Owning berkshire means owning a slice of a huge conglomerate of profitable, growing businesses.  Owning bitcoin means owning an electronic numerical value that's guaranteed by the network.

Berkshire is a productive asset, bitcoin is effectively an e-commodity.  There is virtually no intrinsic value in bitcoin (it doesn't generate massive amounts of value for society).  Owning berkshire for long periods of time is investing (long-term profit and value growth), while owning bitcoin for long periods of time is speculating (believing the next sucker will buy a non-productive asset at a higher price than you).

The fad phase of the past three years is over and bitcoin's price should unwind to nearly $0.

1. Intrinsic value is worth next to nothing, possibly not even pennies.  Buffett's right - Bitcoin is no more than a decentralized money order with the added drawback of long-term capital gains tax on any price fluctuation.
2. Price is supported 99.9% by speculation, 0.01% by intrinsic value.  People using bitcoin for its intended purpose are in the minority.
3. Most speculators are still long coins and haven't capitulated yet.  There's MASSIVE bearish downside potential from all of the longs who haven't seen a really big bear market yet.
4. Price catalysts are exhausted.  Virtually all potential early adopters with capital have put their money in already.  There's not a constant flow of fresh capital to sustain a bubble doubling every 6 months, so some sort of unwinding down to intrinsic value ($0.01 per coin) is more likely to occur than not.
5. Downtrend has sustained momentum for 5 months.  The current bear market has beaten all previous price collapses, which rallied after 3 months and showed decreased momentum after 1-2 months and a sudden, sharp rally at the 3rd month.  In more general terms, "this time IS different."  In percentage terms, the current collapse is accelerating.
6. Media attention rallied the price after all of the other bear markets due to drawing in more early adopters, but this time it's generally causing longs to lose interest and sell since the early-adopter well has dried up and the mainstream definitely isn't going to use bitcoin.

Disclosure: I don't own bitcoin!  Just saying it like it is!!

Bitcoin has close to $0 intrinsic value per coin and is functionally a money order. Who would be stupid enough to stake their retirement on it?

USD has a lot more going for it than bitcoin.

Pros to USD
USD: untraceable transactions via physically exchanging cash
Bitcoin: traceable, all transactions recorded on blockchain

USD: Keep cash in an FDIC insured bank account and the government is good for the first $100,000, fraud/theft protection
Bitcoin: 15% of all coins currently held in circulation were stolen from their original owners (if you believe the list of bitcoin thefts on this forum)

USD: zero transaction fees for cash or check deposits or withdrawals, or ACH transfers
Bitcoin: transaction fees

USD: treated as cash by the IRS, duh
Bitcoin: treated as a commodity by the IRS, taxed as capital gains

USD: costs you nothing to safely stash it in a FDIC guaranteed bank, and you get paid interest to boot!
Bitcoin: spend lots of your money for security, you're in charge of it yourself

USD: exchange rate is very stable, intrinsic value is its guarantee as a medium of exchange by the U.S. government & use as a medium of exchange by U.S. economy, and the U.S. government and U.S. economy are powerful entities
Bitcoin: exchange rate is extremely unstable, has virtually no intrinsic value at all (compare to money orders)

USD: currency exchanges are stable, reliable, no risk of theft
Bitcoin: exchanges are unstable, unreliable, risk of theft

USD: can keep a bunch of them of varying types in wallet easily as paper medium
Bitcoin: poor/zero implementation as paper medium

USD: inflation rate in the near-term (1-2 years) is very predictable, and long-term inflation is quite low.
Bitcoin: deflation rate as measured by bitcoin's exchange rate is very high, making it unattractive as a currency and instead attractive as a commodity/hedge against the dollar (probably why the IRS pwned bitcoin by treating it as such)

USD: I can make a bunch of cash transactions under $5,000 and it's not recorded anywhere
Bitcoin: I can make a bunch of transactions and every single one of them is viewable by everyone in a global database.  NSA's wet dream, how ironic.

Bitcoin is flavor of the month.

It's possible to conceive of a better cryptographic store of value (imagine a more deflationary version of bitcoin with close to zero coins generated on the network that requires 2-step verification in order for transactions to occur).

Conversely, it's possible to conceive of a better medium by which value can be transferred (imagine bitcoin with blocks generated every few seconds - fast enough to generate confirms that compete with credit card authorizations).

Other cryptocurrencies will gain popularity that offer superior options to bitcoin eventually, although this might take a while.  Buffett's dead on about bitcoin, but I definitely see other cryptocurrencies existing in the future and being quite popular.  Bitcoin's inability to compete with the instantaneous confirmation speed of cash, or the 5 second confirmation speed of credit cards, will render it obsolete eventually, fiat or not, it's just a terrible general currency platform.

Warren Buffett is being generious with his praise of Bitcoin.  Bitcoin is the tulip of the 21st century, destined to be obliterated by a better-implemented altcoin.

The best investors on Wall Street will continue going long on U.S. businesses and likely won't buy bitcoin.  A 3x leveraged NASDAQ ETF is less risky than bitcoin.

"Bitcoin is a currency."

Fact: Bitcoin is crypto-gold, not crypto-currency.  99% of bitcoin users hoard or speculate.  It has zero prospects for ever becoming a currency, but it's a great speculative investment.

Bitcoin users actually use fiat as their currency of choice.  They use bitcoin as an investment vehicle - dollars, euros, etc. are the medium of exchange by which they either buy bitcoins on exchanges or use to buy mining equipment which generates bitcoins, the investment.  Let's contrast the difference between something used as a medium of exchange, such as a dollar, and something used as a store of value which is expected to appreciate over time ("investment"), such as bitcoins.

A dollar is a good example of a currency.  Most people hold on to a small amount of dollars at any given time, and readily swap those dollars out for things they need - products or services.  Most people are also receiving dollars at the rate they spend them.  For example, your average person's checking account doesn't hold much currency at any given time - something like $1,000 - but that person might have received $3,000 in income and spent $3,000 over a single month.  The person uses the dollar as an exchange of value, because he is exchanging the vast majority of his dollars for things he needs as he receives dollars for providing services or goods for other people.  The average person doesn't let his dollars sit around because they don't gain value over time relative to anything else - they tend to slightly lose value.  Therefore, dollars are constantly and rapidly moving from person to person, business to business.  The average American starts and ends the year with about $3,000, yet receives $35,000 through the course of the year and spends $35,000 through the course of the year.  95% of dollars are spent quickly on something else.  People expect their $1.00 to be worth 3% less at the end of the year, so it's readily exchanged for other things.  If that $1.00 was expected to be worth more at the end of the year, it would be held onto.  The dollar would cease being a medium of exchange, since people would hoard them.

Let's compare this to a bitcoin.  The average bitcoin user uses his currency of choice - typically dollars, euros, or other fiat - to either purchase bitcoins or purchase mining equipment to generate bitcoins.  The average joe with a job who is into bitcoins might be able to buy 1 bitcoin a month from an exchange, or generate 1 bitcoin a month with a decent mining setup.  At the end of the month, this typical bitcoin user has gained 1 bitcoin, but has spent virtually none of the coins on products or services.  It's likely he's donated 0.05 a couple of times for some apps that he downloaded which offered a donation, possibly paid back a friend, etc.  But 95% of the bitcoins are just sitting there in his possession.  After two years, the average bitcoin user has acquired 24 bitcoins, yet only spent at most 1-2 of them.  Contrast this to the poor dollar - 95% of dollars are spent on something just as soon as they are received.  The dollar (a currency) and bitcoin (a commodity/investment) are total opposites.

Bitcoin is not fundamentally designed to behave as a currency.  Its value increases rapidly over time, and there are a fixed maximum number of coins which can be in circulation, ever, so this phenomenon will continue as long as demand for bitcoin increases.  95% of 'transactions' are either users acquiring bitcoins from exchanges or simply moving bitcoins from one wallet to another in their possession, with the intent and purpose of holding bitcoin over a long period of time with the expectation that their value relative to goods or services will increase, or selling coins that have appreciated in value.  Contrast this to any currency, where 95% of 'transactions' are exchanges for goods or services, or investments.

This thread, and every other bitcoin discussion, seems to really be an endless debate about bitcoin's strengths/weaknesses as an investment.  The bigger point is missed.  The fact of the matter is that bitcoin simply cannot function as a currency, and the behavior of users on the network confirms this, more and more so over time.

Tying into the original post, I suppose, is the fact that Bitcoin's a horrible, HORRIBLE long-term investment.  When AES is rendered obsolete or any of the potential flaws discussed in this thread are exploited, all value in the network will be lost.  Seeing as how at least 8% of all bitcoins in circulation have been stolen at least once, well....

Bitcoin wouldn't replace the credit card because no merchant in their right mind would forgo payments in USD for BTC with BITC's price volatility.  Are you guys serious?  BTC behaves more like a commodity or store of value than a currency.  Everyone hoards it.

Gox did go bankrupt, and the total body count is 850,000 coins - 750,000 customer coins and 100,000 of the exchange's own. Here's Mark at the Tokyo District Court at a news conference:

http://www.reuters.com/article/2014/02/28/us-bitcoin-mtgox-bankruptcy-idUSBREA1R0FX20140228

There's more, though.  Also, there's a $27+ million discrepancy in Gox's bank account.

7% of all bitcoins in circulation are now owned by hackers, plus any previous thefts.

Mark is "very sorry"

I love this.  Krugman obliterates this dunce.

Sigh, PNSN had at its peak a market cap that's five times lower than the smallest company in my stock portfolio.  Even MF global was a comparatively small company in terms of financial importance.  Plus, Eurozone contagion risk (the primary culprit for MF global's failure) is already priced into markets, which would be much, MUCH higher otherwise (dow near the 17,000 mark sans Euro Debt Madness).

Regarding the protective advice - anyone doing business outside the realm of FDIC or SIPC insurance is stupid anyways. Keep an accurate record of your statements on a monthly basis and you'll be just fine, especially going forward over the next 25 years as risk and market volatility gradually subside.  Your risk of losing all your money betting on gold and silver is much higher than having your brokerage or bank collapse.

What this data shows is that from pre-recession inflationary peak to the present day, U.S. currency has devalued in total 5% over the course of about four years.  That's about 1.25% inflation per year, average.  If you kept your dollars in an online savings account over this period of time, your interest rate would've averaged about 2%.  Kept them in the market and reinvested dividends?  Anywhere from 5% to 40% gain per year, depending on your timing competence.

Current inflation levels aren't problematic - deflation could be around the corner at any time and is a much bigger threat at current inflation levels of 1.25%.  Some goods have increased in price 50-100%, such as frozen vegetables, over this period in time, for reasons not directly tied to currency valuation.

Want to see bitcoin traded for goods instead of hoarded?  The currency needs to be fundamentally inflationary in nature.  Where are all of the merchants flooding in to embrace bitcoin?  People aren't likely to readily spend bitcoins due to their constant tendency to increase in value and their exceptionally high volatility.  It's a hoarder's world.  Bitcoin is more like a precious commodity exponentially increasing in scarcity over time, and the fact that people even consider it remotely comparable to government-backed currencies is incomprehensibly ludicrous.  After all, like gold, bitcoin is mined, not printed. 

How ironic.  A bitcoin supporter calling one of the world's most brilliant economists a troll.  Stupid has reached a new level on the internet.

Who cares, GS's petty cash is bigger than the entire bitcoin market capitalization...

How does sending $4 of cash to hong kong have to do with billionaires?  Even as a poor person, I'm not stupid enough to make small-ticket purchases overseas.

Bitcoin is an inferior means of exchanging sums of capital, in its current form.  Nobody wealthy really cares about it.

Small transactions: cash is faster and 100% secure (money goes from person X to person Y and is verified by counting in 10 seconds or less, vs. bitcoin's 20 minute block confirmation wait).

Large transactions: bank transfers are much, MUCH safer (FDIC insurance at my free savings account covers up to $100,000, there's no 100% secure equivalent in the bitcoin world, and wallet security is a joke right now).

Price volatility: developed nation currency is 100 times more stable.

Usability: developed nation currency is 100,000 times more commonly accepted as monetary standard.

Speaking from the perspective of a very wealthy individual, why care about such an inferior currency system at all?  This is a proof of concept, not designed for mainstream use, and needs a lot of work.  Respect bitcoin for what it is and what it proves.  Graham Bell's first telephone is NOT an iphone.  Got it?

Sorry guys.

No, the average bitcoin customer already didn't have a lot of money in "evil fiat currency" to begin with before bitcoin, and the total market capitalization of the entire bitcoin system is smaller than about two hours of trading profits at Goldman Sachs.  Why would they care?  Moreso, with people like me who think most bitcoin embracers are completely nuts to choose this system over putting their assets in a bank, why would they bother?  There are already enough voices of dissent out there.

This is the drawback to encrypted currency.  Instead of having a bank take care of a lot of the administrative annoyances of the monetary system for you (long-term transaction records, sending and receiving your money, security), you get to bear a slice of the overhead directly yourself.  You are your own "mini-bank."  Personally, I'd rather have a FDIC-insured bank do it for free, enjoy the perks of interest, and enjoy the perks of zero transaction fees, and invest the hours of time and effort into making more money.  Bitcoin is a well-done concept, but it's by no means a medium of exchange and vessel of monetary storage, at least for the average competent businessman who knows time is money.

Here's what you get with a bank checking account and savings account in the USA through ING direct:
$0 in fees
Small amounts of interest (on $50,000 of deposits, you're going to earn $200-$400 per year in interest!  Currently yields are 0.8% APY)
Virtually zero resource load on your computer (running the online banking web portal is pretty undemanding)
FDIC insurance, the world's most powerful government and military guaranteeing $100,000 of my deposits! WooT.

Here's what you get with bitcoin:
Transaction fees on a per transaction basis (boo!)
No interest (super boo!)
Moderate resource load on your computer (downloading the blockchain requires a paid for internet service - fail), although in the long term the resource load will be insurmountable (100GB blockchain some day)
No insurance and nonexistent client-side security unless you spend money / time / effort properly securing your wallet (super duper boo).

Bitcoin has a way to go to beat banks, credit cards, and plain old cash.  For those of you who who are considering a non sequitor into evil fiat currency, buy S&P automatic index funds, trust me you're really bad at investing if you think btc is the way to go to beat usd.