In the annual meeting today, Buffett said if he was offered all the Bitcoin in the world for $25, he would not buy it.
Seriously.
This, by itself, should probably forever put to rest all the ultra-parsing of anything Buffett says, as if it came down engraved in tablets of stone. And I confess, I’ve participated in such nonsense in the past.
Besides the comment being asinine of the face of it, even more disturbing is his rationale. “Because it doesn’t produce anything”, he said. Well, that could be said of every single fiat currency in the world, no? Money isn’t supposed to produce anything. It’s a medium of exchange for that which has been produced. So the three relevant questions are 1) is Bitcoin an effective medium of exchange?, 2) for how long will it persist as a medium of exchange?, and 3) can one determine the value of any particular quantity of Bitcoin at present? FWIW, I have never owned Bitcoin, because of problems with #2 and #3. But certainly not because of the nonsense that “it never produced anything”. Neither has any of the U.S. currency I’ve owned during my lifetime. He should have said he puts it in the “too hard pile”, and left it at that.
WEB has lost all credibility with Bitcoin comments.
It’s like watching Biden speak. This is painful. Money is an economic good that provides an accounting system for value and value transfer. You pay for the quality of slots on the ledger. Dollars, yen euros do not produce anything either. He is a very confused old man and no longer knows what he is talking about or he is talking up the criminal fiat book which his businesses now require.
There are products now being created with block chain and crypto embedded in these producs.
There is a lot of smart talent going into creating a Crypto economy.
Additionally, Fidelity is now going to allow retirement in Crypto
and African countries are now beginning to adopt Crypto/BitCoin as a currency.
There is a lot of misinformation amongst proponents and opponents on this topic.
Reality on the ground is murky as well with crypto being used for black money, drug dealers and
some creating equivalent of pets.com, boats.com but somewhere in there is the next Google.com, Amazon.com.
It will shake out in next few years but in my opinion Crypto economy has inherent advantages
…and its coming.
Besides the comment being asinine of the face of it, even more disturbing is his rationale. “Because it doesn’t produce anything”, he said. Well, that could be said of every single fiat currency in the world, no? Money isn’t supposed to produce anything. It’s a medium of exchange for that which has been produced. So the three relevant questions are 1) is Bitcoin an effective medium of exchange?, 2) for how long will it persist as a medium of exchange?, and 3) can one determine the value of any particular quantity of Bitcoin at present? FWIW, I have never owned Bitcoin, because of problems with #2 and #3. But certainly not because of the nonsense that “it never produced anything”. Neither has any of the U.S. currency I’ve owned during my lifetime. He should have said he puts it in the “too hard pile”, and left it at that.
He might be guilty of hyperbole, but his sentiments were spot on. Bitcoin is not “too hard.” On the contrary, it is dead simple to understand. People own Bitcoin because they like the idea of owning Bitcoin. The price of Bitcoin depends on the number and fervor of people who own Bitcoin. That’s it. There is no enterprise value. There is no coupon. Unlike the USD, there is no way to know how much Bitcoin will be worth in three or six months. That’s not the kind of thing Buffett would ever have any interest in.
I personally would be willing to buy all the Bitcoin in the world for $25. Gladly even. But I’m not interested in spending $25 on Bitcoin.
This, by itself, should probably forever put to rest all the ultra-parsing of anything Buffett says
It is ironic, that the “leader” of this board accused me I am here to piss off people, yet the god he worship’s (nothing wrong with that by the way), just managed to piss of very large section of people, it is not just bitcoin, by their own admission.
The price of Bitcoin depends on the number and fervor of people who own Bitcoin. That’s it. There is no enterprise value. There is no coupon. Unlike the USD, there is no way to know how much Bitcoin will be worth in three or six months.
You’re making my point, without realizing it.
No money has “enterprise value”.
No money has a “coupon”.
And if you’re intelligent and honest, you would admit “there is no way to know how much the USD will be worth in three to six months”, much less three to six year, and certainly not three to six decades.
Bitcoin is fundamentally money. True, it’s an odd kind of money. But that’s what it is. Look it up in the dictionary: money = “any medium of exchange”.
Many folks still don’t get it… USD doesn’t have any coupon attached to it. Someone borrowing it from you is paying the interest. I don’t see why it will not happen eventually with Bitcoin also. I have no opinion and don’t own Bitcoin. I am still struggling to understand it, but don’t want to call it as Evil either.
Dollar doesn’t have the taxing ability, it is the government that has it. But Government also has liabilities. Don’t confuse USD with government finance.
The dollar has the taxing ability of the government. Bitcoin does not. That’s the crux of the difference.
Is it? Why, precisely?
Let’s say hypothetically that tomorrow the US government announced it would henceforth have a zero taxation policy. Would the currency not still have value? Sure, the debt wouldn’t, but US debt is not the same thing as US dollars. I think you’re conflating currency with debt. One is a medium of exchange, the other is a loan. One repays a loan (thus the need for taxation); one does not “repay” currency.
On the other hand, I think “the ability of government” could indeed end up being “the crux of the difference”. One reason I’ve never “invested” in Bitcoin is that I fear that the government is very jealous of its monopoly on legal tender, for that is power. I doubt they’ll be willing to share that power once crypto sufficiently challenges it…but who knows.
I’m shaking my head at those here that just refuse to see how CONSISTENT Buffett’s treatment of Bitcoin is with his long-held views on Gold. You don’t remember the giant cube of gold that just sits there? Or the stories of digging it up from a mine, and refining it, just to bury it in a vault again?
This is 100% classic Buffett, and I think it’s stupid people keep asking him the same questions. I rolled my eyes when they asked the question because I think it’s just so ridiculous to talk about at the Annual Meeting.
All dollars are debt.In order to create money,debt is issued. Said debt has no value if it cannot be repaid through the collection of taxes. If the government stopped taxation,dollar value would crater to near zero.
And if you’re intelligent and honest, you would admit “there is no way to know how much the USD will be worth in three to six months”, much less three to six year, and certainly not three to six decades.
No way to know exactly, no. But every business in the USA makes decisions assuming a future value of the USD. That’s how all business works. Do something now, get paid later. If that weren’t true, then nobody could work on a credit system, which is how the entire economy is based.
I can make a pretty good guess–good enough guess to do business–what the USD will be worth in one year and in ten years. I have no idea what BTC will be worth in one year or six months, and neither does anyone else.
Let’s do an observational experiment: How many real world contracts are priced in Bitcoin? Wages, mortgages, credit cards, what have you. I’ve never even heard of one. The reason is simple: No one knows what Bitcoin might be worth in the future.
Obviously, all Bitcoin is worth more than $25. But there is no way to reliably estimate future value. There just isn’t. That is not true for the USD. So we can separate those two things as not being the same.
Anyway, this is off topic for the board so I’ll let you have the last word.
Crypto’s and such, an endless parade of copy-cat things are sure to follow, is based on rebellion and disruption. Whether you are 40-ish, 60-ish, or just young and impatient? Well you are damn tired of reading about Buffett and Munger… or Bezos… and you want to be rich and rich quick.
Crypto is slinging pie in the face of “them” and a crystal clear signal of what large groups of people can do when they stick together. I am totally surprised that we haven’t seen individual names, gotta be those disrptors, on crypto such as “Musky” or “Woody” (Cathie!). Why not? Oh my would they go parabolic!
The key of course is to get in early on the next wild-ass chase of something. I’d love to be a part of a discussion on what that may be!
Another thing that all of you guys should consider is that those of us my age and older have seen a lot of this stuff similar to cypto. You’ll dismiss this of course if you are a believer, you’re in the moment and you’ve got that disruptor trait which to me is not all bad, it just also disrupts your financial state over time.
But anyway I had a hyper-intelligent friend who ended up making a living restoring historic boats because not only was he excellent at that trade but it afforded him the living outside norms model. He said once while driving uphill passing an 18 wheeler on a curvy road: “The left side is just as flat as the right.”
You will see men (almost always it will be a man) on CNBC who are obviously intelligent…it is in their eyes! Generally beards too…but they will rationalize crypto just like “the left side is as flat as the right” and it will sell well…
…to those who desperately need to get somewhere fast and outside the frustrating system that they think limits their life and growth.
In the annual meeting today, Buffett said if he was offered all the Bitcoin in the world for $25, he would not buy it.
I didn’t watch the video, but I’ll take it as hyperbole for the moment.
This, by itself, should probably forever put to rest all the ultra-parsing of anything Buffett says, as if it came down engraved in tablets of stone. And I confess, I’ve participated in such nonsense in the past.
Irrespective of Bitcoin, it has always been good to consider Buffett and Munger’s opinions as they certainly have a lot of financial wisdom and success to back it up. On the other hand, a mistake to elevate their comments as being infallible, as they certainly are not. Right there in the session yesterday Warren and Charlie mentioned that they’ve made a lot of mistakes. I’m sure they are making some now and will make more in the future.
If I was teaching a class in investing, I would put the following 2-part question on a test:
How much would you pay in dollars, today - January 1, in return for a stream of bitcoins delivered one on each January 1st starting next year and continuing for ten years?
How did you or would you determine such price?
A correct answer for the first part would be any seemingly reasonable amount.
The correct answer for the 2nd part would be anything such as: “I would take the number of points scored by my favorite basketball team in its most recent game and multiple it by 500”; “I would roll a pair of dice and multiple the result by 1,000”; “I would ask a friend for a number between 1 and 20 and multiple it by 1,000.”
A wrong answer for the second part would be anything such as: “I would compute the present value of an eleven-year discounted cash flow.”
Buffett said if he was offered all the Bitcoin in the world for $25, he would not buy it.
“IF he was offered all the Bitcoin in the world for $25”… What would have to be true about Bitcoin if Buffett was offered all of it for $25? It would have to mean that no one who actually owns it thinks it is worth more than $25. If Buffett took the deal it would mean he would own all the bitcoin. There would be no transactions going on in Bitcoin. It would be a dead currency.
Suppose somebody offered you all the US dollar currency in the world for 25 BTC, would you buy it? Or would you realize something was up and that the US dollar is worth something only as long as the people who own it think it is worth something, and they wouldn’t be offering it all to you for 25 BTC if that were still true?
There are lots of things other people buy that Buffett doesn’t buy. And there are lots of people that take great offense that Buffett doesn’t buy the thing they think is worth buying. If it is any consolation, I don’t think Buffett minds if you buy BTC and get rich.