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Buffett: Bitcoin not a currency [video]

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Re: Buffett: Bitcoin not a currency [video]

#41

Post by Tyrannosaurs »

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…

Does Bitcoin meeting a dictionary definition of a currency (that is being a medium of exchange) really matter given his actual point (which you've clearly understood)?

Also, if your defence of Bitcoin as a currency is to compare it to the Zimbabwean Dollar (a currency ridiculed and later abandoned) then is it OK if I ever need a lawyer that I pass on you and go to the next guy? ;-)

Re: Buffett: Bitcoin not a currency [video]

#42

Post by Cless »

Bitcoin isn't a currency by most textbook definitions. As Bitcoin is now, it will never replace fiat currencies because it is not a stable store of value (among other reasons). For now, Bitcoin is just another way to send fiat and something of an investment.

So Bitcoin fanatics who believe Bitcoin will replace fiat are wrong - unless they're willing to accept major changes to the system that go against their usual beliefs. (And even then, I doubt many governments would sit idly by, for good reason.) But for practical people who don't want to deal with buyer fraud, exorbitant fees, and lack-of-privacy, Bitcoin is great.

Buffett may be a killjoy and trying to preserve the current system which tends to benefit the wealthy and well-connected. I'd guess he probably has a lot of stake in that. But he is correct for now.

Re: Buffett: Bitcoin not a currency [video]

#43

Post by nly »

JonSkeptic wrote: post #5
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…

The Zimbabwean dollar analogy is appropriate. Throughout its wild swings and hyperinflation, it was backed by a government. Bitcoin is backed by nothing at all. One is a currency, the other is a commodity.

Fiat is only "backed by government" in the sense that you're forced to obtain it to pay debts and taxes. Other than that, the Fed can print more to prevent deflation and the Government can act politically to try and stem inflation. There are limits to that control.

Re: Buffett: Bitcoin not a currency [video]

#44

Post by nly »

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.

If I had 30 million British pennies it wouldn't be legal tender, because nobody is required to accept that volume by law. Does that mean my 30 million pennies aren't currency?

Re: Buffett: Bitcoin not a currency [video]

#45

Post by [deleted] »

nly wrote: post #43
JonSkeptic wrote: post #5

Earlier quoted context omitted.

The Zimbabwean dollar analogy is appropriate. Throughout its wild swings and hyperinflation, it was backed by a government. Bitcoin is backed by nothing at all. One is a currency, the other is a commodity.

Fiat is only "backed by government" in the sense that you're forced to obtain it to pay debts and taxes. Other than that, the Fed can print more to prevent deflation and the Government can act politically to try and stem inflation. There are limits to that control.

[deleted]

Re: Buffett: Bitcoin not a currency [video]

#46

Post by chii »

tfinniga wrote: post #22
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 bitc…

I think you may have gotten it the other way around - Buffet doesn't feel confident about measuring/guestimating the value of bitcoins, and so he doesn't consider it a currency. A while ago, i read that Buffet's investment strategy is to find companies/stock that is undervalued, and buy it. That means his mindset is that any investment must be made by first making value judgements. In the case of bitcoins, he must be judging the volatility of bitcoins is way too high, and that investing in it isn't a good return on investment.

Re: Buffett: Bitcoin not a currency [video]

#47

Post by chii »

maratd wrote: post #32
hawkharris wrote: post #28

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.

> Though his point about Bitcoin may be valid, we should take it with a grain of salt. Why? His point is valid. Just because something is digital doesn't make it magical and certainly doesn't make it a good idea. For all intents and purposes, the dollar has been digital for a while. Certainly, there is the analog equivalent and certainly it is centralized, but it's definitely digital. I want a pure decentralized digi…

> a pure decentralized digital currency as much as the next guy, but bitcoin is definitely not there yet

i would say bitcoin is the closest contender yet, compared to all prior art in digital currency.

Re: Buffett: Bitcoin not a currency [video]

#48

Post by iambateman »

hawkharris wrote: post #28

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.

What Buffett means by "understands how it works" is to say he understands how the businesses finance works. As an investor in coke, I'm sure he doesn't know much about making the drink.

When WB says he doesn't understand the business of bitcoin, it's because NO ONE understands the business of bitcoin. The market is a wild west of boom and bust every year. Buying bitcoin is speculating, not investing.

Re: Buffett: Bitcoin not a currency [video]

#49

Post by chii »

Tloewald wrote: post #24
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 wh…

I have respect for people who can find the "loopholes" in the system, exploit it, but also work to close it. This is a process in which a selfish individual can slowly improve the overall system, while not having to behave altruistically.

Re: Buffett: Bitcoin not a currency [video]

#50

Post by TeMPOraL »

ck2 wrote: post #7
doyoulikeworms wrote: post #6

Earlier quoted context omitted.

Yup, this video is a subset of that interview. Thanks for the transcript, by the way.

Would have posted it but for some reason HN has taken away my posting privileges. All my links are auto-dead now. I can only comment :-(

Your last submissions were about Ukraine and the current situation there; maybe some mod got trigger happy with banning "mainstream news" posts?

:(

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