Hey guys,
Serious question here. Bitcoin has more awareness now than ever, but why aren't people like bill gates and warren buffet just buying all of the coins?
Do you ever wonder that? Like you would think they would be buying up all the coins, and the market cap would be tens of billions right now. Maybe they are going to war against Bitcoin?
A 51% attack controlled by opposition of Bitcoin would be fairly easy with the amount of resources these guys have.
Whats your opinion?
To give an analogous example; Warren Buffet famously shunned gold investment in early 2000 and plowed money into his enterprises that went on to underperformed gold over the proceeding decade. He would have been better off putting the cash into gold and not expending effort on his enterprises.
I think Bitcoin does not fit most people's mental models of how finances work. But then that comes down to a discussion of how allied with 'reality' people's mental models are.
Sure, Buffett "lost out" by not buying gold. Hindsight is always 20/20 though. He did buy a ton of businesses and shares of other companies that grew their earnings at rates generally faster than the economy did, though. Which, after doing his homework, was a prediction that he felt comfortable in making. Had he just piled into gold, there would have been zero earnings and zero earnings growth. His investment returns would have been based purely on hoping that someone else would offer more for it that he paid. Knowing what we know now, yes, he could have done better going that route. But there were zero guarantees of that happening; gold had been a horrible investment for the previous 15 or so years.
Just like Bitcoin; herd mentalities rule. I was getting a lot of inquiries from friends about "what is this bitcoin thing and how do i get into it?" when bitcoin was over $200. When it slipped down the the double digits, none of them expressed any interest whatsoever. Even someone i was dealing with on localbitcoins.com had gone and frantically sold all of his in the mid $90's; I kept inquiring, and he didn't buy back in until well after the trough... not at $60 or $70, but at $110 to $120. In essense, the age old mistake of buy high sell low.
That's disjointed. What i'm trying to say is that you can look at a "hot" commodity in hindsight and say "yeah, obviously everyone should have bought that" but in the real world, most people don't act that way. They see the price of something collapse (because everyone else is selling) and jump ship. And they get excited and buy in only after it's gone up quite a ways. The consensus of the world in 2000 was that gold was still a "go nowhere" investment. And unlike buinesses that grow and create more earnings, the only way for gold (and bitcoin, for that matter) to go up is by other people offering more and more for it. Where as an investment in a company, maybe the shares will be spurned for some time, but if it's operating well, it could generate positive returns for its owners in the form of dividends until that time that the rest of the market catches on.
And here's a point. The wealthy aren't going to buy bitcoin. They'll buy businesses operating in Bitcoin, quite possibly. But they're not going to make purchases of BTC itself on the hope that someone else will buy them from them for more later on. People here can do that, sure, because their purchases don't distort the market. And it takes relatively few bitcoins to make meaningful returns for most people here. If Buffett bought 10% the bitcoins in existence and they doubled in price, AND he was able to sell them all without pushing the price far down, the results would barely move the needle of his overall portfolio. Same goes for Gates and his Foundation, and for many other wealthy investors as well.
