On Wednesday, bitcoin plummeted below the $10,000 level. “Investors” watched the value of the cryptocurrency plummet in previous days, losing approximately 50 percent of its value.
Bitcoin believers point to the fact that it has gained nearly 1,000 percent in value in the last year alone. Investment icons like Berkshire Hathaway Chairman Warren Buffett, Berkshire Vice Chairman Charlie Munger, and Vanguard founder Jack Bogle have been chided on many fronts for suggesting that bitcoin is a bubble and that it won’t end well for “investors” in the cryptocurrency.
Complicating the dialogue for those watching the debate, famed money manager Bill Miller told Consuelo Mack on her WealthTrack podcast that he had almost half of the money in one of his funds allocated to bitcoin late last year. It is still only worth what someone would be willing to pay for it and cannot be valued by the future cash flow it can produce.
There is nothing to support bitcoin except the hope that you will be able to sell it to someone for more than you paid for it. There is no store of value aspect to a cryptocurrency.
Speculators, on the other hand, rely on the “greater fool theory,” meaning that some greater fool will come along and pay you more than your purchase price. Of course, you may say that Bogle, Buffett and Munger are 88, 87 and 94 years old respectively, and they simply don’t understand the transformative impact that cryptocurrencies and blockchain technology are likely to have on the way we live. Read more from thehill.com…
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