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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

#111

Post by saalweachter »

AlexandrB wrote: post #74
chii wrote: post #51

Earlier quoted context omitted.

A casino is an analogue to crypto. The house takes in money, and produces entertainment. Some people also leave with more money than they go in, but most lose it all.

Crypto differs in that the people getting the most entertainment are not the ones putting in the money.

Now I'm imagining a new casino, wired to the gills with cameras like all casinos, where you can view live streams of the casinos or edited cuts that follow individual story lines as people win and lose money, complete with camera confessionals after someone loses their home.

How would the ad revenue compare to the casino revenue?

Re: Warren Buffet and Charlie Munger on crypto in 2018

#112

Post by madsbuch »

pavlov wrote: post #75
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.

HermanMartinus is stating facts: there are already millions of organizations productively managing assets, and blockchain governance structures haven't made any kind of concrete contribution so far. You're stating an opinion that it's like a steam engine, which doesn't really mean anything in this context.

I do not know whether Crypto is a good or a bad idea. I am merely trying not to be presumptive about it.

The horse metaphor is an attempt to lead some attention to the fact that we several times in the history have seen long adaptation time for certain technologies we benefit from on large scale.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#113

Post by saalweachter »

pontus wrote: post #88
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…

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…

> (investments, debt, advertiser dollars, ...)

I think the problem is that the first pipe is just investment/debt.

You need a second pipe of money coming in -- ad revenue, sales, fees for services provided -- or else, as said, the money going back to investors can't exceed the money coming in from investment.

As long as that second money pipe remains aspirational/marginal, there's just not much potential.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#114

Post by noxer »

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…

If you would make the same circles but with different fiat currency on one side and difference fiat currency on the other side you would figure out that exchanging different fiat currency isn't generating any value therefore the Forex markets should not exists. And extending on that knowledge any currency from a country that produced more debts each year should be worthless. Reality check: Nope, both not true in the "real economy".

Buffet is know for not liking stuff that does not "produce goods" like Gold. However trading any kind of asset does actually produce something it produces market liquidity which s the oil in the financial system that make the economy run smother.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#115

Post by noxer »

chii wrote: post #51
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…

A casino is an analogue to crypto. The house takes in money, and produces entertainment. Some people also leave with more money than they go in, but most lose it all.

But there is no "house" in crypto this analogue make no sense.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#116

Post by bell-cot »

phyalow wrote: post #91
bell-cot wrote: post #80

Earlier quoted context omitted.

Yes - but any decently-managed casino is extremely careful in managing their cash, cashflow, and fiat money supply (chips), to make sure that: (1) they make real money, and (2) their chips hold their value against real money. Crypto, on the other hand...

You might be familiar with Jump Capital, Jane Street, DRW, Hudson River Trading etc all deal in crypto and act in the way you describe.

I have seen a bit of the "management side" of a modest-size American casino or two. Those guys are hard-core about accounting for every dollar and chip. Every day. Plus thinking three steps ahead of any "tempted" employees, who might imagine that they could get away with something, in spite of the security cameras.

Vs. I have zero behind-the-scenes knowledge of any crypto firms.

Comparing the casinos to the juicy gossip that comes out with each crypto collapse...my gut feel is that the crypto folks do not even know that such a culture & controls exist. Otherwise, more crypto folks would at least be pantomiming bits of that stuff, to look good. And yelling about specific violations of accepted industry norms & standards after each big bust, to at least give the appearance that crypto has & cares about such things.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#117

Post by jqpabc123 »

bouncycastle wrote: post #66

It is wrong to assume that crypto is broken if it doesn't have a high value in some arbitrary currency like the USD. Crypto works just as well even if the price 0. It will still process transactions, still create new blocks, and it will still have a use for someone somewhere, even non-financial.

Crypto works just as well even if the price 0.

No. See other comments on this. Validation will most likely start to cease as the price drops below a certain motivational level.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#118

Post by mannerheim »

saalweachter wrote: post #113
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…

> (investments, debt, advertiser dollars, ...) I think the problem is that the first pipe is just investment/debt. You need a second pipe of money coming in -- ad revenue, sales, fees for services provided -- or else, as said, the money going back to investors can't exceed the money coming in from investment. As long as that second money pipe remains aspirational/marginal, there's just not much potential.

The second pipe is also what represents real value. Sellers buy ad space to find buyers (if they can't, the ad sale business isn't sustainable). Seller values what they sell at less than what the buyer pays (on average), and vice versa for the buyer. Both are better off, value is created.

What we have in crypto is as if somebody invented the Internet, and the only thing anybody used it for was to trade stock in Internet companies. Not companies in general, which would at least provide an external source of value, but only Internet companies in an overgrowing ouroboros of speculation upon itself.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#119

Post by noxer »

saalweachter wrote: post #113
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…

> (investments, debt, advertiser dollars, ...) I think the problem is that the first pipe is just investment/debt. You need a second pipe of money coming in -- ad revenue, sales, fees for services provided -- or else, as said, the money going back to investors can't exceed the money coming in from investment. As long as that second money pipe remains aspirational/marginal, there's just not much potential.

The flaw in all of this is that people who buy crypto are not investing in something so its entirely pointless whether there is something that generates revenue.

If you buy crypto you trade 2 assets like USD > BTC Its the same as if you buy baseball cards USD > baseball card

You bet on the value of one asset to increase over the other. The correct term for this is speculation [1] not investment [2].

Speculation doesn't require anyone to do any "work" (as in produce goods or services). Speculation required that there is or will be an imbalance in the supply and demand of the involved assets which can happen for infinite other reason that someone creating revenue while somehow being associated with that asset.

[1] https://en.wikipedia.org/wiki/Speculation [2] https://en.wikipedia.org/wiki/Investment

Re: Warren Buffet and Charlie Munger on crypto in 2018

#120

Post by rcarr »

noxer wrote: post #114
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…

If you would make the same circles but with different fiat currency on one side and difference fiat currency on the other side you would figure out that exchanging different fiat currency isn't generating any value therefore the Forex markets should not exists. And extending on that knowledge any currency from a country that produced more debts each year should be worthless. Reality check: Nope, both not true in the…

Not sure I agree with this. If you're trading fiat currencies as investment rather than out of travel necessity, you're essentially saying that you think that the governance of one country is over or undervalued in relation to another and you can profit from identifying that discrepancy. It doesn't matter if the country is creating more debt as long as you have faith in the governance of the country and their reasoning for taking out that debt is that it will lead to net value added in the long term.

This was very clearly illustrated recently in the UK. Kwarteng and Truss announced a budget that was going to increase the debt of the UK and allow them to give tax cuts to the rich. The markets didn’t see this as adding net long term value to the UK and the currency tanked as a result allowing a lot of people to profit from the forex trade.

The value added in a foreign exchange trade is security which is based on the real economic growth of the country behind the currency. If a country is well governed the value of your investment is safe and will grow. If it isn’t, then it will decline. Obviously you also have to be aware that some well governed countries may choose to purposely devalue their currencies as the US historically did (and may do again).

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