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Warren Buffet and Charlie Munger on crypto in 2018

96 points by JSDevOps 4y ago

gizajob 4y ago
The Stadtler and Waldorf of high-finance.
plazmatic 4y ago
edem 4y ago
Too bad that what they are talking about is not crypto just regular tradfi ponzi schemers who happen to have chosen crypto for their next scam.
- newaccount74 4y ago
  Unfortunately if you take away ponzi schemes and money laundering there's not much left of the crypto market.
  - edem 4y ago
    Unfortunately you know nothing about crypto.
- r2_pilot 4y ago
  Eh, I feel like you are being intellectually lazy and are falling into the "No True Scotsman" fallacy.
  - edem 4y ago
    Eh I feel that you're dumb
- bertman 4y ago
  >crypto >ponzi schemers Literally the same.
  - oldgradstudent 4y ago
    Not really. You forgot about money laundering
    - edem 4y ago
      Even the US Treasury said that crypto is not ideal for money laundering and the amount of money laundering happening in the space is miniscule.
  - edem 4y ago
    DYOR before you post dumb comments.
adriand 4y ago
Regardless of how you feel about crypto - and I admit to seeing some valuable use-cases, while being highly skeptical of the speculation - you gotta admit that these comments are prescient and also very funny. I sincerely hope I have that presence of mind at that age.
- azaras 4y ago
  But the valuable use-cases could be solved using other methods efficiently.
  - mattbrewsbytes 4y ago
    Oh most certainly. We also have a ever growing list of JavaScript frameworks. Software developers are great at the NIH syndrome or not liking how something was solved and they like their way of solving it. Just because there is another solution path doesn't mean new solution paths to the same problem are void. If you mean more efficiently then that is likely a dimension of the solution where it may not fit for some use cases. For example blockchain transactions are known to be slow when compared to say a RDBMS transaction. If you are recording purchases in a web shopping cart its probably not a good solution. The trade-off here is that for some problem, maybe the speed of the transaction is not a concern. Don't get me wrong, I'm not defending, nor supporting blockchain solutions. Just pointing out that the "we have ways to solve those problems already" isn't a very valid argument in software.
  - ekianjo 4y ago
    so why were they not already solved efficiently before crypto?
    - hef19898 4y ago
      Who says they were not?
- tokai 4y ago
  >I admit to seeing some valuable use-cases Could you write them here? Genuinely curious.
agd 4y ago
I'm not sure that the statements that a) there are bad actors in the space, and b) there will be a crash, are particularly insightful here. Both of these were predicted/expected by many, including many crypto supporters. The key question is whether crypto will rebound. I would expect it to, particularly as governments move more into digital currencies.
- koolba 4y ago
  > The key question is whether crypto will rebound. I would expect it to, particularly as governments move more into digital currencies. The “when” and the “what” matter immensely though. A rebound after a couple years of global recession is much different than one early next year. A rebound of the existing big names (e.g. BTC and ETH) is much different than the rise of “fed coin” or some other chain. An investment strategy of dollar cost average, spray, and pray, is gonna eat quite a few losers.
  - antupis 4y ago
    It will when it actually start delivering value. It might be cross national digital money or somekind nft Ticketmaster competitor or some kinda cross game NFT items.
- soco 4y ago
  What kind of "government digital currencies" are you referring to?
  - bil7 4y ago
    https://twitter.com/Snowden/status/1592587655178592256 https://twitter.com/Snowden/status/1592587655178592256
  - the-smug-one 4y ago
    Google term: central bank digital currency For example, Sweden: https://www.riksbank.se/sv/betalningar--kontanter/e-krona/ https://www.riksbank.se/sv/betalningar--kontanter/e-krona/
itsthemmrvax 4y ago
madsbuch 4y ago
> There is nothing being produced of value from the assets. A guy like Warren Buffet can clearly appreciate value in the sense of institutions, after all he made his fortune largely in the insurance sector. We are still in the early stages of Crypto, only now we see serious DAO structures start to emerge. There is also a good chance that he will see his entire industry disrupted in some years as more efficient ways to govern small-scale institutions, like an insurance company, are emerging.
- paulgb 4y ago
  Is an insurance DAO fundamentally any different from mutual insurance? What benefit does the blockchain provide? https://en.m.wikipedia.org/wiki/Mutual_insurance https://en.m.wikipedia.org/wiki/Mutual_insurance
  - deleted 4y ago
    [deleted]
  - madsbuch 4y ago
    There are probably no fundamental differences like there are no fundamental difference on transportion from a horse to a car. You just have the benefit when you can drive 130kmh for hours on well maintained road infrastructure instead of riding through a forest.
    - Eisenstein 4y ago
      There are benefits from moving from a horse to a car. What are the benefits for moving insurance onto a blockchain?
      - mopsi 4y ago
        I don't need to fight airlines and insurance agents for compensation when my flight gets delayed. A smart contract can unlock insurance payouts as soon as independent organizations responsible for managing air traffic verify the delay. Cutting out all the current manual labor will lower insurance premiums and offer much more trustworthy service. This is typical automation story. Replacing switchboard ladies with automated systems wasn't "fundamentally different" either, but made calling much more efficient. Government organizations are already collecting loads of machine-readable stats on things like road accidents, and it's fairly trivial to tie these sources of ground truth with automated insurance systems. There should be no reason for me to fill forms and for a lady in a expensive office building to process them, if my insurance is simple standard contract and department of transportation has a database entry stating when, why and by how much my flight was delayed. A script on AWS can process that, and free our time for more valuable or more pleasurable enterprises.
kelthuzad 4y ago
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.
- newaccount74 4y ago
  A lot of people have already lost a lot of money speculating on crypto since 2018, because of volatility, fraud, and exchanges that turned out to have spent all their customers money. Cherry picking a specific period where you would have made a lot of money is easy in hindsight, especially since I'm pretty sure the big crash is yet to come. (I'm not sure enough to bet on a crash, but sure enough to go nowhere close to crypto)
  - noxer 4y ago
    Its not "Cherry picking" the video is from 2018 and obviously you would compare to the current price. Also the whole "people have already lost a lot of money" argument is totally pointless since you do not think the people who made money are relevant so why should the people who lost money be? If all of crypto is totally useless as people here keep saying then its a zero sum game and no money is lost at all it just moved around. Could it be that the people who moved it away from them are at fault? Anywhere outside of crypto we would blame the people for their stupid actions and not "the system" after all casinos exist and HN people aren't constantly talking about how it makes people lose money.
    - newaccount74 4y ago
      You picked two currencies that happened to have a big difference in value at these two points in time. You are ignoring that a lot of people who bought BTC in 2018 sold it again in 2019 as it lost 50% of its value. Nobody could predict that the value would spike again a few years later, and crash again, and spike again, and crash again. You are ignoring all the people who bought BTC at 40000 and are wondering if they should sell it at 60% loss now, or wait for it to rebound. You are ignoring all the people who lost their money because the exchange that they used turned out to be a pyramid scheme. You are ignoring all the people who bought altcoins that fizzled out, or that bought into the NFT craze or any of the other crazy schemes that crypto shills came up with. That's why I am saying you are cherry picking.
rvz 4y ago
Exactly. They sure 'nailed it' alright. [0] /s [0] https://www.cnbc.com/2022/10/19/buffett-backed-digital-bank-nubank-to-launch-its-own-cryptocurrency.html https://www.cnbc.com/2022/10/19/buffett-backed-digital-bank-...
- madsbuch 4y ago
  Why is this downvoted? Why do we see this bifurcation on HackerNews whenever this topic comes up?
- aradaelli 4y ago
  Nubank, which went public late last year, counts famed investor Warren Buffett among its roster of backers. Buffett’s firm Berkshire Hathaway took a $500 million stake in Nubank in June 2021. The company is valued by the stock market at $20.4 billion, roughly half what it was worth in its December 2021 debut. The title is an exaggeration. Buffet owns less than 3% of the bank. He has no control on their initiatives...
lvl102 4y ago
Sorry but these two are not that great and their track record for the past decade is also not that great. They basically missed out on 10x type of opportunity just from 2018. They are in the money making business right? Last I checked, BTC is still 5x from 2018 low. Money is money. Return is return. Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/share repo. Until they actually pay you for your shares, you’re effectively invested in a ponzi scheme.
- _fizz_buzz_ 4y ago
  > Last I checked, BTC is still 5x from 2018 low. The video clip appears to be form may 7th, 2018 [1]. Bitcoin was around $9200 at the time. [1] https://www.cnbc.com/2018/05/07/berkshires-charlie-munger-bitcoin-is-worthless-artificial-gold.html https://www.cnbc.com/2018/05/07/berkshires-charlie-munger-bi...
- unicornmama 4y ago
  They are not in the trading business. You can’t make the identical argument for companies because they may return value to shareholders in the future. But there is the risk of management and governance, like we see now with Meta pissing away money on vanity projects instead of returning value to shareholders.
- Eisenstein 4y ago
  > Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/share repo. Until they actually pay you for your shares, you’re effectively invested in a ponzi scheme. A corporation still has assets you know. As a shareholder you own a share of them. That said, no one is arguing in support of non-dividend paying stocks here, so what is your point?
- kennend3 4y ago
  > Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/share repo. Until they actually pay you for your shares, you’re effectively invested in a ponzi scheme. Yes.. by redefining what "ponzi scheme" means you can say anything is a ponzi scheme. Or alternatively you can use the accepted definition: --- Pon·zi scheme /ˈpänzē ˌskēm/ Learn to pronounce noun a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors. --- And when you apply this to "buying shares" you see it doesn't ring true. Probably because shares represent ownership in a business. Businesses can offer returns to investors such a price appreciation instead of dividends. Most tech/growth stocks don't pay dividends because they reinvest the free cash back into the business. There is probably a reason you are being downvoted, and your attempt to rewrite ponzi to suit your needs may be a contributing factor. While it is easy to arm-chair-critic people who many consider the best investors around, perhaps you can post your own investment history as a frame of reference? Clearly you feel they made mistakes, and that you did not? Lastly, investors have risk factors. Those who invested in Buffet/Munger did so because of their risk views and it is unlikely that those same people invested in bitcoin because of its risks. Maybe other assets beat out Buffet, but does this factor risks?
tinco 4y ago
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 crypto is. Besides crypto there's a ridiculous amount of overhyped tech stocks on the market. None of the tech companies have a market cap that is anywhere close to being sane relative to their intrinsic value. I'm long on Tesla, but I'd never actually hold that position, because I'm long at a much lower value of their stocks than they have now. But you know, the market can stay irrational a lot longer than you can resist FOMO'ing into an overhyped stock, is how the saying goes right?
- kaon123 4y ago
  Yes yes and yes. But: Microsoft?
  - notRobot 4y ago
    Elaborate please?
- prepend 4y ago
  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 because most of tech stocks (by market cap) are not scams and hype. Although there is a lot of hype and probably a decent amount of scam.
  - sokoloff 4y ago
    General agreement, with minor clarification: AMZN has never paid a dividend, at least to my knowledge; they certainly don’t do it regularly.
rcarr 4y ago
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 fiat currencies. While we understood how fiat currencies from investors could flow in, we failed to grasp what could be occurring within the crypto universe that would create more fiat currency for investors to take out at a later date.
- JumpCrisscross 4y ago
  There are a lot of people who have bet their resumes on crypto. Easy money put cash in their accounts. Until that’s depleted we’ll be stuck with this side show, a reality unlikely to rear for at least another decade (barring a deep recession).
- chii 4y ago
  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.
  - AlexandrB 4y ago
    Crypto differs in that the people getting the most entertainment are not the ones putting in the money.
    - nafey 4y ago
      That could be true for real casinos as well if you get really lucky while playing slots.
    - saalweachter 4y ago
      Now I'm imagining a new casino, wired to the gills with cameras like all casinos, where you can view live streams of the casinos or edited cuts that follow individual story lines as people win and lose money, complete with camera confessionals after someone loses their home. How would the ad revenue compare to the casino revenue?
boh 4y ago
Let's not forget that crypto had a huge crash in 2018, so nailing it wasn't too hard to do.
- theclansman 4y ago
  It's like "I predict it will crash again" woah...
JonathanBeuys 4y ago
So far, the market disagrees with Buffet and Munger. In 2018 Bitcoin's market cap was around $150B. Today it is around $300B. Maybe Charles and Munger might have come up with interesting concepts long ago. But not during my adult life. They put all this work and research and expertise into their asset picking. But did anything come out of it in the last decades? If you invested into the NASDAQ 100 - no matter if it was 10 or 20 years ago - you would have had the same ROI Berkshire had over these timespans. There also is a huge blunder at 3:32:19 in the full video: https://youtu.be/sYiv4AMq9Tk?t=12739 https://youtu.be/sYiv4AMq9Tk?t=12739 Buffet saying that buying gold at the time of Christ and holding until today would not have been a great investment. To illustrate that non-productive assets are not good investments. He completely misses that most of gold has been mined after the time of Christ. If the amount of gold had been fixed (like Bitcoin), it would have been an insanely great investment.
- CPLX 4y ago
  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.
  - JonathanBeuys 4y ago
    First, you are confusing market cap with "value" or some other concept. Market cap is price of the last sale multiplied by stock. So every asset has it by definition. Second, how do you back up that statement of not being able to sell it? How do you know you couldn't sell those Bitcoins back to the market? Would you think the same about buying up all gold?
    - themitigating 4y ago
      This is what I was thinking. Anything that another person wants has value. Gold, water, btc. People make this big distinction for things like oil because it's used for something but I don't see how's thats relevant.
stephc_int13 4y ago
Scams and get-rich-quick schemes are not new, they seem to have existed for centuries. People get burned, then learn, but their children and grandchildren don't. Generational knowledge loss is something that is widely underappreciated. Of course, newcomers don't listen, it is always a new thing, new words, surfing on the latest cultural trends and technologies. At some point, crypto/blockchain based scams will stop working, when the current generation will be tired of it. Is there a way to stabilize global knowledge around this?
- paulryanrogers 4y ago
  Tulip mania was never a secret. Crypto just added some more layers, making it harder to tell that it was mania. Education is the only answer I can see.
  - stephc_int13 4y ago
    "Education" is a lazy and naive answer, IMHO. I don't think we can consider that Isaac Newton was uneducated or dumb. And yet, he fell for get-rich-quick scams. https://moneymorning.com/2017/05/08/this-classic-investing-mistake-cost-isaac-newton-everything/ https://moneymorning.com/2017/05/08/this-classic-investing-m... We need something more targeted than "education".
    - paulryanrogers 4y ago
      Newton being knowledge about physics doesn't mean he was immune from financial scams. There isn't much appetite for regulation, at least in the US. What would you propose?
      - stephc_int13 4y ago
        I would go for something simple and radical.
nathias 4y ago
Billionires preaching to me about morality, because I'm supporting decentralized solutions? Who could take this seriously?
bouncycastle 4y ago
It is wrong to assume that crypto is broken if it doesn't have a high value in some arbitrary currency like the USD. Crypto works just as well even if the price 0. It will still process transactions, still create new blocks, and it will still have a use for someone somewhere, even non-financial.
- AlexandrB 4y ago
  There's little incentive to mine if the price is zero. It would be much easier for a single entity to undermine the integrity of the chain with a 51% attack if the only miners are true believers not motivated by money.
  - bouncycastle 4y ago
    0 here is a figure of speech. Chains never go to zero if they are still alive, they are always worth something to someone, even if they are test-nets. Also, high price of a token does not mean the security is high! What matters is that the participants stay honest. See section 6 of bitcoin.pdf, also nowhere in the paper it mentions about price!
- Zanfa 4y ago
  All mainstream cryptocurrencies rely on the high cost of attacking the network to ensure consistency. If the price is 0, there’s little incentive to participate (mine, validate etc), reducing the cost to attack the network, resulting in the entire network becoming useless.
  - bouncycastle 4y ago
    Counterpoint, the Goerli network is not useless.
- jqpabc123 4y ago
  Crypto works just as well even if the price 0. No. See other comments on this. Validation will most likely start to cease as the price drops below a certain motivational level.
noxer 4y ago
The irony of this is that when it was recorded BTC was worth less than it is now. Also, this is not the end of crypto its probably gonna get way worse but crypto isn't gong away. But hopefully all the useless and fraud projects do.

96 points by JSDevOps 4y ago

gizajob 4y ago

The Stadtler and Waldorf of high-finance.

plazmatic 4y ago

edem 4y ago

Too bad that what they are talking about is not crypto just regular tradfi ponzi schemers who happen to have chosen crypto for their next scam.

newaccount74 4y ago
Unfortunately if you take away ponzi schemes and money laundering there's not much left of the crypto market.
- edem 4y ago
  Unfortunately you know nothing about crypto.
r2_pilot 4y ago
Eh, I feel like you are being intellectually lazy and are falling into the "No True Scotsman" fallacy.
- edem 4y ago
  Eh I feel that you're dumb
bertman 4y ago
>crypto >ponzi schemers Literally the same.
- oldgradstudent 4y ago
  Not really. You forgot about money laundering
  - edem 4y ago
    Even the US Treasury said that crypto is not ideal for money laundering and the amount of money laundering happening in the space is miniscule.
- edem 4y ago
  DYOR before you post dumb comments.

adriand 4y ago

Regardless of how you feel about crypto - and I admit to seeing some valuable use-cases, while being highly skeptical of the speculation - you gotta admit that these comments are prescient and also very funny. I sincerely hope I have that presence of mind at that age.

azaras 4y ago
But the valuable use-cases could be solved using other methods efficiently.
- mattbrewsbytes 4y ago
  Oh most certainly. We also have a ever growing list of JavaScript frameworks. Software developers are great at the NIH syndrome or not liking how something was solved and they like their way of solving it. Just because there is another solution path doesn't mean new solution paths to the same problem are void. If you mean more efficiently then that is likely a dimension of the solution where it may not fit for some use cases. For example blockchain transactions are known to be slow when compared to say a RDBMS transaction. If you are recording purchases in a web shopping cart its probably not a good solution. The trade-off here is that for some problem, maybe the speed of the transaction is not a concern. Don't get me wrong, I'm not defending, nor supporting blockchain solutions. Just pointing out that the "we have ways to solve those problems already" isn't a very valid argument in software.
- ekianjo 4y ago
  so why were they not already solved efficiently before crypto?
  - hef19898 4y ago
    Who says they were not?
tokai 4y ago
>I admit to seeing some valuable use-cases Could you write them here? Genuinely curious.

agd 4y ago

I'm not sure that the statements that a) there are bad actors in the space, and b) there will be a crash, are particularly insightful here. Both of these were predicted/expected by many, including many crypto supporters. The key question is whether crypto will rebound. I would expect it to, particularly as governments move more into digital currencies.

koolba 4y ago
> The key question is whether crypto will rebound. I would expect it to, particularly as governments move more into digital currencies. The “when” and the “what” matter immensely though. A rebound after a couple years of global recession is much different than one early next year. A rebound of the existing big names (e.g. BTC and ETH) is much different than the rise of “fed coin” or some other chain. An investment strategy of dollar cost average, spray, and pray, is gonna eat quite a few losers.
- antupis 4y ago
  It will when it actually start delivering value. It might be cross national digital money or somekind nft Ticketmaster competitor or some kinda cross game NFT items.
soco 4y ago
What kind of "government digital currencies" are you referring to?
- bil7 4y ago
  https://twitter.com/Snowden/status/1592587655178592256 https://twitter.com/Snowden/status/1592587655178592256
- the-smug-one 4y ago
  Google term: central bank digital currency For example, Sweden: https://www.riksbank.se/sv/betalningar--kontanter/e-krona/ https://www.riksbank.se/sv/betalningar--kontanter/e-krona/

itsthemmrvax 4y ago

madsbuch 4y ago

> There is nothing being produced of value from the assets. A guy like Warren Buffet can clearly appreciate value in the sense of institutions, after all he made his fortune largely in the insurance sector. We are still in the early stages of Crypto, only now we see serious DAO structures start to emerge. There is also a good chance that he will see his entire industry disrupted in some years as more efficient ways to govern small-scale institutions, like an insurance company, are emerging.

paulgb 4y ago
Is an insurance DAO fundamentally any different from mutual insurance? What benefit does the blockchain provide? https://en.m.wikipedia.org/wiki/Mutual_insurance https://en.m.wikipedia.org/wiki/Mutual_insurance
- deleted 4y ago
  [deleted]
- madsbuch 4y ago
  There are probably no fundamental differences like there are no fundamental difference on transportion from a horse to a car. You just have the benefit when you can drive 130kmh for hours on well maintained road infrastructure instead of riding through a forest.
  - Eisenstein 4y ago
    There are benefits from moving from a horse to a car. What are the benefits for moving insurance onto a blockchain?
    - mopsi 4y ago
      I don't need to fight airlines and insurance agents for compensation when my flight gets delayed. A smart contract can unlock insurance payouts as soon as independent organizations responsible for managing air traffic verify the delay. Cutting out all the current manual labor will lower insurance premiums and offer much more trustworthy service. This is typical automation story. Replacing switchboard ladies with automated systems wasn't "fundamentally different" either, but made calling much more efficient. Government organizations are already collecting loads of machine-readable stats on things like road accidents, and it's fairly trivial to tie these sources of ground truth with automated insurance systems. There should be no reason for me to fill forms and for a lady in a expensive office building to process them, if my insurance is simple standard contract and department of transportation has a database entry stating when, why and by how much my flight was delayed. A script on AWS can process that, and free our time for more valuable or more pleasurable enterprises.

kelthuzad 4y ago

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.

newaccount74 4y ago
A lot of people have already lost a lot of money speculating on crypto since 2018, because of volatility, fraud, and exchanges that turned out to have spent all their customers money. Cherry picking a specific period where you would have made a lot of money is easy in hindsight, especially since I'm pretty sure the big crash is yet to come. (I'm not sure enough to bet on a crash, but sure enough to go nowhere close to crypto)
- noxer 4y ago
  Its not "Cherry picking" the video is from 2018 and obviously you would compare to the current price. Also the whole "people have already lost a lot of money" argument is totally pointless since you do not think the people who made money are relevant so why should the people who lost money be? If all of crypto is totally useless as people here keep saying then its a zero sum game and no money is lost at all it just moved around. Could it be that the people who moved it away from them are at fault? Anywhere outside of crypto we would blame the people for their stupid actions and not "the system" after all casinos exist and HN people aren't constantly talking about how it makes people lose money.
  - newaccount74 4y ago
    You picked two currencies that happened to have a big difference in value at these two points in time. You are ignoring that a lot of people who bought BTC in 2018 sold it again in 2019 as it lost 50% of its value. Nobody could predict that the value would spike again a few years later, and crash again, and spike again, and crash again. You are ignoring all the people who bought BTC at 40000 and are wondering if they should sell it at 60% loss now, or wait for it to rebound. You are ignoring all the people who lost their money because the exchange that they used turned out to be a pyramid scheme. You are ignoring all the people who bought altcoins that fizzled out, or that bought into the NFT craze or any of the other crazy schemes that crypto shills came up with. That's why I am saying you are cherry picking.

rvz 4y ago

Exactly. They sure 'nailed it' alright. [0] /s [0] https://www.cnbc.com/2022/10/19/buffett-backed-digital-bank-nubank-to-launch-its-own-cryptocurrency.html https://www.cnbc.com/2022/10/19/buffett-backed-digital-bank-...

madsbuch 4y ago
Why is this downvoted? Why do we see this bifurcation on HackerNews whenever this topic comes up?
aradaelli 4y ago
Nubank, which went public late last year, counts famed investor Warren Buffett among its roster of backers. Buffett’s firm Berkshire Hathaway took a $500 million stake in Nubank in June 2021. The company is valued by the stock market at $20.4 billion, roughly half what it was worth in its December 2021 debut. The title is an exaggeration. Buffet owns less than 3% of the bank. He has no control on their initiatives...

lvl102 4y ago

Sorry but these two are not that great and their track record for the past decade is also not that great. They basically missed out on 10x type of opportunity just from 2018. They are in the money making business right? Last I checked, BTC is still 5x from 2018 low. Money is money. Return is return. Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/share repo. Until they actually pay you for your shares, you’re effectively invested in a ponzi scheme.

_fizz_buzz_ 4y ago
> Last I checked, BTC is still 5x from 2018 low. The video clip appears to be form may 7th, 2018 [1]. Bitcoin was around $9200 at the time. [1] https://www.cnbc.com/2018/05/07/berkshires-charlie-munger-bitcoin-is-worthless-artificial-gold.html https://www.cnbc.com/2018/05/07/berkshires-charlie-munger-bi...
unicornmama 4y ago
They are not in the trading business. You can’t make the identical argument for companies because they may return value to shareholders in the future. But there is the risk of management and governance, like we see now with Meta pissing away money on vanity projects instead of returning value to shareholders.
Eisenstein 4y ago
> Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/share repo. Until they actually pay you for your shares, you’re effectively invested in a ponzi scheme. A corporation still has assets you know. As a shareholder you own a share of them. That said, no one is arguing in support of non-dividend paying stocks here, so what is your point?
kennend3 4y ago
> Edit: from a purely financial point of view, you can make the same argument for companies that do not pay dividends/share repo. Until they actually pay you for your shares, you’re effectively invested in a ponzi scheme. Yes.. by redefining what "ponzi scheme" means you can say anything is a ponzi scheme. Or alternatively you can use the accepted definition: --- Pon·zi scheme /ˈpänzē ˌskēm/ Learn to pronounce noun a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors. --- And when you apply this to "buying shares" you see it doesn't ring true. Probably because shares represent ownership in a business. Businesses can offer returns to investors such a price appreciation instead of dividends. Most tech/growth stocks don't pay dividends because they reinvest the free cash back into the business. There is probably a reason you are being downvoted, and your attempt to rewrite ponzi to suit your needs may be a contributing factor. While it is easy to arm-chair-critic people who many consider the best investors around, perhaps you can post your own investment history as a frame of reference? Clearly you feel they made mistakes, and that you did not? Lastly, investors have risk factors. Those who invested in Buffet/Munger did so because of their risk views and it is unlikely that those same people invested in bitcoin because of its risks. Maybe other assets beat out Buffet, but does this factor risks?

tinco 4y ago

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 crypto is. Besides crypto there's a ridiculous amount of overhyped tech stocks on the market. None of the tech companies have a market cap that is anywhere close to being sane relative to their intrinsic value. I'm long on Tesla, but I'd never actually hold that position, because I'm long at a much lower value of their stocks than they have now. But you know, the market can stay irrational a lot longer than you can resist FOMO'ing into an overhyped stock, is how the saying goes right?

kaon123 4y ago
Yes yes and yes. But: Microsoft?
- notRobot 4y ago
  Elaborate please?
prepend 4y ago
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 because most of tech stocks (by market cap) are not scams and hype. Although there is a lot of hype and probably a decent amount of scam.
- sokoloff 4y ago
  General agreement, with minor clarification: AMZN has never paid a dividend, at least to my knowledge; they certainly don’t do it regularly.

rcarr 4y ago

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 fiat currencies. While we understood how fiat currencies from investors could flow in, we failed to grasp what could be occurring within the crypto universe that would create more fiat currency for investors to take out at a later date.

JumpCrisscross 4y ago
There are a lot of people who have bet their resumes on crypto. Easy money put cash in their accounts. Until that’s depleted we’ll be stuck with this side show, a reality unlikely to rear for at least another decade (barring a deep recession).
chii 4y ago
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.
- AlexandrB 4y ago
  Crypto differs in that the people getting the most entertainment are not the ones putting in the money.
  - nafey 4y ago
    That could be true for real casinos as well if you get really lucky while playing slots.
  - saalweachter 4y ago
    Now I'm imagining a new casino, wired to the gills with cameras like all casinos, where you can view live streams of the casinos or edited cuts that follow individual story lines as people win and lose money, complete with camera confessionals after someone loses their home. How would the ad revenue compare to the casino revenue?

boh 4y ago

Let's not forget that crypto had a huge crash in 2018, so nailing it wasn't too hard to do.

theclansman 4y ago
It's like "I predict it will crash again" woah...

JonathanBeuys 4y ago

So far, the market disagrees with Buffet and Munger. In 2018 Bitcoin's market cap was around $150B. Today it is around $300B. Maybe Charles and Munger might have come up with interesting concepts long ago. But not during my adult life. They put all this work and research and expertise into their asset picking. But did anything come out of it in the last decades? If you invested into the NASDAQ 100 - no matter if it was 10 or 20 years ago - you would have had the same ROI Berkshire had over these timespans. There also is a huge blunder at 3:32:19 in the full video: https://youtu.be/sYiv4AMq9Tk?t=12739 https://youtu.be/sYiv4AMq9Tk?t=12739 Buffet saying that buying gold at the time of Christ and holding until today would not have been a great investment. To illustrate that non-productive assets are not good investments. He completely misses that most of gold has been mined after the time of Christ. If the amount of gold had been fixed (like Bitcoin), it would have been an insanely great investment.

CPLX 4y ago
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.
- JonathanBeuys 4y ago
  First, you are confusing market cap with "value" or some other concept. Market cap is price of the last sale multiplied by stock. So every asset has it by definition. Second, how do you back up that statement of not being able to sell it? How do you know you couldn't sell those Bitcoins back to the market? Would you think the same about buying up all gold?
  - themitigating 4y ago
    This is what I was thinking. Anything that another person wants has value. Gold, water, btc. People make this big distinction for things like oil because it's used for something but I don't see how's thats relevant.

stephc_int13 4y ago

Scams and get-rich-quick schemes are not new, they seem to have existed for centuries. People get burned, then learn, but their children and grandchildren don't. Generational knowledge loss is something that is widely underappreciated. Of course, newcomers don't listen, it is always a new thing, new words, surfing on the latest cultural trends and technologies. At some point, crypto/blockchain based scams will stop working, when the current generation will be tired of it. Is there a way to stabilize global knowledge around this?

paulryanrogers 4y ago
Tulip mania was never a secret. Crypto just added some more layers, making it harder to tell that it was mania. Education is the only answer I can see.
- stephc_int13 4y ago
  "Education" is a lazy and naive answer, IMHO. I don't think we can consider that Isaac Newton was uneducated or dumb. And yet, he fell for get-rich-quick scams. https://moneymorning.com/2017/05/08/this-classic-investing-mistake-cost-isaac-newton-everything/ https://moneymorning.com/2017/05/08/this-classic-investing-m... We need something more targeted than "education".
  - paulryanrogers 4y ago
    Newton being knowledge about physics doesn't mean he was immune from financial scams. There isn't much appetite for regulation, at least in the US. What would you propose?
    - stephc_int13 4y ago
      I would go for something simple and radical.

nathias 4y ago

Billionires preaching to me about morality, because I'm supporting decentralized solutions? Who could take this seriously?

bouncycastle 4y ago

It is wrong to assume that crypto is broken if it doesn't have a high value in some arbitrary currency like the USD. Crypto works just as well even if the price 0. It will still process transactions, still create new blocks, and it will still have a use for someone somewhere, even non-financial.

AlexandrB 4y ago
There's little incentive to mine if the price is zero. It would be much easier for a single entity to undermine the integrity of the chain with a 51% attack if the only miners are true believers not motivated by money.
- bouncycastle 4y ago
  0 here is a figure of speech. Chains never go to zero if they are still alive, they are always worth something to someone, even if they are test-nets. Also, high price of a token does not mean the security is high! What matters is that the participants stay honest. See section 6 of bitcoin.pdf, also nowhere in the paper it mentions about price!
Zanfa 4y ago
All mainstream cryptocurrencies rely on the high cost of attacking the network to ensure consistency. If the price is 0, there’s little incentive to participate (mine, validate etc), reducing the cost to attack the network, resulting in the entire network becoming useless.
- bouncycastle 4y ago
  Counterpoint, the Goerli network is not useless.
jqpabc123 4y ago
Crypto works just as well even if the price 0. No. See other comments on this. Validation will most likely start to cease as the price drops below a certain motivational level.

noxer 4y ago

The irony of this is that when it was recorded BTC was worth less than it is now. Also, this is not the end of crypto its probably gonna get way worse but crypto isn't gong away. But hopefully all the useless and fraud projects do.