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Warren Buffet and Charlie Munger on crypto in 2018

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Re: Warren Buffet and Charlie Munger on crypto in 2018

#91

Post by phyalow »

bell-cot wrote: post #80
chii wrote: post #51

Earlier quoted context omitted.

A casino is an analogue to crypto. The house takes in money, and produces entertainment. Some people also leave with more money than they go in, but most lose it all.

Yes - but any decently-managed casino is extremely careful in managing their cash, cashflow, and fiat money supply (chips), to make sure that: (1) they make real money, and (2) their chips hold their value against real money. Crypto, on the other hand...

You might be familiar with Jump Capital, Jane Street, DRW, Hudson River Trading etc all deal in crypto and act in the way you describe.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#92

Post by Nursie »

jgilias wrote: post #46
tokai wrote: post #17

Earlier quoted context omitted.

>I admit to seeing some valuable use-cases Could you write them here? Genuinely curious.

Two real life datapoints. 1. A friend of mine has a small software consultancy. He usually works within EUR area. All fine and dandy there. Then there was a client in the US, they agreed on a USD rate for his work. He went to his bank to open a USD account, they did additional AML and KYC procedures and just refused to open a USD account. Didn’t even explain why, he’s not doing anything shady. So, the first USD payme…

1. Services like Wise seem to solve this, I can add currencies to my account there pretty much at the touch of a button. Rates are good and conversion fees low.

2. Less sure about this one!

Re: Warren Buffet and Charlie Munger on crypto in 2018

#93

Post by Nursie »

StingyJelly wrote: post #60
CPLX wrote: post #47

Earlier quoted context omitted.

Bitcoin doesn’t have a market cap. This is true because if you somehow could pay $300bn today and then possess all bitcoins you would have acquired literally nothing whatsoever. This, in fact, is exactly what these guys are pointing out.

If you could pay $300bn today, you wouldn't be able to possess all bitcoins.

Certainly, but then if you possessed all bitcoins, you wouldn't able to sell them for 300 billion either.

The "market cap" metric has always been meaningless.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#94

Post by wakamoleguy »

wakamoleguy wrote: post #85
rcarr wrote: post #32

I've always found this excerpt from a Doomberg article sums the whole thing up nicely: > We distinctly recall drawing two circles on a piece of paper. In the circle on the left, we wrote "Real Economy"; while in the circle on the right we wrote "Crypto Universe". We drew two pipes between the circles - one flowing into the crypto universe and the other flowing back to the real economy - and labeled both pipes with fi…

What part of that diagram would break down for a company within the 'real economy'? Naively, if I am running a SaaS company, I receive fiat in and pay fiat out. It's the same two pipes. It's just that some of the fiat coming out is going to shareholders. The 'value' that the service is providing only justifies who the fiat is going to, not how much there is.

I suppose one answer is that the diagram does still work for non-crypto companies. Reading the analysis that way, the simple conclusion is that they didn't see the value being created. However, it's not impossible that it could have been created.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#95

Post by Nursie »

kelthuzad wrote: post #11

I personally don't own any Bitcoin, but would you have bought it in 2018 you'd still be up approx. ~370% at the current dip, while you would have been profitable a whopping ~1700% at ATH. I find their contrarian takes rather regressive and self-serving.

Unless you bought in early January 2018, when you'd still be down.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#96

Post by sokoloff »

prepend wrote: post #39
tinco wrote: post #25

Everyone with half a brain has predicted the failure of NFT's and the collapse of ridiculous get rich schemes such as FTX. The big problem is when recognising the (small amount) of value that actually is in the cryptocurrency/defi industry, to put your money to work in a smart manner. Sequoia is clearly not able to do so reliably, but in general it's incredibly hard to be long on a market that's so overhyped as crypt…

I think the difference is that there are many tech stocks that aren’t overhyped and are delivering things of value to the market, paying dividends, and rightly appreciating (eg, apple, Microsoft, Amazon, etc). I don’t think there’s any examples of crypto that have had virtuous payouts in the past 10 years. Everything is based on some future payout and luring in greater fools. So I don’t think the comparison is valid…

General agreement, with minor clarification: AMZN has never paid a dividend, at least to my knowledge; they certainly don’t do it regularly.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#97

Post by paulryanrogers »

pontus wrote: post #88
rcarr wrote: post #32

I've always found this excerpt from a Doomberg article sums the whole thing up nicely: > We distinctly recall drawing two circles on a piece of paper. In the circle on the left, we wrote "Real Economy"; while in the circle on the right we wrote "Crypto Universe". We drew two pipes between the circles - one flowing into the crypto universe and the other flowing back to the real economy - and labeled both pipes with fi…

Isn't that true of anything that doesn't include the fed? I mean unless you can print money, you can't change the amount of fiat in any subset of the economy. You can still add value though which would be evident by more people wanting a piece of whatever pie there is, driving more fiat into the subset and/or creating paper gains which is a sort of money in itself, but this is true for crypto as well. For example, I…

Because Google can sell the attention of billions of people, albeit only in small ad slots. That's quite an asset. Then they have DCs, mountains of computers, and office buildings. So worst case those can be sold off.

Crypto has some NFTs no one really wants.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#98

Post by JumpCrisscross »

pontus wrote: post #88
rcarr wrote: post #32

I've always found this excerpt from a Doomberg article sums the whole thing up nicely: > We distinctly recall drawing two circles on a piece of paper. In the circle on the left, we wrote "Real Economy"; while in the circle on the right we wrote "Crypto Universe". We drew two pipes between the circles - one flowing into the crypto universe and the other flowing back to the real economy - and labeled both pipes with fi…

Isn't that true of anything that doesn't include the fed? I mean unless you can print money, you can't change the amount of fiat in any subset of the economy. You can still add value though which would be evident by more people wanting a piece of whatever pie there is, driving more fiat into the subset and/or creating paper gains which is a sort of money in itself, but this is true for crypto as well. For example, I…

> unless you can print money, you can't change the amount of fiat in any subset of the economy

Credit is money. Anyone who can create credit can create money.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#99

Post by Nursie »

ekianjo wrote: post #68
HermanMartinus wrote: post #33

Earlier quoted context omitted.

Turns out we govern small scale institutions pretty well without blockchain. Eg: companies, collectives, organisations, associations, etc.

"Pretty well" is your description of this total mess of a financial system that crashes like a clock every ten years? You forgot the /s at the end of your comment

Really? The great crash of 08 was a thing, but IIRC 2018 wasn't a crash year.

Pretty bad clock.

Re: Warren Buffet and Charlie Munger on crypto in 2018

#100

Post by sokoloff »

zanderxyz wrote: post #72
tinco wrote: post #25

Everyone with half a brain has predicted the failure of NFT's and the collapse of ridiculous get rich schemes such as FTX. The big problem is when recognising the (small amount) of value that actually is in the cryptocurrency/defi industry, to put your money to work in a smart manner. Sequoia is clearly not able to do so reliably, but in general it's incredibly hard to be long on a market that's so overhyped as crypt…

If you hold Tesla, you hold it at the current market price. It’s the same position as someone who buys today. If you wouldn’t buy it today then you should sell.

With the only exception of tax treatment for different holding periods or year of sale. If you’re a few days away from getting long-term treatment on a large gain, you’re not in exactly the same position as someone buying today and could easily have a different risk-adjusted return on holding shares you think are over-valued for a few more trading days.

Less common is if you have a long-term loss (in-year or carry-forward) that will be used to offset a short-term gain, but you have a long-term unrealized gain. In that case, you would consider holding and realizing the long-term gain in the subsequent year, allowing the (less valuable) long-term loss to offset the (more expensive) short-term gain.

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