Buffet, Munger and Gates Denounce Bitcoin

[BobK71]

Bitcoin only does one thing new, and that's decentralization. It's a poor store of value due to instability in the price, it's an even poorer currency for the same reason. When he says Bitcoin doesn't solve any real world problems, it's acknowledging the reality as it is right now. The best you can say about Bitcoin is it has potential to change things, but nobody who needs to conduct day to day commerce is taking Bitcoin seriously. To the extent it's used at all, it's to appeal to the niche part of the market that wants to use it for transactions. Bitcoin hasn't proved any ability to be the new gold, the best you can say again is that it has potential, but it's much more of a speculative asset than a store of value.

Bitcoin can't even hold it's value for an hour, the notion that it's more stable than the USD is idiotic. Sorry, there's no sense in sugarcoating that. It's absolutely absurd.

No elite prefers the gold standard because the fiat standard is what made them wealthy. The gold standard was abandoned because it constrained the economy by limiting debt-fueled growth. It wasn't until the abandonment of the gold standard that you got this explosion of ultra wealthy elites, and since the abandonment of the gold standard, the wealth accumulation by the top .1% has really accelerated relative to the rest of the populace. It defies logic they would abandon the system that created their wealth to a larger degree than the gold standard would have allowed, so if you want to sell that, you need to provide some substantiation, because it's not a compelling theory.

If the top elites dislike the gold standard so much, why did every gold standard get abandoned only when the elites were about to run out of gold?

'Fiat money' might have created a lot of the wealth of the elites of today, but the system is also much more unstable than the gold standard days, and on the whole less desirable from the top elites' point of view.

Bitcoin hasn't achieved a stable exchange rate against fiat money, yet.  It will likely go up a lot more (if with a lot of turbulence) before it does.  No, it will probably never serve as a unit of account or means of exchange (the trustless blockchain arhitecture makes those impossible pretty much from the start.)  But store-of-value is money's most important function.

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[r32godzilla]

Nothing other than this could be expected from these corporate guys.They would still continue to speak in this way against cryptos.They don't want any such new technology like cryptos to spread all over the world disturbing the traditional economic firms.

[audaciousbeing]

It is of course no surprise that some among the big beneficiaries of the status quo will denounce Bitcoin and cryptos.

That is not what I want to write about.  The really interesting thing is what these three *didn't* say.  They didn't use the biggest argument against Bitcoin and cryptocurrencies, the new systems' biggest weakness.

That weakness is that cryptocurrencies are not limited in supply, as a whole.  Anyone can copy some code, rewrite some code, and 'create value' out of thin air.  This will dilute the value of current coins and can become no different from today's inflationary fiat money.  Unlike gold, the value of crypto is not protected by nature.

So these three VIPs threw everything they had against cryptos (including phrases like 'rat poison,') but forgot to use their biggest weapon!

Why?  My guess is that they've been directed by the elites to say bad things about cryptos (and trust me, the elites have plenty of leverage against people like these.)  The goal was to cool down public speculative demand for cryptos, at this moment, but not cause a big drop.  This would be consistent with my theory that the top Western elites are really behind cryptos, for their own reasons.

To a large extent there is some reason in what you have expatiated but the convincing factor is not there in that everything is still based on speculation. The argument about the unlimited about of crypto and the dilution afterwards is very much valid and with the advent of forks, it makes it very easy than we all thought. If it had been the creation of other coins, I wouldn't have any issue with it because I believe that for such coin to gain popularity, it needs to add some value to the market through some level of advertisement unlike the forked coins that relies on exiting market structure and thereby diluting the portfolios of people depending on where loyalty lies and not bringing in new investment because only existing markets participants knows about them.

On the theory, there is always some group of people behind the market position and because of the current market capitalization, its fairly easy to manipulate but I hope this won't last for long.

[jaysabi]

Bitcoin only does one thing new, and that's decentralization. It's a poor store of value due to instability in the price, it's an even poorer currency for the same reason. When he says Bitcoin doesn't solve any real world problems, it's acknowledging the reality as it is right now. The best you can say about Bitcoin is it has potential to change things, but nobody who needs to conduct day to day commerce is taking Bitcoin seriously. To the extent it's used at all, it's to appeal to the niche part of the market that wants to use it for transactions. Bitcoin hasn't proved any ability to be the new gold, the best you can say again is that it has potential, but it's much more of a speculative asset than a store of value.

Bitcoin can't even hold it's value for an hour, the notion that it's more stable than the USD is idiotic. Sorry, there's no sense in sugarcoating that. It's absolutely absurd.

No elite prefers the gold standard because the fiat standard is what made them wealthy. The gold standard was abandoned because it constrained the economy by limiting debt-fueled growth. It wasn't until the abandonment of the gold standard that you got this explosion of ultra wealthy elites, and since the abandonment of the gold standard, the wealth accumulation by the top .1% has really accelerated relative to the rest of the populace. It defies logic they would abandon the system that created their wealth to a larger degree than the gold standard would have allowed, so if you want to sell that, you need to provide some substantiation, because it's not a compelling theory.

If the top elites dislike the gold standard so much, why did every gold standard get abandoned only when the elites were about to run out of gold?

'Fiat money' might have created a lot of the wealth of the elites of today, but the system is also much more unstable than the gold standard days, and on the whole less desirable from the top elites' point of view.

Bitcoin hasn't achieved a stable exchange rate against fiat money, yet.  It will likely go up a lot more (if with a lot of turbulence) before it does.  No, it will probably never serve as a unit of account or means of exchange (the trustless blockchain arhitecture makes those impossible pretty much from the start.)  But store-of-value is money's most important function.

Go back and look at all the financial crises that happened under the gold standard. It was not the bastion of stability you make it out to be. Deflation caused by the gold standard created the Great Depression. If the "elites" run things as you seem to think and they want a gold standard, there'd be a gold standard. Congress (the Senate) especially is made up of substantially richer than normal folks in our society, and if they have so much power and desire for the gold standard and are doing the bidding of even richer people who also want a gold standard, we'd have a gold standard. In fact, it was the elites who wanted out of the gold standard because it was capping economic growth and limiting their wealth. I never see Bitcoin achieving any kind of price stability. Nobody wants it to have that. They'd rather gamble on a speculative vehicle and dream about the moon.

http://www.nber.org/papers/w3488
http://www.nber.org/papers/w18616

There's plenty more.

The economy is susceptible to deflation on the gold standard. The world has moved on for good reason.

[daarul50]

Do not mind the statement of the 3 people. They will never declare not to hate bitcoin, their three statements always contain to suggest that we do not use cryptocurrency especially bitcoin. I do not understand why those 3 characters do not support the existence of cryptocurrency and technology when they know that the potential of cryptocurrency is very promising for a safer economy without being controlled by anyone or any party.

[BobK71]

To a large extent there is some reason in what you have expatiated but the convincing factor is not there in that everything is still based on speculation.

It is.  There's no way to really know what anyone thinks.

The argument about the unlimited about of crypto and the dilution afterwards is very much valid and with the advent of forks, it makes it very easy than we all thought. If it had been the creation of other coins, I wouldn't have any issue with it because I believe that for such coin to gain popularity, it needs to add some value to the market through some level of advertisement unlike the forked coins that relies on exiting market structure and thereby diluting the portfolios of people depending on where loyalty lies and not bringing in new investment because only existing markets participants knows about them.

Well, even the forked coins claim to have some technical merit.  Bitcoin Cash is supposed to be more scalable, right?  But the major reason for all of this inflation is still IMO someone wants to make a profit.  This is not to say technical improvements are not real, but the reality is that somebody benefits big.  And, even more importantly, a market of many coins is much easier for the elites to manipulate in the future.

On the theory, there is always some group of people behind the market position and because of the current market capitalization, its fairly easy to manipulate but I hope this won't last for long.

[HaXX0R1337]

Nothing other than this could be expected from these corporate guys.They would still continue to speak in this way against cryptos.They don't want any such new technology like cryptos to spread all over the world disturbing the traditional economic firms.

Everyone can have their own opinion about the market, investing in the market have its risk and there is nothing wrong in it but some people clearly do not want to take the risk and every market had its risk when it all started, the stock market was a revolution when it started centuries back and i am sure there were many people having negative thoughts about it and we all know how it is going, this is another revolution and i am sure this will change the economics in the future.

[BobK71]

Go back and look at all the financial crises that happened under the gold standard. It was not the bastion of stability you make it out to be. Deflation caused by the gold standard created the Great Depression. If the "elites" run things as you seem to think and they want a gold standard, there'd be a gold standard. Congress (the Senate) especially is made up of substantially richer than normal folks in our society, and if they have so much power and desire for the gold standard and are doing the bidding of even richer people who also want a gold standard, we'd have a gold standard. In fact, it was the elites who wanted out of the gold standard because it was capping economic growth and limiting their wealth. I never see Bitcoin achieving any kind of price stability. Nobody wants it to have that. They'd rather gamble on a speculative vehicle and dream about the moon.

http://www.nber.org/papers/w3488
http://www.nber.org/papers/w18616

There's plenty more.

The economy is susceptible to deflation on the gold standard. The world has moved on for good reason.

See, for example, the multi-century statistics of financial crises here:

https://qz.com/1096237/deutsche-bank-analysis-on-the-frequency-of-financial-crises/

Now it is true that gold-standard era crises may have been more severe, if less frequent.  But that is only because democratic and trade-union forces were not powerful enough to oppose the elites' tight-money policy after a crisis, in an attempt to protect the their system (ie to avoid or minimize devaluation against gold) by imposing even more pain on average people.

I don't for a minute think the elites want to go back to a hard-money-standard in the same form as the classical gold standard.  What they will hope to achieve is the best of both worlds from their point of view: the relative infrequency of crises of the gold standard, combined with the ability to prevent political 'crises' by lessening the pain.  It will most likely be a 'flexible hard-money standard' with continuous devaluation of state money over the long term.  And of course the new mantra won't be 'gold is money and dollars are debt,' but that 'gold/Bitcoin are subject to market supply and demand and we have to let these values go up if we mess up and inflate too much of a bubble.'  (Of course, the reality will be that they will try to manipulate hard-money values down, most of the time, much like what they have done with gold since 1971.  It's just that since they have more Bitcoin, they can be more market-friendly with it, and that makes sense for them too.)

This would not be very different in essence from the gold and silver standards. The public narrative will be completely different, but that doesn't matter, since that has been deceptive from day one.

[jeronimosuykens]

Do not mind the statement of the 3 people. They will never declare not to hate bitcoin, their three statements always contain to suggest that we do not use cryptocurrency especially bitcoin. I do not understand why those 3 characters do not support the existence of cryptocurrency and technology when they know that the potential of cryptocurrency is very promising for a safer economy without being controlled by anyone or any party.

It's just a statement or maybe it's something they're on hold and waiting for the opportunity. Gradually they will understand and adapt to electronic money, then give out thoughts again. I believe they will change their minds and adapt to the technology of the day.

[georgiasus]

What to expect from people of old school. They really can not believe this because they simply do not understand the phenomenon of crypto currency. However, what the author writes about is also completely impossible to exclude