More Bitcoin FUD From Billionaire Warren Buffett
An article from Coindesk mentions Warren Buffett with him describing Bitcoin as a "real bubble". Either he doesn't fully understand Bitcoin or he's spreading FUD(Fear of Uncertainty and Doubt) to possibly buy the dips?
Remember when JP Morgan executive Jamie Dimon called bitcoin a “fraud” and claimed he would fire any employee from his firm who traded the digital currency for being “stupid”? It was around the same time China was going through regulation changes with their exchanges and Bitcoin took a bit of a dip on Sept. 15 and then JP Morgan bought a bunch of XBT shares.
The Coindesk article goes on to say that Buffett told attendees at a Q&A session in Omaha that:
"You can’t value bitcoin because it’s not a value-producing asset."
Let's take a look at this.
Depending on what an individual interprets as value and an asset, there are many reasons why Bitcoin is a value-producing asset.
First, let's define the term value. There are many types of value but in this case, we will go with economic value.
Economic value - is a measure of the benefit provided by a good or service to an economic agent. It is generally measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service"?
Asset:
In financial accounting, an asset is an economic resource. Anything tangible or intangible that can be owned or controlled to produce value and that is held by a company to produce positive economic value is an asset. Simply stated, assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset).
Now, most users in crypto-currency agree that Bitcoin does fall into these definitions and is a value-producing asset.
What Gives Bitcoin its Value?
All that is really required to have to be a form of money is trust and adoption. In Bitcoin's case, it provides more than just that.
Global Community
I would have to say one of the main reasons what gives Bitcoin its value is the community behind it. Generally, where there is a community, there is value. It started as an idea and spread among a small group of people. If we look at most innovations including how currency was born, it started with this process. Then more and more adoption happened and now there are large communities across the world that accept Bitcoin as a payment and are making an effort to make this change in our society.
Countries are going through attempted government regulations now and would not be something necessary to do if Bitcoin was not a value-producing asset.
Businesses
With merchants, vendors, and startups to provide Bitcoin-related services, this brings more adoption than just people accepting them as payment.
We are in a digital age where many of us shop and pay our bills online. With services like Coinbase and businesses like Overstock.com, it makes it easier for an individual to get goods and services without having to go through the physical obstacles or through a "middleman" process which is normally the bank. Bitcoin has its own public ledger that makes it easier for businesses with their accounting and to be more transparent with their finances.
Limited Supply
There will only be 21 million Bitcoins to be produced and be in circulation. Similar to people collecting rare metals, stones, postal stamps, paintings and baseball cards. Once they are collected, it can increase in value when there is more demand for it.
Once something rare and collectible gets some value, it can become money.
Decentralization
One big thing I think that gives Bitcoin its value is the fact that it works as a decentralized system. More individuals and businesses are fed up with centralized systems and authority and want to make a change to a more decentralized way of doing things.
Centralized systems and authorities can be a hinder to the way the economy works and many see decentralization to be more of a free market
I can continue on in more detail but there are so many factors that give Bitcoin its value but these are some of the main selling points that average people can understand.
Fear of Uncertainty and Doubt(FUD)
Don't buy into the FUD. IMO most of those that spread FUD usually don't understand the technology and the economics behind it or just spreading the FUD as a strategy. I myself still have a lot to learn but I think I have spent enough time to understand a large portion of the technology.
The fact is, Bitcoin and it's underlining blockchain technology has been around for nearly a decade. We constantly hear FUD type news such as the Coindesk article and stating that Bitcoin will fail, it's not real money, it's the stuff that criminals use, etc. Bitcoin has evolved beyond that and we are slowly seeing it become mainstream.
One Step Closer to Mainstream Adoption
Late last week, a major payment processor, Mastercard, announced that they are "opening up access to a blockchain-based business-to-business (B2B) payment service" that is called “MasterCard Blockchain API.”
This goes to show we are getting closer to mass adoption. We are seeing more and more financial services and institutions looking into blockchain technology and launching their own product and services. Whether these services and institutions deal with Bitcoin or their own token, the technology being used is blockchain and Bitcoin is the blockchain.
That's the general goal of most Bitcoin believers, enthusiast, and entrepreneurs. It's to see the technology being widespread and used in our everyday life and replace an old, outdated, and broken financial system.
