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Crypto currency is an asset. He has bought and sold a lot of assets over time and has done pretty well. Google Tulip mania. The whole point of bitcoin was a for

Crypto currency is an asset. He has bought and sold a lot of assets over time and has done pretty well. Google Tulip mania. The whole point of bitcoin was a form a digital currency. However due to the high transaction fees and volatility you can't really use it for that. I have no idea where it is going, but to dismiss a guy who has experience buying and selling things for a long time seems foolish.

vasilipupkin 9y ago
Buffet has a lot of expertise investing in businesses where cashflows can be analyzed. Not every investment is like that. Where it's not like that, his expertise is less valuable
- TheAdamAndChe 9y ago
  Yet at the end of the day, Bitcoin is simply a store of value, just like any currency. And Buffet has plenty of experience with handling stores of value. Bitcoin's recent exponential growth screams "bubble" for anyone who knows what to watch for.
  - vasilipupkin 9y ago
    I don't get this whole store of value concept. Nothing is a store of value, all there is is investments with varying levels of risk.
    - TheAdamAndChe 9y ago
      Bitcoin is just a store of value because ownership itself does not produce any profits or dividends, profits require higher demand in the future. No wealth is generated, merely transferred. This is similar to gold, and very different from, say, ownership in a farm, where goods can be consistently generated and sold every year.
      - vasilipupkin 9y ago
        gold is an investment, not a store of value. Between 1979 and 2001, it lost 70% of its value. What kind of store of value does that?
        TheAdamAndChe 9y ago
        Lots do. The dollar has greatly depreciated due to inflation. A dollar in 1950 would be the equivilant of $10.16 today[1]. [1] http://www.in2013dollars.com/1950-dollars-in-2017?amount=1 http://www.in2013dollars.com/1950-dollars-in-2017?amount=1
        vasilipupkin 9y ago
        that's my point. "Store of value" implies storing value, not losing value. Which is why I am saying there is no such thing - all you have is various types of investments which can make or lose money over time
        adventured 9y ago
        Gold did not lose value. It locked you in at the price you paid in that time's dollar. If you then try to swap that locked in value for a dollar at a later date that has a higher value, you will suffer the imbalance. It stored your value. It's the dollar that gained (or lost) value. You're attempting to move back into the dollar afterward, when the dollar's value has shifted. What you're describing is that, as an example, a mistake was made by locking in your value by buying gold at a weak 1980 dollar price, then the dollar gained significant value in subsequent years, and then you're again trying to move back out of gold and into the dollar later (ie exchanging gold for dollars) after the dollar has climbed (while your value in the gold was set at that weak 1980 dollar). Your loss is the difference between the two different values of the dollar at two points in time separated by decades.
        vasilipupkin 9y ago
        if this was true, the same would have happened to other dollar denominated assets - but it didn't. So, no, it's specifically gold that lost its value 70% during that period, not dollar gaining value.
- bradleyjg 9y ago
  Yes, every investment is like that. The sine qua non of an investment is purchasing a productive asset. If you purchase a non-productive asset--that could be hedging, or speculation, or just consumption, but it isn't investing.
  - vasilipupkin 9y ago
    well, what I mean is, imagine a company that will have no cashflows for 100 years and then with probability 0.01% will have cashflows of 100 trillion gazillion. Buffet doesn't invest in those types of companies normally, that's not his edge.
jonathanjaeger 9y ago
What about a crypto with no transactions fees (e.g. Raiblocks)? Obviously volatility is still an issue.
- davidcbc 9y ago
  Do you think that once bitcoin collapses under its own weight and investors lose a ton of money the general public is going to trust another cryptocurrency?
  - rndmwlk 9y ago
    Just like all internet based companies went out of business after the dot com bubble crashed. I agree that crypto is in a bubble right now, but that doesn't mean it has zero value as a technology.
  - realusername 9y ago
    It worked for the Internet bubble, just give it 10 more years . The bubble crash will slow down everything for a while but the technology is here to stay.
DennisP 9y ago
Tech stocks are assets, but Buffett has always said he purposely avoids most of them because he doesn't understand them well enough. Taking him at his own word, we shouldn't put all that much weight on his cryptocurrency opinions.
- diab0lic 9y ago
  Cryptocurrency is comparable to a tech stock because computers? That's about the extent of what they have in common.
  - deleted 9y ago
    [deleted]
  - sodafountan 9y ago
    If you don't understand technology you're not going to understand crypto-currency, that's the point.
    - TheAdamAndChe 9y ago
      This is wrong. You don't need to understand hashing and network algorithms to understand supply and demand. There's a fixed supply of bitcoins and a rising demand due to speculation. Anyone can see that that this is what is driving the growth, but blind speculation is how bubbles form, and bubbles always pop. Here[1] are the signs of asset bubbles. I've posted the signs I feel are most relevant to Bitcoin below. > Rationalizing borrowing, lending and purchase decisions based on expected future price increases rather than the ability of the borrower to repay. > Rationalizing asset prices by increasingly weaker arguments, such as "this time it's different" or "housing prices only go up." > A high presence of marketing or media coverage related to the asset. [1] https://en.wikipedia.org/wiki/Economic_bubble#Identifying_asset_bubbles https://en.wikipedia.org/wiki/Economic_bubble#Identifying_as...
  - rytill 9y ago
    Compare it to something else then.
nerdponx 9y ago
Bitcoin does not represent all digital currency. Bitcoin will die, crypto currency will survive.
- WalterSear 9y ago
  The mature and stable crypto-currency market will doubtlessly shrug off the demise of its founding coin. All the newbies who've never even opened a savings account before won't rush for the exits, and the market movers, given their decades of experience along with their secured and diversified assets, will doubtlessly take losses rather than slosh the deck. At least the terrible transaction speeds will mitigate a substantial amount of damage.
  - nerdponx 9y ago
    None of that has anything to do with the failure of cryptocurrency in general.
- PeterisP 9y ago
  "Bitcoin will die, crypto currency will survive." is the exact scenario where investing in cryptocurrencies is stupid - if cryptocurrencies as a concept win, but the particular cryptocurrencies you bought fail, then you lose. Just as in the dotcom boom - the concept of dotcom businesses won (and absurdly so), but pretty much everyone who invested in dotcom businesses lost.
  - nerdponx 9y ago
    Who said to invest in them? Cryptocurrency is currency. Investing in forex is for nerds, quants, and banks. Cryptocurrency ought to be treated the same.
wyager 9y ago
> Google Tulip mania. People involved in cryptocurrencies hear this idiotic comparison all the time. By the way, the tulip mania was a myth. https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...
- sodafountan 9y ago
  I don't know why this is getting down-voted. Tulips die, Blockchains don't.
  - sp527 9y ago
    It’s getting downvotes because crypto enthusiasts have strawman’ed their way out of the argument. The tulip bubble was above all a cautionary tale about the behavioral dynamics of speculative assets.
    - sodafountan 9y ago
      Except bitcoin isn't speculative, bitcoin has real value. It makes a great hedge against inflation and the global demand for it is a testimony to that. While it's true that we could be seeing over-inflated prices now or in the future, I FULLY believe that the value of bitcoin will always increase over the long term. It's a principal of the technology it's deflationary. That's not a bubble my friend.
      - imtringued 9y ago
        The problem is it's increasing faster than inflation right now. That also means at some point it has to go down again to match the inflation rate.
      - lurr 9y ago
        > Except bitcoin isn't speculative, bitcoin has real value because zealots say so.
sodafountan 9y ago
You realize things can change and adapt right? Just because bitcoin was conceptualized as a currency doesn't mean that it always has to be one. Bitcoin may prove to be a better store of value and a hedge against inflation, like a next generation savings account. Don't be so narrow minded. Look at how the web has evolved, I highly doubt Tim Berners Lee could conceptualize Facebook, Youtube or Google when he put together the fist world wide web page.
- slivym 9y ago
  You can say that it can change to be something other than a currency, but unless you actually have something interesting to say about how it actually will become something else then you're really not saying much. It could become a hedge against inflation. Do you have any evidence that it acts as a hedge against inflation at all? Do you have any logic why it could? You may as well say that stones act as a good hedge against inflation. You need reasons to actually argue it.
  - sodafountan 9y ago
    The evidence is in the market, I don't see many people buying and selling rocks. What I do see is people buying and holding an asset that has gained hundreds of thousands of percentage points since its inception and could very well continue that trend. The real revelation came when someone decided to purchase bitcoin from someone else, from that point on bitcoin had value and it always will. But you go ahead and try to sell some rocks you picked up off of the ground to someone and then report back here and let me know you did.
    - PeterisP 9y ago
      "people buying and holding an asset that has gained hundreds of thousands of percentage points since its inception and could very well continue that trend" applied to all kinds of stuff like the beanie baby craze as well. Seeing this behavior is not an evidence of something being long term value store. If the bitcoin doesn't gain a widespread practical use, it may well be that the long term value it has is, say, $100 / BTC, wiping out 99% of the value, and failing in any purpose as an inflation hedge or censorship-resistant store of value. Saying that it has value because it's being bought for ever increasing price is the "greater fool" value foundation, i.e. saying that it has value because someone else will value it even more later, which actually works really well (and can earn you a lot of money) until suddenly it doesn't. Other than that, any long-term valuation will have to be based on actual, practical, specific uses of Bitcoin (for example, but not limited to, as a transactional currency). It's easy to imagine realistic uses of Bitcoin that will justify some value, e.g. $10 or maybe $100 per BTC. However, the scenarios where the use is so massively valuable to justify a long-term market cap that matches a price of $10k or $100k per BTC require BTC to have a massive, very very widespread use - so either it will gain this massive use as a transactional currency (or something else), or the price won't be sustained nearly as high.
panarky 9y ago
Why does every discussion about cryptocurrency instantly devolve into a boring repetition of the same old stale arguments? Do you really think this community has never heard of the Dutch tulip mania? Everybody already knows cryptocurrencies are volatile and risky, what does this add to the conversation? Yes, let's talk again about how it's a Ponzi scheme, has no intrinsic value, can't buy coffee with it, it's only good for drugs and crime. Then supporters will say you can't trust banks, fiat is going to zero, and spew conspiracy theories about the Federal Reserve. Then someone will hype a random token, then a banker will call it all a fraud. Every. Single. Person. on this thread knows all of this already. Is there nothing new to talk about?
- thesumofall 9y ago
  > Do you really think this community has never heard of the Dutch tulip mania? Likely. Also likely that most believe it was something that it wasn’t (a wide-spread market bubble): https://en.wikipedia.org/wiki/Tulip_mania#Modern_views https://en.wikipedia.org/wiki/Tulip_mania#Modern_views
- JumpCrisscross 9y ago
  > Then supporters will say you can't trust banks, fiat is going to zero, and spew conspiracy theories about the Federal Reserve. Then someone will hype a random token, then a banker will call it all a fraud. :D

vasilipupkin 9y ago

Buffet has a lot of expertise investing in businesses where cashflows can be analyzed. Not every investment is like that. Where it's not like that, his expertise is less valuable

TheAdamAndChe 9y ago
Yet at the end of the day, Bitcoin is simply a store of value, just like any currency. And Buffet has plenty of experience with handling stores of value. Bitcoin's recent exponential growth screams "bubble" for anyone who knows what to watch for.
- vasilipupkin 9y ago
  I don't get this whole store of value concept. Nothing is a store of value, all there is is investments with varying levels of risk.
  - TheAdamAndChe 9y ago
    Bitcoin is just a store of value because ownership itself does not produce any profits or dividends, profits require higher demand in the future. No wealth is generated, merely transferred. This is similar to gold, and very different from, say, ownership in a farm, where goods can be consistently generated and sold every year.
    - vasilipupkin 9y ago
      gold is an investment, not a store of value. Between 1979 and 2001, it lost 70% of its value. What kind of store of value does that?
      - TheAdamAndChe 9y ago
        Lots do. The dollar has greatly depreciated due to inflation. A dollar in 1950 would be the equivilant of $10.16 today[1]. [1] http://www.in2013dollars.com/1950-dollars-in-2017?amount=1 http://www.in2013dollars.com/1950-dollars-in-2017?amount=1
        vasilipupkin 9y ago
        that's my point. "Store of value" implies storing value, not losing value. Which is why I am saying there is no such thing - all you have is various types of investments which can make or lose money over time
        adventured 9y ago
        Gold did not lose value. It locked you in at the price you paid in that time's dollar. If you then try to swap that locked in value for a dollar at a later date that has a higher value, you will suffer the imbalance. It stored your value. It's the dollar that gained (or lost) value. You're attempting to move back into the dollar afterward, when the dollar's value has shifted. What you're describing is that, as an example, a mistake was made by locking in your value by buying gold at a weak 1980 dollar price, then the dollar gained significant value in subsequent years, and then you're again trying to move back out of gold and into the dollar later (ie exchanging gold for dollars) after the dollar has climbed (while your value in the gold was set at that weak 1980 dollar). Your loss is the difference between the two different values of the dollar at two points in time separated by decades.
        vasilipupkin 9y ago
        if this was true, the same would have happened to other dollar denominated assets - but it didn't. So, no, it's specifically gold that lost its value 70% during that period, not dollar gaining value.
bradleyjg 9y ago
Yes, every investment is like that. The sine qua non of an investment is purchasing a productive asset. If you purchase a non-productive asset--that could be hedging, or speculation, or just consumption, but it isn't investing.
- vasilipupkin 9y ago
  well, what I mean is, imagine a company that will have no cashflows for 100 years and then with probability 0.01% will have cashflows of 100 trillion gazillion. Buffet doesn't invest in those types of companies normally, that's not his edge.

jonathanjaeger 9y ago

What about a crypto with no transactions fees (e.g. Raiblocks)? Obviously volatility is still an issue.

davidcbc 9y ago
Do you think that once bitcoin collapses under its own weight and investors lose a ton of money the general public is going to trust another cryptocurrency?
- rndmwlk 9y ago
  Just like all internet based companies went out of business after the dot com bubble crashed. I agree that crypto is in a bubble right now, but that doesn't mean it has zero value as a technology.
- realusername 9y ago
  It worked for the Internet bubble, just give it 10 more years . The bubble crash will slow down everything for a while but the technology is here to stay.

DennisP 9y ago

Tech stocks are assets, but Buffett has always said he purposely avoids most of them because he doesn't understand them well enough. Taking him at his own word, we shouldn't put all that much weight on his cryptocurrency opinions.

diab0lic 9y ago
Cryptocurrency is comparable to a tech stock because computers? That's about the extent of what they have in common.
- deleted 9y ago
  [deleted]
- sodafountan 9y ago
  If you don't understand technology you're not going to understand crypto-currency, that's the point.
  - TheAdamAndChe 9y ago
    This is wrong. You don't need to understand hashing and network algorithms to understand supply and demand. There's a fixed supply of bitcoins and a rising demand due to speculation. Anyone can see that that this is what is driving the growth, but blind speculation is how bubbles form, and bubbles always pop. Here[1] are the signs of asset bubbles. I've posted the signs I feel are most relevant to Bitcoin below. > Rationalizing borrowing, lending and purchase decisions based on expected future price increases rather than the ability of the borrower to repay. > Rationalizing asset prices by increasingly weaker arguments, such as "this time it's different" or "housing prices only go up." > A high presence of marketing or media coverage related to the asset. [1] https://en.wikipedia.org/wiki/Economic_bubble#Identifying_asset_bubbles https://en.wikipedia.org/wiki/Economic_bubble#Identifying_as...
- rytill 9y ago
  Compare it to something else then.

nerdponx 9y ago

Bitcoin does not represent all digital currency. Bitcoin will die, crypto currency will survive.

WalterSear 9y ago
The mature and stable crypto-currency market will doubtlessly shrug off the demise of its founding coin. All the newbies who've never even opened a savings account before won't rush for the exits, and the market movers, given their decades of experience along with their secured and diversified assets, will doubtlessly take losses rather than slosh the deck. At least the terrible transaction speeds will mitigate a substantial amount of damage.
- nerdponx 9y ago
  None of that has anything to do with the failure of cryptocurrency in general.
PeterisP 9y ago
"Bitcoin will die, crypto currency will survive." is the exact scenario where investing in cryptocurrencies is stupid - if cryptocurrencies as a concept win, but the particular cryptocurrencies you bought fail, then you lose. Just as in the dotcom boom - the concept of dotcom businesses won (and absurdly so), but pretty much everyone who invested in dotcom businesses lost.
- nerdponx 9y ago
  Who said to invest in them? Cryptocurrency is currency. Investing in forex is for nerds, quants, and banks. Cryptocurrency ought to be treated the same.

wyager 9y ago

> Google Tulip mania. People involved in cryptocurrencies hear this idiotic comparison all the time. By the way, the tulip mania was a myth. https://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...

sodafountan 9y ago
I don't know why this is getting down-voted. Tulips die, Blockchains don't.
- sp527 9y ago
  It’s getting downvotes because crypto enthusiasts have strawman’ed their way out of the argument. The tulip bubble was above all a cautionary tale about the behavioral dynamics of speculative assets.
  - sodafountan 9y ago
    Except bitcoin isn't speculative, bitcoin has real value. It makes a great hedge against inflation and the global demand for it is a testimony to that. While it's true that we could be seeing over-inflated prices now or in the future, I FULLY believe that the value of bitcoin will always increase over the long term. It's a principal of the technology it's deflationary. That's not a bubble my friend.
    - imtringued 9y ago
      The problem is it's increasing faster than inflation right now. That also means at some point it has to go down again to match the inflation rate.
    - lurr 9y ago
      > Except bitcoin isn't speculative, bitcoin has real value because zealots say so.

sodafountan 9y ago

You realize things can change and adapt right? Just because bitcoin was conceptualized as a currency doesn't mean that it always has to be one. Bitcoin may prove to be a better store of value and a hedge against inflation, like a next generation savings account. Don't be so narrow minded. Look at how the web has evolved, I highly doubt Tim Berners Lee could conceptualize Facebook, Youtube or Google when he put together the fist world wide web page.

slivym 9y ago
You can say that it can change to be something other than a currency, but unless you actually have something interesting to say about how it actually will become something else then you're really not saying much. It could become a hedge against inflation. Do you have any evidence that it acts as a hedge against inflation at all? Do you have any logic why it could? You may as well say that stones act as a good hedge against inflation. You need reasons to actually argue it.
- sodafountan 9y ago
  The evidence is in the market, I don't see many people buying and selling rocks. What I do see is people buying and holding an asset that has gained hundreds of thousands of percentage points since its inception and could very well continue that trend. The real revelation came when someone decided to purchase bitcoin from someone else, from that point on bitcoin had value and it always will. But you go ahead and try to sell some rocks you picked up off of the ground to someone and then report back here and let me know you did.
  - PeterisP 9y ago
    "people buying and holding an asset that has gained hundreds of thousands of percentage points since its inception and could very well continue that trend" applied to all kinds of stuff like the beanie baby craze as well. Seeing this behavior is not an evidence of something being long term value store. If the bitcoin doesn't gain a widespread practical use, it may well be that the long term value it has is, say, $100 / BTC, wiping out 99% of the value, and failing in any purpose as an inflation hedge or censorship-resistant store of value. Saying that it has value because it's being bought for ever increasing price is the "greater fool" value foundation, i.e. saying that it has value because someone else will value it even more later, which actually works really well (and can earn you a lot of money) until suddenly it doesn't. Other than that, any long-term valuation will have to be based on actual, practical, specific uses of Bitcoin (for example, but not limited to, as a transactional currency). It's easy to imagine realistic uses of Bitcoin that will justify some value, e.g. $10 or maybe $100 per BTC. However, the scenarios where the use is so massively valuable to justify a long-term market cap that matches a price of $10k or $100k per BTC require BTC to have a massive, very very widespread use - so either it will gain this massive use as a transactional currency (or something else), or the price won't be sustained nearly as high.

panarky 9y ago

Why does every discussion about cryptocurrency instantly devolve into a boring repetition of the same old stale arguments? Do you really think this community has never heard of the Dutch tulip mania? Everybody already knows cryptocurrencies are volatile and risky, what does this add to the conversation? Yes, let's talk again about how it's a Ponzi scheme, has no intrinsic value, can't buy coffee with it, it's only good for drugs and crime. Then supporters will say you can't trust banks, fiat is going to zero, and spew conspiracy theories about the Federal Reserve. Then someone will hype a random token, then a banker will call it all a fraud. Every. Single. Person. on this thread knows all of this already. Is there nothing new to talk about?

thesumofall 9y ago
> Do you really think this community has never heard of the Dutch tulip mania? Likely. Also likely that most believe it was something that it wasn’t (a wide-spread market bubble): https://en.wikipedia.org/wiki/Tulip_mania#Modern_views https://en.wikipedia.org/wiki/Tulip_mania#Modern_views
JumpCrisscross 9y ago
> Then supporters will say you can't trust banks, fiat is going to zero, and spew conspiracy theories about the Federal Reserve. Then someone will hype a random token, then a banker will call it all a fraud. :D