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Warren Buffet and Charlie Munger on crypto in 2018

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Re: Warren Buffet and Charlie Munger on crypto in 2018

#101

Post by colmmacc »

wakamoleguy wrote: post #85
rcarr wrote: post #32

I've always found this excerpt from a Doomberg article sums the whole thing up nicely: > We distinctly recall drawing two circles on a piece of paper. In the circle on the left, we wrote "Real Economy"; while in the circle on the right we wrote "Crypto Universe". We drew two pipes between the circles - one flowing into the crypto universe and the other flowing back to the real economy - and labeled both pipes with fi…

What part of that diagram would break down for a company within the 'real economy'? Naively, if I am running a SaaS company, I receive fiat in and pay fiat out. It's the same two pipes. It's just that some of the fiat coming out is going to shareholders. The 'value' that the service is providing only justifies who the fiat is going to, not how much there is.

The real point being made here is that a 'real company' can generate value in the form goods or services, which hopefully makes the out pipe bigger than the in pipe.

This could be true of crypto; maybe the voting system in a DAO, or the art in an NFT, or the peer to peer trust, has intrinsic value that people will sustain a profit margin for. But with the simple empty circle they are making the point that the main reason folks invest is just to make money, and in that regard crypto is mostly just moving it around and that's not a value add.

You could say that regular finance is the same, but it brings intrinsic values like insurance on deposits and investments to the table, and invests in 'real-growth' businesses that produce goods and services.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#102

Post by paulryanrogers »

stephc_int13 wrote: post #49

Scams and get-rich-quick schemes are not new, they seem to have existed for centuries. People get burned, then learn, but their children and grandchildren don't. Generational knowledge loss is something that is widely underappreciated. Of course, newcomers don't listen, it is always a new thing, new words, surfing on the latest cultural trends and technologies. At some point, crypto/blockchain based scams will stop w…

Tulip mania was never a secret. Crypto just added some more layers, making it harder to tell that it was mania.

Education is the only answer I can see.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#103

Post by mopsi »

Eisenstein wrote: post #52
madsbuch wrote: post #34

Earlier quoted context omitted.

There are probably no fundamental differences like there are no fundamental difference on transportion from a horse to a car. You just have the benefit when you can drive 130kmh for hours on well maintained road infrastructure instead of riding through a forest.

There are benefits from moving from a horse to a car. What are the benefits for moving insurance onto a blockchain?

I don't need to fight airlines and insurance agents for compensation when my flight gets delayed. A smart contract can unlock insurance payouts as soon as independent organizations responsible for managing air traffic verify the delay. Cutting out all the current manual labor will lower insurance premiums and offer much more trustworthy service.

This is typical automation story. Replacing switchboard ladies with automated systems wasn't "fundamentally different" either, but made calling much more efficient.

Government organizations are already collecting loads of machine-readable stats on things like road accidents, and it's fairly trivial to tie these sources of ground truth with automated insurance systems. There should be no reason for me to fill forms and for a lady in a expensive office building to process them, if my insurance is simple standard contract and department of transportation has a database entry stating when, why and by how much my flight was delayed. A script on AWS can process that, and free our time for more valuable or more pleasurable enterprises.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#104

Post by kennend3 »

lvl102 wrote: post #13

Sorry but these two are not that great and their track record for the past decade is also not that great. They basically missed out on 10x type of opportunity just from 2018. They are in the money making business right? Last I checked, BTC is still 5x from 2018 low. Money is money. Return is return. Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/sha…

> Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/share repo. Until they actually pay you for your shares, you’re effectively invested in a ponzi scheme.

Yes.. by redefining what "ponzi scheme" means you can say anything is a ponzi scheme.

Or alternatively you can use the accepted definition: ---

Pon·zi scheme /ˈpänzē ˌskēm/ Learn to pronounce noun

a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

---

And when you apply this to "buying shares" you see it doesn't ring true. Probably because shares represent ownership in a business. Businesses can offer returns to investors such a price appreciation instead of dividends.

Most tech/growth stocks don't pay dividends because they reinvest the free cash back into the business.

There is probably a reason you are being downvoted, and your attempt to rewrite ponzi to suit your needs may be a contributing factor.

While it is easy to arm-chair-critic people who many consider the best investors around, perhaps you can post your own investment history as a frame of reference?

Clearly you feel they made mistakes, and that you did not?

Lastly, investors have risk factors. Those who invested in Buffet/Munger did so because of their risk views and it is unlikely that those same people invested in bitcoin because of its risks. Maybe other assets beat out Buffet, but does this factor risks?

Re: Warren Buffet and Charlie Munger on crypto in 2018

#105

Post by madsbuch »

paulgb wrote: post #53
madsbuch wrote: post #34

Earlier quoted context omitted.

There are probably no fundamental differences like there are no fundamental difference on transportion from a horse to a car. You just have the benefit when you can drive 130kmh for hours on well maintained road infrastructure instead of riding through a forest.

If speed is the primary advantage of a car to a horse, what is the primary advantage of an insurance DAO to mutual insurance?

Instant governance decisions that does not require a case worker.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#106

Post by mannerheim »

JumpCrisscross wrote: post #98
pontus wrote: post #88

Earlier quoted context omitted.

Isn't that true of anything that doesn't include the fed? I mean unless you can print money, you can't change the amount of fiat in any subset of the economy. You can still add value though which would be evident by more people wanting a piece of whatever pie there is, driving more fiat into the subset and/or creating paper gains which is a sort of money in itself, but this is true for crypto as well. For example, I…

> unless you can print money, you can't change the amount of fiat in any subset of the economy Credit is money. Anyone who can create credit can create money.

But only banks do this, not Google itself (although I guess they do lend money so maybe?).

Ultimately more fiat at the end of the day doesn't matter either - what matters are real goods and services produced. Of course, crypto has not been good with respect to this either...

Financial services only produce value insomuch as they enable people to access goods and services in the 'real economy'. Houses and cars for consumers, and for those who produce goods/services, capital that enables them to produce, whether that be loans for equipment, salaries, whatever, as long as something comes out at the end that there's somebody willing to buy (and for that to be sustainable, there should be a reason to own it more than selling to somebody else).

Money is only useful insomuch as it enables exchange that leads to more real things people want.

So there is some value in the exchange of cryptocurrency, if nowhere near enough to justify its valuation - after all, it does enable people to purchase all sorts of illegal drugs, which is a real good people want.

Other than that, financial speculation (pretty much every other application we usually see of cryptocurrency) is all well and good, but the question at the end of the day is what's the underlying stuff being speculated upon, and how does it correspond to stuff people actually want? Financial instruments on housing and corn at least have some relation to things people want, after all.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#108

Post by stephc_int13 »

paulryanrogers wrote: post #102
stephc_int13 wrote: post #49

Scams and get-rich-quick schemes are not new, they seem to have existed for centuries. People get burned, then learn, but their children and grandchildren don't. Generational knowledge loss is something that is widely underappreciated. Of course, newcomers don't listen, it is always a new thing, new words, surfing on the latest cultural trends and technologies. At some point, crypto/blockchain based scams will stop w…

Tulip mania was never a secret. Crypto just added some more layers, making it harder to tell that it was mania. Education is the only answer I can see.

"Education" is a lazy and naive answer, IMHO.

I don't think we can consider that Isaac Newton was uneducated or dumb.

And yet, he fell for get-rich-quick scams.

https://moneymorning.com/2017/05/08/this-classic-investing-m...

We need something more targeted than "education".

Re: Warren Buffet and Charlie Munger on crypto in 2018

#109

Post by jgilias »

Nursie wrote: post #92
jgilias wrote: post #46

Earlier quoted context omitted.

Two real life datapoints. 1. A friend of mine has a small software consultancy. He usually works within EUR area. All fine and dandy there. Then there was a client in the US, they agreed on a USD rate for his work. He went to his bank to open a USD account, they did additional AML and KYC procedures and just refused to open a USD account. Didn’t even explain why, he’s not doing anything shady. So, the first USD payme…

1. Services like Wise seem to solve this, I can add currencies to my account there pretty much at the touch of a button. Rates are good and conversion fees low. 2. Less sure about this one!

Yes, Wise was the first option he tried. The problem was that he needed a business account and Wise put him in a waiting list for opening one but never got back.

But, yes, Wise would’ve helped here.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#110

Post by madsbuch »

Eisenstein wrote: post #56
madsbuch wrote: post #44

Earlier quoted context omitted.

Of cause your wording represents an opinion. You say there is no room for improvement on current small scale institutions by using blockchain technologies. I will leave that opinion to you. It took several decades from the first steam engines til we had a serious contender to previous means of transportation on a horse back. So the empiric foundations you refer to are not representative. Have a good day.

Steam engines were not designed to supplant horses as transportation, they were designed to supplant horses for work. In that regard there was effectively no lag time between their invention and their usefulness. What is it with people defending crypto with terrible metaphors?

> What is it with people defending crypto with terrible metaphors?

Why do you feel the need for this type of attack?

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