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Buffett: Bitcoin not a currency [video]

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Re: Buffett: Bitcoin not a currency [video]

#21

Post by Tloewald »

mnw21cam wrote: post #13
jeremysmyth wrote: post #2

His argument (that articles priced in bitcoin change their priced based on the value of a fiat currency such as USD) is valid as a qualitative judgement of bitcoin's utility as a currency, but isn't really a valid test of what is or isn't a currency. Case in point: The Zimbabwean dollar remained a currency through its hyperinflation period, and is still considered a currency (however useless) even though it is no lon…

Bitcoin isn't legal tender anywhere. One could argue that a currency is something which is legal tender somewhere in the world.

Yes but the argument at hand is that BTC is not a sensible unit of exchange. How much for a hotel room .... now, oh wait now, no no no I mean now?

Re: Buffett: Bitcoin not a currency [video]

#22

Post by tfinniga »

jeremysmyth wrote: post #2

His argument (that articles priced in bitcoin change their priced based on the value of a fiat currency such as USD) is valid as a qualitative judgement of bitcoin's utility as a currency, but isn't really a valid test of what is or isn't a currency. Case in point: The Zimbabwean dollar remained a currency through its hyperinflation period, and is still considered a currency (however useless) even though it is no lon…

Whether it's a currency is a separate discussion from whether it has value.

Currencies have value based on the stability of the government, how many goods are priced in that currency, the GDP and trade balance of the country, etc. I'd guess that Buffet is confident in his ability to measure the value of a currency.

Bitcoin is not a currency. I'd bet that Buffet doesn't feel confident about measuring the value of bitcoin.

Re: Buffett: Bitcoin not a currency [video]

#23

Post by NateDad »

Who cares if it's not a currency or store of value or whatever other economics 101 term? Could it be gone in 10-20 years? Sure. But I doubt it. And if it is, it's because something similar but somehow vastly better comes along (anything only slightly better cannot hope to compete with Bitcoin's network effect and name recognition).

Re: Buffett: Bitcoin not a currency [video]

#24

Post by Tloewald »

terranstyler wrote: post #12

Buffet IMO gets way too much credit for what he achieved. AFAIK his holdings in 2008 got bailed out, saving his financial empire from destruction. Frankly, I don't care what Buffet or Soros say and I don't see how they could have earned the money if not with corruption, insider trading, you name it ... Very unlike start-up founders where you exactly know why they got the money...

Buffett did not get bailed out. He was a small part of the effort to prevent a financial collapse.

Buffett is a long term investor. Soros is a currency speculator who sometimes manipulates markets to his own advantage. Could not be more different in terms of their methods. That said Soros has repeatedly proposed simple legal changes to put him and his kind out of business, but while it's legal and profitable to do what he does, he does it.

Re: Buffett: Bitcoin not a currency [video]

#25

Post by terranstyler »

terranstyler wrote: post #12

Buffet IMO gets way too much credit for what he achieved. AFAIK his holdings in 2008 got bailed out, saving his financial empire from destruction. Frankly, I don't care what Buffet or Soros say and I don't see how they could have earned the money if not with corruption, insider trading, you name it ... Very unlike start-up founders where you exactly know why they got the money...

Thanks for the downvote but see this for example:

http://www.wallstreetmanna.com/2009/11/warren-buffett-loves-...

or this:

http://truthingold.blogspot.com/2011/08/think-buffet-investm...

Re: Buffett: Bitcoin not a currency [video]

#26

Post by kaa2102 »

Money is a store of value, a medium of exchange, and a unit of account. Currency is money that is created and backed by the faith and credit of a Government. Central banks control the money supply with the aim of controlling inflation and/or maximizing employment. Bitcoins supply is fixed making it deflationary. Bitcoins function more like a commodity than a currency.

Re: Buffett: Bitcoin not a currency [video]

#27

Post by this_user »

dnautics wrote: post #19
terranstyler wrote: post #12

Buffet IMO gets way too much credit for what he achieved. AFAIK his holdings in 2008 got bailed out, saving his financial empire from destruction. Frankly, I don't care what Buffet or Soros say and I don't see how they could have earned the money if not with corruption, insider trading, you name it ... Very unlike start-up founders where you exactly know why they got the money...

specifically buffet has made a career of acquistions of medium and small family businesses which are being sold at distressed prices because of estate taxes. Moreover Berkshire Hathaway is in the insurance business, and life insurance is a way of circumventing the estate tax. Not surprisingly, buffet is an advocate of estate taxes. As for Soros, he is well known for manipulating the price of the pound. It's often lau…

> "As for Soros, he is well known for manipulating the price of the pound. It's often lauded as a 'brilliant move' but the net effect of what he did was to screw over poor and middle-class britons"

Depends on your POV. The BOE was manipulating its currency by trying to keep it stable and thus overvalued compared to other European currencies. Soros' fund forced the BOE to give up on that endeavour and let the pound find its fair value.

Re: Buffett: Bitcoin not a currency [video]

#28

Post by hawkharris »

Buffet is famous for having strong convictions as an investor. He refuses to invest in any business, industry or technology if he doesn't understand how it works.

Though his point about Bitcoin may be valid, we should take it with a grain of salt. Buffet is often predisposed to be standoff-ish about emerging (digital) technology.

Re: Buffett: Bitcoin not a currency [video]

#29

Post by maxerickson »

terranstyler wrote: post #25
terranstyler wrote: post #12

Buffet IMO gets way too much credit for what he achieved. AFAIK his holdings in 2008 got bailed out, saving his financial empire from destruction. Frankly, I don't care what Buffet or Soros say and I don't see how they could have earned the money if not with corruption, insider trading, you name it ... Very unlike start-up founders where you exactly know why they got the money...

Thanks for the downvote but see this for example: http://www.wallstreetmanna.com/2009/11/warren-buffett-loves-... or this: http://truthingold.blogspot.com/2011/08/think-buffet-investm...

He took a bet on Goldman Sachs and got it right. I'm pretty sure Berkshire Hathaway would have walked away from $9 billion in losses.

Not sure about 2009, but look here, they carry $30 billion in cash assets:

http://finance.yahoo.com/q/bs?s=BRK-A+Balance+Sheet&annual

It is hard to say how much of his success is due to his skill and how much of it is survivor bias (with him being the lucky lucky survivor). It's a neat issue.

Re: Buffett: Bitcoin not a currency [video]

#30

Post by tim333 »

Obviously it depends how you define 'currency'. Dictionary.com has at it's first meaning "something that is used as a medium of exchange" as it's first definition, for which bitcoin qualifies. From that point of view it is in some ways better than USD as there is less friction for international transfers.

In other ways it's different - most currencies are backed and regulated by governments. Though things like cigarettes have been used as currency in prisons. I guess the test is whether you can go buy stuff with the thing in which case bitcoin qualifies while gold does not.

The question of what units you use to price future transactions is interesting and more what Buffett is talking about. Like if I'm going to offer to sell you some oil next month I'll probably price it in $usd as that's conventional, and almost certainly not in bitcoin as who knows what it'll be worth in a months time. You could argue though that we could do with some other unit to price contracts, say something like average annual US wage divided by something, that would not be change value much with inflation in the way that fiat currencies do, so you could use it for say pension payments and say in 50 years we'll pay 0.5 average wages or some such which is kind of what you want rather than saying us$40k - who knows what that will buy in 50 years.

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