Warren Buffet is making headlines again with his opinions on Bitcoin and other cryptocurrencies. The Oracle of Omaha recently told Yahoo Finance that buying digital assets is not investing. No one seems to know precisely why Buffet is bearish on Bitcoin, but it could be that the famous investor lacks understanding of blockchain technology and its potential.
Buffet’s Opinions About Cryptocurrency
Warren Buffet has stated in the past that he knows very little about Bitcoin or the blockchain technology which drives it. He went further in his recent interview by claiming that no one actually knows what Bitcoin is. These statements hint at a flawed perception which could account for Buffet’s skepticism.
Bitcoin is a digital asset which is traded just like fiat currency. The fact that it does not exist in physical form has in no way lessened its value. Over the past few years Bitcoin has posted a steady annual gain. Buffet’s claim that no one knows what the cryptocurrency is lacks substance when compared to Buffet’s own investments in the stock of companies like Apple and Coca-Cola.
Stock shares also have no true physical existence. They are recorded in a physical ledger and documented on paper but are not tangible investments like a piece of real estate. Similarly, Bitcoin transactions are recorded and documented in a ledger known as the blockchain. In truth, a cryptocurrency blockchain affords more reliability and accuracy that the methods in which stock holdings are recorded.
Buffet claims that buying an interest in a business is a true investment while purchasing Bitcoin is a gamble. He claims that Bitcoin buyers are simply hoping that someone will eventually pay them more for the coin than what they invested. Once again, this is the essence of stock trading. If there were no hope of ever selling the stock for a gain, what would be the point? Dividends paid by most companies are very small and would not merit holding the stock forever. Eventually, its price would fall.
Buffet’s History of Bashing Bitcoin
While he may not know much about cryptocurrency, Warren Buffet has no problem speaking on the subject when given the opportunity. He has, at various times in the past, called Bitcoin a “mirage” and a “joke” that cannot endure. So far, it is unclear what effect Buffet’s opinions may have on Bitcoin investors.
It is hard to knock Buffet’s track record where investing is concerned. He is widely considered to be the most successful investor of the modern era. Buffet’s company Berkshire Hathaway Inc. has posted significant gains year after year. He is not infallible, however. Buffet famously passed on investing in Google’s stock, a move that would have brought a substantial return.
It could be that Warren Buffet is simply too old now to devote time and energy to analyzing emerging markets. At 87 years old, Buffet has spent more time investing in stocks than almost any other living person on the planet. As such, his thoughts on Bitcoin may merit some weight.
DAVENPORT LAROCHE, Alternative Investing Solutions based in Hong Kong