Warren Buffet on Bitcoin

[altcur]

Warren Buffett recently said the following about Bitcoin:

"It's not a currency. I wouldn't be surprised if it wasn't around in the next 10-20 years...It's being priced off the dollar. It is not a durable means of exchange."

Do you think that Buffett is correct or that he's too old to understand the latest currency innovations?

[MoneyTips4U]

Warren Buffett isn't one of the richest men in the world by luck.

With Mt. Gox shutting down, it will be interesting to see where Bitcoin goes now.

[Tabs]

I agree with Buffett, although I think he is only looking at Bitcoin specifically, and not digital currency in general.

With the former, I would not want to get into it, as who knows where that will end up. And Bitcoin isn't the only game out there. Plenty of other digital currencies are also available as well.

However, I do think some kind of digital currency can and will get adopted somewhere in the future. They can be used as an international standard, transactions can be made without having to pay a merchant fee, and no government can control it (which is both a positive and a negative, depending on who you ask).

All that is missing is for some major, reputable backer to implement it seamlessly into their financial ecosystem. Imagine, if you will, the likes of paypal.com or even amazon.com offering it as an alternative to credit cards or gift cards for you to click, while also helping you keep track of your balance on there.

I mean, I don't see why not. Most of us are already using digital currency via credit cards. We are also used to seeing miniature token economies (such as going to a casino or playing similar games online). Digital currency can be implemented to be functionally no different, and serves as a decent storage of value.

But that's just my opinion, and only time will tell.

[JBinKC]

One thing I really like about the bitcoin concept is it is not subject to fractional banking and wars where fiat currencies are ALWAYS subject to these horribly depreciating effects. In order to survive as an exchange medium is it has to totally prevent counterfeiting fraud and operational mishaps as on the Mt Gox exchange.

[MoneyTips4U]

Digital currency aka cryptocurrency is in its infancy.

I understand that Warren Buffett says it will not be around to say - maybe he's right.

People also said that you would never buy things on the Internet when it came out, that buying things online would never catch on. These days I feel like people buy stuff on the Internet sometimes...

Time will tell, however.

[Tabs]

I've said it before, and I'll say it again: Crypto currency is here to stay.

Every bill on our fiat currency is marked with an unique serial number for identification and tracking purposes. As it stands right now, there is no digital equivalent of this, but digital currency can easily be used to perform this function.

However, crypto currency is capable of so much more, and some of it would appeal to people who are into Gold, for example, because they want to know that their value can be stored in a fairly stable manner, and perhaps without any government control or intervention (printing more).

But unlike other value stores, because it is purely digital, there are little associated costs to storing such values. No need to buy a bank vault. No security systems or security guards put in place. No gas or electric bill for temperature control. Just you, a PC, and the internet is all you need.

Most importantly, with the right implementation, it can all be done transparently and seamlessly without the average person even knowing that they are holding and using crypto currency. Nothing has to change on the front end. This could be used as an extra layer of underlying security for your money.

So there are plenty of benefits (and some pitfalls) of crypto currency, and it certainly addresses some of the issues that we are still lacking with current digital currency system (which everybody seems to be using quite happily, from credit cards to Amazon.com).

But yes, crypto currency in its current form right now is something that is still in its infancy. Who knows if Bitcoin will even exist five or ten years from now? But I bet money that the underlying technology will be adopted some day into the mainstream future... but say maybe ten or twenty years from now?