Do you think Buffett was right?

[rikkie]

He was obviously wrong. Look the price is going up today .People believe in bitcoins and thats the only reason for it

I have exactly the same meaning as you mentioned in your post.
I find you are completely right.

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[ArticMine]

The Winklevoss Investment Trust could literally provide Buffett with the opportunity to put his money where his mouth is by insuring the Bitcoin held by the ETF. https://bitcointalk.org/index.php?topic=973048.msg10635752#msg10635752.

[afbitcoins]

Buffet benefits from the status quo and seeks to maintain the status quo. He called bitcoin rat poison at one time which is a very ineresting statement which can be taken different ways. I think he is best summed up as a paper bug

[Meuh6879]

The idea that it has some huge intrinsic value is just a joke in my view."

QE is a joke ... but people are agree.
we (they) are already lost.

Only gold, diamand and bitcoin can save the world now.

[jubalix]

Banks are a way to transmit money are are worth alot, also the check is only the front end, what about all the processing behind it eg the Banking system.

[DeathAndTaxes]

But the bitcoin network can operate even if one bitcoin is worth about 10$.  

Not efficiently.  To move $10M @ $10 per BTC would require 1M BTC.  Trying to acquire and liquidate 1M BTC would cause massive disruptions in price.   That loss roundtrip would result in a high effective cost for both parties.  Also at $10 per BTC the network would be far easier to attack so not only would it be expensive to use it would also be risky.  More Expensive and risky than alternatives?  Not a very good value proposition.  So while in theory Bitcoin can work at any price there are practical limitations to the utility of the network based on the value of the underlying currency.

[dinofelis]

"Are checks worth a whole lot of money just because they can transmit money?"

Yes. A check is an instrument provided by a bank. And banks are worth a lot of money according to the stock exchanges, last time I checked.

But the bitcoin network can operate even if one bitcoin is worth about 10$.   

Yes and no.   For the moment, for sure.  The point is that the "price of a bitcoin" needed to do a certain number of transactions, with a certain amount of time in between them, is exactly what the monetary formula gives you:

P x Q = V x M.


P x Q is the total price (in bitcoin) of all goods and services bought with bitcoin in a certain period, say S, the total sum of bitcoin expended to buy stuff.

V is the number of times on average the same bitcoin participates in a buying action of such good or service in the given period (say, a year).

M is the amount of bitcoins in circulation. 

Now, V is the inverse of the (harmonic) average hold time T of a coin.  Indeed, you do not immediately upon reception of a coin because you sold something, buy something else with it.  If you sell a car today against coins, you will probably not spend all that money in the evening.  So all coins are held a certain time on average in between two interactions.  A dollar is held a few months on average for instance. 

Let us assume that a coin is held on average half a month.  That would put V to 24 (if the period is a year).  Now, with finally 20 million coins in circulation, that would bring us to a total sum spent on goods and services of 480 million bitcoin.

Every year, one will buy for about 480 million bitcoin goods and services under these assumptions.

If your bitcoin is worth $10.-, then that means that every year, for not more than about $ 5 billion goods and services are bought with bitcoin.

If you want to buy MORE stuff, then there's no alternative but for the price of bitcoin to go up (or for the holding times to go below half a month).

If you want to buy 20% of all of the black market (estimated $ 300 billion, so $ 60 billion bought with coins), then a coin needs to be at least 12 times more expensive, or at least $120 a coin.  (under the assumption of a spending every 2 weeks).

So the price of a coin cannot be arbitrary low if it has to buy large volumes of goods and services.

[Gyfts]

Really poor analogy. You can not compare Bitcoin to checks. Bitcoin is yes, a good way to transmit money under a decentralized network. Not just anonymously. Checks are supported by the bank. Without the bank, the check is a piece of paper. 

[jl2012]

This is a bad analogy.

The correct one should be:

Bank = Bitcoin miner
Cheque = Bitcoin transaction
USD = Bitcoin

Bitcoin transaction, like a cheque, has no intrinsic value. But bitcoin transaction is not bitcoin

Buffett is an excellent investor but he doesn't invest in anything he doesn't understand. Obviously he doesn't understand Bitcoin at all.

[Soros Shorts]

Really poor analogy. You can not compare Bitcoin to checks.

Not in this case, but the check analogy and postage is good when it comes to transaction fees. Postage should be related to the number of checks you place in the envelope, not the value of the checks. Similarly the transaction fees should be related to the number of bytes you transaction takes up and not the value of the transaction.

Speaking of Buffett, he may be a good investor but he himself admits there are a lot of things in the financial world that he doesn't understand. He's not even a good trader. I've owned Berkshire Hathaway A for almost 20 years (bought 1 share in the 90's when is was only $80K) and it has done well, but it certainly has not been my best performing investment,

 

[chessnut]

It was fate that he would appear right on this call. He would have said the same bs if asked about it at the price of $2, but he is just a pop star so no wonder he was asked and gave his thoughts on it at the peak of a mania driven bubble.

[ajareselde]

Buffet is a dying old horse, and his time passed a long time ago, but he's a smart horse, making bussinessman all around the world doing what he wants them to,
making them believe he's teaching them how to make money for themselves, when they're actually making his investments more profitable/sustainable.

I don't know is bitcoin an answer to world financial system problems, but fiat money is proven not to be.

cheers

[johnyj]

"Are checks worth a whole lot of money just because they can transmit money?"

Yes. A check is an instrument provided by a bank. And banks are worth a lot of money according to the stock exchanges, last time I checked.

But the bitcoin network can operate even if one bitcoin is worth about 10$.  

Yes and no.   For the moment, for sure.  The point is that the "price of a bitcoin" needed to do a certain number of transactions, with a certain amount of time in between them, is exactly what the monetary formula gives you:

P x Q = V x M.

Exactly, and due to bitcoin's long term appreciation potential, most of the bitcoin are being hold long term, 2 million maximum is circulating actively

[dataispower]

"Are checks worth a whole lot of money just because they can transmit money?"

Yes. A check is an instrument provided by a bank. And banks are worth a lot of money according to the stock exchanges, last time I checked.

But the bitcoin network can operate even if one bitcoin is worth about 10$.  

Yes and no.   For the moment, for sure.  The point is that the "price of a bitcoin" needed to do a certain number of transactions, with a certain amount of time in between them, is exactly what the monetary formula gives you:

P x Q = V x M.

Exactly, and due to bitcoin's long term appreciation potential, most of the bitcoin are being hold long term, 2 million maximum is circulating actively

Can't ripple be used to transmit money world wide more efficiently? If ripple will be cheaper and more convenient than all other alternatives (including bitcoin) then it will be used by most people. Most people don't care about decentralization.

Convenience, popularity and price is all that matters.

[Meuh6879]

Checks are supported by the bank.

only on local (national) ground ... not international.

[HarmonLi]

If he was right, also Gold is a mirage. The intrinsic value of Gold is also much lower than its actually perceived value. If Gold was only traded because its intrinsic value, we'd see prices maybe a 1/100th of what it's currently 'worth'.

[dataispower]

If he was right, also Gold is a mirage. The intrinsic value of Gold is also much lower than its actually perceived value. If Gold was only traded because its intrinsic value, we'd see prices maybe a 1/100th of what it's currently 'worth'.

Gold has intrinsic value, it is used for different purposes.

There is not reason for most people to use bitcoin as a currency. If a different network can be used to transmit money efficiently it will be used.

Why bitcoin has such a high value today is really a mystery.

[HarmonLi]

If he was right, also Gold is a mirage. The intrinsic value of Gold is also much lower than its actually perceived value. If Gold was only traded because its intrinsic value, we'd see prices maybe a 1/100th of what it's currently 'worth'.

Gold has intrinsic value, it is used for different purposes.

There is not reason for most people to use bitcoin as a currency. If a different network can be used to transmit money efficiently it will be used.

Why bitcoin has such a high value today is really a mystery.

Yeah, but the intrinsic value is much lower than the current price of Gold, how do you explain that? -> Speculation, Gold's purpose as a storage of wealth.
Bitcoin is unique in it's decentralization. Sure, there are altcoins, but that doesn't matter - they're only as valuable as their share of the cryptocurrencies is - negligible.

[dataispower]

If he was right, also Gold is a mirage. The intrinsic value of Gold is also much lower than its actually perceived value. If Gold was only traded because its intrinsic value, we'd see prices maybe a 1/100th of what it's currently 'worth'.

Gold has intrinsic value, it is used for different purposes.

There is not reason for most people to use bitcoin as a currency. If a different network can be used to transmit money efficiently it will be used.

Why bitcoin has such a high value today is really a mystery.

Yeah, but the intrinsic value is much lower than the current price of Gold, how do you explain that? -> Speculation, Gold's purpose as a storage of wealth.
Bitcoin is unique in it's decentralization. Sure, there are altcoins, but that doesn't matter - they're only as valuable as their share of the cryptocurrencies is - negligible.

I don't know if Gold is overpriced. The price of bitcoin should represent the value it brings to the people. If it doesn't bring value as an efficient network for transmitting money (most people don't care about decentralization), and isn't used as a currency by a large amount of people, then it means that bitcoin is highly overvalued, and the people who invested their money into bitcoin will lose it.

[HarmonLi]

If he was right, also Gold is a mirage. The intrinsic value of Gold is also much lower than its actually perceived value. If Gold was only traded because its intrinsic value, we'd see prices maybe a 1/100th of what it's currently 'worth'.

Gold has intrinsic value, it is used for different purposes.

There is not reason for most people to use bitcoin as a currency. If a different network can be used to transmit money efficiently it will be used.

Why bitcoin has such a high value today is really a mystery.

Yeah, but the intrinsic value is much lower than the current price of Gold, how do you explain that? -> Speculation, Gold's purpose as a storage of wealth.
Bitcoin is unique in it's decentralization. Sure, there are altcoins, but that doesn't matter - they're only as valuable as their share of the cryptocurrencies is - negligible.

I don't know if Gold is overpriced. The price of bitcoin should represent the value it brings to the people. If it doesn't bring value as an efficient network for transmitting money (most people don't care about decentralization), and isn't used as a currency by a large amount of people, then it means that bitcoin is highly overvalued, and the people who invested their money into bitcoin will lose it.

I don't see a problem of it being an excellent storage of wealth. Why not? It's decentralized, accessible (almost) world-wide and not backed by any political agenda, state, whatever. This is what a lot of people want - like gold.