Bitcoin is a gamble or investment?
Read an interview about how the great Warrant Buffet sees the cryptocurrency. He is not buying the idea of investing in Bitcoin obviously, again, for a couple of reasons stated below:
Bitcoin is not a Ponzi
“If you buy something like a farm, an apartment house, or an interest in a business… You can do that on a private basis… And it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you. Now, if you buy something like bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more.”
While generally, I would kind of agree with him on the last sentence as that is how the supply and demand drive up the price. But comparing a house to Bitcoin is like the apple and orange comparison, they are just different.
There is a dozen of ways to make a profit out of a house investment. Rent the unit out to the tenants, create tax-free profit from the mortgage, turn it into a homestay business, and etc. Or you can simply make money the Bitcoin way, buy low sell high. No matter how you buy a broken house, fix it up, invest in some renovation, and sell it out with a brand new price, or just flipping houses on the market.
When it comes to trading, we all are practically hoping the next guy pays more for what we have paid.** The same applies to gold, stocks as well as Bitcoin.
Trading is just a tiny part of Bitcoin
"Now if you ban trading in farms, you can still buy farms and have a perfectly decent investment," he said, but if trading in bitcoin was banned, people would have no reason to invest.
Bitcoin is not boomed on its fame for merely the explosiveness in profit gaining by trading, though I believe that would be the big part of the reasons Bitcoin became one of the most search keywords in Google.
It is more to offer than that.
Bitcoin is first thing ever created to be the real smart programmable money that happened in 2009 (I heard of it a few times before taking a serious look at it by last year, shame!). It shows the world we can actually have a currency that is not controlled by the centralised entity, which is usually the government.
It was the absolute a fresh breath in the human-dominant world where human is atop of everything. By introducing the decentralised ledger technology(blockchain) and a new way of consensus(proof of work), Bitcoin is the first money that obeys nothing but the code. Code is the only king here, it decides how the coin should behave and takes no order from any traditional authorities.
Comparing to all the fiats available on the planet, Bitcoin is the only currency one can study everything about it by the open information available on the Internet. When was the first block of Bitcoin mined? What is biggest Bitcoin transaction? Which wallet hold the most Bitcoin? Everything is ready for you to dig it out. Now, answer me the question above but replacing the Bitcoin with US Dollar.
Anyone can predict the price of Bitcoin tomorrow or 10 years later, the fact is no one actually knows and we should leave it to the open market. It might drop to zero against the dollar one day. But the Bitcoin itself is not going to anywhere, it remains on the Internet forever, with the finite supply of 21 million. In the ideal world, Bitcoin shall not be compared to fiat for its value, it doesn't care. It is us, the traders, the speculator, and the people who care most about the price. Bitcoin is like the Internet. The Internet doesn't care if you use it for charity payment or surfing porn.
It is not appropriate to view Bitcoin as just a trading asset. Look beyond the price, you will fall in love with it.
if he was talking to Henry Ford and explaining stocks, Ford probably would say "boy, go build and construct something... speculation is just a gamble!"
time... it is about changing. Warren Buffet inspires me in many aspects (investment tycoon, philanthropist etc) but blockchain and crypto is something new... I prefer to stay in the market rather than getting diluted in my assets because of thinking too orthodox
Exactly, I doubt he has put in some effort at all trying to look beyond the trading nature of this tech.
I firmly believe that cryptos aren't a form of gambling but as of now, they do have gambling tendencies. This I feel attributes to the volatility of the price. You have written a very good article @fr3eze but, this can be extended to many other real and useful cryptocurrencies.
So, volatility is the only thing which I feel is making cryptos look like gambling arenas. This volatility is not just because of the market, but due to Greedy whales who manipulate the market for their selfish needs.
And soon, as we hit mass adoption of cryptos, it will become very evident to all the naysayers on its true capability as a decentralized currency.
Warren Buffet comparing BTC with a house is not right as you pointed out. BTC should be compared with other FIAT currencies and I do believe that the cryptos will get stable eventually.
Very very well said.
@fr3eze most people know the truth but the don't just want to accept the fact that bitcoin has come to stay.
Investing in bitcoin and other cryptocurrencies is similar to any other form of investment. Risk is involved, you might make profit or not.
If I must be honest, the government is just scared that crypto is coming to snatch the control the have from them.
I really appreciate the efforts you have put in making this post available for people to read.
Warrabt is just making the point that investment in Btc itself does not bring any cash flow profit, which is kind of true. Why don't stop seeing Btc as investemnt but another currency?
Hi. @fr3eze
He 's the strongest coin right now
Yea, strongest and eldest.
I can't comment much because I'm so new to crypto but I always like your posts because they make me think. Very thoughtfully written.
That's one hell of a encouragement to a writer, thanks!
You keep writing and I'll keep reading :)
I don't really like it when someone says "X is gambling". There many aspects of gambing. It is mathematical (mean, standard deviation, risks, rewards), social ("gambling = playing games", gambling ruining lives) and regulatory (how are financial risk vs. gambling risk regulated? what about gambling addiction?).
If "the house always wins" is gambling, then Bitcoin doesn't have a "house", and Bitcoin is more known for "I got lambo-rich because of Bitcoin" rather than "I lost everything because of Bitcoin".
If high standard deviation of payoffs is gambling, then trading forex with 100x leverage or betting your life savings on options is also gambling. There are also prediction markets and betting markets. Both can predict on same event, like Brexit. They seem to be regulated differently, but you can create a set risk-reward profile with a set combination of prediction market contracts, or place certain combinations of bets.
Saying "X is gambling" means something rhetorically, just like saying "Bitcoin is beanie babies". I have already written an article about Beanie Babies, guess gambling is next.
I take Warren Buffet seriously for investing strategies in general, but not his opinions on crypto.
Fyi he is also against investment like gold because it does not bringing in cash flow and its intrinsic value is hard to define.
Absolutely how I treat this legendary figure.
Cryptocurrency really is a big unknown for most people. I didn't understand the tech or culture around it when I first began investing. But as I've become more involved in the space, my knowledge and confidence in the tech and community around the cryptocurrency movement has made me into a believer!
Now does that mean that a single Bitcoin will one day be worth $1 million? Probably not -- but it is here to stay and will be joined by an ever growing chorus of distributed apps, ledgers and services that will shape the future of what it means to be online.
Well, you have already benefited by the knowledge investing this way.
Thought provoking post about Bitcoin. This is why during the Singapore Steemit meetup, they enjoyed listening to your crypto sharing. I don't really invest much in Bitcoin. I used to invest mainly in altcoin but after joining steemit, I found it a better investment since we not only just buy steem but we can earn steem and SBD via posting. Thanks for sharing this article!
I guess we should use a more open and 'healthy' towards this ground-breaking tech. Else everything else will be the same if you just thinking the trader's mind. Steem is definitely one of the most down-to-earth projects that anyone can join. Glad you like the post!
BTC and any other crypto are still at an infant stage, perhaps the blockchain itself will evolve and bringing the crypto into a newer form. While for Warren Buffet, he is more keen on cold hard cash.
He prefer something which can be valued otger tgan trading the whole product itself. Maybe crypto is too new and disruptive for old school investor like him to understand?
I doubt that 😂 he can easily employ those bright people to work for him too. Plus, he’s already near to his 90. He wanna control risk from my view, steady dividend profit around 20% per annum if not mistaken. And not everyone can buy the Berkshire share too.
Not happening when the boss himself is not convinced. And yeah, he doesn't need the ultra high risk from crypto at all.
Ya also, he has his style.
Thank you for telling us this, many of them do not know about them
These are the fundamental, buying without knowing this is really just gambling.