87-year old Warren Buffet has never been much of a fan of cryptocurrency and Bitcoin, and this week he is back in the financial headlines, flying against popular opinion and claiming Bitcoin is not an investment and it’s a gamble to invest in it, despite endless cases of people becoming very rich from doing just that. So has old Warren lost his mind, or does he have a point?
It is the job of any news source to present the news, be it good or bad, negative or positive. At BitMoneyNews.com, we will tell you when the markets are up or down, when Bitcoin is on a tear or sinking like a stone, and when someone of great authority is saying that cryptocurrency is “Bigger Than The Internet” and “Worth $40 Trillion”, or, as in this case, when somebody whose name carries a great deal of respect, but clearly has no respect for our industry, says something negative about cryptocurrency. Again.
Warren Buffet was back in the news today, claiming that “Bitcoin is a gamble, not an investment” and that buying “a farm, an apartment house, or an interest in a business” is a “perfectly satisfactory investment.” In an era when more and more business is done online by companies that exist in cyberspace, and are perfectly suited to cryptocurrency, does the “Oracle of “Omaha” make any sense at all?
Who Is Warren Buffet?
There’s little doubt that even at his advanced age, Warren Buffet is still a force to be reckoned with in the investment business. The 87-year old Omaha-native is the CEO and majority shareholder of Berkshire Hathaway, the holding company who in turn own or have an interest in more than 90 companies worldwide. A decade ago Buffett used to swap places with Bill Gates as the Richest Man in the World, and he is still worth a cool $85 billion today, which makes him the 3rd richest person in the world, despite giving away $35 billion to charity.
Other mega-billionaires have come and gone, and one or two have even overtaken him on the Forbes Rich List, albeit briefly (the names Carlos Slim and Armancio Ortega spring to mind), but Buffet keeps rolling along, year after year, and is always there or thereabouts, always near the very top of the list.
Buffet’s father was a politician and businessman, and young Warren started out in the family business, before acquiring Berkshire Hathaway and turning it into a holding company in 1970. Via Berkshire Hathaway, Buffet began buying businesses, and today he owns literally dozens and dozens of companies across the US and throughout the world.
Despite his colossal wealth, Buffett remains a genuinely well liked man, and few have a bad word to say about him. He lives frugally, has stated that he will be giving away 99% of his fortune before his life is over, and is leaving nothing to his three children. In 2009 Buffet founded The Giving Pledge, along with fellow multi-billionaires Bill Gates of Microsoft and Mark Zuckerberg of Facebook. Billionaires who join The Giving Pledge agree to give away at least half of their fortunes.
Buffet is renowned for his inspirational quotes, which include:
“Hang Out with People Who Are Better Than You”
“The More You Give Love Away, the More You Get”
“Nice People Come In All Colors”
“Stick Within Your Circle of Competence”
And the classic:
“It Takes 20 Years to Build a Reputation and Five Minutes to Ruin It”
Warren Buffet On Bitcoin
While the world’s third richest man has admitted he actually knows nothing about Bitcoin or other cryptocurrencies or indeed blockchain technology, it hasn’t stopped him from deriding it every now and again.
In a 2014 interview on CNBC, Buffet said this of Bitcoin:
“Stay away from it. It’s a mirage, basically…The idea that it has some huge intrinsic value is a joke in my view.”
In another interview with CNBC, this time in January 2018, Buffet said of cryptocurrency in general:
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending. When it happens or how or anything else, I don’t know.”
Then came his latest quote, which came earlier this week ahead of Berkshire Hathaway’s annual shareholder meeting:
“There’s two kinds of items that people buy and think they’re investing. One really is investing and the other isn’t. If you buy something like a farm, an apartment house, or an interest in a business… you can do that on a private basis… and it’s a perfectly satisfactory investment… Now, if you buy something like bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more.”
So, Does Warren Buffett Have A Point?
In a word – no.
For one, comparing investing in Bitcoin to gambling is nonsensical. Gambling means wagering on an occurrence, which once it has taken place is gone forever. Bitcoin, like precious metals or stocks and shares, is a commodity whose value may rise and fall, but it will still be there the next day. Investing in Bitcoin is like investing in gold or silver, it’s nothing like betting on a sports event.
Secondly, unless someone comes along and pulls the cable on the internet… FOREVER, Buffett cannot claim Bitcoin is a “joke” or a “mirage”. Sure, anyone can see the logic of investing in bricks and mortar, machines, land, businesses, even works of art, because they are physical things that we can see and feel. But the landscape as to what is valuable changed the very first time the expression “Dot Com Millionaire” was born, and businesses based purely online began making a lot of money.
Sure, there is something off about huge corporations that own vast factories which are cornerstones of communities, employ 100,000 or more people and create the kind of goods that make a difference to people’s lives, somehow being worth less than companies that produce nothing at all and exist solely online, yet are worth billions because of their billion-strong following and resulting colossal advertising they generate.
That is simply the world we live in, and it’s not going to change. Cryptocurrency is a part of that world, and it will eventually be used by all banks for speedy transactions, and even sit alongside fiat currency as an option for people to simply buy stuff with.
As the first ever cryptocurrency, the one with the highest profile and one with a limited protocol of 21 million coins, Bitcoin is certainly a great investment option, and will be for many years to come. The fact that Warren Buffet doesn’t understand that shouldn’t put any prospective Bitcoin investor off, nor dissuade them from other crypto purchases.
Mr. Buffett probably thought the internet was a “passing fad”, and he even admitted losing a lot of money by not investing in Google and Amazon when he had the chance because he had no faith in them. For Google and Amazon in 2018, simply read Bitcoin and Cryptocurrency!