Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Warren Buffett: Bitcoin Is Pure FOMO

secure.marketwatch.com

Post reply on HN
Print view View original

151–160 of 196 posts

Re: Warren Buffett: Bitcoin Is Pure FOMO

#151

Post by acoye »

XR0CSWV3h3kZWg wrote: post #144

He didn't say that. That's what the author of the article said. Of course Warren buffett doesn't like it. He has made his name on being able to tell if a stock's price is above or below it's fundamentals. Bitcoin doesn't have fundamentals and it doesn't pay dividends.

I would like to argue Bitcoin has a fundamental. The number of people using it and making up its value.

`Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2)` https://en.wikipedia.org/wiki/Metcalfe%27s_law

Re: Warren Buffett: Bitcoin Is Pure FOMO

#152

Post by imtringued »

adamnemecek wrote: post #42
JumpCrisscross wrote: post #28

Earlier quoted context omitted.

> A lot of other countries dont have that luxury The intersection of (a) countries with reliable Internet access and broadly-available Internet-connected devices, (b) a useless national currency and (c) effective controls on the use of cash hard currency is small. The GDP of that intersection certainly doesn't support anything close to Bitcoin's price.

You don't need A. Re B, which countries have a useful currency really? Say Hungarian Forint. Do you consider that a useful currency? Ok what do you think would be a justified price and why?

A useful currency is a stable currency with predictable small inflation or deflaction. It doesn't really matter if this currency is implemented with people having "faith" in the currency, backing the currency with real assets or via a blockchain without a central bank.

A "currency" that can rise or fall by 30% on a single day is not useful as a currency.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#153

Post by AznHisoka »

tootie wrote: post #128
noncoml wrote: post #127

Earlier quoted context omitted.

> 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…

The political/economic climate around the time bitcoin caught on was also the Ron Paul/Austrian economics fad. They were calling the end of the USD and fiat currencies because central banks were risking hyperinflation. Lots of people were calling for a return to gold. BTC seemed even better. I think it's safe to say they were completely wrong about everything and orthodoxy won the day.

Weird, is Austrian economics a fad? I always thought it was a legitimate, alternative model of economics that was just as valid (if not more) as Keynesian.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#154

Post by noncoml »

primrose wrote: post #150
Clubber wrote: post #146

Earlier quoted context omitted.

One of the main reasons we got off the gold standard is in fact the scarcity of it was a shackle. Imagine if, say China decided to hoard gold, how much of an influence that artificial scarcity would have on all the other economies that could only value things in gold? The US has 75% of all the world's reserves. http://www.usfunds.com/investor-library/frank-talk/top-10-co... Also, there is finite value in the total am…

> Why buy a truck for 1oz of gold today when I could buy two for the same amount next year? Because someone needs a truck now. Deflation makes people more fiscally responsible, not less.

You are both saying the same thing. You only buy a truck today if you absolutely need it.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#155

Post by XR0CSWV3h3kZWg »

acoye wrote: post #151
XR0CSWV3h3kZWg wrote: post #144

He didn't say that. That's what the author of the article said. Of course Warren buffett doesn't like it. He has made his name on being able to tell if a stock's price is above or below it's fundamentals. Bitcoin doesn't have fundamentals and it doesn't pay dividends.

I would like to argue Bitcoin has a fundamental. The number of people using it and making up its value. `Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2)` https://en.wikipedia.org/wiki/Metcalfe%27s_law

The air can be thought of as a telecommunications network that everyone is connected to. Sure signal loss is a problem, but that can be fixed by amplification.

That doesn't mean that you should invest in air.

When I said fundamentals I meant something more on the lines of:

    cash flow
    return on assets
    conservative gearing
    history of profit retention for funding future growth
    soundness of capital management for the maximization of shareholder earnings and returns
Bitcoin has none of those. Bitcoin does not have cash flow as the protocol doesn't take in or give out cash. There is no return on assets because there is no income. Conservative gearing means nothing here.

Taken from https://www.investopedia.com/articles/fundamental/03/022603....

I am long on bitcoin, but not because it has any of the properties of a stock.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#156

Post by AznHisoka »

notyourwork wrote: post #41
juanmirocks wrote: post #27

Sending small to large quantities of wealth worldwide quasi instantly and with small fees does have a tremendous value. Ask families of immigrants. Buffet hasn’t even invested in digital tech stocks. IMO, even after all the huge respect he deserves, he doesn’t get this technology. Other than that, I don’t doubt that many current “investors” are only FOMO movers

I agree and it makes me wonder how much the current price is drive by these FOMO investors versus actual believers. If we removed the first group does the price settle somewhere lower like $10k? I don’t really know but the surge is interesting.

Heres a good thought experiment. How much would people pay for 1 bitcoin if they could never ever sell it(just exchange it for goods)?

another one is: how much would people pay if you did not know the true “market value”? ie you dont know what people are selling a bitcoin for.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#157

Post by Clubber »

primrose wrote: post #150
Clubber wrote: post #146

Earlier quoted context omitted.

One of the main reasons we got off the gold standard is in fact the scarcity of it was a shackle. Imagine if, say China decided to hoard gold, how much of an influence that artificial scarcity would have on all the other economies that could only value things in gold? The US has 75% of all the world's reserves. http://www.usfunds.com/investor-library/frank-talk/top-10-co... Also, there is finite value in the total am…

> Why buy a truck for 1oz of gold today when I could buy two for the same amount next year? Because someone needs a truck now. Deflation makes people more fiscally responsible, not less.

Right, but in economies, that's a bad thing. (less spending, less demand, fewer jobs, repeat, downward spiral, economic collapse).

Re: Warren Buffett: Bitcoin Is Pure FOMO

#158

Post by mancerayder »

root_axis wrote: post #86
juanmirocks wrote: post #27

Sending small to large quantities of wealth worldwide quasi instantly and with small fees does have a tremendous value. Ask families of immigrants. Buffet hasn’t even invested in digital tech stocks. IMO, even after all the huge respect he deserves, he doesn’t get this technology. Other than that, I don’t doubt that many current “investors” are only FOMO movers

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…

Western Union takes up to 10%! Of people's wages, often cash wages of low income people. You're assuming I think incorrectly that the value add won't cause people to find another way to circumvent. Either learn how to transfer BTC yourself, use a system someone else wrote that your friend told you about, or even use a different crypotocurrency.

Secure isn't a problem if you don't assume every exchange is a Mt Gox waiting to happen.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#159

Post by sprafa »

AznHisoka wrote: post #153
tootie wrote: post #128

Earlier quoted context omitted.

The political/economic climate around the time bitcoin caught on was also the Ron Paul/Austrian economics fad. They were calling the end of the USD and fiat currencies because central banks were risking hyperinflation. Lots of people were calling for a return to gold. BTC seemed even better. I think it's safe to say they were completely wrong about everything and orthodoxy won the day.

Weird, is Austrian economics a fad? I always thought it was a legitimate, alternative model of economics that was just as valid (if not more) as Keynesian.

Both the Keynesian and the Austrian models have been shown to be flawed and incomplete understandings (from what I understand of it). They can explain some things, but they break down, and in those breakdowns we had crises - keynesian thinking was abandoned after the 70s crisis, and now monetarism is being (slowly and reluctantly) abandoned after 2008.

I find that the assumptions on both models, that humans can measure and act according to their own preferences, might be one of the core issues with economics today. In fact if you keep to that idea economics is more of a religion than fact. There's very little evidence that humans act rationally in economic situations. There's accumulating evidence they don't. Economics makes more sense if you come at it from psychology from my view: humans are irrational and so are markets. Rational thinking is the exception, not the norm (might be an odd idea for the HN audience, but think about everyone else...)

Re: Warren Buffett: Bitcoin Is Pure FOMO

#160

Post by njarboe »

coldtea wrote: post #132
aetherson wrote: post #113

Earlier quoted context omitted.

> 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 ar…

Those few and far between opportunities is what the consistently great investors shoot for. I think I might agree with Warren Buffet and his view of investing. If you are a professional investor, patience and rare (every few years) big bets when things look very good. Otherwise, full market index funds.
Post reply on HN