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Indeed Warren Buffet made a similar point: if you buy a farm, you're buying the land, the potential to grow crops that people actually consume, etc. whereas cry

Indeed Warren Buffet made a similar point: if you buy a farm, you're buying the land, the potential to grow crops that people actually consume, etc. whereas cryptocurrency doesn't really have a purpose except as a store of value. It's not a productive asset; it doesn't produce anything. It is a bit like buying gold. https://www.youtube.com/watch?v=LtITDtZPYEw https://www.youtube.com/watch?v=LtITDtZPYEw

craftyguy 8y ago
Well, except in the case of gold it has a real use (electronics and jewelry, to name a couple).
- Moodles 8y ago
  Of course, although probably most people investing in gold are using it as a store of value rather than to create jewelry.
  - latchkey 8y ago
    ... and jewelry has (artistic) value beyond the value of what it is made of.
  - newnewpdro 8y ago
    Isn't the whole point of this thread that gold is superior to bitcoin as a store of value because it also has intrinsic value/utility? If most people investing in gold are using it as a store of value, it says nothing of the other uses for the material. When you're making an investment in something, it's a feature for that thing to have more, not less, potential applications.
    - Moodles 8y ago
      Haha personally I am a little baffled that my one small comment on gold sparked such a big thread. Yeah, gold is kinda similar to bitcoin, kinda different. I don't think much of what has been said is particularly new to most people.
dlubarov 8y ago
That's also true of fiat currencies though, yet Berkshire Hathaway is holding seething like $130b of cash equivalents. Granted, fiat has some major advantages: momentum, required for taxes, no capital gains tax, etc. But neither is a productive asset.
- narrator 8y ago
  Even if you live out in the middle of nowhere, you have to pay property taxes. If you barter, you have to pay taxes on that stuff too, so you need to make the fiat bucks somehow. That's why fiat being required for taxes is the big one that makes it the defacto standard. After all, you have to have it, or its electronic equivalent or people with guns will come and get you, imprison you and take all your stuff away. Not that paying taxes is bad. It helps keep inflation down vs the government just borrowing all the fiat it needs from the fed. However, if you try and run your whole life in gold or bitcoin or whatever you just can't do it legally.
  - arcticbull 8y ago
    Beyond that the government only accepts fiat for tax payments, tax payments are denominated in it. It’s a small distinction but an important one, as swings in the value of the bartering asset you’ve been trading with as we see today can put you massively behind on your tax payments.
- arcticbull 8y ago
  In my opinion it’s likely that they are holding the $130B of cash equivalents because they’re expecting a downturn in the economy and want to buy up assets on the cheap. It’s not that they are investing in the cash, they sold some assets at what they perceive to be at the top of the market and are holding for the next downturn so they can get back in on some discounted equities. This is large-scale buy low sell high. It’s not a productive asset but a short term store of buying power.
  - dlubarov 8y ago
    I think it can be rational for an investor to forgo productive assets, even if they have no opinions about market timing. They might look at a company, estimate its lifespan, estimate its total inflation-adjusted earnings over that period, and find that it's less than the current market cap. In that case it's just not a good investment opportunity, irrespective of market timing. Historically there has always been a shortage of capital, and plenty of productive enterprises competing for that capital, so investors have received a discount on expected future earnings. But I think the case can be made that in the current economy, there is no such discount. That appears to be Buffet's stance, judging from his public comments. He says that he doesn't practice market timing, but simply can't find many worthwhile investments.
EGreg 8y ago
Not all cryptocurrency has no purpose. To me the “store of value” has always been a copout due to Proof of Work based ledgers painting themselves into a corner and being unable to scale to support enough transactions to support real payments. So all people can so with eg bitcoin and ethereum tokens is speculate. That is changing with the next breed of cryptocurrencies like Stellar and EOS. Take for example https://intercoin.org https://intercoin.org (disclaimer: working on it). It is explicitly designed to solve real problems, and the applications are listed in the video. I consider Bitcoin and Ethereum to be the myspace and friendster of the industry.
- legionof7 8y ago
  This is why people dislike the crypto space. Someone is always shilling their project. I'm not saying intercoin is a scam but it certainly looks like one and it's ridiculous for you to be calling Bitcoin and Ethereum "the myspace and friendster of the industry" when your project has literally no advantages over it, lots of disadvantasges, and no public code. When projects like this get burnt out of the space from the bear market, we can finally start realizing the potential of decentralization.
  - EGreg 8y ago
    Nothing in your message is backed up by any arguments. I would love to know for example: Why Intercoin looks like a scam Why it’s ridiculous to be calling Bitcoin and Ethereum the myspace and friendster of the industry when they are literally the first movers and have been around for 10 years but painted themselves into a corner and are unable to scale - no one uses bitcoin for real world transactions and projects building a token on ethereum who needs it to be actually used regularly says they’ll get off ethereum right in their whitepaper (Kik Messenger for instance). How can you say Intercoin (or EOS or SAFE network or Stellar) has no advantages over Bitcoin and Ethereum, what planet are you on? We have half a million lines of public code written over 7 years. We have been trying to fix decentralization for longer than you knew about crypto. And MAidSAFE has been doing this for 12 years! Why would “projects like this” be “burnt out of the space” in the bear market, when I just said they are the future of the space, which has stagnated? The promise was utility tokens and ICOs, where the tokens would be presold and the network would be owned by the participants instead of extracting rents. Tht was the dream. That was chilled by regulators, in favor of security tokens. This reaction is what’s ridiculous. Imagine me saying this about MySQL for instance, or Wordpress. It looks like a scam guys. It has no advantages over current first-gen database systems or CMS, and there can never be anything better Do you really, honestly think that a system burning more electricity than most countries to do 7 transactions per second, where each full node needs an ever growing amount of memory to even join the network, is the best BFT database and distributed ledger that can ever exist? Look at other projects like Holochain and Maidsafe. Look at the evolving EOS ecosystem. “People” who dislike cryptocurrency hardly know what’s going on it. “People” also disliked the Internet, the Web, social networking, and thought it was a fad. At the very least, answer my questions point by point and bring some substance. Other people are working for years on free open source software, instead of cushy jobs at some cushy VC funded startup, which is likely to fail, and you are calling THEM scammers because...? You do realize that these projects produce open source software AND are looking to build a decentralized ecosystem where you no longer have to extract rents and have middlemen like Facebook which can be hacked, influence elections etc. And meanwhile you say once these projects are burned out and we go back to ethereum THEN finally we can get back to the business of decentralization? Ha ha ha.
CPLX 8y ago
It’s nothing like buying gold. Gold is widely considered to be beautiful, and was considered a store of very high value in many cultures that were completely isolated from each other, and human desire for it has remained consistent for literally thousands of years. Astonishingly, crypto even less defensible.
- TylerE 8y ago
  Even ignoring it's use in jeweler, gold has significant industrial value.
  - mhluongo 8y ago
    Not that justifies its cost today, no. That's a commonly repeated fallacy by goldbugs.
    - TylerE 8y ago
      It literally justifies it's cost because they buy it. If it didn't justify it's cost they'd use other metals, no? Large corporations don't usually light money on fire for no reason.
      - XorNot 8y ago
        Gold enjoys a lot of fashionable demand. Which is very much why you shouldn't use it to store your money - because not enough is actually propping up that demand. It just has a longer historical inertia - if you want to see a future problem, depending on the mineralogical analysis of near earth asteroids we could be in for a long slow decline if it's abundant up there.
        TylerE 8y ago
        I'm not talking about it's use for fashion. I'm talking about industrial usage - like the contacts on your CPU. Gold offers a unique combination of very high electrical conductivity and near-immunity to corrosion.
pmart123 8y ago
Coming from the investing world, I won’t say this is entirely true. If an ICO token is a genuine utility token, then it could have true value in the distributed network as far as I understand. If some company takes off where this utility token/security works, it could be a preferable form to a more common IPO/listed equity. I don’t think many companies fall under this domain, but for a few types of circumstances, the ICO model makes a lot of sense.
- Moodles 8y ago
  Can you provide any examples? I literally cannot think of a single company that needed to do an ICO for reasons other than to make quick money. I’m actually far more skeptical orf ICOs and adding blockchains to a company for no reason than bitcoin as a mere currency solution. We don’t need an ICO and a blockchain to track bananas in Laos.
  - pmart123 8y ago
    I think the hard part is we haven't seen anything take off in reality yet. I've thought about one from a conceptual standpoint. In finance, many buy-side firms are collecting the same alternative data. This might be anything from consumer reviews to executive flight traffic data. So, could the buyside band together to create "Bloomberg"? More buyside firms now have data science teams, and with the explosion of alternative data, you could make the argument that the DIY is too taxing for one firm and the vendor is too slow at incorporating new datasets, and merely is the middleman. I don't think a hedge fund would give away its secret sauce, but much of this data eventually becomes table stakes. I've thought about whether a token could be created to provide an incentive for firms to build and share datasets. Tokens could be rewarded if a large number of other firms use/read from a particular dataset, or another firm could fork a dataset to clean dirty data and potentially tokens would flow to multiple firms in this instance. More firms using the network should lead to more data and a more valuable network/token.
    - pmart123 8y ago
      Maybe the closest real-world example I've heard so far is the Catalonian government using IPFS during an election, and how Filecoin could be used on top of IPFS to pay people to store data: https://medium.com/swlh/filecoin-and-ipfs-f5e84ae79afa https://medium.com/swlh/filecoin-and-ipfs-f5e84ae79afa
ssdd 8y ago
Human civilization is at least tens of thousands of years old(just considering what modern man believes) and always valued gold more than anything for both store and exchange of value. I don't see why modern civilization(which were ahead of us in all domains) would feel any different from their ancestors for gold. Gold as metal has something more than what makes it scarce and valuable, something we have yet to discover. There's a good reason why all central banks of all economies(US,Chine,Russia) are holding on to gold as much as they can and buy/steal more of it as the opportunity arises.

craftyguy 8y ago

Well, except in the case of gold it has a real use (electronics and jewelry, to name a couple).

Moodles 8y ago
Of course, although probably most people investing in gold are using it as a store of value rather than to create jewelry.
- latchkey 8y ago
  ... and jewelry has (artistic) value beyond the value of what it is made of.
- newnewpdro 8y ago
  Isn't the whole point of this thread that gold is superior to bitcoin as a store of value because it also has intrinsic value/utility? If most people investing in gold are using it as a store of value, it says nothing of the other uses for the material. When you're making an investment in something, it's a feature for that thing to have more, not less, potential applications.
  - Moodles 8y ago
    Haha personally I am a little baffled that my one small comment on gold sparked such a big thread. Yeah, gold is kinda similar to bitcoin, kinda different. I don't think much of what has been said is particularly new to most people.

dlubarov 8y ago

That's also true of fiat currencies though, yet Berkshire Hathaway is holding seething like $130b of cash equivalents. Granted, fiat has some major advantages: momentum, required for taxes, no capital gains tax, etc. But neither is a productive asset.

narrator 8y ago
Even if you live out in the middle of nowhere, you have to pay property taxes. If you barter, you have to pay taxes on that stuff too, so you need to make the fiat bucks somehow. That's why fiat being required for taxes is the big one that makes it the defacto standard. After all, you have to have it, or its electronic equivalent or people with guns will come and get you, imprison you and take all your stuff away. Not that paying taxes is bad. It helps keep inflation down vs the government just borrowing all the fiat it needs from the fed. However, if you try and run your whole life in gold or bitcoin or whatever you just can't do it legally.
- arcticbull 8y ago
  Beyond that the government only accepts fiat for tax payments, tax payments are denominated in it. It’s a small distinction but an important one, as swings in the value of the bartering asset you’ve been trading with as we see today can put you massively behind on your tax payments.
arcticbull 8y ago
In my opinion it’s likely that they are holding the $130B of cash equivalents because they’re expecting a downturn in the economy and want to buy up assets on the cheap. It’s not that they are investing in the cash, they sold some assets at what they perceive to be at the top of the market and are holding for the next downturn so they can get back in on some discounted equities. This is large-scale buy low sell high. It’s not a productive asset but a short term store of buying power.
- dlubarov 8y ago
  I think it can be rational for an investor to forgo productive assets, even if they have no opinions about market timing. They might look at a company, estimate its lifespan, estimate its total inflation-adjusted earnings over that period, and find that it's less than the current market cap. In that case it's just not a good investment opportunity, irrespective of market timing. Historically there has always been a shortage of capital, and plenty of productive enterprises competing for that capital, so investors have received a discount on expected future earnings. But I think the case can be made that in the current economy, there is no such discount. That appears to be Buffet's stance, judging from his public comments. He says that he doesn't practice market timing, but simply can't find many worthwhile investments.

EGreg 8y ago

Not all cryptocurrency has no purpose. To me the “store of value” has always been a copout due to Proof of Work based ledgers painting themselves into a corner and being unable to scale to support enough transactions to support real payments. So all people can so with eg bitcoin and ethereum tokens is speculate. That is changing with the next breed of cryptocurrencies like Stellar and EOS. Take for example https://intercoin.org https://intercoin.org (disclaimer: working on it). It is explicitly designed to solve real problems, and the applications are listed in the video. I consider Bitcoin and Ethereum to be the myspace and friendster of the industry.

legionof7 8y ago
This is why people dislike the crypto space. Someone is always shilling their project. I'm not saying intercoin is a scam but it certainly looks like one and it's ridiculous for you to be calling Bitcoin and Ethereum "the myspace and friendster of the industry" when your project has literally no advantages over it, lots of disadvantasges, and no public code. When projects like this get burnt out of the space from the bear market, we can finally start realizing the potential of decentralization.
- EGreg 8y ago
  Nothing in your message is backed up by any arguments. I would love to know for example: Why Intercoin looks like a scam Why it’s ridiculous to be calling Bitcoin and Ethereum the myspace and friendster of the industry when they are literally the first movers and have been around for 10 years but painted themselves into a corner and are unable to scale - no one uses bitcoin for real world transactions and projects building a token on ethereum who needs it to be actually used regularly says they’ll get off ethereum right in their whitepaper (Kik Messenger for instance). How can you say Intercoin (or EOS or SAFE network or Stellar) has no advantages over Bitcoin and Ethereum, what planet are you on? We have half a million lines of public code written over 7 years. We have been trying to fix decentralization for longer than you knew about crypto. And MAidSAFE has been doing this for 12 years! Why would “projects like this” be “burnt out of the space” in the bear market, when I just said they are the future of the space, which has stagnated? The promise was utility tokens and ICOs, where the tokens would be presold and the network would be owned by the participants instead of extracting rents. Tht was the dream. That was chilled by regulators, in favor of security tokens. This reaction is what’s ridiculous. Imagine me saying this about MySQL for instance, or Wordpress. It looks like a scam guys. It has no advantages over current first-gen database systems or CMS, and there can never be anything better Do you really, honestly think that a system burning more electricity than most countries to do 7 transactions per second, where each full node needs an ever growing amount of memory to even join the network, is the best BFT database and distributed ledger that can ever exist? Look at other projects like Holochain and Maidsafe. Look at the evolving EOS ecosystem. “People” who dislike cryptocurrency hardly know what’s going on it. “People” also disliked the Internet, the Web, social networking, and thought it was a fad. At the very least, answer my questions point by point and bring some substance. Other people are working for years on free open source software, instead of cushy jobs at some cushy VC funded startup, which is likely to fail, and you are calling THEM scammers because...? You do realize that these projects produce open source software AND are looking to build a decentralized ecosystem where you no longer have to extract rents and have middlemen like Facebook which can be hacked, influence elections etc. And meanwhile you say once these projects are burned out and we go back to ethereum THEN finally we can get back to the business of decentralization? Ha ha ha.

CPLX 8y ago

It’s nothing like buying gold. Gold is widely considered to be beautiful, and was considered a store of very high value in many cultures that were completely isolated from each other, and human desire for it has remained consistent for literally thousands of years. Astonishingly, crypto even less defensible.

TylerE 8y ago
Even ignoring it's use in jeweler, gold has significant industrial value.
- mhluongo 8y ago
  Not that justifies its cost today, no. That's a commonly repeated fallacy by goldbugs.
  - TylerE 8y ago
    It literally justifies it's cost because they buy it. If it didn't justify it's cost they'd use other metals, no? Large corporations don't usually light money on fire for no reason.
    - XorNot 8y ago
      Gold enjoys a lot of fashionable demand. Which is very much why you shouldn't use it to store your money - because not enough is actually propping up that demand. It just has a longer historical inertia - if you want to see a future problem, depending on the mineralogical analysis of near earth asteroids we could be in for a long slow decline if it's abundant up there.
      - TylerE 8y ago
        I'm not talking about it's use for fashion. I'm talking about industrial usage - like the contacts on your CPU. Gold offers a unique combination of very high electrical conductivity and near-immunity to corrosion.

pmart123 8y ago

Coming from the investing world, I won’t say this is entirely true. If an ICO token is a genuine utility token, then it could have true value in the distributed network as far as I understand. If some company takes off where this utility token/security works, it could be a preferable form to a more common IPO/listed equity. I don’t think many companies fall under this domain, but for a few types of circumstances, the ICO model makes a lot of sense.

Moodles 8y ago
Can you provide any examples? I literally cannot think of a single company that needed to do an ICO for reasons other than to make quick money. I’m actually far more skeptical orf ICOs and adding blockchains to a company for no reason than bitcoin as a mere currency solution. We don’t need an ICO and a blockchain to track bananas in Laos.
- pmart123 8y ago
  I think the hard part is we haven't seen anything take off in reality yet. I've thought about one from a conceptual standpoint. In finance, many buy-side firms are collecting the same alternative data. This might be anything from consumer reviews to executive flight traffic data. So, could the buyside band together to create "Bloomberg"? More buyside firms now have data science teams, and with the explosion of alternative data, you could make the argument that the DIY is too taxing for one firm and the vendor is too slow at incorporating new datasets, and merely is the middleman. I don't think a hedge fund would give away its secret sauce, but much of this data eventually becomes table stakes. I've thought about whether a token could be created to provide an incentive for firms to build and share datasets. Tokens could be rewarded if a large number of other firms use/read from a particular dataset, or another firm could fork a dataset to clean dirty data and potentially tokens would flow to multiple firms in this instance. More firms using the network should lead to more data and a more valuable network/token.
  - pmart123 8y ago
    Maybe the closest real-world example I've heard so far is the Catalonian government using IPFS during an election, and how Filecoin could be used on top of IPFS to pay people to store data: https://medium.com/swlh/filecoin-and-ipfs-f5e84ae79afa https://medium.com/swlh/filecoin-and-ipfs-f5e84ae79afa

ssdd 8y ago

Human civilization is at least tens of thousands of years old(just considering what modern man believes) and always valued gold more than anything for both store and exchange of value. I don't see why modern civilization(which were ahead of us in all domains) would feel any different from their ancestors for gold. Gold as metal has something more than what makes it scarce and valuable, something we have yet to discover. There's a good reason why all central banks of all economies(US,Chine,Russia) are holding on to gold as much as they can and buy/steal more of it as the opportunity arises.