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Warren Buffett: Bitcoin Is Pure FOMO

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Re: Warren Buffett: Bitcoin Is Pure FOMO

#91

Post by tfolbrecht »

I appreciate the reporters critique, but what I believe they're missing is that there's an inherent value in the network and its market share in the space.

Bitcoin is not the check, it's the store of value and the bank. Bitcoin is the investors, developers, the miners, the ledger, wallets(accounts), the speculators, the store of value. Bitcoin is the headline maker in the WSJ, NYT, etc. That multilayered coupling is what makes BTC valuable.

The reporter talks about intrinsic value of companies, cash flow etc. The underlying healthy and stable economy is not some axiomatic truth. With BTC, You have all of the components to have currency emerge into existence and stay from bitcoins incentive system.

How much is it worth? That depends on what the alternatives are worth, and that evaluation changes every day. I hope it's long term near worthless, but you can never be too sure.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#92

Post by root_axis »

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.

Scarcity doesn't create value. A copy of my personal memoir is extremely scarce, yet the value is zero. Further, bitcoin only has the illusion of scarcity, and clearly that's enough, but as was demonstrated by BCH, the supply of coins can be trivially increased. Enthusiasts will argue "BCH is not BTC, they're two separate currencies", but this is missing the point that "crypo-tokens" are an unlimited resource that is artificially limited through a consensus that can change at any time.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#93

Post by PakG1 »

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.

You have a third group: hungry sharks who saw the feeding frenzy and are tantalizing at ripping the shirts off of the backs of the first two groups.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#94

Post by fragsworth »

PakG1 wrote: post #90

Scrolling through these threads, I am surprised at how many people are suggesting that Buffet just doesn't get it. That's possibly not wrong. Buffet's desire to not get into stuff he doesn't understand is well-documented. He traditionally has stayed away from tech investments for primarily that reason, and definitely doesn't do bleeding edge tech when he finally does do tech. As the OP alludes to, Buffet actually com…

His logic is very clear, and makes a lot of sense. The problem with it is that despite gold being a bad investment, its value is STILL $9.6 trillion. It has value because it is effectively deflationary, and can be used as a risk-management tool that works better than cash, allowing you to avoid inflation.

Buffet knows this, and I even recall that he bought a sizeable amount of silver a while back. I assume he also bought gold before too. He doesn't put the bulk of his assets in it. Most people don't. That's why Gold is only about 3% of the world's wealth.

Cryptocurrency's value is $600 billion, and by many arguments works better than gold for this purpose. This suggests to me that it would replace gold, making it potentially a good investment (even now). Once it replaces gold, it then only becomes a good hedge, and no longer a long-term investment.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#95

Post by njarboe »

billmalarky wrote: post #20
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…

The author sort of covers that in this line: >I counter that just about nobody thinks of American cash as an investment, except for perhaps currency speculators. Of course that sort of ignores the fact that bitcoin investors are currency speculators...

Before the interest rates crashed, many people put most of their money into saving accounts that paid more interest than inflation. They probably thought of this more as saving than investing, but what many people are looking for is a store of value that wont go down and pays a bit of interest. Historically getting 3% on very secure, gold denominated debt was the norm.

Savers don't necessarily want to be investors. Most people don't have the combination of time, interest, temperament, and intelligence to invest well. You used to be able to just buy US bonds or longer term CDs and do OK, but this is no longer the case. Now the savers are encouraged to buy broad market index funds using a time averaged purchase method and never sell the dips (or buy extra during the booms). This just does not sit well for moderately risk adverse people (and this risk aversion is also a trait that makes them want to have savings).

I think the smart money knows that a combination of factors has put the dollar in a less sound footing than in the past (rise of China, $20 trillion US debt, US baby boomer pension, social security, and medicaid obligations, decline in the dollar denominated global oil market, etc) and no long want to hold US dollar based assets (US bonds, US cash, US corp debt, etc). In fact you see a lot of the rich piling up US dollar debt against their assets.

Regular people are now also feeling the fiat currencies are no longer a good store of value, still want to save, but don't want to be investors. So what to save? Copper ingots? Bushels of wheat? Barrels of oil? Bitcoin or some other cryptocurrency could be it. Maybe a few of them could be, but for now they look like a crazy frenzy of Ponzi schemes. The regular public is getting sucked in with many stories of 10x in a year returns and are not familiar with previous 80% crashes. If a a single cryptocurrency does become the default store of value for the masses of conservative savers then another 100x from current price levels is not unreasonable. Bitcoin seems the most likely candidate at the moment.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#96

Post by empraptor »

adamnemecek wrote: post #69
cptskippy wrote: post #23

Earlier quoted context omitted.

Couldn't it also be that he does "get it" and all the young and inexperienced investors/speculators don't?

I'm not going to try to refute your argument (even though I might disagree with it), I'm going to assume that what you say is right. Ok, why does it matter if he does get it and the young investors don't if the young investors can participate in a new economy. Like what is there to get? If they establish a new economy, who cares if Warren gets it?

I don't think most of the young investors these days are participating in a new economy. They are just trading Bitcoin as commodity on exchanges. In which case if they don't get it and Warren does, that's a problem for them.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#97

Post by 0x445442 »

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…

This! When a company comes along that can pull off a 1/1 mapping of an electronic token to a given currency and build out the trust less blockchain like infrastructure that allows for transactions at little to no cost that company will have value.

I'm really intrigued by things like Ripple but to me the value there isn't XRP but is Ripple Labs. But AFAIK I can't buy stock in Ripple Labs.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#99

Post by twelve40 »

PakG1 wrote: post #90

Scrolling through these threads, I am surprised at how many people are suggesting that Buffet just doesn't get it. That's possibly not wrong. Buffet's desire to not get into stuff he doesn't understand is well-documented. He traditionally has stayed away from tech investments for primarily that reason, and definitely doesn't do bleeding edge tech when he finally does do tech. As the OP alludes to, Buffet actually com…

Here, let me try:

In my humble opinion, at today's PE ratio of 43.57, stock price of Coke is completely detached from "the actual cash flow of the business" and is also FOMO and good mostly for speculation. In fact, people are complaining that value is near impossible to find in the current market. Anyone who enters KO at 43.57 (let's say you're just got some money to invest) is risking a ton more than Buffet.

"investors pounced on fixer-uppers" is also not a very compelling example by the author, where i live (bay area) investors wiped out all fixer-uppers 6 years ago already and are now bidding in the millions for what looks like dog sheds.

Bitcoin is detached from fundamentals and should drop to 0? Maybe. Is Coke justified at 43 PE and not 14? Who knows? Of course, anyone who entered it years ago at <20 may not really care.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#100

Post by adamnemecek »

empraptor wrote: post #96
adamnemecek wrote: post #69

Earlier quoted context omitted.

I'm not going to try to refute your argument (even though I might disagree with it), I'm going to assume that what you say is right. Ok, why does it matter if he does get it and the young investors don't if the young investors can participate in a new economy. Like what is there to get? If they establish a new economy, who cares if Warren gets it?

I don't think most of the young investors these days are participating in a new economy. They are just trading Bitcoin as commodity on exchanges. In which case if they don't get it and Warren does, that's a problem for them.

Exchange is the foundation of any new economy. By creating exchanges, they are creating a foundation of the next economy.
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