Crypto Buffet & Munger Deride Bitcoin as "Swapping Turds"

And that is the thing - a lot are leveraged. Maybe not in Australia where our institutions are very conservative and we don't have large hedge funds playing in the crypto space.

However take the US, where there are huge funds who are specialising in crypto investment, who are able to borrow from the US Fed Reserve (or merchant banks) with ridiculously high leverage. It's already happening massively over there.

This sort of thing happens every large boom, prices go up nicely.. people leverage in near the top of the market (although that is never altogether visible) chasing those same gains. It is all good for a couple of years, it seems the sky seems the limit and this will go on forever at the same growth. However eventually the tide goes out, and the prices come crashing down as the leverage has to unwind, and most get sucked out to sea.

I'm not as old as Buffet, but even at my age I've seen this time and time again.

 

Sold some IOTA the other day with coinspot.
6k AUD in my account within a couple of hours.

Not a large amount by any stretch but I was impressed with the speed of transfer.

 

If there is an opportunity to make a bucket load of money right now, why would I wait for 21% pa over 57 years. If crypto is having a bull run right now cash in on it. After you make what you are comfortable with you can jump in between stocks, bonds, property and earn your 21% pa.

No there isn't.

Give it 57 years like Berkshire Hathaway.

The main currency type globally.

 

This doesn't even make sense. A lot of billionaires are not liquid and not individuals (they are mainly companies and shareholders of companies that are very valuable).

Why does a crypto billionaire have to be liquid to be considered a billionaire. They just need to be able to leverage against their holdings or have a certain element of liquidity and then it becomes no different to any other asset or asset owner.

Imagine a property billionaire that is fully diversified in property types - some hard to sell and some easy. Houses, apartments, land, farms, resorts, office towers. Are they not a billionaire because they can't sell their assets? say they own an office block worth $300 million and it doesn't sell for 5 years?

 

I’ve got some magic beans to sell. Interested?
All the celebs on Insta celebs are on board. These crusty dudes in their 80s who've only ever made over $150 billion USD (of real money not pretend 'money') between them are being so mean to you. It's not fair! I've got some unicorn aura for sale too. Interested? My mate who has no investing experience thinks it will be the dominant currency in 47 years. Get in while you can!

 

You've missed my point. They aren't billionaires because they CAN'T liquidate. Good luck using crypto as security.

 

Bitcoin may not be the dominant currency in this space in 47 years but a form of crypto currency will be. Whether it still has the name of crypto currency or not is a secondary item, the main focus is that paper and fiat currencies will eventually be phased out in the way that we see them now and replaced by currencies that were probably inspired by or the foundations were formed in what is happening in the crypto space today. Just because YOU cannot see this happening it doesn’t mean it won’t.

Also I’m not discounting Warren Buffet, I’ll admit I don’t read too much about him. But isn’t he anti gold? Doesn’t he also have the philosophy to not invest in assets that don’t produce an income? So while he is a genius, there are other valid philosophies out there too, contrary to his that are very good.

 

I don't doubt this is a possibility but that does not make crypto an investment. Rather, your point exposes a real vulnerability for all crypto currencies, that there is no restriction on competing crypto-currencies usurping their places, nor any restrictions on players with real capital and real commercial nous exploiting blockchain technology at the expense of the HODlers and their theological faith.

I'd just suggest that 'playing at' crypto is gambling and is not investing. If you can do what you suggested earlier, that is make some money and transition to stocks, real estate... then good luck to you.

 

Of course they can liquidate. Where are you getting your information from?

 

Not buying bitcoin is a bigger risk in my opinion. Governments are destroying all currency.

 

Let's say you put $10k into BTC a decade ago. Not a huge sum for most people on this forum. Today it'd be worth several hundred million dollars. Huge life changer! You'd be a "whale". The thing is I've never met or heard of anyone cashing in their BTC chips in such a big way. What I do hear is folks losing their wallet, so to speak, to scammers.

There's a lack of transparency in BTC. Perhaps it's the anonymity that makes it attractive.

Anyone here cashed out a few hundred thousand dollars or more? Please share your story. Surely there must be a few whales somewhere who can verify the possibility of being able to safely extract ones 'investment.'

Disclaimer: I missed the boat and I'm jealous as hell. I keep an open mind.

 

I'm loving all these false perceptions of crypto being posted. Validates the existence of information arbitrage and oportunities for alpha and supernormal profits. I'll try and correct some the comments being made here.

Cashing in a billion $ is no dramas. I have cashed in 6 figures plus. I know of people who regularly cash in millions. And I invest alongside crypto billionaires. The notion of people not being a crypto billionaire due to illiquidity is totally false.

Crypto is far more transparent than cash due to transactions being recorded onchain. Latest analysis shows less than half a prcent of all btc activity is illicit, compared to 2-5% for cash

 

I have friends who have “cashed out” six figures. How do you think Tesla and microstradegy have gone and bought billions of dollars worth?
Also you haven’t missed the boat! People have been saying that since it was $10! IMO bitcoin is going to 10million plus.

 

Thanks Laker and Eggnog.

Laker, you've bet the house on this and are to be saluted for your courage. Good luck with it.

Eggnog. I'm not raining on the BTC parade, in these inflationary times I keep an open mind.

Both of you are obviously fans of Crypto. More importantly, rightly or wrongly, you have put your money where your mouths are. Can you possibly alert us to any possible pitfalls? What of those folks who have lost their wallets - how can one mitigate the risk of this happening? It seems to happen and is frequently reported. Obviously someone like the almighty Elon would have recourse, but what about the rest of us mere mortals....what do we do if things go wrong ie. boot up the computer and pffft its all gone.....does this ever happen? My computers get viruses from time to time and die - would that be a problem and how does one overcome it? Please share any experiences or worries you have had. It would surely help the rest of us. .

I also invite others with more than a few hundred thousand dollars in BTC to contribute to this thread and help set the record straight on crypto.

My position is neutral. I'm openly jealous and respectful of those who have made good. On my part, I don't want to arrive at the party when its likely too late, as many people in the dot com boom/bust did.

 

I dont know anyone who has actually used bitcoin for any transaction other than buying it in the hope of selling it on again a higher price.

Ultimately it has to serve some useful purpose (other than trying to solve a problem that doesn't materially exist for most people) or its nothing more than tulip mania, and so far its greatest purpose seems to be for speculating on further gains.

 

I'm trying to learn more about it as well. Laker- what makes you think bitcoin will hit $10 million?

What Determines the Price of 1 Bitcoin?

How Does Bitcoin Make Money?
Unlike stock, bitcoin does not represent ownership in a company or entity. Owning bitcoin is owning digital currency, much like owning US$1 is owning paper currency. Bitcoin miners earn rewards for completing blocks of verified transactions, and owners of bitcoin make money as the price per coin increases. For example, if you purchased 100 coins at $65.52 (100 x $65.52 = $6,552) on July 5, 2013 (bitcoin's record low) and held it until its all-time high of $61,683.86 on March 13, 2021, you would have $6,168,386.4

Why Is Bitcoin So Valuable?
The demand for bitcoin is increasing, whereas the availability of new supply is shrinking, with the size of each block reduced by half, on average, every four years and the final bitcoin to be mined somewhere around the year 2140. Indeed, unlike most other produced goods, the rate of supply of new bitcoins cannot increase in response to spikes in demand.

A supply and demand imbalance results in increased prices. Some consumers, companies, and investors favor bitcoin for this and the potential ability to hedge inflation. The resulting popularity contributes to increased demand, and thus an increased price.

What Makes Bitcoin Prices Go Up and Down?
Bitcoin's price fluctuates for various reasons, including media coverage, speculation, and availability. With negative press, some bitcoin owners panic and sell their shares, driving down the price. Vice versa with positive press. Also, when the volume of bitcoin sold on the market increases, the price decreases. As more institutions adopt bitcoin as an investment and medium of exchange, its price increases.

Also, many people have eroded confidence in their fiat currency and seek alternative sources to store their money. Because bitcoin is decentralized and unregulated, it is a favorable alternative, thus driving up its price.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author does not own bitcoin.

 

Isaac Newton is not known for being stupid. But he lost a huge chunk of his net worth in the South Sea Bubble. From absolute bottom to top, that bubble 'only' saw a ten-fold increase in price. Pretty tame.

The Dutch tulip bubble saw tulip prices rise in triple digits. And remember, tulips don't last very long - they eventually die. Again, this is a very tame appreciation compared to crypto.

BTC has gone up a hell of a lot more than the above examples. Are you saying "this time it is different" Is BTC is headed for 'a permanently high plateau'?

If what you say is true......at a predicted ten million dollars per BTC, this will surely be the world's largest asset class. Certainly more than all the real estate in the world. Someone do the numbers. From BTCs bottom of a few cents to a top of $10m.....whoah the numbers are beyond belief.

Back in 2011 and 2012 I looked at Bitcoin. I had lost two computers to viruses during that period and, at the time, I told myself digital wallets might be too dangerous. Looking back I kick myself. Kudos to those who took the risk and made money.

Another question for the true-believers. There are already hundreds of digital coins on the market. When more and more come into operation, how will this affect BTC?

 

This is what I dont get.

Sure bitcoin supply might be limited and the price might go up, but if I want to avoid the big bad establishment of the evil governments and banks to pay someone in Timbuktu for my loaf of bread, why wouldn't I just use something like Ethereum, dodgecoin, crapcoin, or any of the other thousand Bitcoin alternatives instead??

 

I unfortunately was too young to be an investor during this dot com bubble. But didn't Amazon, Ebay and some other major companies come out of this so called bubble and isn't internet the life blood of society today? That is hardly a bubble right. Most of those companies are modern day powerhouses. To expect thousands of companies to stay standing after the dot com boom is just naive. The same way to think there will be 10,000 successful cryptos in the future is naive as well. Yes certain crypto currencies are going to flop and they do flop every day, but somewhere, maybe today or in the future there is one being created that will be the Amazon of tomorrow.

 

You can look at it like gold. You don't break up a gold bar to go and buy bread. You'll sell it for something else to buy the bread whatever you have left over you might want to put back into the gold or keep spending it.