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My local St Louis homie Vance Crowe hands out a very dignified, respectful backhand to megabank investor Warren Buffett, who recently derided Bitcoin as a “mirage.”
Bitcoin allows us to instantly send money to one another securely, without relying on a financial middleman who works bankers’ hours, charges transfer fees, and gambles with depositor’s money with the potential to do harm to the economy and needs to be bailed out with tax dollars.
The fact is that the financial system is outdated. Thousands fall victim to credit fraud every day. Merchants who accept those cards pay 2.7 percent off the top, and banks charge anywhere from $10 to $50 for wire transfers, and transactions take days to settle. Merchants can accept bitcoin for fractions of a percent, and transactions settle in 10 minutes. These are innovations that have will enable more people to participate in the economy.
It is also critical that we not view Mt. Gox as a failure of bitcoin. Bitcoin did not fail; its encryption was not hacked. Instead, it was a failure of the people running an exchange. The rugged beauty of the bitcoin system is that individuals are responsible for their own investments. We do not live under the belief that someone will bail us out if something happens, so we take security on as a personal moral responsibility. Our world is better when individuals take responsibility for themselves.
I actually don’t believe that Warren Buffett is foolish enough to miss the larger implications of alternative currency. He is executing, rather, an old investment strategy of “talking your book.” People with a stake in a certain investment use their credibility as a market analyst to drive market sentiment their way. Buffett owns around $21 billion of Wells Fargo stock, and he totally cheered your taxes going to bail them out to the tune of $25 billion. He loves his government-guaranteed investment and does not want competition in the marketplace from you meddling kids.
Then again, he’s 83. Maybe he just doesn’t get it.
I don’t really care what he thinks either way.