in your vacation planning.
Choose your hotel carefully
It’s very tempting to stay in the Disney resort hotels. However, these can be very pricey whether in Florida or California. Consider how much time you plan to spend in the hotel room and on the hotel property. If you plan to visit the park the majority of the time, then you’ll be out and away from the hotel property. The only thing the hotel is good for then is sleeping at the end of the day. Unless you plan to spend a day or more to take advantage of the resort amenities, staying at a resort hotel is an unnecessary extra expense. Instead, choose a less expensive standard hotel with fewer amenities. This can save you money that you can put towards food, souvenirs or transportation.
Plan out your park visit
If you plan your park schedule in advance, this can help minimize your expenses. For example, if you bring your own food to the park, you can eat that instead of spending for expensive in-park dining. If your hotel is close enough, you can always take a break, head back to the hotel and eat food there. Many hotels offer both fridges and microwaves (usually on request). You can head to a supermarket and stock the fridge with sandwich fixings for the duration of your stay. Making your own food in the hotel room is the least expensive way to eat food that’s healthier and reduce your expenses. If you visit one park per day, you can save on ticket costs and reduce transportation expenses.
If you do decide to dine at a restaurant in Disney, expect to spend more than you might think. Disney’s dining experiences aren’t inexpensive affairs. You’ll also want to make sure to make reservations in advance. You don’t want to arrive at the restaurant and have to wait and hour or two just to get a table. Reservations save you a lot of time… time that you can better use in the park and get the most out of your tickets. To save the most on food expenses, head to a local grocery store and stock the fridge at your hotel and eat your meals there.
If your hotel offers free continental breakfast or a free breakfast buffet, take advantage of this food and eat breakfast there.
Breakfast with the Characters
If you want to spend a little money on food, this is one of the better ways to do it, particularly when you are with children. You can buy Breakfast in the Park with Minnie and friends. This breakfast experience, while tremendous fun for the kids, can cost between $20 to $40 per person. This breakfast experience alone does not allow you to take advantage of the 1 hour early park opening. You will have to buy the Magic Morning option separately. The Minnie and friends breakfast offers usually around 8 different characters who will interact with you while eating breakfast.
Extra Magic Hour / Magic Morning
One of the perks for staying at a Disney resort hotel is that you automatically get the Extra Magic Hour included with your stay. This means you can enter the park one hour early in the morning and take advantage of select stores and attractions. If you don’t stay at a Disney resort hotel, you can buy the Magic Morning option for each 3+ multi-day ticket. Magic Morning and Extra Magic Hour are available at both Disneyland and Disney World parks. You’ll need to consult the current schedule at the park to determine which parks open early on which days as the early openings change based on the day of the week. If you choose to stay in a Disney resort hotel to obtain the Extra Magic Hour benefit, you will want to call the hotel and confirm that your stay includes this option. Don’t just assume that it does.
When planning your visit in advance and you intend to take advantage of the early park opening, always confirm which park is open on what day so you can plan to visit that park on that day. This is especially important if you’re intending to visit one park per day to avoid the park hopper charge.
Take a Break
There’s always lots to see and do at any Disney park, but it gets tiring walking around the park and standing in lines. When it reaches the hottest part of the day, you’ll want to take a break and head back to the hotel for a few hours to cool off. If you’re at a resort hotel, you can use this time to take a swim, relax in the room or take advantage of other hotel amenities. This lets the heat pass and gives you time to energy up for the evening hours. It also gives you some time to catch late lunch or early dinner and avoid paying in-park food expenses. Taking a break is the best way to enjoy the park.
Carry a water bottle, bag and medicine
You’ll want to take a water bottle and a small bag with you into the park for keys, phone, medicine and flavoring powders. It’s easy to get ice and water from a restaurant to fill your bottle. Then, flavor the water with a flavoring packet you have with you. This saves on buying expensive sodas and drinks in the park. These flavoring powders are packed in small packets which are easily stored in a small bag. Because the packets are so small, you can carry a lot of them. You can sometimes find soda water and make your own soda with a flavoring packet.
You’ll also want to carry a small amount of medicine like Tylenol or other pain relievers, antacid and diarrhea medicine. If you realize you need these while in the park, you’re going to pay a lot to buy a tiny single dose container that may not be a brand you like or be effective. Instead, carry your favorite medicines with you in your luggage when you travel. If you buy your favorite brand medicine before you depart, you can be sure to get the best deals and use brands familiar to you. Having this medicine with you in the park, you’re prepared if your favorite ride jostles you around just a little too much or a food you consume doesn’t sit well. If you or your child has the possibility of anaphylactic allergies, be sure to carry at least one Epipen with you into the park. I’d also recommend avoiding eating foods made in the parks to avoid accidental exposure.
It’s always best to buy your medicines in advance of travel because it’s the least expensive way to get them. And, you may already have them in your cabinet at home which will save you money buying medicine in the park, at the hotel or at a local pharmacy.
Shop Around
Before buying souvenirs willy-nilly inside or outside of the park, shop the stores and see what you like. Visit as many stores as you can in the park, then outside of it. Compare prices and buy the souvenirs that fit within your budget. Keep in mind that the stores in the park carry items that you typically can’t find anywhere else. In fact, Disneyland has merchandise exclusives branded to Disneyland. Disney World has merchandise exclusive to Disney World. You won’t find any Disney World merchandise in Disneyland and vice versa. You’ll want to weigh this when you visit the stores and when planning your vacation. If you plan to buy in-park souvenirs, you’ll want to set a maximum limit to spend. Your souvenir budget is likely to stretch farther if you’re willing to buy items at discount stores outside of the park.
Keep a list or take pictures of merchandise+prices you might want. If you take pictures, you can remember both the style and price when you go looking for a similar item at Target or Walmart close to the park. For items like small pins or buttons, you likely won’t find these outside the park. You’ll want to buy them at the store in the park. For T-Shirts or other clothing items, these are usually cheaper outside the park.
Laundry Facilities
When you’re staying for 5 or more days, you’ll probably need to do laundry at some point. Many hotels offer full laundry service. You’ll want to ask the hotel if they have a self-service laundry room. This can save you money instead of using the hotel’s much more expensive full service laundry. If you can plan your hotel stay at a hotel with a self-service laundry room (call and ask before you make the reservation), you can save money by doing your own laundry. You’ll just need to pick up a small container of laundry soap or carry some with you in your luggage.
First Aid Kit
Bring a small first aid kit with you that contains adhesive bandages, antibiotic ointment and cleaning wipes at a minimum. It doesn’t have to be anything fancy. You can shove these into a small zipper lock bag which fits easily into luggage. If someone in your party is scraped or cut while in the park, you can visit the first aid center, but you’ll also want to take care of it when you get back to the hotel. I’d suggest carrying a few bandages and ointment to the bag you carry with you, but it’s not strictly necessary as the park’s first aid center can help you take care of it right away. It may take some walking to get to it. I can be faster to take care of if you have bandages and ointment with you. If you need to locate a first aid kit while on vacation, it will dig into your budget if you end up at the hotel’s gift shop or, worse, you end up at some all night drug store because nothing else is open.
SPF Lotion
Bring this with you in your luggage. Not only can it be difficult to locate a quality brand in the park, it’s likely to be very expensive for a tiny bottle. You’ll want to carry a small TSA authorized and sized container with you. This allows you to carry it into the park and also carry it on a plane. This likely means transferring some of the lotion from the original container to a TSA sized container. Be sure to label what it is. If you have to go shopping for this later, this will eat into your budget. SPF lotions are not always inexpensive even at the best of times. If you have sensitive skin and need a specific brand, be sure to carry this with you as you may not be able to find the brand you use at your vacation destination.
Hats and Sunglasses
This should go without saying, but bring your hats and sunglasses with you from home. This will save your vacation budget. Of course, if you’re looking for a souvenir hat, then fine. Sunglasses won’t be cheap inside the park. If you can get to a Target or Walmart, you can likely buy a cheap pair. Again, that eats into your vacation budget. Save this money by bringing these items with you from home.
You’ll also want to keep your sunglasses on a string or take them off and hold or secure them inside the bag when riding rides. Same for hats. Hats and sunglasses tend to sprout wings and fly on rollercoasters. Be sure to hold onto them well. This also includes cell phones. If you can rent a locker before heading onto a rollercoaster, you can lock these items up to avoid losing them while riding. Though, you should always hold your cell phone in your hand tightly while riding. You shouldn’t leave your phone in a locker.
Phone charger, cable and power bank
If you know that your phone is likely to run out of power quickly, you’ll want to carry a fully charged power bank and charge cable in your bag (and in your luggage on your trip). If you forget to bring these items with you, you’ll pay $30 to Disney to get a power bank and cable. That’s $30 you could have used to help pay for dinner or a souvenir. Of course, you might be able to run to Best Buy or Target and pick one up for slightly less, but that’s still an expense you can avoid by bringing one with you. It also means you have to leave the park and go run errands, wasting time.
Yes, the TSA allows you to carry a power bank in your suitcase or carry on bag so long as it is inside of a bag that prevents accidental discharge. Purchasing a power bank or cable is one expense you’ll want to avoid.
You may be able to find power outlets inside of Disney to plug in your charger, but that means you’ll be sitting around waiting. If you have a power bank battery in your bag, you can charge your phone while you’re walking around the park. Be sure to remember to charge the power bank each night at the hotel. You’ll also want to have a battery that can charge your phone at least twice or carry two batteries.
Strollers
If you’re traveling with children who need a stroller, you are permitted to bring your own stroller as long as the stroller is less than 36″ x 52″ in size and is not a wagon. Wagons are not permitted. You can rent a stroller at the park, but these obviously cost money. If you’re trying to save on costs, plan to bring your own stroller with you. This means checking the stroller as checked baggage at the airport.
However, many airlines today are now charging for checked bags with fees up to $50. If the checked stroller cost ends up higher than the cost to rent a stroller, renting a stroller may be worth the expense at the park. For example, if you plan a 5 day trip to the park, your rental costs will be $65-75 depending on discounts. This is higher than $50 to check a bag. In this case, it’s worth it to bring your own from home. If your trip is 3 days in the park, then it might be less expensive to rent a stroller in the park.
If you simply don’t want the hassle of carrying a bulky stroller with you while traveling, then renting a stroller is your only option.
Fireworks Show
This tip isn’t really a money saver, but it does let you take better advantage of the money you spent on your tickets. Always take advantage of the fireworks display and other large crowd attention gathering shows (i.e., parades). You’ll want to watch the fireworks show once while you’re at the park. Skip the fireworks shows on the rest of the days. Instead, use this time to ride the long wait time rides.
Because the fireworks show is a huge crowd draw, many people leave the rides to go watch the show. This gives at least 30 minutes to make haste and ride some of the more popular rides like Space Mountain or Big Thunder Mountain. These line wait times can drop precipitously during the fireworks show. Take advantage of this. You can sometimes ride these popular rides more than once in that 30 minute period. You’ll want to find which rides have the longest wait times, then plan to visit these rides during the fireworks show each successive night.
Because this window of opportunity is 30 minutes with the fireworks, you’ll need to plan which rides in advance. For example, riding Space Mountain, then traversing half the park to ride a different ride could lose you 10-15 minutes in walking time. Try to keep your rides close together to maximize this 30 minutes of short lines.
Note that this window of opportunity isn’t always a sure thing. It all depends on how many people realize this drop in wait times and take advantage of it. If you’re in the park on Halloween or Christmas, for example, these are times when the park is excessively crowded. Waiting for fireworks on these nights may not reduce the wait times simply because the crowds are already excessive.
Also note that as soon as the fireworks end, the lines go right back to the length they were before it started.
FastPass
If visiting Disney World, Take advantage of FastPass to reserve times in advance on popular rides. Note that you don’t necessarily have to reserve times the day before. If you’re diligent enough on the phone app, you can sometimes find cancelled reservations that you can immediately take advantage of (within 15-45 minutes). You just need to keep polling the FastPass app looking for cancelations.
Unfortunately, FastPass requires adding the MaxPass option to your tickets which is at least $50 extra per ticket. FastPass is worth it if you intend to ride the most popular rides in the park. Otherwise, you can find yourself standing in line for several hours to ride… or you’ll have to wait for the fireworks show later in the evening and hope the wait times temporarily subside.
Note that FastPass works somewhat differently at Disneyland than at Disney World. You’ll need to download the app on your phone for Disneyland to use FastPass.
Costs
For any Disney vacation, you’ll have to expect to spend around $1200-$1500 for a family of 4 just on tickets. This is pretty much the same cost at Disneyland vs Disney World. Depending on your distance from California or Florida, your airfare may vary. If you live in California and travel to Disneyland, it will be less expensive than traveling from New York City to California. The hotel and airfare might knock you back an additional $1400 to $2500 depending on hotel, airline and time of year.
You’ll still need to plan for food, souvenirs and incidentals. This will probably be another $1000. Overall, expect to spend $2500-$5000 for a family of four not including food or incidentals for a 5 day vacation. Disney World will be slightly more costly than Disneyland. By slightly, I mean several hundred dollars more costly as Disney World ticket prices are higher and hotel costs seem a slightly higher in Florida than in California.
Can you visit a Disney park with less money? If you drive, you can save on airfare. If you have an RV, you can live in that and save on hotel costs. Driving an RV, you can save on both airfare and hotel fees, but you’ll need to pay for RV rental space. Having an RV can substantially reduce your travel and stay costs, but this also means having access to an RV. If you have to rent an RV, per day rental fees can be very similar to hotel room rates and an RV is much more cramped. You may not save much money by renting an RV. You also likely won’t want to use the RV around town, so you’ll need to rent a car when you get there adding to the costs of the vacation.
Camping
If you’re willing to rough it a bit when at Disney World, you can camp at Disney’s Fort Wilderness. You can check this page to determine the going campsite rates. The cheapest rate I’ve seen is $55 a night before tax. There may less expensive non-Disney RV parking and campsites available (i.e., state and national parks). Check Google for details. Parking off of Disney’s grounds means you’ll need to find your own transportation to and from the parks.
Camping near Disneyland is limited considering it’s in the middle of Anaheim, CA. There are several RV parks not far from Disneyland, but you’ll need to find your own transportation to and from the RV park and Disneyland.
RV Parking at the Parks
If you intend to also use your RV as your vehicle, RV parking is permitted at the all Disney World parking areas for a fee. This fee is higher than for a car. RV Parking is only permitted in the Toy Story parking area at Disneyland also at a higher fee. You’ll need to plan for this daily fee in your vacation budget if you want to use your RV to transport you to the park(s) each day.
Tips and Traps
This section is both about saving money and about not losing your money to scams. It’s pretty much common sense, but these are always worth saying.
Avoid Ticket Scams
Don’t buy your park tickets through eBay, Craigslist or other similar classified sites or sellers. Always use reputable sites authorized to sell tickets on behalf of the Disney parks. A few of these reputable sites include:
- Disney Direct Ticket Sales
- AAA travel
- Orlando’s Official Ticket Center (Florida parks only)
- Parksavers
- Costco Travel — Disney Vacations
- Southwest Airlines Disney Deals
- Undercover Tourist
- Your local travel agent
You may find some people claiming to sell partially used tickets. DO NOT buy these! Tickets, once used, are tied to an individual’s fingerprint and cannot be transferred. There’s no way for you to make use of a anyone else’s used ticket. Also, once a multi-day ticket is used, the clock is ticking. Multi-day tickets also expire 13 days after first use. Used ticket sales are always a scam. Don’t even consider this as an option.
However, if a ticket has never been used, these are valid tickets. The problem is, if you’re not buying the ticket from an authorized channel or from someone you absolutely trust, it’s very likely a scam. It’s easy to counterfeit e-tickets and paper tickets to look legitimate. You don’t want to get to the front gate and find out what you bought was counterfeit, then be stuck paying full price at the gate. Always buy through reputable booking services. Don’t get scammed by buying tickets from a classified ad or an individual.
Use your own camera
When in the park, take photos with your own camera. Don’t fall for Disney’s photographic services. Disney will always try to entice you into using their services to take pictures of you with the characters. This is a costly service. Simply ask a cast member to take the picture with your camera or phone.
For safety reasons, only ever ask a cast member with a name badge to take a photo with your camera. Never ask another guest whom you don’t know to handle your property. They can easily run off with your camera or phone and you’ll never see it again. In a place the size of Disney’s parks, you can’t trust anyone to hold your property. The only people in the Disney parks that you can trust to hold your property are cast members. Better, bring along a telescopic selfie stick and hold the camera yourself.
Carry only what you need
This goes back to carrying a small bag with you. If you carry a small zippered bag, you can contain everything you’ll need for a day at the park and not have to carry it in your hands. Because Disney crowds can be varied and large, avoid flashing money if you don’t have to. Also, a small bag allows you to stow your camera, hat and sunglasses when you ride rides. Be sure to secure your bag when you take it onto a ride or use a locker.
Go Cashless
If you have a MagicBand wristband (not available at Disneyland) or room card and you’re staying in a Disney resort hotel, you can charge purchases to your room. I’m not a big fan of doing this because you end up with a whopping bill to pay at the end of your stay. There’s also nothing available to allow you to budget your spending. However, you can go this route if you like. I already don’t trust hotels to tally up the correct amount when the bill is due. Why convolute the bill further by charging in-park items to the hotel room?
You can still go cashless. Because Apple Pay is available within the Disney parks, this means you’ll have flexibility in using your Apple watch or phone device to pay for items within the park. Of course, you can also use a credit or debit card. This avoids cash transactions and it avoids pulling out your wallet for all to see. Unfortunately, it seems that Samsung Pay is not available at Disney. Google Wallet may only be available for use at Disney World. Apple Pay seems to be the best choice for either Disney World or Disneyland. Unfortunately, these cashless options don’t allow for easy budgeting.
Even though Apple Pay is accepted at Disney parks, it may not be accepted at stores outside of Disney. Always carry an alternative payment method when your preferred method is unavailable. For example, Target and Walmart don’t accept Apple Pay. Also, some smaller food carts in the park may be cash only.
Gift Cards and Budgets
If you want to stick to a strict budget while at Disney, buy and fill a Disney Gift card. If you have a $100 a day budget, then add $100 to a Disney gift card. You can use this card when purchasing anything at any Disneyland park, Disney World park or even at a Disney store. Using a gift card avoids overspending in the park and allows you to stick to your daily budget. Buying and using a Disney Gift card is the best budgeting choice at Disney. Note that you can only refill the cards at a location that sells them. There are refill and purchase locations in the park. Online refills are not available. This means you’ll need to buy the card(s) at a Disney Store before you travel or buy them in the park when you get there. You’ll need to allot time to refill the card each morning or before you leave the park each night. Disney gift cards have no fees. Even though the gift cards never expire, you’ll want to use up any remaining balance before you leave the park on your final day.
Protect your gift card like you would any other credit card. However, if it’s lost or stolen, you will need a copy of the original purchase receipt to freeze the account and transfer the remaining balance to a new card. Call 1-877-650-4327 to report a lost or stolen card. You will need to provide the first 12 digits of the Disney Gift Card account number to the agent to freeze the account. You can then visit a gift card location and they will transfer the remaining balance to a new card. Be sure to take a picture of the card number on your phone or write it down and take a picture of the receipt so you always have a copy of both the card number and the receipt on your phone. It’s also a good idea to back up these photos to Google Drive or iCloud just in case you lose access to your phone.
Non-Disney Parks and Cards
If your vacation plans include visits to non-Disney parks, then a prepaid Visa or MasterCard is the more flexible option even though they have fees. With a prepaid Visa or MasterCard, you will need to keep close track of the balance available on the card. Unlike gift cards that let you use every last penny on a transaction seamlessly, prepaid Visa and MasterCards don’t work like this. If you have a balance of $1.22 on the card and you attempt to spend $1.25, the payment will decline. It doesn’t automatically give you the option of spending $1.22 and then making up the difference in cash like a gift card. You’ll need to continually check the balance of the Visa or MasterCard so you know exactly how much you have left.
To work a payment similarly to a gift card, you’ll need to ask the cashier to ring exactly $1.22 onto the card which will succeed, then pay the difference with cash or another payment method. The merchant has no way to tell you how much balance remains on a prepaid card. You’ll have to check the balance online through your phone or computer. However, unlike Disney gift cards, you can refill your prepaid Visa and MasterCard cards online.
Lost or stolen Visa or MasterCard prepaid cards are more complicated. You will need to write down the phone and card numbers listed on the back of your cards or take a photo of the front and back of the card so you have it on your phone. You can then call the number on the back of the card from the photo if your card is missing. Getting a replacement card is not nearly as fast as a replacement Disney gift card. Be prepared to wait for a replacement. You might be able to request Visa or MasterCard to provide emergency cash that you can pick up somewhere close to your location until your replacement card arrives.
Stick to known payment methods
Avoid using odd payment cards like AmericanExpress gift cards, Visa gift cards, MasterCard gift cards, Visa TravelMoney (traveler’s check cards), Traveler’s Cheques (they’re old and antiquated) and other oddball payment methods. These payment methods are not always accepted everywhere and may cause you no end of trouble. The last thing you want is a bunch of vacation frustration because you chose a payment method or card that few places accept. Undoing a mistake like this can be costly and time consuming when you should be enjoying your vacation.
Stick to mainstream, well known and accepted payment methods for your vacation. If you’re unsure about a payment method, call the places you intend to visit while on your vacation and ask if they accept a specific payment method. Keep in mind that not all employees are well versed in what their employer accepts and may tell you, “Yes” just to get you off of the phone. Always ask to speak to a manager to confirm the accepted payment methods. To avoid this possible source of stress, stick to well known, modern and accepted payment methods.
Emergency Cash On-Hand
Always carry emergency cash on your person for obvious reasons. If you need a cab or similar to get out of the park, having cash will get you out of there faster.
Overall
Can you spend less money on a Disney vacation? To a degree, yes. It also depends on you. If your family is up for roughing it outside in a tent, you can save money by staying at a campground rather than at an expensive hotel. You can also save money on airfare by driving to the resort.
If you set a strict budget on your in-park spending, you can reduce your incidental and food expenses.
With that said, if you intend to fly and stay at a hotel along with visiting the park for several days, expect to spend about $300-$400 per person for 3-5 days just on tickets to get into the park. On top of that, add your airfare, hotel and food and incidental costs.
For example, to plan a Walt Disney world vacation stay in Orlando, expect to spend around $3000-$5000 for four people over 5 in-park days. You can reduce this some by reducing the number of days you stay. You may be able to get a discount if you use AAA to book your airfare and hotel rooms. Your costs may be $200-800 lower if you choose to visit Disneyland in California because hotels are somewhat less expensive and the tickets to enter the park are also somewhat less expensive. Airfare is whatever it costs to get your family from your current location to any of the parks. Note that you can have just as much fun at Disneyland as you can at Disney World. It’s just that there’s a bit more to see at Disney World because there are more parks to see.
If you choose to add on Universal Studios or other parks, the costs go up… but you can sometimes get additional park bundles that offer discounts. You’ll need to shop around and compare to get your best deals.
You may be able to get better deals on lower attendance days. You can view the expected Disney park attendance by visiting the Attendance Calendar at Undercover Tourist. Off-peak season begins when the kids have gone back to school and right after the holidays are over. While you may not be able to take your children out of school to go during off-peak, this is the best time to visit Disneyland or Disney World. If you book your trip on lower attendance days, you may also see better deals and discounts. The worst time to book a vacation is within a few weeks of when you want to go, during peak season (June and July) and during the Halloween and Christmas holidays. You’ll get the least discounts booking during peak season.
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Bitcoin: Scam or Currency?
Note, if you’re not really into philosophical discussions about economics, money and technology, this is probably not the post you’re looking for. Also, if you’re looking for technical details on exactly how Bitcoin is implemented, I suggest you seek your research elsewhere.
[Update for 3/1/2014] — Mt. Gox files for Bankruptcy
Mt. Gox, a bitcoin exchange located in Japan, has filed for bankruptcy stating the loss of around 744,000 bitcoins from its exchange wallet. More info in this Reuters article. How this loss occurred is up for speculation. Mt. Gox claims its loss stems from a known flaw in the Bitcoin protocol. Bitcoin protocol advocates claim the wallet that Mt. Gox used was designed so that it exacerbated the known but usually rarely occurring flaw, which ultimately led to the massive loss of the Bitcoin from Mt. Gox exchange. Because of the massive amount of debt incurred as a result of its loss (among other debts), the exchange has ceased operations and anyone who had Bitcoin (or any other currency) deposited there may be out of luck.
What this says is that is several things. The Achilles heel of Bitcoin is its decentralization and the lack of properly protected wallet systems. The fact that there is no authority to advocate for depositors when companies like Mt. Gox go bankrupt leaves Bitcoin in a majorly problematic state. This situation also advocates for using personal wallets stored locally over using third party companies where situations like Mt. Gox can arise.
Because of the decentralized currency, there is no one to turn to when your Bitcoin goes missing from a large privately run exchange. Situations like Mt. Gox are exactly the type of setbacks that prevent Bitcoin from really becoming a solid workable useful currency.
If you had Bitcoin deposited in Mt. Gox, I’d like to hear your experience. Please leave a comment below describing your experiences with Mt. Gox or any other exchanges.
Disclaimer
This article is written with the sole intent to discuss whether Bitcoin can succeed as a currency at all or whether it’s a scam. This article is not here to discuss the technical merits of Bitcoin, how a Bitcoin is specifically implemented technically or whether those technical details are a valid. Once again, this article is here to discuss if a Bitcoin has any value in the marketplace or is merely a scam.
If you really want to know how Bitcoin is implemented, there are many many technical white papers that discuss this in great detail and that are available from the below mentioned Wikipedia article and through Google searching. This article’s author leaves it up to the reader to do the technical research on the Bitcoin implementation details if you are interested. If you’re looking for that level of detail, you’re not going to find it here.
What is Bitcoin?
Bitcoin alleges itself to be a, more or less, a digital / electronic currency that uses decentralized electronic ‘banking’ techniques involving digital signatures to validate each coin and approve transactions (to validate authenticity of said coin). As Wikipedia states about Bitcoin,
Bitcoin (abbrv: BTC) is a decentralized digital currency based on the open source protocol created by a pseudonymous developer named Satoshi Nakamoto.[1] It is subdivided into 100-million smaller units called satoshis.
This technical implementation was designed to solve the problem of exact digital copies when in the digital form. Therefore, the way each Bitcoin is created means that it is unique, individual and can’t be double spent by the same person. So, when you own a Bitcoin, only you owns that unique coin and no one else (until you spend it).
Want more details? Follow the Wikipedia link on Bitcoin or search Google.
What is a currency?
Bear with me as some of this may seem very simplistic, but we need to start simple and at the beginning to understand the issues involving Bitcoin. Currency is, simply, any object or thing that takes on a given value. More specifically, it becomes a currency when many of these objects are mass produced that all look and feel identical. For most currencies, we equate the value with these tangible objects by ‘size’ or ‘denomination’ of the object. Most of the currencies in play today work with two types of duplicated objects: paper ‘bills’ and flat metal cylinders called ‘coins’. These are tangible physical duplicated but unique objects. The denomination is then a specifier of that specific duplicated object. In the US, the currency is named ‘dollar’. But, it could be just as easily named ‘fred’ or ‘mxyzptlk’ (except that that word is probably trademarked by DC comics). So, as in the US Dollar, it’s a piece of paper marked with the number 1 and the words ‘one dollar’ or a coin struck and marked with the words ‘one dollar’. These unique objects are then the basis of a piece of currency or ‘money’. So, while these are the fundamentals to begin a currency, it doesn’t establish it as valid currency until other criteria have been met.
Simply striking out objects labeled with this information doesn’t make it become currency. For example, you can mint any coin you like, but the simple act of minting a coin doesn’t make it worth money. After all, you can go buy child’s play money or grab some of Hasbro’s Monopoly game ‘money’, but these are mere pieces of paper with ink and hold no value in a currency market. For casinos, they have chips and metal coins, but again these hold no value until exchanged within the casino back to US Dollars (or whatever currency that that casino provides). For example, while a casino will accept their own tokens and coins to play their games, these tokens and coins hold no value outside of the casino (except in the case as a collectible or because of they contain rare earth metals as discussed below).
So, what makes a currency become legitimate legal tender?
Basically, it requires an ‘authority’ to decree that the currency exists, issue the currency and usually a government to back the currency. By ‘backing’, I don’t mean that there’s something tangible backing up the currency (like gold or land), I mean that the government has a gun-wielding military force at its disposal. Having such force at someone’s disposal gives that someone power. With power comes the ability to enforce rules. And then, rules establish policy, policy establishes currency, currency establishes an economy along with such things as capitalism and that establishes the ability to buy and sell things. Keep in mind that buying and selling will happen with or without currency. It’s just that currency makes it easier and more standardized. So, instead of having to hand over a bushel of apples in trade for a bail of hay for your horse (i.e., random bartering), you can hand over 25 dollars instead. And because many people have all handed over around 25 dollars for a bail of hay, that establishes that a bail of hay is ‘worth’ around 25 dollars. That also establishes at once, the value of 25 dollars and the value of a bail of hay. It doesn’t necessarily establish the value of a bushel of apples until the apples are ‘sold’ multiple times at or close to a certain price.
That means people have to ‘buy into’ that that piece of currency paper (or coin) has a ‘value’ and that that ‘value’ is established by the words printed on it, along with the issuing body’s ability to enforce that this piece of paper is now considered ‘legal tender’. That value is then further established by how much it can buy. Remember that policy establishes what is ‘legal’ and the power to enforce that policy is what puts the power behind that piece of paper which is then considered ‘legal tender’. The government and the issuing body (not necessarily the same thing) lend legitimacy to the currency by power, policy and the ability to enforce policy. Note that tangible currency created by decree and enforced by power is called ‘fiat currency’.
Of course, ‘the people’ have to allow that government to wield the power. The reason the people give the government power is in exchange for protections. So, in exchange for allowing the government to remain in power, the government will provide protections for the people in the form of such things as a police force, a fire department, a military and some types of health services. Of course, these protections aren’t without costs (i.e., read taxes or payments using, of course, the decreed currency). But, the protections are established by the government.
One additional thing is that not only does the government and the issuing body have to recognize the currency as valid, but so do other worldly governmental bodies. So, a currency must be recognized as valid by other governments to be useful in those other locales. It’s not an absolute requirement, but unless other governmental bodies recognize the currency as valid, it cannot be used in exchange for other currencies. Without being recognized by other countries, this then makes it hard to, for example, buy things from other countries with our currency. Once recognized, however, the currency can then be exchanged to other forms of currency around the world and purchases can be made. And with that, foreign currency exchange is born, which is a much more lengthy discussion than is required here.
The bottom line is that ‘the people’ give their trust to the government to both decree and ‘back’ the currency as valid. So then we all have to agree that the ‘dollar’ has value, what that value is and how much it will ‘buy’.
Digital vs Real World currency
Bitcoin does not have a governmental power behind it. It does not have a governmental sanctioned entity issuing the currency. It is not recognized by any governmental force as a legitimate or legal currency. It was developed by a technical engineer with an open standard protocol and is backed by nothing other than a relatively strong encryption algorithm and a set of established exchanges (where to buy Bitcoin). So, as long as the encryption algorithm cannot be cracked, each issued Bitcoin is a unique and individual entity. If it ever is cracked, the whole Bitcoin system falls apart.
Let’s compare the difference between a tangible ‘dollar’ and a Bitcoin. A tangible dollar is a physical unique piece of fiat currency. That is, it’s a tangible thing you can put in your pocket, it has a unique serial number (at least the bills have these) and are so stamped by the issuing authority. Ignoring for the moment that these tangible ‘dollars’ can be reproduced (read counterfeit) by unauthorized entities, each ‘dollar’ is its own unique entity. Counterfeit bills are usually identifiable because the ‘original’ issuer uses anti-counterfeit techniques that establish parts of the bill which cannot be duplicate easily. However, counterfeiting is a problem with any currency. Or, at least, in real world currency. That’s why bills and coins are redesigned periodically.
So, when you have ten tangible dollars, they are real physical bills. In a digital world, these rules can’t apply. In a digital world, it’s all 1’s and 0’s. These can be duplicated infinitely and freely without knowing that that digital file was ever duplicated. So, for example, attaching and emailing a photo of your dog to your friend makes a copy of that photo. And that photo is the exact same as the photo on your computer and the exact same as the one you posted on Flickr.
With a digital currency, this is a problem. Enter Bitcoin.
Why Bitcoin?
Bitcoin creates each coin uniquely through a computer algorithm that generates guaranteed unique coin entities and to prevent counterfeiting. So, each Bitcoin represents one unique digital coin that stands on its own. Each coin was created by an issuing authority using that algorithm and each coin is then registered in a decentralized database of outstanding coins. So, whenever you spend that unique Bitcoin, the decentralized database will log that coin’s ‘transaction’. However, like any currency, the transaction does not need to be recorded. In reality, to verify the legitimacy of any digital Bitcoin(s) when spent, it should be cleared with one of the transaction databases. Otherwise, you risk that it may be counterfeit or double spent. Because the coin was created using a basically un-crackable bitsize combined with each being unique and because each coin is officially registered with the decentralized transaction registry, that coin in theory can only be spent once per transaction. So, even if you manage to copy the coin and attempt to give it away to someone else, it’s still only one coin no matter who owns or spends it. In other words, duplicating the coin file into multiple files still only yields one coin to spend. So, duplicating the coin’s file does not duplicate the number of coins that it is. It’s still only one coin and is valued at whatever one coin is worth. If you give away a copy of the coin to someone else, you’ve effectively just given them one Bitcoin and you’ve lost it. Or, you will have lost it if they spend it first. Again, if you want exacting details on how all of this is implemented technically, please read the Bitcoin Whitepaper.
Suffice it to say that the coins are allegedly unique and the transaction service prevents double spending. So, it effectively makes it useable currency in the sense that each coin is unique like paper money. Which, of course, is the sole goal of the whole technical implementation.. to mimick real world money in a digital way.
Before I get into the spending of Bitcoins, let’s step back and ask, “What legitimizes this currency?” The answer is, not much. The ‘currency’ is not yet recognized by any governments that I know of. Therefore, it is not listed on exchanges with the dollar. In other words, to exchange any other currency, such as the dollar for Bitcoin, you have to go to a Bitcoin exchange. Bitcoins are not openly exchanged at regular exchanges. So, you’re handing over dollars (or other legal tender) to a Bitcoin controlled exchange in trade for Bitcoins.
Think of this like going to a casino. To get a chip to use in the casino, you have to go to that casino’s cashier and exchange your dollars for casino chips. Therefore, you’re at the mercy of that casino to 1) remain in business while you play and 2) to retain the value of the chips while you’re playing. So, if the casino goes out of business and kicks you out of the casino with chips in hand, those chips are worthless. If the casino refuses to exchange the chips back to dollars, again, they are worthless. If the casino decides that a ‘one dollar’ chip is now worth ‘one cent’, again, you’re at the mercy of the casino. This is effectively Bitcoin.
Scam? You decide!
So, this is the place where some people see Bitcoins as a scam. If you don’t personally recognize the currency as legitimate yourself, then you will only ever see it as a scam. The fact that you have to go to a Bitcoin controlled exchange (regardless of being ‘decentralized’, read peer-to-peer) to change dollars (or any other currency) to Bitcoins is suspect. Let’s get to the heart of the matter. Exchanging real money for Bitcoin may simply make the originators of Bitcoin rich with ‘legal tender’ at the expense of people buying into the ‘Bitcoin’ idea as currency, but in reality is destined to fail and become worthless digital files. Where do those dollars go when handed over to that exchange? How is the exchange rate determined? These are all questions not easily answered. Oh, I’m sure the people running the Bitcoin exchange will come up with some colorful answers, but the reality is that who really knows? Unless Bitcoins become traded at a national exchange level and through exchanges not controlled by Bitcoin exclusive exchanges, then we really don’t fully know where the dollars or euros or whatever went after becoming Bitcoins. Of course, the flip side of this is that you effectively ‘bought’ Bitcoins with your ‘real’ currency. By purchasing a Bitcoin, that comes to another issue regarding collectibility, but that’s discussed below.
So, on the one hand you have legal tender which is established, recognized and sanctioned that you can really spend for real world items. You are taking that money and exchanging it for Bitcoin which has extremely limited uses cases, limited spend venues, questionable exchange rates, limited denominations coupled with low supply, no governmental backing, not being recognized by governments and other authorities and the high probability that it will be used for less than legitimate purposes, and this is presently what Bitcoin is. Looking at all of this coupled with giving some random entity real money in exchange for ‘Bitcoin’ can be easily seen as a highly speculative scam. It has a high probability to be or become a scam and, at the same time, make someone (or a few someones) very rich with real legal tender in the process… possibly your supplied legal tender funding violence or other unsavory uses.
On the other hand, you have a possible new digital currency that could succeed if it gains enough traction in various marketplaces. However, the risk vs reward for Bitcoin is clearly too high for real currency use. So, that leaves speculation and collectability almost the entire reason to buy into the idea of Bitcoin, if that’s a reason at all.
Ignoring the fact that each coin is unique and can’t be easily counterfeit, you have to consider what things you can currently buy with Bitcoins. Since it’s not recognized as legal tender or even valid currency other than in very limited uses and by limited ‘businesses’, this currency is ripe for scam artists. That means, legitimate businesses (especially banking) shy away from things that are not considered ‘legal’ or that reside in the fringe of ‘legality’. Any such legitimate businesses will opt for ‘legal tender’, such as the US Dollar. So, adoption by legitimate business is a huge hurdle for Bitcoin. Especially in the banking sector.
In addition, because Bitcoins are now being considered as the standard for online gambling uses (to thwart restrictions on the US dollar in online gambling), this further reduces the legitimacy of this ‘currency’. That is, you can’t run to your local supermarket and buy a loaf of bread with a Bitcoin, but you can place an online poker bet with it. You can’t run to your local car dealership and buy a new car with Bitcoin, but you likely can buy some drugs with it. You can’t buy school supplies with your Bitcoin, but you probably can buy a handgun with it in an underground market. This doesn’t spell good things for Bitcoin’s success or legitimacy as a currency. Because online gambling is one of the biggest scams out there right now, this use case doesn’t make Bitcoin look better. Considering that most of the online casinos reside outside the US, US laws don’t apply to wagers made at those casinos. So, even if you win big, there’s no protection from simply losing all of your Bitcoin when they choose not to give you your winnings (the most likely outcome) or the exchange rate has changed so much as to have lost any gains you may have won. When you invest in Bitcoin to use at a casino, you’re effectively gambling twice: Once at the casino with your wager and again when you go to exchange your Bitcoin back to legal tender.
The fact that you were using Bitcoin, which have few protections anyway and which is then used to place a bet at an online casino leaves you ripe for losing everything you’ve given to the casino. Meaning, you’ve lost your dollars to the exchange and you’ve lost your Bitcoins to the scam casino who’s just bilked you. If you do manage to get anything out of the casino, you have to try your luck at the exchange and hope you can get legal tender back out at any kind of a decent rate.
Is Bitcoin Legitimate Currency?
None of these uses cases, no matter how technically well designed that this currency is, validates or legitimizes Bitcoin as a useful or legal currency. Sure, it might be able to protect you from counterfeiting, but it will never protect you from being scammed. And, if you are scammed, there is no one you can turn to to get your Bitcoin back, let alone get your US dollars back. With the US Dollar, you can turn to your bank or your police both. If you know who the other party is, you can sue. With Bitcoin, all that is likely off the table. In the digital wild west, there’s no Sheriff in town here. So, you lose your Bitcoins and they’re gone. Neither the cops, nor the feds nor the banks will help as Bitcoin is not recognized as legal tender. And, this is one of many hurdles involving the use of Bitcoin.
Of course, you might be able to sue the exchange where you gave your dollars for Bitcoin, but if there is a transaction record that can be produced that proves you were handed Bitcoin, then any lawsuits will be fruitless. If you exchange money for any other good or service (digital or otherwise) and delivery can be proven through a transaction record, there is really nothing that can be done there legally. That you gambled with your Bitcoin and lost is your problem.
Worse, what of the exchanges? How are they managed or audited? Who runs them? Are they even audited? In this case, who watches the watcher? I’ve read a rather disturbing blog article at Nerdr.com about how at least one of the Bitcoin exchanges is manually altering the Bitcoin price to their own whim. So, what does that say of the other exchanges?
Collectible Commodity vs Currency
Bitcoin faces another serious adoption problem: supply. Built into the algorithm at the decentralized exchange is managing how much Bitcoin is in circulation at any one time. So, if you want to obtain Bitcoins, you probably can’t get them from an Exchange until they are issuing new Bitcoin. And since new Bitcoin isn’t issue often, that leaves you to find someone with Bitcoin willing to sell it to you outside of the exchange and likely at collectible prices (which brings up collectibility of Bitcoin). If you do manage to get it, you’re likely to pay the ‘collectible’ price for the Bitcoin. Basically, as of this writing, $10-15 might get you one Bitcoin assuming you can even find someone willing to sell you coin. And, that’s the problem, supply.
For a currency to succeed, it has to remain liquid. That is, there has to be enough currency in circulation all of the time that people can get it when they need it. If it cannot be obtained, it cannot be used as a currency. Which then comes to the difference between Bitcoin being a collectible commodity and being currency. Clearly, even the US Dollar has numismatists (or currency collectors). And, here’s the problem. Collectible value markets operate outside of the currency market. So, for example, the face value of a one dollar bill is one dollar. But, to a collector looking for specific markers, that ‘one dollar’ bill might be worth 1000 dollars as a collectible. As collectors pull money out of circulation marked as a collectible commodity, it removes that liquid currency from the market and, thus, it cannot be spent as its face value. This means that the issuing body has to make up for the currency pulled out of circulation as a collectible and replace that currency with new liquid currency.
Bitcoin faces this exact problem. Speculation collectors are holding onto their Bitcoin as a collectible, not as currency. They are speculating that the collectible value of the currency will rise and they will be able to sell it to another collector at a much higher value than the monetary face value of the Bitcoin. Worse, because Bitcoin doesn’t have stamped monetary denominations, it makes it all the worse at determining the face value of a single Bitcoin, let alone the collectible value of it.
Basically, the speculative collectors are hording the Bitcoin as a commodity and preventing it from becoming and remaining liquid currency. So, each time an exchange releases more Bitcoin into the wild, it’s immediately snapped up by collectors rather than going into liquid motion to be spent. Speculative collectors are the biggest problem that Bitcoin faces today. As there’s so little currency in motion, it really cannot be used as a currency. So, it’s really become a collectible item for people to hold onto and not spend. In fact, there’s so much more incentive to hold onto Bitcoin than spend it, it’s basically paralyzed as a currency.
Bitcoin’s future
The Bitcoin designer was so focused on making sure that Bitcoin was secure and, at the same time, scarce that he/she probably didn’t realize it would become paralyzed by speculative collectors. The reality of low supply of anything only breeds one thing, collectors. Collectors do not spend or trade. They collect and hold with the intention of selling at a much much higher price much later. The only way out of this paralysis is to release so much more Bitcoin into the wild that the collectors have no incentive to hold it any longer. And this is exactly what Bitcoin must do to succeed as a currency. This is also exactly what the US Treasury does to avoid the same paralysis of money movement with the dollar. Note that the release of new Bitcoin has to be so much that it’s impossible for any one collector to afford to horde. While it may ruin the market for collectibility of Bitcoin (and also kill any paper profits that collectors may perceive they have) and also lower the value of Bitcoin, it will force Bitcoin to become liquid again. Until this happens, Bitcoin will never become a liquid currency that can be used for anything more than speculation and the occasional wager, assuming you can even find Bitcoin to buy or spend.
Personally, I wouldn’t invest in Bitcoin other than as a collectible at this point and even that is questionable due to the volatility of that market. Bitcoin has no real uses as a currency, other than perhaps at offshore casinos and other mostly unsavory purposes. Even then, it may not protect you from the IRS or US authorities (if in the US) when you win at a casino. Right now, it’s more or less a novelty investment and even then there are better investment vehicles that offer safer and higher returns.
Demise of the Bitcoin?
There is one other thing that could potentially destroy Bitcoin. If the US Government (or any government) were to take the idea of Bitcoin and implement something similar (and easier) as a national digital currency sanctioned and issued by the Treasury department, this would likely destroy Bitcoin’s main objective, to become the defacto digital currency. The one thing that a US digital coin cannot destroy in Bitcoin, however, is the anonymous nature of the currency, that Bitcoin is not issued by a government (it is outside of government control) and the peer-to-peer decentralized nature of it. In the end, those pieces probably don’t really matter. That the new digital currency works, that it is usable, that it can buy milk and eggs and pay rent, that’s what’s important. Were the US to legitimize its own digital currency, businesses would adopt this en-masse and people and businesses wouldn’t look twice at Bitcoin thereafter. A US digital coin would become the defacto standard for digital currency, at least in the US. Bitcoin would then, as it is now, be relegated to a digital underground currency used for purchases where government sanctioned money cannot be used without penalties.
It’s just a matter of time before the US Treasury department wakes up. As the saying goes, “Fight fire with fire”. Creating a national digital currency solves a lot of problems. It reduces the amount of paper and metal that it must mint saving money buying the supplies for the production of tangible money, it ushers in an even more solid digital economy and it gets rid of Bitcoin all at the same time.
America’s Recession: loans and scams
Economic Downturn & The Fed
Unless you’ve been hiding in a cave, you’re probably aware that we’re going through a fairly deep recession. Recessions are cyclical, but in this case it probably could have been either avoided or lessened IF the banks and lenders had not been offering creative financing techniques. It also could likely have been avoided if our current pro-business govt. administration hadn’t chosen to look the other way while bad mortgages were being doled out. The problem with all of the creative financing is that it tended to lead some people into believing they could afford a mortgage they could not afford. When the loan reset after the promotional period, the realization quickly set in. Worse, the situation was compounded by property investors who sank huge amounts of loaned money into properties that would eventually become valued less than the loan.
It’s not as if the handwriting wasn’t on the wall several years ago when the fed dropped the rate to 1 percent. Now, we are back in this exact situation again with the fed dropping the rate to an unprecedented 1/2 percent. The feds are, again, trying to spur the economy like they did 2-3 years ago. But, this time, the banks don’t have money to lend. So, the 1/2 percent may not trickle down into the mortgage market like it did several years ago.
But, our economy is still likely being set up for yet another financial failure. The banks that do have money to lend are still advertising on the radio claiming extremely low interest rates. The problem isn’t the rate, but the loan you’ll be getting. If it’s a standard fixed rate loan, that’s fine. But, it’s the fine print you need to read. Don’t get locked into an adjustable rate mortgage or a limited time interest only loan. Once these creative loans reset in a couple of years, you may end up deep under water.
The Fed, therefore, needs to be extra careful when cutting the rates this low again to avoid the same mortgage problems all over again.
Scams in a down economy
With the economy being so depressed, it’s also a good idea to watch your money closely. As money gets tighter and tighter, the scammers will come out of the woodwork (and they already are). I’ve already noticed a drastic increase in spam and phishing emails since the economy has taken a turn. It’s going to get worse before it gets better.
There are many scams out there from the Nigerian 419 scam that claims to give you a ton of money only to rip you off of thousands of dollars before you realize it, to sending you what look like official invoices that only turn out to be scams in themselves. Don’t fall for them. The easiest way to avoid scams is to not give out any personal information to anyone who approaches you claiming to be from a legit company. This means, if you receive a call asking you to make a payment and they request for you to give a credit card over the phone, don’t. Make sure you know who this company is first and make sure you are a customer. Then, tell the company that you will call them back through their official channels and make a payment that way. As long as you are the person making the call to the official number, you should be safe. With incoming calls, you have no idea who is really calling you no matter what the CallerID says. Always, always call companies back from official numbers located on a trusted bill or from the back of your credit card.
TV advertisements that offer products or services usually employ people who are not paid very well. So, be wary when you give your credit card number out to TV commercial based purchases. Not only are some of these companies impossible to get refunds, your card number could be enrolled in a club or, worse, stolen by one of the telephone operators in an independent scam. You should always Google the product you are thinking of purchasing to 1) find out if you can find it cheaper online and 2) find out if people have had issues with either the product or the companies refund polices.
Get rich schemes are basically another form of scam. Yes, they do make someone rich… the person who created the scheme, but not you. Get rich schemes are usually designed to part you from your money. So, in a down economy, you should avoid get rich schemes (placing classified ads, setting up ecommerce sites that sell Amway products, or Multi Level Marketing – MLM schemes). Note that MLMs only make the top most people money. If you’re anywhere near the bottom, you will be parted from your money.
Craigslist and even eBay are a haven for scammers. Be careful when you work with people selling or renting things. Never buy or rent anything sight unseen and never give money out as a ‘deposit’ or to ‘hold’ something unless you truly trust the individual. Chances are, if the person you are thinking of doing business is presently outside of the US, you should immediately stop the transaction unless you know for sure that what they are selling/renting is legit.
If you are selling a car or renting out an apartment, watch out for scams here too. There are some people who are outside of the US who will claim to give you an excessive sum of money in the form of a check. They may even send you what looks like an official check.. the problem is that it will bounce causing you fees and other associated problems (and may let them get access to your account number). Don’t cash any checks like this.
The bottom line is that in this weak economy, you should be extra careful with your money as there are lots of desperate unemployed people willing to do anything to make a buck (or a thousand). Always make sure to do your homework before buying anything or giving out personal information to someone you don’t know. If you suspect a scam, you should alert your bank or credit card company immediately.
Ponzi Schemes and Wall Street
I hope that everyone who invests money knows that entrusting your money to someone else is risky. It doesn’t matter if the yield is 0%, 2% or 5%. The act of handing your money to someone else involves risk. So, is it then no surprise when someone like Bernard Madoff, who once the chairman of the Nasdaq Stock Market, is arrested for an alleged ponzi scheme that bilked people out of billions?
Hello, no! Wake up people. When times are good, no one delves into such corrupt Wall Street vehicles because they are self-sustaining. It’s only when times become bad that these schemes fall apart. The way a ponzi scheme works is by paying old investors out with new investor money. The fund itself is not self-sustaining (and probably was never intended to be). So, as new investors dry up, the older investers can no longer be paid. The whole thing then falls apart.
But, the question isn’t so much that this one person did this. It’s the loss of trust and of faith in the system. It’s the question of how many more people are doing it? When respected people of the invesment community end up operating such scam vehicles, what does that say of Wall Street as a whole? Clearly, this is not and will not be the only ponzi scheme to turn up. It’s the first major case of it recently, but it certainly won’t be the last.
Is investing a bad idea? Not necessarily. But, it is risky. This is why diversification is part of the answer. Do not put your money into one fund or even two or three funds. Spread the money out into many funds. Granted, it’s harder to keep track of, but the chances that every single investment fund being corrupt is unlikely. However, we all know that money corrupts. So, you have to take the good with the bad when you give someone your cash to manage.
These are the kinds of problems that shake the foundations of investing to the core. These are the kinds of trust issues that the investment community needs to avoid like the plague. Yet, here we are. These are also the kinds of problems that America itself has been fostering for the last 10-15 years. Why is greed, power and corruption such a big part of the American dream today? Only a historian will be able to look back and fully answer this question. Today, these problems appear to be unrelated. But, is this problem systemic? Is it only likely to get worse? When well respected Wall Street investment professionals, such as Madoff, can bilk so many out of their money, this is much more than isolated and, indeed, does appear to be systemic and a symptom of a much bigger issue.
At this point, America needs an overhaul and perhaps this downturn and the financial sector upheaval is the beginning of that overhaul. The corporate and financial system on which this country is based is near completely broken. When 20 year veterans of Wall Street can turn to Ponzi schemes to keep their lifestyle afloat, anything can happen. So, watch your money closely when you invest. But, even doing so is no guarantee that you aren’t investing in a sham. One quote is more salient now than ever… “Caveat Emptor” (Buyer Beware).
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