Bitcoin as a Value Producing Asset.
a rebuttle to the Brekshire Board
- only READ THE BOLD to get the abridged version, a 2 min read.
If you know who WARREN BUFFET is then it should come as no shock to you that he ISN'T THE BIGGEST BITCOIN BULL on the planet. I bought Bitcoin back in 2010 and i did so because of Warren Buffet. I know this sounds outlandish and anyone remotely familiar with his investing style would know that the Oracle of Omaha would never touch Bitcoin. When I first learned about Bitcoin I thought it was fake internet money, made from nothing, backed by nothing, worthless. "How could anyone ever think this was going to hold it's value?", which at that time was pennies. But there were a lot of people convinced that it was going to hit a dollar; I needed to understand it better.
I kept hearing the great words of Warren Buffet "I don't buy anything I don't understand." That's what sheltered him from the tech bubble. So this meant I had some work to do. I learned it all, new terms, new jargon, I understood and I was a believer; Buffet made me a Bitcoin believer. I took his words as motivation to learn, they inspired me to do better, work harder but it seems that maybe these words were not meant to be taken that way. It seems that if Buffet doesn't understand something he ignores it and makes no effort to learn it.
I knew one day he would have to comment on Bitcoin and I knew just what he would say, JUST LOOK AT HIS STANCE ON GOLD.
"I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today's market prices about $7 trillion – that's probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils and you could have a trillion dollars of walking-around money…and IF YOU OFFERED ME THE CHOICE OF LOOKING AT SOME 67 FOOT CUBE OF GOLD and looking at it all day, and you know me touching it and FONDLING IT OCCASIONALLY...CALL ME CRAZY, BUT I'LL TAKE [ALL] THE FARMLAND [IN THE US] AND THE [7] EXXON MOBILS."
Now he has never directly compared BTC to gold however CALLING BITCOIN A NON-VALUE PRODUCING ASSET IS ESSENTIALLY TAKING THE SAME STANCE. I wonder if Mr. Buffet has ever learned to write code or if he understands the amount of work it takes not only to learn, but to implement. People get paid and paid well for the work they do programming. Maybe Mr. Buffet is unaware of the evolving nature of code, LIKE DNA CODE, COMPUTER CODE GOES THROUGH SURVIVAL OF THE FITTEST AND IT EXPERIENCES EVOLUTIONARY SPLIT-OFFS (FORKS). Everyone who was holding their Bitcoin since August 2017 has also become the holder of many of these split offs. Bitcoin cash was the first to split from the main chain, then Gold, Diamond, etc...etc.. Each split gave value to the holder of the Bitcoin. EACH OF THOSE PROJECTS ADDED VALUE TO THE COIN IN THE EYES OF THE DEVELOPEMENT TEAM THAT WORKED ON IT. Now whether or not that split-off will gain or lose value is up to survival of the fittest. Is this a better option? Did the changes the development team make improve the code? The best option will survive and old,outdated code becomes obsolete and will die. A NETWORK FORK IS ALMOST LIKE A COMPANY SPINning OFF a new company and the share holders of the parent company are now holders of the spin-offs stock as well. Now in crypto things change fast but as of writing this if you add up the value of all network forks (spin-offs) it equals about .2 BTC. That's equivalent to saying that the BITCOIN HELD FROM AUGUST UNTIL NOW, less than one year, HAS PROVIDED A 20% YIELD from forks! That's amazing, HOW CAN HE SAY THAT THIS IS NOT A VALUE-PRODUCING ASSET when it has produced so much in under a year. It's only because he doesn't care enough to learn that he doesn't understand why Bitcoin produces value.
LETS LOOK AT VALUE PRODUCTION FROM ANOTHER ANGLE, EARNINGS. "But Bitcoin isn't a company so it has no earnings." This is a common misconception. IT COST MONEY TO BROADCAST A TRANSACTION ACROSS THE BITCOIN NETORK. In fact, users spent about $500 million dollars in 2017 or that is to say the Bitcoin network received $500 million in revenue. So lets look at this again: the MINNERS PROVIDE A SERVICE ON A NETWORK AND THE USERS PAID $500 MILLION TO USE THAT SERVICE; sounds to me like this is valuable to someone. The BITCOINS THEMSELVES ARE BACKED BY THIS NETWORK. People like to say, "Bitcoin is fake money, it's not backed by anything," well that statment is wrong. It's backed by hashing power the miners provide to the network in order to secure it. This hashing power requires a computer to do the work as well as electricity to run it. At this moment IT COST ABOUT $5000 IN ELECTRIC COST TO MINE ONE BTC. HOW MUCH DOES IT COST TO PRINT A HUNDRED DOLLAR BILL? That's why Bitcoins do have intrinsic value, they cost money to make.
HOW ABOUT NETWORK VALUE? Robert Metcalfe, the co-inventor of Ethernet, came up with a concept that is now called "METCALF'S LAW," and it SHOWS HOW NETWORKS BECOME MORE VALUABLE AS THEY BECOME LARGER. If you apply this to BTC then you will see how BTC produces value in yet another way. BTC entices user to join its network by offering a reward to miners. SINCE MINERS ARE REWARDED FROM CONTRIBUTING POWER TO A NETWORK, THE NETWORK KEEPS GROWING. All this computational power is SECURING the network FROM ATTACK and therefore ADDING VALUE. New users, who aren't necessarily miners, are also joining the network. According to Metcalfe's Law this user growth should also be adding value.
Clearly Buffets theory that BTC is a non-value producing asset is wrong but he's not a tech guy so maybe I should excuse his ignorance. However, BILL GATES recently said the same thing and SAID, "HE'D SHORT IT IF HE COULD." THAT QUOTE PROVES HIM A LIAR AND AN UNRELIABLE SOURCE OF INFORMATION ON THE SUBJECT OF BTC, which can be shorted very easily through the Bitcoin Futures market. The truth is not that he CAN'T short Bitcoin, it's that he "can't" short it because it would bankrupt him. BTC on average as doubled in price every 8 months for around nine years.
CHARLIE MUNGER wasn't silent on BTC either SAYING IT IS IMMORAL and tantamount to trading baby brains, well SOME MIGHT MAKE THE SAME ARGUMENT ABOUT THE FEDERAL RESERVE SYSTEM. They have made all United States citizens debt slaves always working to pay back a loan that's so big they have to borrow money to do so. It's an endless cycle on indebtedness and that's their business model. ANDREW JACKSON devoted his presidency to removing us from under the crippling system he ONCE STATED,
"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! **YOU [BANKERS] ARE A DEN OF VIPERS AND THIEVES. I HAVE DETERMINED TO ROUT YOU OUT, AND BY THE ETERNAL, I WILL ROUT YOU OUT!"
He was successful, however years later UNDER WOODROW WILSON A CENTRAL BANK WAS REINSTATED. He would grow to regret that decision. In his latter life HE IS QUOTED AS SAYING:
"I am a most unhappy man. I HAVE UNWITTINGLY RUINED MY COUNTRY. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world — NO LONGER A GOVERNMENT BY FREE OPINION, NO LONGER A GOVERNMENT BY CONVICTION AND THE VOTE OF THE MAJORITY, BUT A GOVERNMENT BY THE OPINION AND DURESS OF A SMALL GROUP OF DOMINATE MEN."
But that's how the Federal Reserve system is meant to work, "The few who understand the system, will either be so interested from its profits or so dependent on its favors, that there will be no opposition from that class." -- Rothschild Brothers of London, 1863
I hear a lot of people today TALKING ABOUT WEALTH INEQUALITY and the 1%ers, well if you ask me THE BEST WAY TO ACCOMPLISH WEALTH REDISTRIBUTION IS to simply just take it out, REMOVE YOUR WEALTH FROM THEIR SYSTEM. Now PREVIOUSLY the only way to do this would be to turn your Federal Reserve Notes (dollars) into GOLD OR SILVER, but in today's day and age this is IMPRACTICAL, you can't send gold over the internet or file off shavings onto a scale for a loaf of bread not to mention HOW DO YOU ENSURE PURITY. Purity is even a problem with the Federal Reserve Notes, how many dollars are counterfeited, printed in China, North Korea, Russia or even here in our own country. Well BTC CAN'T BE COUNTERFEITED because they are secured by the hashrate (proof of work) backing the system.
Proof of work, if you are familiar at all with how BTC works then im sure you've heard the term, butWHAT IS ANY MONEY BUT JUST A PROOF OF WORK TOKEN. Most people go to work and in exchange, or as proof of that work, their employer gives them money. You then give that money in exchange for work others have done. Money is the original proof of work coin so to speak. GOLD IS MINED, REFINED, MINTED, SHIPPED, AND STORED; a lot of WORK goes into its creation **BUT DOLLARS FROM ANY CENTRAL BANK ARE JUST PRINTED. (NO WORK, WHERE'S THE WORTH?)
BITCOIN IS A PROOF OF WORK TOKEN THAT CAN'T BE FAKED, IS INSTANTLY RECOGNIZABLE BY ANYONE WITH THE WALLET SOFTWARE, AND CAN BE SENT SAFELY OVER THE INTERNET WITHOUT A CORPORATE MIDDLE MAN OR GOVERNMENT OVERSEER. THIS NEW INNOVATED PRODUCT WILL ONLY INCREASE IN VALUE BECAUSE BY DESIGN AS ITS NETWORK GROWS ITS UNITS REQUIRE MORE WORK TO OBTAIN. MAYBE ITS MOST VALUABLE QUALITY IS THAT IT GIVES HUMANITY (IN A DIGITAL AGE) A WAY TO OPT OUT OF THEIR (THE BANKERS) SYSTEM AND BREAK OUR CHAINS OF INDEBTED SERVITUDE.
- So I'm trying out a new format with this abridged version embedded within the full article. Let me know if you guys liked it or if it was hard to read. I want to be able to reach as many people as I can even those who have less time or attention span. Thanks for reading, and thanks for any input you can provide. If you liked it please follow me and share the article. I recently had a kid so i haven't written in a while but I plan to be putting out a lot more content in the near future.
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