Buffett does not invest in Bitcoin, is he wrong?
Buffett's Berkshire Hathaway company has an average compound annual growth rate of 19.1% or more, and a 50-year return rate of 30,000 times. It has made Wall Street's fund managers and stock managers squandered and stood in an invincible position. . Its company stock is also the world's most expensive stock, with a stock price of $300,000 per share.
Buffett’s early investment method was: licking cigarette butts. Look for stocks whose stock value is much lower than the company's intrinsic value, buy and hold, wait for the value to return, and squeeze the difference. The stocks he chose were severely undervalued, and even if the company went bankrupt, he could make a fortune; after Buffett and Charlie Munger worked together, under the influence of Charlie Munger, the strategy changed. Having a high-growth, good-selling company at a reasonable price is far more profitable than the previous company.
In the November 2017 bitcoin bull market, Buffett and Charlie Munger both made public speeches, predicting that the digital currency will fall within five years, actually fell more than 3,200 yuan in less than a year, a drop of more than 80%. The negative attitudes and predictions of the investment strategists on Bitcoin have undoubtedly poured cold water on many digital currency fanatics, but some people have questioned Buffett’s conservative attitude towards such investments, arguing that he is “unwilling to invest in new technologies”. This weakness has also caused him to miss the opportunity to invest in Google and Amazon.
So, can Buffett’s investment strategy be borrowed from companies or digital currencies in the digital currency arena? And can Buffett’s attitude towards bitcoin (digital currency) be recognized?
First of all, is there any value in Bitcoin?
First, the blockchain creates credit. Money is not exactly equal to sovereign credit. Money is the carrier of credit. Money and the credits behind it often do not match. However, the blockchain creates credit, which is like discovering a golden mountain. Bitcoin provides an open and transparent platform through code. The credit carried behind it is guaranteed by the platform, and it is more than the Swiss bank. Trustworthy. UBS has provided the US government with a list of “terrorism” funds and lost everyone’s trust. Bitcoin replaces the role of the most trusted bank and is of great value.
Second, peer-to-peer transactions reduce transaction costs. The blockchain can remove the frictional costs of the intermediate links of traditional finance (lawyers, accounting firms, insurance, etc.), and the value of saving and improving efficiency is obvious. On October 16, 2018, a Bitcoin user transferred 29,999 bitcoins at a cost of $0.10, valued at approximately $194 million. The $194 million bitcoin transfers only $0.10 on the Bitcoin network, but in the banking system, at least tens of thousands of dollars in fees are required.
The first point of value is explained, making Bitcoin more like the attributes of gold and foreign exchange. Buffett believes that gold also has no investment value. First, as a non-productive asset, gold does not have "production capacity." So Buffett will invest in oil fields, buy factories, and invest in stocks of growth companies. "But if you buy an ounce of gold, after a few hundred years, it is still an ounce of gold." Second, Buffett believes that the second biggest flaw in gold is the lack of practical use. Although gold can be processed into jewelry and other uses, these are not enough to support a wide range of needs. And even the same non-productive assets like copper and steel, if they have a wide range of uses, can at least count on demand to push up prices. Here, the second value of Bitcoin we have stated is precisely that Bitcoin has a practical use - its value and the cost savings due to efficiency increase determine its intrinsic value. The invention of Bitcoin can solve many problems in the electronic age: the possibility of P2P transactions bringing "trust machines" and the problem of "password punk" trying to use cryptocurrency to solve transaction privacy - "Currently, cash has been An important part of this system. Anonymous trading system is not a secret trading system. When an anonymous user uses an anonymous system, it will only be confirmed by authorization when it is necessary to disclose their identity - this is the essence of privacy."
Second, what kind of digital assets are valuable assets?
Buffett once judged digital assets: "You can't determine the price of bitcoin, because this kind of asset can't create value... From this perspective, it's a complete bubble." Indeed, we think of a concept Sending a token on the ERC 20, without any intrinsic value, can only be called a short-term and quick project to raise funds directly. Although this does not prevent speculators from speculation and follow-up, in the value system of Buffett, such digital assets are worthless. I believe that public chain projects that continue to generate revenue are intrinsic, and the intrinsic value of a public chain is determined by the value it creates and the cost savings from efficiency gains.
Buffett does not invest in Bitcoin, is he wrong?
Today, Buffett does not invest in Bitcoin: First, similar to gold, in his view, Bitcoin is a non-productive asset, not an asset that can generate value, the price is arbitrarily priced by the holder, and the investor’s profit is only I can look forward to the next "receiver" purchase that is willing to pay a higher price. Secondly, he believes that Bitcoin has not supported a wide range of uses and needs so far, so it is a "bubble"; finally, the financial masters such as Buffett and Charlie Munger Characters do not believe in the mechanism of testing human nature. Even in the traditional financial industry where supervision is extremely strict, personal moral characterization and trust endorsement are extremely dangerous. Munger repeatedly said that "the correct way to deal with Bitcoin is to strictly control it. This is the responsibility of the government." The centralized transaction link without supervision is not credible.
As a supporter of blockchain technology, I agree with Buffett's point of view from the current time dimension. At present, the digital and monetary infrastructure is seriously lacking. Even the 21 million bitcoins have become unreliable due to the serious over-issuance of the centralized exchanges. Therefore, even non-productive assets are not necessarily qualified. The technological innovation of the ERC 20 currency and the innovation of the 1CO model have caused the price of the currency to rise, and the crazy speculators of the digital currency believe that there will be a higher price “connector”. If there is no Bitcoin payment, transfer, etc., or there is no widespread use of the bitcoin underlying technology blockchain, digital currency such as Bitcoin does not have any assets to support its intrinsic value.
As a believer in blockchain technology, I don't agree with Buffett's point of view on long-term human development and technological change. The use of financial attributes such as payment, transactions and transfers of digital currency will be regulated and improved by governments. And, at present, many public chains are working on solving various underlying problems, especially TPS performance. At this point, the core factor that weighs the value of the public chain may be the number of real users. In 2018, some people calculated the total number of users of global cryptocurrencies between 20 million and 30 million through the number of Bitcoin wallet addresses and the data disclosed by major exchanges. If not only are there more and more users of encrypted digital currencies such as Bitcoin, but blockchain technology is gradually coming to every aspect of everyday applications, then I still believe that the encrypted world of password punk will eventually be like the Internet innovators. achieve.
As the builder of the blockchain industry, standing in the industry's infrastructure is seriously lacking today, I agree with Buffett's point of view. Buffett’s current negative attitude reflects his deep insight into human nature. The cryptocurrency is highly manipulated, and it is easy to be spotted in the centralized futures exchange. Bitcoin is seriously over-represented in the centralized exchange, and the leverage generated by its borrowing is already high. Once the run-off phenomenon occurs, it is easy. Thunder, perhaps a gamble that is doomed to lose money, is not suitable for investors. Entrepreneurs of digital currency and blockchain technology hope that the great technology of blockchain can solve the problems of the current world, but before that, we need to solve the industry's criticism of the blockchain itself, using the blockchain technology itself. To build a solid world of encrypted digital, make this industry transparent and credible.
Finally, from the perspective of bitcoin investment, is Buffett wrong? I think he may miss a big era of digital currency investment. It is also because the digital currency industry is in the earliest period of barbaric development. Bitcoin is seriously over-represented in the absence of transaction transparency and supervision, and its value is seriously underestimated. Since there are only 21 million real bitcoins (17 million are dug out), it is conservatively estimated that there are more than 100 million bitcoins circulating in the market. When a black swan event occurs on a large centralized exchange, the exchange is forced to pay for the currency, the investor runs on bitcoin, and the bitcoin will quickly return to its real price, and the industry will gradually enter the formal.