Last week, Marc Andreessen and Warren Buffett had an old-white-male catfight over the investment potential of Bitcoin. I think hair was pulled.
Buffett’s take is that Bitcoin has no intrinsic value. Bitcoin is not a currency, according to the IRS. And it’s not. It cannot be used as a medium of exchange because it is not a reliable store of value. Wait, but what about the US Dollar and hyperinflation? Shut up.
To be fair, Andreessen isn’t buying up Bitcoins himself. He’s investing in the technology, including $25M in Coinbase, a Bitcoin wallet and exchange.
Either way, Warren Buffett does not invest in technology. He cites the auto industry to give insight as to why:
All told, there appear to have been at least 2,000 car makes, in an industry that had an incredible impact on people’s lives. If you had foreseen in the early days of cars how this industry would develop, you would have said, “Here is the road to riches.” So what did we progress to by the 1990s? After corporate carnage that never let up, we came down to three U.S. car companies–themselves no lollapaloozas for investors.
Buffett says that it would have been wiser to short horses, because the US Horse Population declined from 21 million to 5 million between 1900 and 1998. And Warren Buffett was probably around to do just that.
Another example is airplanes. There were hundreds of airlines and even more aircraft manufacturers last century, but only a few managed to not die. Rather than taking positions in airlines, investors should have shorted the passenger railroad industry.
There are about a bajillion Bitcoin startups right now. Most will die, but it’s Marc Andreessen’s job in life to invest in things that can die. The only constant is change.
Why Buffett Doesn’t Invest in Technology –Henry Blodget @BI
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