Cryptocurrencies

[Xerxes]

[MikeL]

there are 2 kinds of supporters: one truly believe it has value, the other doesn't feel it has value, but think people can benefit from speculation by "buy low sell high".

 

for the latter, key question is: at what price you are comfortable to buy, and what price you think it should be sold?

[TwoCitiesCapital]

25 minutes ago, rkbabang said:

The fact is that whether it has been colorful shells from far away or rare shiny metals, the free market has always used the hardest thing to create, find, or duplicate as money, as long as it was also easily transported, divided, and fungible.  That was gold for centuries, but right now on planet Earth it is Bitcoin.

 

 

+1

 

All the respect in the world for Charlie and Warren. But they've entirely missed the boat on basically all things tech related historically. I don't know why I'd expect this to be anything different for them. 

[Spekulatius]

No dogma and you can definitely use the volatility to your advantage but you can do the same thing with many other things that actually have intrinsic value. I think the best take for most is to avoid the crypto thing and just let it play out as it may.

 

On FTX specifically, the mindboggling thing is that the founder of FTX exchange also controlled a crypto hedge fund that was speculating on the same tokens and crypto than the edchange. Who thought that this was a good idea? Seems like a bit red flag even if you know nothing about this space or the founder.

 

[rkbabang]

12 minutes ago, TwoCitiesCapital said:

 

+1

 

All the respect in the world for Charlie and Warren. But they've entirely missed the boat on basically all things tech related historically. I don't know why I'd expect this to be anything different for them. 

 

Not that I would criticize them in any way for it.  They did what worked for them and it worked like nothing else ever has for anyone else.   My criticism is strictly pointed only in the direction of the people who think that it is impossible for them to ever be wrong about anything.  I don't think Buffett and Munger consider themselves to be omniscient or infallible, but some of their followers clearly think that and aren't afraid to say so.

[DooDiligence]

I'll take "How to Avoid a Scam" for $0 Alex.

 

www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned

[rkbabang]

 

9 minutes ago, Spekulatius said:

On FTX specifically, the mindboggling thing is that the founder of FTX exchange also controlled a crypto hedge fund that was speculating on the same tokens and crypto than the edchange. Who thought that this was a good idea? Seems like a bit red flag even if you know nothing about this space or the founder.

 

 

 

Exactly.  This was setup to fail.   What you see failing and what you are going to continue to see failing are the centralized "coins" and exchanges.  It is a proof that public blockchains have value not a refutation of it.  Creating a centralized organization around crypto is like writing an email, saving it on a floppy disk, and mailing it via the USPS.   "See! Email is useless!"

 

[SharperDingaan]

19 minutes ago, MikeL said:

there are 2 kinds of supporters: one truly believe it has value, the other doesn't feel it has value, but think people can benefit from speculation by "buy low sell high".

 

for the latter, key question is: at what price you are comfortable to buy, and what price you think it should be sold?

 

The reality is that no one has any idea; as no one has a proven market tested method by which to value it.

Historically, all that we really know, is that if an asset value under stress does not go to zero; it typically bottoms out at less than the market thinks it is worth (dead cat bounce). And we have no idea as to what those numbers are, until we get there. All that we can really do is step away, and let the markets do their thing.

 

SD

[TwoCitiesCapital]

22 minutes ago, DooDiligence said:

I'll take "How to Avoid a Scam" for $0 Alex.

 

www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned

 

Yield farming is absolutely ponzi-esque

 

 

[Charlie]

"All the respect in the world for Charlie and Warren. But they've entirely missed the boat on basically all things tech related historically. I don't know why I'd expect this to be anything different for them."

 

Nearly half of Berkshires equity portfolio is Apple. 

[TwoCitiesCapital]

22 minutes ago, Charlie said:

"All the respect in the world for Charlie and Warren. But they've entirely missed the boat on basically all things tech related historically. I don't know why I'd expect this to be anything different for them."

 

Nearly half of Berkshires equity portfolio is Apple. 

 

Took them decades to jump on that train and hardware manufacturing is more akin to traditional industry than most things in "tech". 

[james22]

1 hour ago, MikeL said:

there are 2 kinds of supporters: one truly believe it has value, the other doesn't feel it has value, but think people can benefit from speculation by "buy low sell high".

 

for the latter, key question is: at what price you are comfortable to buy, and what price you think it should be sold?

 

Why is that question not posed to the former as well?

I believe BTC has value, I just don't know what it is.

 

Sure it was overvalued for the longest time, but might be interested once the bubble deflates.

[dealraker]

Commodities don't produce cash flow.  OK...that's a new one on me.  I'll have to twist my head around a few times to grasp that one.

 

Bitcoin being compared to a commodity?  I'll have to stand on my head and twist my head around mutliple times for that too.  Weehaa, we do have differences of view don't we!

 

Back to start we go!  Here is the great thing about Bitcoin:  At some point in the future you can be 99.9% certain that the price of this, whatever we want to call it or compare it to, will be far higher and likely far lower than it is today.  Thus?  Hell, we all can (and surely will) claim "VICTORY!"

 

 

Edited November 14, 2022 by dealraker

[TwoCitiesCapital]

1 hour ago, dealraker said:

Commodities don't produce cash flow.  OK...that's a new one on me.  I'll have to twist my head around a few times to grasp that one.

 

Bitcoin being compared to a commodity?  I'll have to stand on my head and twist my head around mutliple times for that too.  Weehaa, we do have differences of view don't we!

 

Back to start we go!  Here is the great thing about Bitcoin:  At some point in the future you can be 99.9% certain that the price of this, whatever we want to call it or compare it to, will be far higher and likely far lower than it is today.  Thus?  Hell, we all can (and surely will) claim "VICTORY!"

 

 

 

What cash flow does aluminum produce? Or is aluminum an input into things manufactured and later sold by corporate entities to produce said cash flows. 

 

Is aluminum valued on a DCF basis? Or just the corporations that produce it and the things that it goes into?

 

If the latter, does that mean aluminum shouldn't have a price? Or does it have a price because its value to someone for something that isn't strictly tangible in a DCF model unto the commodity itself? 

 

And if the latter, why aren't the savings for payments considered in the value proposition of BTC. Surely paying a few pennies instead of 2% of every electronic transaction over a lifetime has value. Surely saving 10-15% on international remittances and currency conversions has value? Surely the ability to self-custody and participate in the electronic payments eco system without the need for an established banking intermediary has value? Surely being able to carry your wealth with you across borders and in a secure manner has value? Surely it's scarcity alone provides some value like any collectible? 

 

But few of these things can be valued by a DCF model because that's an incredibly limited model by which view of the world. 

 

The value is the network - not unlike Facebook's value being its network. It just converts that value to USD via advertising. The BTC network has value too - and it that value is "converted" to $ via the secularly rising price of a BTC. 

 

As far as comparing BTC to a commodity - it's not a new idea. As a matter of the fact, the existing regulatory bodies all believe it is one. Go figure!

 

Edited November 14, 2022 by TwoCitiesCapital

[Spekulatius]

Al is not a collectible. It has value because you can do something with it, like build cars or airplanes for example.

The utility of BTC is fairly limited at this point. The #1 application by far is gambling right now. It is a collectible right now, similar to a bored Ape NFT or a baseball card.

Edited November 14, 2022 by Spekulatius

[Suri22]

Two common sense questions that come two my mind when i see the comment's in this thread.

 

1. Printing Money out of thin air and spending tax money collected from public is the power of any sovereign nation and their elected officials, why would they let that power taken away by  someone(nobody) who created similar kind of currency made out '1' and '0' binary code ? 

 

2. Whoever that guy Mr Nakamota is.. if you read his first post 2009 feb , he clearly mentioned that we want to bring change monetary system, so bitcoin can become an alternate currency to use.(ideological)

however why nobody talks about using crypto to buy pack of cigarettes or dozen eggs as nakomoto intended

But every one is interested in how much Bitcoin is worth in $$(dollar's) 20k, 30k.. 50k .. tell me is this not motivated by "greed' in them sort of get rich quick scheme  ?????

[Gregmal]

8 minutes ago, Surya said:

Two common sense questions that come two my mind when i see the comment's in this thread.

 

1. Printing Money out of thin air and spending tax money collected from public is the power of any sovereign nation and their elected officials, why would they let that power taken away by  someone(nobody) who created similar kind of currency made out '1' and '0' binary code ? 

 

2. Whoever that guy Mr Nakamota is.. if you read his first post 2009 feb , he clearly mentioned that we want to bring change monetary system, so bitcoin can become an alternate currency to use.(ideological)

however why nobody talks about using crypto to buy pack of cigarettes or dozen eggs as nakomoto intended

But every one is interested in how much Bitcoin is worth in $$(dollar's) 20k, 30k.. 50k .. tell me is this not motivated by "greed' in them sort of get rich quick scheme  ?????

Of course and this is all accurate. The past few years have been spent basically being a crypto promotion. But that doesn’t remove the fact that there is utility to it. Or undermine the idea that huge portions of the investment community are simply lazily and prideful and therefor refuse to admit that things without cash flows have value too. Of course most of the time they do, but definitely not all the time. 
 

Sports teams I guess are one of the longest running manias in the world along with art, although now there’s a movement to try to say they’re all tax based benefits….it’s a scary world when the ti-83 doesn’t tell you what to pay for something! Hey, just slap a 10-15x multiple on it…. I mean serious investing shouldn’t be that easy, at least not all the time.

[Gregmal]

Internet derived reality has already commandeered large portions of life over the past 5 decades. The monetary system will come too. But there’s no assurance BTC or any of the other shitcoins will enable you to profit from it. 
 

I always love going somewhere and observing….how many people are sitting at a table with other people and on their phones? How many people outside walking have their phones clenched in their hands? Or what percentage of people leave the house without them? It’s all relevant.

[Parsad]

13 hours ago, Charlie said:

It always surprises me that when Buffett and Munger say that cryptocurrencies are worthless,

there are thousands of intelligent people arguing otherwise.

 

Buffett and Munger have a very, very high success rate with these predictions.

The counter argument is always that Buffett doesn't understand crypto.

That's like saying Einstein doesn't understand the relativitaets theory.

 

An asset is worth the discounted cash flows.

Since crypto doesn't produce anything, they are worthless....

Crypto people always come up with elegant theories, but investing is simple.

The elegant theories are probably made from the people who are selling or

profiting from high crypto prices or are technology people, which like the

technology aspects of crypto.

 

Investing is simple, but not easy.

 

 

+1!  Cheers!

[Dalal.Holdings]

If the BTC network has utility, why does a token on said network need to possess value? What is the proper value? $16,000 per one BTC? Why not 16 cents? Why not $16 million?

 

Barcodes have utility and the more retailers use them, the more "network effect" exists promoting their usage across the industry--however I would not ascribe value to an individual barcode...

 

Does my IP address have value?

 

What about my phone number? $16,000 ?

 

"Ignore Bitcoin, it's a mirage" QED

[SharperDingaan]

One of my favorite examples of 'undefinable DCF value' is this one ..

https://artreview.com/frans-hals-painting-two-laughing-boys-stolen-for-the-third-time/

 

Sure, the painting itself is worth what someone else is willing to pay for it .... but this one is obviously worth quite a bit more than that. Should you meet some of the former owners when in the 'big house' - you're meeting people of class and taste, and are one of them. Respect!!

 

SD

[Parsad]

8 hours ago, Gregmal said:

See this is something that I think people get too married to when it comes to investing.
 

Is it generally true? Absolutely. Is it always true? Idk, gold, Carolina Panthers, 52 Topps Mantle…..where’s the cashflow analysis? 

 

110% married to it!  Ingrained in my mind like breathing!

 

Other than the Carolina Panthers, those are speculative assets.  Investing is something else...as stated, the discounted cash flow over the lifetime of the investment. 

 

You could come to a reasonable valuation for the Carolina Panthers as well based on discounted cash flow.  Doesn't mean that the marketplace won't attribute all sorts of valuation to it...both higher and lower than what the discounted cash flow analysis suggests. 

 

Investing, when done properly, provides a margin of safety and minimizes the loss of capital.  Nothing wrong with speculation...just don't confuse it with investing.  Cheers!

[Dalal.Holdings]

https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-balance-sheet-was-bad

 

Matt Levine's piece on FTX. Quite a read.

 

What happens when you un-tether yourself from fundamental tenets like "investments should possess cash flow" is that you can become un-tethered to reality...

 

People will be reading about this in financial history wondering "WTF was everyone smoking?" decades from now...

 

And yeah, looks like Michael Lewis is working on a book which will surely turn into a movie a la Big Short

[Parsad]

8 hours ago, Gregmal said:

I’ve long been of the belief gold is worthless. It’s not a speculation, it’s just useless. Spare the jewelry usage because sea shells and fake diamonds work for that too. But people have and continue to hold it religiously, many bearish value investors actually. 

 

Nah, gold is not useless.  Apart from jewelry, we use it in computers, electronics, dentistry, medicine, aerospace, glassmaking, architecture/construction, etc.  It has significant utility value unlike BTC.  Cheers!

[Parsad]

7 hours ago, Gregmal said:

Psychological 

 

bitcoin is kinda interesting

true in 2015, 2018, 2020 and today 

 

bitcoin is impossible to value and very likely worthless but also holds similar characteristics to a lot of other things experts have been wrong about 

true in 2015, 2018, 2020, and today

 

i really like bitcoin

no opinion in 2015, true in 2017, not true in 2018, not true at certain points in 2020 but true in others, not true today

 

i really hate bitcoin

no opinion in 2015, false in 2017, true in 2018, true and false in 2020, true today

 

see how these things work? More than being married to investing dogma, simple awareness and disciplined compartmentalization of the various aspects is crucial. What is the difference between BTC today and in 2021? Honestly, just sentiment. Nothing else. The price has come down and some bad actors got caught with their pants down. None of these things should be something folks were naive to all along. They didn’t come out of nowhere. But they also aren’t more significant today than they should have been last year. People just react differently.

 

 

 

Like rap music!  I thought rap music was a fad 35 years ago.  Got that one wrong in a big way!  Cheers!