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Warren Buffett: Bitcoin Is Pure FOMO

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Re: Warren Buffett: Bitcoin Is Pure FOMO

#171

Post by lamontcg »

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…

> 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.

It takes both supply and demand to create a price.

If demand evaporates then the price can crater even though the supply remains constant.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#172

Post by lamontcg »

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

If people start to run for the exits, then that number goes down and there's no floor under that number. The system can unwind in a panic until nobody is using the system and the value of the system becomes zero. Which means that isn't any kind of fundamental value, you're just measuring popularity. Fundamentals are supposed to provide support to value when a security becomes unpopular and untrendy.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#173

Post by dilap »

lamontcg wrote: post #172
acoye wrote: post #151

Earlier quoted context omitted.

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

If people start to run for the exits, then that number goes down and there's no floor under that number. The system can unwind in a panic until nobody is using the system and the value of the system becomes zero. Which means that isn't any kind of fundamental value, you're just measuring popularity. Fundamentals are supposed to provide support to value when a security becomes unpopular and untrendy.

sure but that's the same as like banks and traditional money, right?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#174

Post by adamnemecek »

imtringued wrote: post #152
adamnemecek wrote: post #42

Earlier quoted context omitted.

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.

We are very early on. Like' it's still very much in the beta stage.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#175

Post by mr_spothawk »

Clubber wrote: post #157
primrose wrote: post #150

Earlier quoted context omitted.

> 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).

> Right, but in economies driven by unchecked consumption, that's a bad thing.

FTFY

Re: Warren Buffett: Bitcoin Is Pure FOMO

#176

Post by pttrpttrwttr »

BoorishBears wrote: post #14
bcherny wrote: post #4

Earlier quoted context omitted.

> I can go to Africa right now and I can imagine that even some of the remoter parts will be aware of bitcoin. The Bay Area, ladies and gentlemen. In all seriousness, I doubt people in most of the world have heard of either.

As a person from (West) Africa, I can tell you they've not only heard of Bitcoin but they're mining it, even in villages.

Pakistani here, you really expect us to believe that in countries without reliable electricity in rural areas, nevermind reliable broadband internet access, and 40% literacy rates people who, looking at the average GDPs of countries in the region couldn't possibly afford the necessary computing power are mining Bitcoin?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#177

Post by GenericsMotors »

BoorishBears wrote: post #14
bcherny wrote: post #4

Earlier quoted context omitted.

> I can go to Africa right now and I can imagine that even some of the remoter parts will be aware of bitcoin. The Bay Area, ladies and gentlemen. In all seriousness, I doubt people in most of the world have heard of either.

As a person from (West) Africa, I can tell you they've not only heard of Bitcoin but they're mining it, even in villages.

Interesting. Could you please describe how such a mining operation is setup in one of these villages?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#178

Post by jhanschoo »

dpc_pw wrote: post #170
noncoml wrote: post #169

Earlier quoted context omitted.

> Yes. That's why I've never bought a computer - next year there will be a faster and cheaper one on the market. And that's why people regularly starved before fiat currencies were introduced. They were just hoping they can buy more food tomorrow for the same money. > People don't need encouragement to spend. They need encouragement to save. Whoever thinks otherwise, should talk a bit about it with an average America…

Because, after factoring-in the business risk, the expected return is 5%, and 5 is bigger than 3. Or 10%, or 20%. Eventually, some business opportunities are better than sitting on a pile of cash.

You're adopting the micro perspective to a macro problem of a finite supply of coins.

Finite supply means that on average, net coin-profit of a business is zero coins. With such poor odds, why should someone go into business? Inflation incentivizes investment since you know that on average, a business opportunity has better ROI than saving.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#179

Post by C14L »

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…

Bitcoin was a "first iteration" of digital currency. It has shown some problems. It started by allowing you to send money fast and cheap to other parties. That advantage is gone for Bitcoin. Transaction costs are huge now, and it can take hours for a transaction to get confirmations.

But there are many other digital currencies that try to solve those and other problems. Even currencies that implement the Distributed Ledger without the Blockchain, where no "Mining" is required for the network to function, and therefore no large energy requirements and no cost for transactions.

We are still at the beginning of the technology.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#180

Post by aiCeivi9 »

coldtea wrote: post #134
koonsolo wrote: post #110

Earlier quoted context omitted.

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?

It is true, check for example http://mgafrica.com/article/2015-03-03-mobile-come-first-in-... . Paying by phone is popular and has much lower bandwidth/storage requirements than bitcoin will ever have: http://edition.cnn.com/2017/02/21/africa/mpesa-10th-annivers...
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