Bitcoin continues it’s wild and crazy ride
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce — gold’s price as I write this — its value would be about $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
-Warren Buffett 2011 letter to the shareholders
Within just more then 24 hours Bitcoin has gone from the $1,100 range to the $500s to someplace in the $700s.
Today the world’s Bitcoin stock is about 12.1 million. The maximum Bitcoin there can ever be is 21 million. At $700 per Bitcoin– Bitcoin’s value today as I write this would be $8.4B in USD. Call these 12.1 million Bitcoins currently valued at $8.4B Pile A even though it would be flash drive A.
Let’s now create a pile B costing an equal amount. Pile B could be any number of cash generating corporations, real estate, or anything you wanted purchased from $8.4B in USD. Is there anyone that would really pick Pile A or hope to generate the same value from Pile A as B?
What intelligent investor couldn’t construct more value going forward out of the $8.4 billion in USD dollars with a very large margin of safety? I could buy so many cash flow generating properties that include businesses and real estate and other various assets with the US Dollar. Could you even define a margin of safety with Bitcoin? Bitcoin is very fascinating technologically but there is no firm basis for it’s current value. It’s just as likely to tank as it is to shoot to the moon and the vast majority of the late entrants are conducting wild speculation no different then Tulip Mania, or the Dot Com Boom. This goes for 1 Bitcoin as it does just as much for every Bitcoin in the world.