Warren Buffet and Charlie Munger on crypto in 2018
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> 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.
The house takes in money, and produces entertainment. Some people also leave with more money than they go in, but most lose it all.
How would the ad revenue compare to the casino revenue?
Crypto, on the other hand...
Vs. I have zero behind-the-scenes knowledge of any crypto firms.
Comparing the casinos to the juicy gossip that comes out with each crypto collapse...my gut feel is that the crypto folks do not even know that such a culture & controls exist. Otherwise, more crypto folks would at least be pantomiming bits of that stuff, to look good. And yelling about specific violations of accepted industry norms & standards after each big bust, to at least give the appearance that crypto has & cares about such things.
You dont play against them and the odds are in their favor you instead play against everyone else on the same exchange and there are no odds against anyone.
The exchange gets a fee for the service it provides so it does in fact always win but by providing a service people are willing to pay for and not by favorable odds.
Also you dont need to use a centralized exchange, DEX exists too.
The fundamentals aren't there since (at minimum) crypto can't deliver the QPS at low enough energy needed. But this is the crazy dream.
This could be true of crypto; maybe the voting system in a DAO, or the art in an NFT, or the peer to peer trust, has intrinsic value that people will sustain a profit margin for. But with the simple empty circle they are making the point that the main reason folks invest is just to make money, and in that regard crypto is mostly just moving it around and that's not a value add.
You could say that regular finance is the same, but it brings intrinsic values like insurance on deposits and investments to the table, and invests in 'real-growth' businesses that produce goods and services.
For example, I can draw a circle around Google and make the same argument: "I can see how fiat can flow into Google (investments, debt, advertiser dollars, ...) but I can't see how Google can create new fiat to flow back to the rest of the economy." The best I can see is that higher demand for a share of Google creates paper gains but then that's true for crypto as well.
Crypto has some NFTs no one really wants.
Credit is money. Anyone who can create credit can create money.
Ultimately more fiat at the end of the day doesn't matter either - what matters are real goods and services produced. Of course, crypto has not been good with respect to this either...
Financial services only produce value insomuch as they enable people to access goods and services in the 'real economy'. Houses and cars for consumers, and for those who produce goods/services, capital that enables them to produce, whether that be loans for equipment, salaries, whatever, as long as something comes out at the end that there's somebody willing to buy (and for that to be sustainable, there should be a reason to own it more than selling to somebody else).
Money is only useful insomuch as it enables exchange that leads to more real things people want.
So there is some value in the exchange of cryptocurrency, if nowhere near enough to justify its valuation - after all, it does enable people to purchase all sorts of illegal drugs, which is a real good people want.
Other than that, financial speculation (pretty much every other application we usually see of cryptocurrency) is all well and good, but the question at the end of the day is what's the underlying stuff being speculated upon, and how does it correspond to stuff people actually want? Financial instruments on housing and corn at least have some relation to things people want, after all.
I think the problem is that the first pipe is just investment/debt.
You need a second pipe of money coming in -- ad revenue, sales, fees for services provided -- or else, as said, the money going back to investors can't exceed the money coming in from investment.
As long as that second money pipe remains aspirational/marginal, there's just not much potential.
What we have in crypto is as if somebody invented the Internet, and the only thing anybody used it for was to trade stock in Internet companies. Not companies in general, which would at least provide an external source of value, but only Internet companies in an overgrowing ouroboros of speculation upon itself.
If you buy crypto you trade 2 assets like USD > BTC Its the same as if you buy baseball cards USD > baseball card
You bet on the value of one asset to increase over the other. The correct term for this is speculation [1] not investment [2].
Speculation doesn't require anyone to do any "work" (as in produce goods or services). Speculation required that there is or will be an imbalance in the supply and demand of the involved assets which can happen for infinite other reason that someone creating revenue while somehow being associated with that asset.
[1] https://en.wikipedia.org/wiki/Speculation [2] https://en.wikipedia.org/wiki/Investment
I don't think holding a barrel of oil or a bar of gold, or a share of Berkshire Hathaway will generate any income for me. I'd need to sell it to someone else for me to get my money back.
People also purchase commodities to consume them. The commodity exits the world o' commodities and the money stays, to be returned to investors.
- circumvents capital controls
- allows easier transfer of funds between different countries
- allows anonymous money transfers
- allows storage of value (at least until the prices drop) of money outside regulated financial intuitions.
Interestingly, the utility cases for crypto are all ways to get around existing laws and regulations. The thing is that all these laws and regulations were developed for a reason (chesterson's fence), which is to curb fraud, crime, extortion, theft, etc. Eventually the laws will catch up to crypto, and when they do crypto won't have utility.
Buffet is know for not liking stuff that does not "produce goods" like Gold. However trading any kind of asset does actually produce something it produces market liquidity which s the oil in the financial system that make the economy run smother.
This was very clearly illustrated recently in the UK. Kwarteng and Truss announced a budget that was going to increase the debt of the UK and allow them to give tax cuts to the rich. The markets didn’t see this as adding net long term value to the UK and the currency tanked as a result allowing a lot of people to profit from the forex trade.
The value added in a foreign exchange trade is security which is based on the real economic growth of the country behind the currency. If a country is well governed the value of your investment is safe and will grow. If it isn’t, then it will decline. Obviously you also have to be aware that some well governed countries may choose to purposely devalue their currencies as the US historically did (and may do again).
BTW if you trade fiat you are not investing you are speculating same with trading crypt. But people keep comparing it to an investment.
See my other post about the distinction here https://news.ycombinator.com/item?id=33654983
What can you buy with crypto? Drugs, ok... but that market is not big enough to justify its valuation. Financial products, fine, but what are the financial products? The underlying asset of the vast majority of these financial products is just other crypto stuff!
Well, you can speculate on fiat. But most of the fiat speculation uses centralised stablecoins shadier than an umbrella made by the mafia.
Like, I don't know, maybe there's a future for crypto in settling lumber futures or whatever, but at the moment, the FTX blowup makes it seem like every crypto financial product is based off of another crypto financial product.
Now replace Mexican Peso with baseball cards then with crypto. There is no difference. Everyone knows baseball cards are useless and wont let you buy food not even drugs. But if you get an opportunity to make money trading them why would you not? Trading crypto or even NFTs is just way way simpler than trading baseball cards so more people have access to it.
If all the people who constantly say how useless everything is would actually put their money where their mouth is and would trade and bet on lower prices then they would make huge money. And in the long run it would stabilize the market so we dont get these absurd bubbles and JPEGs temporary worth millions. But its all talk no action. The market requires the "everything is worthless" people to counter the "everything is gold" people. Yet these people just stay on the side line and every 4 year when it crashes they come together and slap each-other on the back for being too clever to partake.
Personally I dont mind it, these huge waves are where money can be made. The recent crashes have been very profitable for me.
>But forex enables international trade.
So does crypt. And cheap international remittance. Everything just runs better if liquidity is high in any asset.
The whole FTX crash and all that dint change anything its just a large fraudulent entity which's fallout will now affect the whole market. The exchange actually runs on the traditional financial system everything they did that was fraudulent wasn't crypt fraud it was just normal fraud. If anything this once again shows that you should not give your money to anyone else and that the government will not protect people form criminals. Needless to say that traditional market invested in FTX so they will be affected too.
> If you bought Mexican Peso yesterday and sell it today for a profit then that's it. Why would you care about what it is good for? The whole point of speculating with assets is to make profit from price movements.
I mean, funnily enough, I've heard this sort of reasoning:
> And now all of a sudden everyone's like, wow, people just decide to put $200 million in the box. This is a pretty cool box, right? Like this is a valuable box as demonstrated by all the money that people have apparently decided should be in the box. And who are we to say that they're wrong about that? Like, you know, this is, I mean boxes can be great. Look, I love boxes as much as the next guy. And so what happens now? All of a sudden people are kind of recalibrating like, well, $20 million, that's it? Like that market cap for this box? And it's been like 48 hours and it already is $200 million, including from like sophisticated players in it. They're like, come on, that's too low. And they look at these ratios, TVL, total value locked in the box, you know, as a ratio to market cap of the box’s token.
But, on the other hand, well,
> If all the people who constantly say how useless everything is would actually put their money where their mouth is and would trade and bet on lower prices then they would make huge money.
I have heard this as well:
> So you've got this boxes and it’s kind of dumb, but like what's the end game, right? This box is worth zero obviously. And like that, you know, you can't like keep this smart cap or something. But on the other hand, if everyone kind of now thinks that this box token is worth about a billion dollar market cap, that's what people are pricing it at and sort of has that market cap. Everyone's gonna mark to market. In fact, you can even finance this, right? You put X token in a borrow lending protocol and borrow dollars with it. If you think it's worth like less than two thirds of that, you could even just like put some in there, take the dollars out. Never, you know, give the dollars back. You just get liquidated eventually. And it is sort of like real monetizable stuff in some senses. And you know, at some point if the world never decides that we are wrong about this in like a coordinated way, right? Like you're kind of the guy calling and saying, no, this thing's actually worthless, but in what sense are you right?
Shorting is tricky for many reasons. There's the counterparty risk of how you're going to actually collect (say you borrow against FTT to get Tether which you use as collateral for your FTT loan; who's to say Tether is worth anything?). The space is rife with market manipulation, so you could take a short position and just get wiped out. And it could just keep going up until it goes back down.
I'd love to be bullish on crypto. I still have some. But like I said, it simply can't be healthy that pretty much every crypto financial product seems to just be based around crypto. It's like a stock exchange where every listed company just trades stock of other companies on the exchange.
Also utility tokens exist with actual use case not "crypto" as the product. You seem misinformed, its not 2015 anymore, big banks use crypto nowadays its not going away its gong to be regulated and become an essential part of the financial system.
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.
Could you write them here? Genuinely curious.
It could be that taxes become absurd or abusive in some governments or corrupt officials steal or waste their fair share. It may be that some government wants to prevent certain types of exchanges that the rest of society thinks are actually 'OK' and their government no longer reflects their interest.
For example, my significant other is filipino and in their culture, many leave the country to work internationally because of limited local opportunity. Part of that culture involves many sending money home regularly to their families. Sending that money has limitations and often goes through currency exchanges and other brokers who collect fees off that money. To my SO and their family, these groups are leeches providing no value.
I understand why some of these structures exist (to help reduce money laundering and criminal monetary exchanges, etc.) but most these folks sending money home are doing honest labor and simply trying to support their families abroad but have various middlemen sticking their fingers the pot. Crypto and exchanges could provide a viable route to avoid this and send wealth home with limited interference.
Distributed consensus reduces the power that all centralized entities - whether government or corporate - exert.
1. A friend of mine has a small software consultancy. He usually works within EUR area. All fine and dandy there. Then there was a client in the US, they agreed on a USD rate for his work. He went to his bank to open a USD account, they did additional AML and KYC procedures and just refused to open a USD account. Didn’t even explain why, he’s not doing anything shady. So, the first USD payment went to his EUR account, and got automatically converted at a very unfriendly exchange rate making him lose non-trivial money on that. Now he accepts USDC and converts on an exchange instead.
2. A different friend has a hardware/software business. A client in an African country found them. The African client wanted to use PayPal, as ‘banks are troublesome’. They didn’t accept PayPal as it can be recalled. So they did the transfer through the banking system which stuck in it due to AML for a month. Because, why are you having a payment from Africa? Are you selling drugs? Are they terrorists? They aren’t using crypto, but it sure would help here.
2. Use Western Union.
2. Seriously? The time and expense of this compared to crypto is huge. Again, decentralization > single point of failure.
Being glib about real benefits and use cases is not helping the conversation here.
Regarding two: The transaction cost of crypto might be lower, but carries the risk of losing the full payments as soon as some exchange decides to stop withdrawals.
2. Less sure about this one!
But, yes, Wise would’ve helped here.
Oh well.
Come to think of it, this actually highlights the point very well. People on this thread generally seem to think that international money transfer is fine. I don’t think Wise would have a business case if that was true.
In trials now, scheduled to launch in mid-2023.
The most valuable use-case for crypto was prodding the Fed to develop and implement this. If all goes as planned, consider crypto's work done.
That the US is generally slow to roll out this kind of national standard is mostly due to politics and general aversion to government work, not because the US waited for crypto to make the problem "known".
Relatively very few people use crypto for any sort of real-world currency transfer.
By design, the Federal Reserve is semi-independent from the political process in the US and is not government funded. The problem was "known" for years but the threat of crypto played a significant role in finally spurring them into quick action.
The American banking system is currently in a bad, insecure, and expensive state.
Almost nothing is ever really *"free"* --- even though it may appear that way at some level. Crypto transactions are certainly not *"free"*; neither are credit cards.
FedNow may likewise have the appearance of being *"free"* for individuals, it all depends on how banks chose to recover the operating costs.
The American banking system is currently in a bad, insecure, and expensive state.
Bad is subjective. Expensive is accurate --- and slow. This is finally being addressed.
Insecure --- I don't really think this is a big issue. There are issues but on an individual level, very few people actually lose money due to any inherent "insecurity" in the system .
Also fednow does not work outside the US currency system. You can not send USD and receive EUR.
But guess what, there are actually crypto solutions that can do that faster and cheaper than any bank can today. The trick is to go over crypto to bridge different fiat currency so you can exchange USD to EUR without a third party taking a fee for the exchange.
This is projected. Actual cost to consumers will depend on banks and how they choose to recover the cost. As an example, credit card transactions are much, much higher but a lot of consumers consider them *free* because they aren't charged directly.
Yes, some crypto transactions may be cheaper --- for crypto swaps only. But crypto isn't a functioning currency. You can't rent a place to live in crypto-land. Compare apples to apples and look at the overall cost of doing an actual, end to end, real world transaction involving crypto (like paying rent) and 5 cents will start looking more attractive.
Moving currencies across borders between different jurisdictions and currencies that is actually where the problems start and thus this is not cheap and not fast.
People already use crypto as a bridge currency today to transfer "functioning currency" aka fiat.
If you are in lets say Europa and you want to send money to Mexico You buy crypto send it there and sell it there for the local currency (Mexican Peso). This takes only a few minutes if done manually and you get the exchange rate of the market not some bad rate from a bank or payment provider. People do this since many years now circumventing banks and payment providers who would take a huge fee.
Take an individual case and add up all the end to end fees associated with doing this. Most likely, they are still huge.
A lot of these people aren't really saving much money compared to traditional banking. They're doing this for convenience because they can't easily get a bank account or don't want one because they operate outside the system.
Transfer is dirt cheap if you dont use the known high fee blockchains like BTC/ETH. A realistic fee is less then 1 cent per Tx. Then crypt back to fiat same thing 0.1% spread.
Lets assume a worst case and you loose 0.5% for the 2 exchanges and 1 cent for the fee.
So for 100 USD send that would mean 99.49 USD is revived
For comparison moneygram's cheapest option for 100 USD to MXN would cost $2 fee (debit card fees not included and the exchange rate (spread) is unknown they give you whatever they want but certainly not anything better than 0.1%) So $102 send and less than $100 will be received and it takes up to 2 business days while the crypto solution takes minutes.
Worst case example is still 4+ times cheaper while completely ignoring the exchange rate because you cant know in advance. And there are way more exotic currencies than MXN which makes the exchange more expensive. Not for crypto tho. If there is a market you get the real market exchange rate as is.
The global remittance market moves billions with double digit growth yearly. If just a tiny fraction of all people use crypto for this (and they do) their saving sum up to millions.
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?
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.
If you wouldn’t buy it today then you should sell.
Less common is if you have a long-term loss (in-year or carry-forward) that will be used to offset a short-term gain, but you have a long-term unrealized gain. In that case, you would consider holding and realizing the long-term gain in the subsequent year, allowing the (less valuable) long-term loss to offset the (more expensive) short-term gain.
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?
Education is the only answer I can see.
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-m...
We need something more targeted than "education".
There isn't much appetite for regulation, at least in the US. What would you propose?
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)
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.
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.
People who do stupid decisions are at fault that has nothing to do with the picked time points.
>Nobody could predict....
Except that thousandth of people did and still does at least the people who are informed. Some day the up and down will end as it gets weaker every wave, its very much predictable.
BTC cycles have been ~4 year slightly growing a bit over time. If someone just randomly expect it to be just 1 year and then sells at -50%, its entirely their fault. To do that you have to be stupid twice once to buy without any knowledge about what they buy and then again after they spend a year not educating themself. No one cheated them, no one defrauded them, no one tricked them into anything. Its 100% voluntary stupidity.
>That's why I am saying you are cherry picking.
I'm not, it wasn't my post, I just pointed out that the times aren't picked by the author but by the release time of the video. He didn't cherry pick a best case point in time either, in fact the video was made after the second large crash in 2018 and the price comparison to now (presumably also after the second large crash in this cycle) It seems very reasonable to point out that the price is still higher now than back then. In fact if you compare 2 points in time 4 years apart that it p much the perfect unbiased pick since the cycled go 4 years.
Meanwhile, we both stayed warm and dry last night.
A lot of people bought Bitcoin during the late 2017 hype peak, around $17-19k. If they're still in, they're underwater on their investment now five years later. So it's not actually such a great long-term investment for the regular people who buy when the FOMO is high.
BTW buying BTC is not an investment it is speculation.
Also 17k-19k will probably give huge returns in 3 years or so.
Its a high risk high reward bet you cant expect 100+% gains without also expecting some periods where you will be "underwater". If you aren't fine with both, long term crypto holding just isn't for you.
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.
For example, Sweden: https://www.riksbank.se/sv/betalningar--kontanter/e-krona/
The point of crypto is to eliminate such attacks by removing the need to trust central actors like SBF and FTX. It's the reason people keep talking about "trustlessness."
This is not a panacea, and building reliable smart contracts is an ongoing technical challenge with its own social issues. To really work, users need to insist on solid audits and minimal special access for admins, just for starters. But those are different problems that had nothing to do with FTX.
But Ethereum and probably other smart contract blockchains have decentralized exchanges, where you can trade tokens around without trusting anyone to hold them for you. That stuff is working just fine.
Obviously we do need legacy systems to trade with fiat. But we don't need to trust those system to hold crypto for any longer than it takes to make that trade. "Not your keys, not your coins" has been a rallying cry of the crypto community ever since Mt. Gox failed eight years ago, but the big brains running hedge funds don't think that way.
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!
No. See other comments on this. Validation will most likely start to cease as the price drops below a certain motivational level.
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.
>ponzi schemers
Literally the same.
You forgot about money laundering
[0] https://www.cnbc.com/2022/10/19/buffett-backed-digital-bank-...
Why do we see this bifurcation on HackerNews whenever this topic comes up?
The title is an exaggeration. Buffet owns less than 3% of the bank. He has no control on their initiatives...
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.
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.
I will leave that opinion to you.
It took several decades from the first steam engines til we had a serious contender to previous means of transportation on a horse back. So the empiric foundations you refer to are not representative.
Have a good day.
Why do you feel the need for this type of attack?
To answer your questions without any use of metaphors:
I do not know whether Crypto is a good or a bad idea. I am merely trying not to be presumptive about it.
The horse metaphor is an attempt to lead some attention to the fact that we several times in the history have seen long adaptation time for certain technologies we benefit from on large scale.
You're stating an opinion that it's like a steam engine, which doesn't really mean anything in this context.
The horse metaphor is an attempt to lead some attention to the fact that we several times in the history have seen long adaptation time for certain technologies we benefit from on large scale.
Pretty bad clock.
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.
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-bi...
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.
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?
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?
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
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.
This, in fact, is exactly what these guys are pointing out.
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?
What’s the market cap of gravel? It might be $1,000 a ton but you can’t multiply that by the amount of gravel in the world and get a meaningful number.
OK so how about gold? How much of that is there? Are you counting ore, how about gold a mile underground? Same problem.
The point is that market cap only applies when you’re talking about a security that represents a claim on a fraction of a whole asset that exists independently of the security itself.
The concept of a market cap is meaningful when adding up all of the stock yields 100% of a defined thing.
In that case you can surmise that the market cap represents some kind of representation of the value of that thing. The lower limit on market cap is generally considered to have a relationship to what that asset is worth.
But Bitcoin doesn’t have intrinsic value. It’s not a thing at all. If you owned all of it you literally would have absolutely nothing at all. Someone else could just start using the same code and call it bitcoin. There’s no asset there.
Hence, no market cap.
You will also find the answers to your questions about whether to count gold below ground.
The "market cap" metric has always been meaningless.