Topic: 2013-10-13 [VIDEO] Motley Fool: 1 Investing Guru's Take on the Future of Bitcoin (Read 1238 times)

have fun with your checkbooks in the 21st century!

A few centuries ago the same kind of professors stated that the Earth is flat and sun with stars are revolving around it.

On October 13, 2013, at 9:27 AM, jzcjca00 wrote:

Why do people insist on expressing opinions on things they know nothing about?

Greenwald's first criticism of Bitcoin is that it does not have a transaction infrastructure. Total hogwash! The entire system is built around a transaction infrastructure that is faster, cheaper, and more flexible than regular banks. Half the world's population currently doesn't have bank accounts, and with Bitcoin, they don't need them. Bitcoin has fast, cheap, global banking for all mankind built into the currency itself!

Then he goes on to say that Bitcoin has "no natural advantages over gold or any other real measure of value." Seriously?

Money should be scarce, durable, portable, divisible, easy to recognize, easy to store, fungibile, hard to counterfeit, and in widespread use.

Scarce. Bitcoin blows fiat currencies away because it cannot be inflated by governments to cover reckless spending. It blows gold away because the mining rate is carefully controlled by its algorithm.

Durable. The blockchain is stored on millions of computers on the Internet. As long the Internet and at least one of these computers survives, and your password remains secure, your bitcoins are safe.

Portable. Much more portable than gold or fiat. You can send any amount of bitcoins (that you own), anywhere in the world, any time of day or night, at the speed of the Internet.

Divisible. To eight decimal places. Much more divisible than fiat or gold.

Easy to recognize, easy to store, fungibile, hard to counterfeit. These things are all built-in.

Widespread use. Not yet. Gold and fiat currencies have been around for thousands of years, while Bitcoin was invented only 4 years ago. Given that Bitcoin is vastly superior to fiat and gold in so many ways, I say it's only a matter of time until Bitcoin replaces them.

I think initially Bitcoin will grow in the area of international money transfers, particularly for poor people sending money home to their poor families in other countries, an area where banks are especially slow and greedy. Then perhaps in areas of the world with particularly unstable currencies. Then perhaps in industries with low profit margins, where credit card fees are killing them.

Today, investors have a unique opportunity to get in early on what is perhaps the biggest innovation of our age. Everyone should have at least a few bitcoins in their portfolio. The downside risk is a few hundred dollars. The upside potential is an orders of magnitude increase in value.

"it's got no natural advantages over gold"
 

This guy doesn't get it...

"It's not a medium of exchange".  

Bruce Greenwald: I don't think it's traditional banking. Don't forget that what traditional banking does is it enables you to write checks. Or do wire transfers.  There is a transaction infrastructure.  And if you go back to the traditional definition of money. It's as a medium of exchange, it's as a measure of value, and it's as a store of value. So it's a unit of account, it's a medium of exchange, and it's a store of value.  Turns out as a unit of account, nobody is going to price anything in bitcoins. It's always going to be the currency.  Because that's just the dominant way to do it. And there are big network effects from that, and it's very hard to get people to change.  In fact, they measure the value of bitcoins in, you guessed it, dollars or whatever currency it is.  So you're not going to get it as a unit of account.  It's not a medium of exchange. You don't have to keep a bitcoin balance to pay your bills. So what you're left with is a store of value. We got lots of stores of vaue. We got gold.  We got all sorts of other kinds of real assets that you can have, we have inflation -- we have TIPS. we have all sorts of real stores of value that are probably more liquid than the bitcoins and are less easier to manipulate, and are less subject to insider trading.  Look, in the old days, every bank used to issue its own currency and it was very unstable what the relationship between the currencies were. Having lots of different Bitcoins has a lot of the flavor of that, but it's got no natural advantages over gold or any other real measure of value.  I think as a rule if the Winklevoss twins are talking about it, it's almost certainly opportunistic and they almost certainly are not the people who know how to make money out of that idea as Facebook showed.  So you don't want to invest with them.