Scrolling through these threads, I am surprised at how many people are suggesting that Buffet just doesn't get it. That's possibly not wrong. Buffet's desire to not get into stuff he doesn't understand is well-documented. He traditionally has stayed away from tech investments for primarily that reason, and definitely doesn't do bleeding edge tech when he finally does do tech. As the OP alludes to, Buffet actually commented similar stuff about Bitcoin already. His logic hasn't changed much from then till now in terms of seeing what the endgame is. http://www.businessinsider.com/why-buffett-doesnt-invest-in-...

If people think Buffet doesn't get it, everyone's entitled to their opinion. But if you want to say he's wrong, you should explain what's wrong with his logic. The OP summarizes his logic really well, and I see nobody in these threads taking apart his logic. Quoting the OP:

Intrinsic value is this continuous waterfall of cash. It’s not the stock price of Coke but the actual cash flow of the business, after costs.

Buffett made his billions by divining when the gap is greatest between intrinsic value and a stock’s share price, then buying loads of shares, tickets to real cash flow other investors would want.

Given that bitcoin is supposed to replace cash, what is the ultimate source of cash flow from digital coins created on the internet? It’s dollars flowing from the pockets of buyers who want to own those coins.

Cut off the supply of new investors and the bitcoin craze ends.

The fact is, bitcoin has no intrinsic value at all. While many digital coin “investors” would argue that neither does a dollar, I counter that just about nobody thinks of American cash as an investment, except for perhaps currency speculators.

Yes, I've seen a comment somewhere in here that says, "hey, aren't people who buy American dollars currency speculators too?" Yeah, of course. But I don't see anyone attacking the part about whether or not Buffet's fundamental thinking of intrinsic value is applicable here.

I will point to another interesting article that summarizes similar thinking in another way. This article is perhaps interesting because I've seen many people here describe Bitcoin as digital gold.

http://www.nasdaq.com/article/why-warren-buffett-hates-gold-...

He considers gold a nonproductiveasset because it doesn't produce anything of value. To illustrate this point, Buffett proposed this thought experiment in his 2011 letter to Berkshire shareholders:

"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 $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-aroundmoney (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

"A century from now the 400 million acres of farmlandwill have produced staggering amounts of corn, wheat, cotton, and other crops -- and will continue to produce that valuable bounty, whatever thecurrency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will beunchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond."

So, instead of nonproductive assets such as gold, Buffett prefers productive assets like farmland or companies that generate enormouswealth for shareholders -- companies like Exxon Mobil ( XOM ) , Coca-Cola or See's Candy.

And he clearly explains why:

"Our country's businesses will continue to efficiently deliver goods and services wanted by our citizens. Metaphorically, these commercial "cows" will live for centuries and give ever greater quantities of "milk" to boot. Their value will be determined not by the medium of exchange but rather by their capacity to deliver milk. Proceeds from thesale of the milk willcompound for the owners of the cows, just as they did during the 20th century when the Dow increased from 66 to 11,497 (and paid loads of dividends as well).

"I believe that over any extended period of time this category ofinvesting will prove to be the runaway winner… More important, it will be by far the safest."

This last sentence is important. Investing in productive assets carries less risk.

That's because, in the past,irrational exuberance has caused all sorts of nonproductive assets to suddenly skyrocket beyond any sane measure ofintrinsic value . The run-up on the prices of tulips in the 17th century is one colorful example.

If Buffet is wrong, take apart his logic. Otherwise, we can only wait and see. Me, I wish I'd gotten in on Bitcoin when it was $1, who doesn't wish that? But... I have yet to figure out how the heck it's reaching these prices. I see it, and it doesn't make sense to me. And I think I understand tech better than the average layperson. In fact, the fact that it's so expensive and volatile makes it difficult to use even as a currency. That makes it even more of a "nonproductive asset".