> “the idea that it [bitcoin] has intrinsic value is a joke.”
I would love to hear Warren Buffet on the "intrinsic value" of gold.
Edit: With the comment of thatthatis in mind, WB uses "intrinsic value" as future income potential. That use then makes me wonder about his "intrinsic value" of dollars, euros and yen.
It is one of the very few metals that do not oxide in normal conditions, this makes :
Any metal very good electrical contact: just putting a single layer of gold over any metal will make the metal a fantastic electrical contact without the oxide layer that any metal will develop over time. This application alone is of great use in anything that plugs, just look around and you see gold in any electronic device.
You can make the best quality IR reflectors with it.
You can cover plastic with a very small layer of it and make mylar that in used in everything from refrigerators to accident blankets.
Gold (and platinum)is one of the the most used metals in any electronic, chemistry, biochemistry or physics laboratory as not being dissolved or attacked from most chemicals makes the extremely useful.
It is also great value because:
It is very dense.
It could be divided ad infinitum without (oxidation)damages.
It is easy to know it is gold and not something different.
It is beautiful.
It is very rare and appreciated, because of its aesthetic and its industrial properties.
Which makes it one of the best material for exchanging goods possible. It is also the preferred way to store wealth around the world when US of America does not threat with its weapons(guess what are China, Rusia, Iran or Brasil using to exchange goods between them as they have a military army on their on).
Gold reserves has been the first thing the US has sto... errr has taken from Ukraine in order to "protect" it. Let me tell you when the gold is coming back:never.
It seems that "intrinsic value" is a measure of the ability to produce future wealth. With that definition, I put the edit above to include dollars, euro and yen.
You're right, Buffett does include dollars, euros, yen and gold as not having intrinsic value. In addition to the link above where Buffett warns against gold as an investment, he also frequently warns against the hidden danger (compounded inflation) when holding cash.
http://finance.fortune.cnn.com/2012/02/09/warren-buffett-ber...
I was at one of the Berkshire annual meetings when he commented on that. He said, "why would I keep a bunch of yellow metal? In ten years, I still have the same amount of gold. But if I buy a great business like Coca-Cola, in ten years the employees of Coca-Cola will have been working hard to expand the business and I'll have more than when I started. So buying gold is kind of stupid." (It's been a number of years, so this is a paraphrase)
Gold actually does have intrinsic value, even if it isn't the best investment: it is a metal, it doesn't tarnish or corrode, it looks nice, and it is easily malleable. So gold gets used for electronic contacts (no corrosion, good conductivity) and jewelry (pretty, doesn't corrode, malleable) come to mind. Gold hasn't been used as a coin in years, but is still valuable, thus demonstrating that it has intrinsic value.
What can you make out of bitcoin? Nothing. If everyone lost their bitcoin keys (and therefore could not use them as a medium of exchange,) you could do nothing with them. Hence, no intrinsic value. He is pointing out that bitcoin is medium of exchange, not something with intrinsic value. A check has no intrinsic value, either (e.g. an expired paycheck), it's entire value lies in being a medium of exchange, not within itself.
Gold looks pretty, has various technological uses, is legitimately rare in the real world, and has thousands of years of human valuation.
The US Dollar has hundreds of years backed by the full faith and credit of the United States (which despite expected snark, is greater than more or less anyone in the world long term).
The inventor of Bitcoin is anonymous, it is rather more vulnerable to software problems than gold or the dollar, it is difficult to exchange for other currency, has questionable legal status around the world, and it's value is disproportionally based on amateur investors (speculators).
Paraphrasing: You pay some guys to dig it up, then you move it halfway around the world, then you bury it again and pay some guys to guard it. I'll pass.
I would love to hear Warren Buffet on the "intrinsic value" of gold.
Edit: With the comment of thatthatis in mind, WB uses "intrinsic value" as future income potential. That use then makes me wonder about his "intrinsic value" of dollars, euros and yen.