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?
:D
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
EDIT: More specifically anything with as much hype as crypto (and tech to a lesser extent) is not really in the value investing camp in which Buffet is trading. Avoiding them entirely is a very useful heuristic for him.
I know people hate to hear this but unless you have a target price and a rational explanation as to why it's worth that much you're just gambling.
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_as...
[0] http://fortune.com/2017/05/06/warren-buffett-berkshire-hatha...
- I don't understand thing ABC, therefore I won't form an opinion on it (true fact, by his own admission... conservative and reasonable).
- Thing XYZ is generally acknowledged to be more complex and harder to understand than ABC (debatable, but I'd love to see someone show me how crypto is easier to understand than Google/Facebook/Amazon/Uber/etc.).
- Even though I don't understand ABC and won't form an opinion on it, I will form an opinion on XYZ which I understand even less (... wut? Why would anyone put stock in this statement, given the prior two statements?).
He is a major investor in Apple and was a relatively-early backer of BYD, the Chinese battery technology company.
[1] https://www.cnbc.com/2017/02/27/billionaire-warren-buffett-m...
[2] http://money.cnn.com/2017/10/11/investing/byd-warren-buffett...
That goes to show that he's aware of the limits of his expertise, and clearly he has an opinion on bitcoin, so presumably he considers them within his range of expertise.
Bitcoin's recent exponential growth screams "bubble" for anyone who knows what to watch for.
Gold 'lost' 70% of its value when priced in dollars, as the dollar regained immense value thanks to Volcker's policies breaking the inflation wave. That's a critical point you're leaving off (when priced in dollars).
The point being, you have to be a lot more precise about what gold gained or lost value vs. It performed differently when priced in different currencies vs the dollar. Most currencies did not see the kind of value gain the dollar did over that window.
This is one of the properties that makes it a store of value. If you buy gold in 1980, it will lock you in at the 1980 dollar value. It's the currency that is gaining or losing value, gold is storing your 1980 dollar value (which you used to buy the gold in 1980). You then try to get back out of your gold in 1999, you're attempting to swap a 1980 dollar that has been locked-in at that 1980 value for a 1999 dollar, when the two are not worth the same thing.
Gold also then went up several hundred percent as the Bush dollar dropped from ~2002 onward.
[1] http://www.in2013dollars.com/1950-dollars-in-2017?amount=1
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.
Bitcoin will die, crypto currency will survive.
At least the terrible transaction speeds will mitigate a substantial amount of damage.
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.
I agree that crypto is in a bubble right now, but that doesn't mean it has zero value as a technology.
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.
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.