“In terms of cryptocurrencies generally I can say almost with certainty that they will come to a bad ending. It’s ingenious & blockchain is important but Bitcoin has no unique value at all. It doesn’t produce anything you stare at it all day & the little bitcoins come out or anything like that. It’s a delusion.”
Warren Buffett
What is a real Investment?
- When you buy a farm you look at the crop every year & what prices are, and you decide whether it is a satisfactory investment. You look at the asset itself & what it produces.
- When we buy a business, we look at what the business earns & decide how we feel about it in terms of what we pay. But we are buying something that at the end of the period we not only have what we bought in the first place but we have something that the asset produced.
Non-productive Assets
- When you buy non-productive assets all you’re counting on is whether the next person is going to pay you more because they’re even more excited about another next person coming along, but the asset itself is creating nothing.
- One of the interesting things for example is gold, if you go back to the time of Christ & look at how many hours you had to give up to buy an ounce of gold 7 you take it forward to now you’ll find that compound 0.2% & then you have to ensure during the time & make sure somebody doesn’t steal it from you, at the end it doesn’t produce anything.
Is Bitcoin a Bubble?
- Generally, non-productive assets don’t deliver much value to investors. Anytime you buy a non-productive asset you are counting on somebody else later on to buy a no-productive asset because they think they can sell it to somebody for more money & it’s been tried with tulips & it’s been tried with various things over time & it does come to a bad ending.
- In the end, you only make money on productive assets. When you do something like Bitcoin because you’re hoping tomorrow morning you’re going to wake up & the price will be higher you need more people coming into it than are leaving & you can get that, & it will feed on itself for a while, but they come to bad endings.
- Cryptocurrency just clips people who are trying to get rich because their neighbor’s getting rich buying this stuff that neither one of them understands.
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