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Warren Buffett: Bitcoin Is Pure FOMO

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Re: Warren Buffett: Bitcoin Is Pure FOMO

#131

Post by adventured »

noncoml wrote: post #127
mholmes680 wrote: post #11

"Rather, dollars are a temporary store of value, a means of transmitting that value from one person to another. As Buffett says, valuing bitcoin is like trying to value a paper check drawn on a bank. Pointless." I agree with the premise of the article, but isn't this quote a jump from that? Whats preventing bitcoin from being a temporary store of value to transmit from one person to another; Isn't there a second argu…

> its a bad _currency_ The problems that I see are: 1. There is a finite number of bitcoins, which means you can never have inflation, or in other words the bitcoin price is only going up tomorrow. So it doesn't make sense for people to spend it. 2. Mining. It costs a lot to mine a bitcoin. Imagine if the US government had to spend 1 billion worth of energy to print 1 billion dollars. I think Bitcoin was designed to…

> or in other words the bitcoin price is only going up tomorrow

That depends on both it remaining valuable technologically and in terms of adoption, neither of which will sustain over time. Bitcoin will die due to replacement if nothing else, the market will innovate until Bitcoin is worthless. It's AltaVista.

It makes sense for people to spend it if: 1) there is actually a bubble and the average value for Bitcoin over the coming years is lower; or 2) if Bitcoin is going to get replaced in the next 3 to 5 years and this general time frame is the highest Bitcoin will ever be.

In the best case scenario it may take a decade to reclaim whatever high Bitcoin puts in during this mania phase. That's typical of bubble pricing, even the things that have legitimate value often take many years to again reach their former high valuations. That's if it doesn't get supplanted in the meantime.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#132

Post by coldtea »

aetherson wrote: post #113
JumpCrisscross wrote: post #89

Earlier quoted context omitted.

> Nobody thinks of American cash as an investment, except for perhaps those who invest in it Most buyers of U.S. dollars buy it for non-speculative purposes. Out of those who speculate on it, most do so in tandem with buying bonds and borrowing. Most FX is a cousin of rates trading more than hoping your currency goes up.

> Most buyers of U.S. dollars buy it for non-speculative purposes. Sure! I didn't say, "except for perhaps those who buy it," I said, "for those who invest in it." > Out of those who speculate on it, most do so in tandem with buying bonds and borrowing. Most FX is a cousin of rates trading more than hoping your currency goes up. I agree, but don't feel like we would split these kinds of hairs when talking about other…

>Sure! I didn't say, "except for perhaps those who buy it," I said, "for those who invest in it."

Well, if those are statistically insignificant outliers, then "nobody" still stands, as it's a colloquialism for "very few people" or "only stupid ones" -- it doesn't really mean "absolutely no one in the history of the world".

Except if you mean people like Soros and co, speculating on national currencies (but those are few and far between too)

Re: Warren Buffett: Bitcoin Is Pure FOMO

#133

Post by coldtea »

tedmiston wrote: post #129
thisisit wrote: post #106

Buffett has described investing as ability to find the right pitch to swing at. He invests in companies which are within his "circle of competence": https://www.cnbc.com/2017/02/02/warren-buffett-simplifies-in... This lesson is apparently lost on many people.

Buffett's whole approach to valuing companies to invest in doesn't really work for tech cos, especially software.

Prudence?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#134

Post by coldtea »

koonsolo wrote: post #110
root_axis wrote: post #86

Earlier quoted context omitted.

When will this false narrative finally die? Bitcoin is practically useless for remittance; I know this from first-hand experience. Bitcoin has to be converted into useable money by the recipient and that process is very inconvenient, slow, expensive and possibly dangerous if you follow the advice of bitcoin enthusiasts and meet up with random sellers in the street. All of this also presumes the recipient is technical…

From the article at the bottom: About a third of the customers queuing at La Maison du Bitcoin’s teller windows in Paris aren’t speculating on the value of the cryptocurrency. They’re sending digital money home to Africa. “In many countries in Africa, there are far more cellphones than bank accounts,” said Manuel Valente, co-founder of La Maison. “For bitcoin, all you need is a phone.” https://www.bloomberg.com/news/…

Is it true though? Or journalistic exaggeration of some insignificant (in quantity) activity?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#135

Post by tedmiston »

coldtea wrote: post #133
tedmiston wrote: post #129

Earlier quoted context omitted.

Buffett's whole approach to valuing companies to invest in doesn't really work for tech cos, especially software.

Prudence?

More specifically, his approach of value investing / choosing to invest in companies per an intrinsic value based on fundamentals.

https://www.investopedia.com/articles/01/071801.asp

Re: Warren Buffett: Bitcoin Is Pure FOMO

#136

Post by otp124 »

juanmirocks wrote: post #115
otp124 wrote: post #74

Earlier quoted context omitted.

> Sending small to large quantities of wealth worldwide quasi instantly and with small fees does have a tremendous value. Ask families of immigrants. I live in a foreign country, and I do pretty easily & regularly with TransferWise, with less fees than Bitcoin (another thread today mentioned $30 fee for $100 tx). Don’t see the value of bitcoin here. > Buffet hasn’t even invested in digital tech stocks. IMO, even afte…

Answering you here but answering many too. I don’t mean BTC in particular, I mean cryptocurrencies in general. Yes, BTC and ETH currently are suffering slow downs. These both assets and many more will overcome those challenges. The tech is relatively in its infancy.

This literally didn’t address any of my replies.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#137

Post by adventured »

tedmiston wrote: post #129
thisisit wrote: post #106

Buffett has described investing as ability to find the right pitch to swing at. He invests in companies which are within his "circle of competence": https://www.cnbc.com/2017/02/02/warren-buffett-simplifies-in... This lesson is apparently lost on many people.

Buffett's whole approach to valuing companies to invest in doesn't really work for tech cos, especially software.

It works on some fronts. He particularly likes to invest into businesses with moats. It's a theme he has spoken about constantly for decades. His personal problem is he doesn't understand technology businesses well enough to identify what those are or when they exist. It's equivalent to the specialized knowledge required to understand which biotech companies have competitive advantages or not, Buffett would also fail on that knowledge front (that is, he'd fail at it, not due to the lack of moats existing, but due to his own inability to understand the businesses).

Microsoft, Intel, Cisco, Facebook, eBay, Amazon, Google - all tech companies with massive moats around them (now or in the recent past) that have helped to protect their core monopolies (or quasi-monopolies). Microsoft had a ~13 PE ratio five years ago (while paying a dividend), Apple was down to something like an 11 PE (pre the recent market bubble run); those are the kind of valuations Buffett likes in quality companies. So why'd he wait to invest into Apple until after it had already gone up so much (why didn't he buy it early into the iPhone ramp)? For the same reason he made a bad investment mistake with IBM, he doesn't understand the technology business at all (he thought Watson was some kind of special competitive advantage, that it'd be a dynamite business etc; he had no idea what he was talking about, it was out of his expertise to pick the winners in that area).

Microsoft had an epic moat circa 1995. Buffett was friends with Gates at the time. Why didn't he invest? Microsoft was an adjusted $5 / share in 1995, it's $85 now (and has paid out a lot in dividends etc). In that time it has generated several hundred billion dollars in profit. Buffett has publicly stated it was because he had no particular ability to understand their business, to identify its competitive advantages; that doesn't mean those things didn't exist. Others with specialized knowledge of tech could identify those advantages. Google as another example has had an extraordinarily obvious monopoly moat in search for 13 or so years at this point.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#138

Post by tbabb »

mholmes680 wrote: post #11

"Rather, dollars are a temporary store of value, a means of transmitting that value from one person to another. As Buffett says, valuing bitcoin is like trying to value a paper check drawn on a bank. Pointless." I agree with the premise of the article, but isn't this quote a jump from that? Whats preventing bitcoin from being a temporary store of value to transmit from one person to another; Isn't there a second argu…

This article talks in more detail about that: http://www.bzarg.com/p/what-bitcoin-shows-us-about-how-money...

Bitcoin is a bad currency because it doesn't count value consistently. And it never could, because there is no central bank to regulate supply to balance an inevitably fluctuating demand.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#139

Post by geezerjay »

juanmirocks wrote: post #116
JumpCrisscross wrote: post #48

Earlier quoted context omitted.

> Buffet hasn’t even invested in digital tech stocks Apple is not a tech stock?

He only invested in it this year, and because, by his own comments, he doesn’t see Apple purely as a tech company any more, but a services one.

> he doesn’t see Apple purely as a tech company

That doesn't mean Apple isn't a tech company (one of the biggest there is), and consequently that this particular complain isn't nonsense.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#140

Post by UncleMeat »

rlefebvre wrote: post #85
hannasanarion wrote: post #61

Earlier quoted context omitted.

Yeah, that's like saying that a pound of shredded bills has value. Like, yeah, you can trade it, and yeah, value was spent to create it, but you can't get that back. It's not like buying bitcoin gives you back electricity.

It is the scarcity that creates the 'value'. Unless everybody walks away from the idea that it is worth something (may happen), then its value is still driven by how difficult it is to create some.

The total volume of my excrement over the course of my lifetime is scarce. Yet it is worthless to investors. Scarcity alone does not make something valuable.
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