Connect with us

Crypto

Despite My Foregone $770 Million Gain, Buffett Is Right To Shun Bitcoin – Forbes

Published

on

OMAHA, NEBRASKA – MAY 5: (FILE PHOTO) Warren Buffett (L) and Berkshire-Hathaway partner Charlie … [+] Munger address members of the press May 5, 2002 in Omaha, Nebraska. The Schwarzenegger for Governor campaign announced that Buffett will serve as Arnold Schwarzenegger’s economic advisor in his California gubernatorial bid. Buffett is chairman of Berkshire Hathaway, an insurance and investment holding company. (Photo by Eric Francis/Getty Images)
About 11 years ago, I made a very expensive decision not to buy Bitcoin. I estimate that cost me three quarters of a billion dollars. Yet I stubbornly stick with the logic — that Warren Buffett so beautifully articulated on April 30 — to avoid Bitcoin.
Bitcoin has come a long way since 2011 when I first wrote about it. But the question I raised in December 2017 — is Bitcoin worth $0, $20,000, $200,000, Or $∞? — still remains unanswered to me.
In the debate between the Bitcoin bulls — such as Elon Musk and Peter Thiel — and bears, I am siding with Warren Buffett and the Wikimedia Foundation who are not fans.
I wish I had invested in Bitcoin back in June 2011. As I wrote back then, the hack of Mt.Gox, a Bitcoin exchange sent its price from $17.50 to “pennies.”
Just for fun, I thought what if it was worth a nickel a Bitcoin back then and I had bought $1,000 worth? Today, those 20,000 Bitcoin would be worth a cool $770 million — a pretty nice return (although down 40% from its November 2021 high of nearly $1.29 billion).
Back then I argued that Bitcoin — then an online currency used to buy Alpaca wool socks and illegal drugs — might survive, as PayPal did, if there was a compelling reason for the consumers, merchants, and payment platforms to adopt it. Otherwise, it would go extinct as did Digicash, Flooz, and Beenz.
As we now know, Bitcoin survived.
In 2017, I wrote that Bitcoin’s value was imprecise and arguments could be made that it is worthless or potentially of infinite value — which I dubbed Theory 1 and Theory 2.
In this theory, people buy or sell Bitcoin in a wave of fear. Specifically, they are afraid of missing out on further appreciation in Bitcoin’s price. For those suffering from such fear, there is plenty of evidence to support their belief.
For example, the compound annual growth of Bitcoin between early June 2011’s $17.50 and May 3, 2022 was 101%. At the same time, I was not surprised — based on my writing about Mt.Gox that on December 6, 2017, $70 million worth of Bitcoin was stolen.
Of course, hacking cryptocurrency has not ended — last month the U.S. Treasury Department alleged that North Korean hacking group Lazarus “is tied to a more than $600 million theft of cryptocurrency from the Axie Infinity-linked Ronin bridge,” according to Coindesk.
On the other hand, Bitcoin exchanges have become better established since then. Coinbase and Binance are two well-known U.S. cryptocurrency exchanges — with Time giving the edge to Coinbase since it’s publicly-traded and it is the “easiest exchange to use, with an intuitive interface, as well as a variety of options for using fiat currency to make purchases.”
Nevertheless, the 40% decline in the price of Bitcoin since last November does keep in the forefront of my mind the question of what could stop it from going to 0.
Another way to think about Bitcoin is that it is like a publicly-traded biotechnology company with no revenue. However, instead of having to overcome scientific and regulatory hurdles to become valuable, BTC Bitcoin hurdle the resistance of people and companies to using the cryptocurrency to transact business.
Aaron Brown, a Bloomberg columnist who owned Bitcoin in 2017 argued that Bitcoin was worth $20,000 each (some $2,500 more than it traded then). His logic was that crypto’s code base had “the potential to significantly expand the value of internet activity, and to add new valuable activities.”
To arrive at his $20,000 figure, he estimated that the Internet represents 6% of the $75 trillion global economy and that crypto can add 2% to that fraction — half of which will go to investors. “If I take 2% of the $75 trillion global GDP, divide by two for the fraction going to investors, multiply by 70% to get the necessary bitcoin value to support that activity, and divide by 21 million bitcoins, I get $20,000 per coin,” Brown wrote.
In 2017, my concern was that Bitcoin — which was unregulated — could seriously destabilize the world’s financial system if traditional financial institutions decided to get involved.
But now, Fidelity Investments — the U.S.’s largest 401(k) plan provider, acting as custodian for 23,000 plans, which have 20.4 million participants, representing $2.7 trillion in assets under management — is doing just that.
In late April Fidelity announced it will offer Bitcoin as an investment option in its 401(k) plans by the middle of 2022, according to CNN. The Labor Department expressed deep concern “about the prospect of 401(k) participants being exposed to the extreme volatility of crypto trading.”
Bitcoin is not universally loved as an investment — Buffett and the Wikimedia Foundation oppose it.
At Berkshire Hathaway’s BRK.A annual shareholder meeting on April 30, CEO Warren Buffett prefaced his remarks on Bitcoin by saying that he does not like people “stepping on [his] windpipe” however, he still does not see the value in Bitcoin.
Buffett’s argument is like the one I made in 2011 — Bitcoin is not useful. According to CNBC, he said, “If you said… for a 1% interest in all the farmland in the United States, pay our group $25B, I’ll write you a check this afternoon…Now if you told me you own all of the Bitcoin in the world and you offered it to me for $25 I wouldn’t take it because what would I do with it?”
Unlike apartments that produce rental income or farmland that produces food, the only way to get value from Bitcoin is to sell it to someone else. “That explains the difference between productive assets and something that depends on the next guy paying you more than the last guy got,” Buffett said.
He explains the price of Bitcoin as magic. While Buffett does not know whether Bitcoin will go up or down in the future, he concluded “the one thing I’m pretty sure of is that it doesn’t multiply, it doesn’t produce anything. It’s got a magic to it and people have attached magic to lots of things.”
The organization that runs Wikipedia — the Wikimedia Foundation — decided this month to stop accepting donations in cryptocurrency form.
The reason, according to Wikipedia editor Molly White, is that accepting crypto donations was “a tacit endorsement of ‘extremely risky investments’ and technology that are ‘inherently predatory’—and, certainly when it comes to the leading virtual currencies Bitcoin and Ether are ‘extremely damaging to the environment,’” according to Fortune.
The Wikimedia Foundation is not alone. In January, the Mozilla Foundation—which produces the Firefox web browser— “paused crypto donations because their environmental impact did not align with its climate goals.” Moreover, Tesla used the same reason nearly a year ago to stop accepting Bitcoin payments for its cars, noted Fortune.
Speaking of Tesla, like populist politicians, Bitcoin proponents Elon Musk and Peter Thiel reacted to Buffett’s comments on Bitcoin with ad hominem attacks.
In response to his April 30 remarks on Bitcoin, Musk mocked Buffett as a diabetes peddler. According to Forbes, Musk said, “Haha, he says ‘bitcoin’ so many times,” [calling it wild that Buffett can attack Bitcoin] while nakedly shilling diabetes — [referring to Buffett surrounding himself with boxes of See’s Candies on stage].”
In March, Peter Thiel — like Musk a PayPal cofounder — called Buffett Bitcoin’s “enemy No. 1” describing him as a “sociopathic grandpa from Omaha,” according to SeekingAlpha.
The logic of investing in Bitcoin still escapes me and I wish Musk and Thiel — rather than name-calling — would offer a rational counterargument to Buffett’s view.

source

Crypto

Bitcoin Is '100 Times Better Than Gold,' Michael Saylor Says – Here's Why | Bitcoinist.com – Bitcoinist

Published

on

Bitcoin and gold are both valuable assets that can be used to protect against inflation; nevertheless, there are important differences between the two in terms of their history, accessibility, and other sources of demand.
Gold, undoubtedly, has a lengthy history and solid basis, while Bitcoin has barely more than a decade of existence to prove its worth as an inflation hedge.
In November of last year, the price of a single BTC soared beyond $65,000, setting a new record high. This increase was related to the introduction of a Bitcoin exchange traded fund in the United States; while others during the year were due to events involving Tesla and Coinbase, respectively.
As of this writing, BTC is trading at $$19,058.84, down 5.5% in the last seven days, data from Coingecko show, Sunday.
Despite the fact that BTC has lost over 73% of its value since its all-time high in 2021, crypto bull and MicroStrategy co-founder and CEO Michael Saylor is unfazed.
Not only does he think the digital coin will regain its former glory, but he also thinks the cryptocurrency has a lot of room to grow beyond its current high point.
While the value of the most popular cryptocurrency in the world has been falling in recent weeks, MicroStrategy has been buying the dip. With 130,000 BTCs in its vault, it is sitting on nearly $4 billion of the crypto.
“I think that the next logical stop for Bitcoin is to replace gold as a non-sovereign store of value asset and gold is a $10 trillion asset as we speak. Bitcoin is digital gold, it’s 100x better than gold,” Saylor said during the Money Festival hosted by MarketWatch on Wednesday.
Bitcoin has a market cap of around $365 billion, according to data by TradingView on Sunday.
And during the festival’s Best New Ideas segment, Saylor didn’t hold back when he predicted the crypto’s price tag may reach $500,000 within the next decade.
“The half-life of money in crypto is forever. You can move it on billions of computers at the speed of light. So if Bitcoin goes to the value of the yellow metal, it’s going to $500,000 per coin, and I think that happens this decade,” Saylor pointed out.
According to MarketWatch, Saylor has around 17,732 Bitcoins that he purchased for around $9,500. Meanwhile, MicroStrategy’s stock price has fallen almost 65% this year, just like Bitcoin.

For updates and exclusive offers enter your email.
Freelance writing is Jet’s other cup of tea. When not on his computer, he unwinds with a cold bottle of beer and laughs with his son over cartoons. Other than that, he’s just like everybody else who wants to be happy with their life.
Bitcoin news portal providing breaking news, guides, price analysis about decentralized digital money & blockchain technology.
© 2021 Bitcoinist. All Rights Reserved.

source

Continue Reading

Crypto

Cryptocurrency prices today under pressure: Bitcoin falls 3%, ether 6%; Uniswap gains | Mint – Mint

Published

on

  • The global cryptocurrency market cap today remained below the $1 trillion mark

Cryptocurrency prices today came under pressure after the US Federal Reserve delivered another big interest-rate hike and warned of economic pain from the aggressive policy tightening still to come. The Fed’s determination to raise rates to levels that hammer inflation at the cost of sliding asset prices sent a chill across global markets.
Bitcoin, the world’s largest and most popular cryptocurrency, was trading more than 2% lower at $18,627, came close to dropping below $18,000 level. The global crypto market cap today remained below the $1 trillion mark, as it was down over 2% in the last 24 hours at $943 billion, as per CoinGecko. On the other hand, Ether, the coin linked to the ethereum blockchain and the second largest cryptocurrency, continued to underperform and fell more than 6% at $1,260.
“Bitcoin, Ethereum, and most cryptocurrencies traded lower on late Wednesday after the Federal Reserve raised interest rates by 75 basis points marking the third consecutive time this year. BTC continues to struggle below the $19,000 since bears are more powerful than bulls in the market. The second largest crypto, Ethereum was seen changing hands above the $1,200 level. The price of ETH has been dipping since the Merge took place as miners continued to dump their ETH in the market coupled with macroeconomic factors. If the selling pressure from miners increases, ETH is likely to fall below the $1,000 level,” said Edul Patel, CEO and Co-founder of Mudrex.
Meanwhile, dogecoin price today was also trading about 3% lower at $0.05 whereas Shiba Inu slipped more than a per cent to $0.000011. Other crypto prices’ today performance also declined as XRP, Stellar, Solana, Polygon, Avalanche, Binance USD, Polkadot, Litecoin, Apecoin, Cardano, Chainlink, Tron, Tether prices were trading with cuts over the last 24 hours, whereas Uniswap gained.
Such a backdrop offers little respite for crypto markets. They were already reeling from a $2 trillion plunge from a 2021 record high, an unraveling pockmarked with blowups such as the Three Arrows Capital hedge fund and the Terraform Labs project — whose co-founder Do Kwon is wanted by authorities.
(With inputs from agencies)
 
Download the Mint app and read premium stories
Log in to our website to save your bookmarks. It’ll just take a moment.
You are just one step away from creating your watchlist!
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
Your session has expired, please login again.
You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.
This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp

source

Continue Reading

Crypto

Bitcoin's Accumulated Momentum Is Going To Be Hard To Stop – Bitcoin Magazine

Published

on

While "the smartest people in the room" scan the horizon, bitcoiners are out there actually building the future they want to live in.
The below is a direct excerpt of Marty's Bent Issue #1259: "Bitcoin is action. The accumulated momentum is going to be hard to stop." Sign up for the newsletter here.
This morning I listened to a recent Macro Voices podcast with Brent Johnson from Santiago Capital. It was a very good conversation about the state of the global economy, particularly focused on the dollar's relative strength against other currencies and how things may play out as the dollar continues to strengthen as prophesied by the "Dollar Milkshake" theory. Here's a link to the episode for those interested.
Toward the end of their discussion Erik (the host) and Brent make it clear without saying anything explicitly that it is insane that global markets are essentially beholden to the whims of a very select few people, central bankers, out of the billions who are alive on this planet. The fact that the world hinges on the cryptic language of people who are completely disconnected from reality and do not suffer the consequences of their actions is a bit baffling. With that being said, what I'd like to focus on is the fact the Erik and Brent ended their conversation with a brief detour to discuss the next world reserve currency. Both gentlemen acknowledged that it would likely be a cryptocurrency – likely produced by one of the governments or a coalition of governments – and will certainly not be bitcoin.
To your Uncle Marty, this is an incredibly hilarious line of thinking from a couple of individuals who seem to "get it" in regards to the fact that the fiat system is doomed for failure and it's failure is being driven by incompetent central planners. To think that the solution to bad central planning from an incompetent group will be better central planning from the same group via a fresh slate a CBDC or something like it would provide. Even funnier is the fact that they emphatically proclaim that bitcoin most certainly will not become the dominant money in the world while deriding "bitcoin maximalists". This is our edge, freaks.
While "the smartest people in the room" scan the horizon waiting to place their bets on something that hasn't materialized yet and is sure to end in failure if it ever does because it will suffer from the same centralized attributes that doomed the dollar, bitcoiners are out there actually building the future they want to live in. The macro mensches of the world can continue to sit on the sideline and pontificate about what they think will come to market. Bitcoiners will continue to act and bring their distributed, censorship resistant, sound money to market. And the headstart bitcoin has amassed is approaching insurmountable. It is a step-function improvement on the incumbent monetary system in every way.
It's provably scarce and extremely hard to change.
You can send it over the internet.
You can divide more granularly.
It is extremely hard to prevent someone from receiving or sending bitcoin if used correctly.
And, what might be the most underappreciated aspect, it is beginning to become an integral part of the energy sector. And as we're finding out now energy is pretty damn important. Arguably the most important asset on the planet. Bitcoin becoming an essential for energy producers makes it significantly harder to kill from a logistical and political perspective.
We are so early.

source

Continue Reading

Trending

Copyright © Diaily Meta News