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Bitcoin is digital gold.
What do you own when you own a bitcoin?
What questions havent I answered??
At 92.8 terawatt hours annualized, bitcoin’s power consumption is slightly ahead of Pakistan’s consumption in 2016, and not wildly away from the Netherlands’ consumption that year. Put a different way, the electricity consumed by minting bitcoin could power all the tea kettles in Britain for 21 years.
Two-thirds of bitcoin production is done out of China. More than half of China’s energy output comes from coal, so the bitcoin production is likely to be particularly dirty.
It's unsustainable. Just sayin'
Buffett believes that Bitcoin has no underlying value. As a value investor, Buffett invests in companies that are undervalued, produce stable and recurring cash flow and have the ability to increase in book value. To Buffett, Bitcoin doesn’t produce earnings or dividends. Rather, the value of Bitcoin is simply what one person is willing to pay for it. In this regard, Bitcoin is no different than the tulip craze of 1637. Therefore, Buffett believes that Bitcoin has no inherent value.
Buffett only invests in things he understands
This may sound obvious to some: only invest in things you understand. However, too many investors, especially retail investors, chase investments based on headlines and stock tips from friends. They don’t do their research or conduct due diligence before investing. Rather, they hear about this “hot technology” and simply buy the stock. Or, they hear about that stock that soared 20% and automatically conclude it will jump another 20%. Sometimes, stocks go up for all kinds of reasons, and this “strategy” may work. Over time, and across an entire investment portfolio, however, it won’t work. In contrast, Buffett has a set of investment principles that he follows. He prefers to invest in stable consumer goods companies like Coca-Cola and financial services companies like American Express AXP +0.8%. If a potential investment falls outside his area of expertise, he rarely, if ever, buys it. Sometimes, there are exceptions, but mostly Buffett invests only in sectors and business models that he understands.
Should you buy Bitcoin: Do you have a set of investment principles? Or, do you simply buy what you read or hear about it without conducting any independent research? Couldn’t you simply buy Bitcoin to own it even if it doesn’t fit your typical investment criteria? Sure. When you think about portfolio strategy, however, you should understand why you own every position (and if you’re comfortable buying a position that you may not fully understand).
Bitcoin is a highly speculative investment
For some, Bitcoin is the single greatest investment in their lifetime. For others, it’s a speculative bubble that will crash to zero. Buffett doesn’t play in this sandbox. Why? Buffett isn’t a speculative investor; instead, he invests in companies that have a wide economic moat. While all investing involves some degree of speculation, Buffett’s background is in insurance and risk mitigation. Buffett doesn’t invest in “high fliers”—that’s not his game. His game is “buy and hold”—forever. He invests in companies that grow over time, steadily and consistently.
Should you buy Bitcoin: Here is a helpful way to approach a potentially speculative investment. The upside is easy: you make a lot of money. As I explain in The Lemonade Life, focus on the downside. Are you comfortable with Bitcoin being worth zero? Are you willing to lose 100% of your investment?
Should you buy Bitcoin?
You need to decide for yourself, and with the help of your financial advisor, if Bitcoin is right for you. Warren Buffett is only one investor. Critics say he doesn’t understand cryptocurrency or blockchain technology, and he’s already missed some of Bitcoin’s meteoric rise. After all, regardless of the underlying reason, each Bitcoin is now worth about $34,000. Isn’t that proof enough that it’s a good investment? Maybe. It’s possible, although unlikely, that Buffett ultimately changes his mind. Buffett said for years he wouldn’t buy technology stocks, only later to buy Apple AAPL +0.9%. Until then, however, Buffett is not a fan of Bitcoin and says he never will be.
Why Cryptocurrency Market Cap Doesn’t Matter
If you were to ask the average person in the cryptocurrency community where they go to find the success of a specific digital currency, they’ll likely point to sites like World Coin Index, Coin Market Cap, or some other market cap platform. Based on the rankings these lists provide, users believe they can garner further insight into the valuation of a currency. Basically, the higher a coin ranks, the better it is performing.
The sad reality is that there isn’t much value in these types of list, and using them doesn’t make a lot of sense...
If you’re unfamiliar with market capitalization, it is measured as the total value each share of a company based on its current market price. You can calculate market capitalization by multiplying the amount of outstanding shared times the market price. For instance, if your company has 100,000 shares outstanding, and the price of one share is $2.50, then your market capitalization comes to $250,000.
CoinMarketCapitalization and similar sites use this system with cryptocurrencies and base their lists on the same basis that the stock market used. The market cap of a specific digital currency is stated as the number of coins on the market (or the circulating supply) multiplied by the price of the coin.
Determining Value
The more coins that are in circulation or the higher the price of a given cryptocurrency, then the higher it will rank on the CoinMarketCap site. The problem here is that many people place a lot of value on a coin’s market cap ranking, which is questionable at best. CoinMarketCap’s value is nonsensical, something that a lot of folks simply don’t realize.
Hypothetical Situation
Let’s say you decide you want to start a cryptocurrency. You set up your blockchain with 100 million coins at the outset. Once you’re all set up, you then go to your friend and ask that they buy one of your coins for $10. If you use the same calculations as CoinMarketCap, your new coin now has a market capitalization of $1 Billion.
Congratulations! You now own a cryptocurrency that ranked in the top ten on CoinMarketCap. This despite the fact that only $10 have been invested into a coin which is now valued at $1 billion USD...
Many believe that market cap is the amount of investment a cryptocurrency has received. This is not the case and can be shown by using a simple calculation. Let’s use Bitcoin for instance:
As recently as December of 2018, the first coin had a market capitalization of $100B on CoinMarketCap. However, just 12 months earlier, Bitcoin was listed with a market cap of three times the amount at $300B.
Before we get too far, let’s first calculate the amount actually invested in Bitcoin. There are on average, 1800 Bitcoins mined each and every day. Up until July of 2016, there were double that amount, or 3600 Bitcoins mined per day. Prior to that, there were 7200 Bitcoins mined each day.
Now, let’s assume that every BTC mined was traded by the miners as a means to pay for expenses such as hardware, electricity, and so on. That means there were buyers for their Bitcoin and that the mined BTC was sold for the market price the same day it was mined.
The remaining volume traded each day moves back and forth by Bitcoin based on the amount invested, which doesn’t add up to much. At that point, you’ll see increases, except those times when a trader takes a loss on their Bitcoin.
Based on daily growth, and ignoring the daily rate, the calculations tell us that there might have been a little over $10B investing in Bitcoin as of December 2018. But don’t forget that miners may not sell all their Bitcoin and that there are reports that Bitcoins have been lost or misplaced as well. That means that CoinMarketCap is valuing Bitcoin at more than 10 times the actual amount invested in the coin itself...
Wrapping Up
Using market cap to evaluate cryptocurrencies is nonsense. It is a number that assigns a fabricated value to a coin based manipulating the way said value is calculated. This means market cap is an unsuitable method to measure and rank coin value or importance.
This value does not give insight into how much capital has been invested into a coin, nor does it give any indication of the quality of the cryptocurrency itself. It only shows that there are some clever marketing folks in the industry who are creative in how they manipulate the supply of coins in circulation.
Why Warren Buffett will never own bitcoin.
Buffett believes that Bitcoin has no underlying value. As a value investor, Buffett invests in companies that are undervalued, produce stable and recurring cash flow and have the ability to increase in book value. To Buffett, Bitcoin doesn’t produce earnings or dividends. Rather, the value of Bitcoin is simply what one person is willing to pay for it. In this regard, Bitcoin is no different than the tulip craze of 1637. Therefore, Buffett believes that Bitcoin has no inherent value.
https://www.forbes.com/sites/zackfriedman/2021/01/03/bitcoin-hit-34000-but-heres-why-warren-buffett-will-never-own-it/?sh=5f5d271e42bb
There is no there there.
I think it's wrong to say it has no value. There is a middle ground between worthless and 100k
Remember when old Joe Kennedy said he knew it was time go get out of the market before 1929 when his shoeshine boy started giving him stock tips?
This all has turned into bullshit because of one spammer.
Someone will break the algorithm for mining with quantum computing and bitcoin will fail the same week.
yeah, for sure, and if quantum computing wont kill Bitcoin the Nuclear EMP will do the trick.
At some point it will be dead. In the meantime we are going to >100k.
G36 saysyeah, for sure, and if quantum computing wont kill Bitcoin the Nuclear EMP will do the trick.
At some point it will be dead. In the meantime we are going to >100k.
Or the rubes will wise up and get out while someone is still willing to pay for your 1.9 "coins".
>100k is a bit vague. My reach the 200-300k range per precious digital gold coin (Bitcoin)
5,200 Tobacco Shops in France Now Sell Bitcoin.
French fintech startup Keplerk announced Thursday that it has resumed service selling BTC at “Tabacs” in and around Paris, after halting the service earlier this year. A Tabac is a convenience store licensed to sell tobacco products. These stores also sell newspapers, lotto tickets, scratch games, telephone cards and postage stamps.
https://news.bitcoin.com/5200-tobacco-shops-in-france-now-sell-bitcoin/
There's your retail demand.
This article got me excited.
Blue saysBitcoin down to 35k at the movement,
Nooooooo!
Eric Holder saysBlue saysBitcoin down to 35k at the movement,
Nooooooo!
Wait until is goes to $0 USD ;)
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https://www.vox.com/2018/4/24/17275202/bitcoin-scam-cryptocurrency-mining-pump-dump-fraud-ico-value