Warren Buffett, a billionaire investor, does not see a “unique value” in Bitcoin, the largest cryptocurrency in the world. He told Becky Quick, from CNBC, on Squawk Box, that “it’s a delusion, basically.”
Unlike buying, shares, stocks and real estate, it is not an investment, according to Buffett, as it lacks intrinsic value. He likens it more to speculation rather than investment.
For it to have real value, it needs to have value on its own, he claims. He does have sympathy, however, for the optimists who purchased the cryptocurrency, hoping that their lives would be changed.
Optimism vs. Realism
The CEO of Berkshire Hathaway (a multinational conglomerate), stated that Bitcoin does not produce anything. Known for his investment strategy “buy and hold,” Buffett states: “People get their hopes up.” He is much more positive about Blockchain technology, stating that it is essential, but he did not elaborate on his reasons why.
There have been other bitcoin detractors, for example, Jamie Dimon, the CEO of JPMorgan, famously called it a “fraud” two years ago (although he later regretted his comment). JPMorgan Chase will also be launching JPM Coin; its cryptocurrency pegged against the dollar.
“Rat Poison Squared”
Warren Buffett’s opinions on bitcoin have been well-reported and date back to 2014 when he gave warning for his fellow investors to dodge the cryptocurrency. In May 2018, Buffett referred to it in an interesting turn of phrase as “rat poison squared” during a stakeholder meeting at Berkshire, claiming it as an asset that would not be productive. Previously, he’s also called it “not a currency,” “tulips” and “a mirage,” to name but a few of his bitcoin descriptors.
The price of Bitcoin relies on individuals wanting to increase their outlay for each coin that was paid previously, Buffet said. He also predicted in January 2018 that there would come “a bad ending” and stressed that Berkshire would therefore not hold a position in Bitcoin futures. However, Buffett has been proven wrong about supporting new technologies. In the past, he let the opportunity of investing in Amazon and Google pass him by, which he now says was a mistake. He freely admits that he did not think Jeff Bezos, the founder, could have so much success on such a big scale.
Cryptocurrency supporters maintain that Mr. Buffett does not understand how blockchain coins work, something which he has alluded to himself, too. Nevertheless, other industry experts such as Tony Robbins, Kevin O’Leary and Jim Cramer from CNBC, also refer to cryptocurrency purchasing as a gamble, like rolling the Vegas dice. If you can afford to lose all you put in, then go for it, O’Leary quips. Buffett would most certainly agree.