
Buffett on crypto ‘I can say almost certainty they will come to a bad ending' - SirLJ
https://www.cnbc.com/2018/01/10/buffett-says-cyrptocurrencies-will-almost-certainly-end-badly.html
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sigjuice
Please don’t say crypto when you mean cryptocurrency.

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mankash666
Yes - the cryptocurrency space is witnessing a bubble. But Warren Buffet's
views on it are just as valid as anyone else's, especially given how little he
understands the technology.

A million Warren Buffets wrote Bitcoin off in 2009. Today, the IRS requires
you to file taxes on income received as Bitcoin payments or investments in
crypto currency. IRS (government) acknowledging Bitcoin to be a currency is
enough of a rebuke to the Buffets from 2009.

Are frothy validations sustainable in this space? Probably not. But is this a
space one can ignore? If you're there world's richest man with about 20 years
to live, then yes - you've already made your fortune. For others, this is a
space that presents opportunities, and may even disrupt legacy players in
existing markets. So, pay close attention. But be vigilant, the space is rife
with fraud.

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gooseus
Warren Buffets opinion is about 100x more valid than anyone else. He doesn't
need to understand the specific technology - he understands markets, investing
patterns and most importantly, risk.

For the richest person in the world to not even want to buy in a little bit
actually says a lot (he said he'd _never_ invest in them). If there are
opportunities to definitely make money then he has the resources to analyze,
be vigilant and make it work for him... he also has plenty of money that he'd
be free to lose cause yeah, 20 years to live.

Everything you've said about bitcoin could have easily been said about CDOs in
2005-06 when there was "plenty of opportunity" and yet Warren Buffett avoided
losing his shirt, unlike plenty of other people who thought they understood
the derivatives market. And that was back when those other people were
actually trained investors who had to pass Series 7 to even touch the stuff.

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mankash666
Data already proves him wrong - if he'd placed a 5 year bet in 2009 on BTC,
he'd already have received a 100x return. An 8 year bet? 1000X returns.

Why pick 5 years? Many of Buffet's investments have that kind of windows.

Never say never.

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gooseus
If he invested using this logic he wouldn't be the richest person in the
world. This is one of the gambling fallacies of "Oh man, if I hadn't folded
I'd have won it on the river! I should remember that next time I get dealt 6,9
off-suit".

And yes, it's gambling because there isn't any metric to assess the value of
the asset beyond some arbitrary price. Investments in other instruments can be
measured by looking at balance sheets and cash-flow and other performance
metrics of the entities that are receiving the investment (how is my
investment being used to produce ROI?).

Not so with crypto, all the data is basically about a computer network and it
doesn't produce an actual product in the real world... because it's not a real
currency and it's not a real investment vehicle. They're just casino chips
that play one game - buy low, sell high.

The big mistake people are making here is thinking that Buffett/Munger and
real financial investors are gamblers like everyone else and they're not, they
are old-school and who invest in actual real world products that serve a real-
world purpose that they believe will produce a measurable return with a
measurable risk.

In 2009 all the talk was about changing the world and making transactions
seamless and the world was going to be buying coffees with crypto and
houses/cars with crypto and we'd start the digital utopia. Based on that
investor deck, they passed, and they were absolutely right looking at how it
has turned out. Just because this startup pivoted into a global slot machine
with an energy cost the size of Ecuador and lots of people have hit it big
doesn't mean it's a real world product, serving a real world purpose.

When the bubble bursts and lots of everyday people lose their shirts, the
backlash is going to set back any actual plans of a crypto-topia decades if
not more and probably send a shock-wave through the venture capital market
(and beyond) putting many in Silicon Valley (and elsewhere) out of job (with
many into bankruptcy). They are predicting that too since this same article
mentions that they believe venture capital is a bubble as well.

If I were heavily invested in crypto I would take this news as a (yet another)
sign and would move out of crypto and into whatever safe vehicles will be
robust to a venture capital / crypto collapse. And if I were a Silicon Valley
employee anywhere near blockchain, I would be diversifying my skill-set and
updating my resume.

