Yet, he took some hits from capitalist Marc Andreeseen for being an "old white m[a]n crapping on new technology [he doesn't] understand." See Bitcoin: Both Buffet and Andreeseen are Right.
But, about three years ago, I said much the same thing, commenting there are "no quick fixes or easy roads to avoid market volatility and economic instability." See, What is a Bitcoin? Where Did My Bitcoin Go? I see Bitcoin much in the way that Buffett does, basically it is a way to transmit money. It is not a currency of the sort that we expect to be backed by government. The IRS has come out explicitly and classified the Bitcoin as not a currency, but property. See IRS: Virtual Currency Guidance.
If investors expect to make money investing in Bitcoin, there would be costs on the users of the system, much in the way that the credit and debit card system works. But, I have more confidence that losses arising under the debit and credit card system are not ordinarily borne by the consumer. Moreover, those investing in the Bitcoin system expecting their investment to rise would be wise to remember that any investment is speculation. It is reminiscent to me of Gordon Gecko's reminder in Wall Street: Money Never Sleeps:
Back in the 1600s, the Dutch, they got speculation fever to the point that you could buy a beautiful house on a canal in Amsterdam for the price of one bulb. They called it 'Tulip Mania.' Then it collapsed. You could buy 10 bulbs for two dollars. People got wiped out, but who remembers?
But, I seem to recall a whole lot of people recently losing money on Bitcoin. See, Bitcoin's Mt. Gox Goes Offline. Perhaps my memory is starting to fade with old age.
- JSM
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