It is no secret to anyone that Bitcoin and cryptocurrencies have millions of supporters, but also many detractors. And regarding the detractors, of all the people who are directly opposed to Bitcoin, perhaps none is as well known, wealthy and influential as the american investor and businessman Warren Buffett.
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What does Warren Buffett say about Bitcoin?
The legendary Wall Street investor (known as the Oracle of Omaha) has once said regarding Bitcoin that it is worthless, because it produces nothing; and he has also said that he would not pay even $25 for all the Bitcoin in the world, arguing that "what would he do with it?"
Now, I am sure that if you are reading me now, through this platform, it is because you believe in Bitcoin and cryptocurrencies and you defend all their enormous potential for growth over time. So, being all of us, as indeed we are, proponents of Bitcoin, Hive, Ethereum, and cryptocurrency in general, Buffett's opinion (or assessment) may upset us quite a bit, but as I always say, we must look beyond the obvious, not blinded by emotions and analyzing the root of things as best as possible.
Because it would be pretty easy for anyone to start insulting Warren Buffett and staunchly defend cryptocurrency. But discrediting the opponent without arguing anything of value is what those who are not right do.
Why Warren Buffett says what he says about Bitcoin and cryptocurrencies
First of all, we must briefly analyze who Warren Buffett is, that legendary investor and businessman born in Omaha, who became a millionaire (and later a billionaire) from his good decisions and his investments in the stock market.
Buffett, is the president of the Berkshire Hathaway company, which was initially a textile factory, then an insurance company, but over time, through many good decisions, actions and important changes; Buffett managed to turn it into a company o holding type conglomerate, which is nothing more than a holding company.
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To put it simply, Buffett (and his partner Charlie Munger) basically managed to turn Berkshire Hathaway into a Wall Street stock investing company. Now, Buffett's has currently an estimated net worth of more than 100,000 Million dollars, what means that he is a billionaire and is in the top 10 of the richest people in the world (To prove it, see the Top 50 Richest People In The World).
Buffett's investment portfolio is made up of shares of companies as diverse and important as Coca-Cola, Duracell, Kraft-Heinz and American Express, among many others.
So, when we talk about Warren Buffett (who is currently 92 years old), we are talking about one of the biggest, smartest and most important investors and entrepreneurs that ever lived; We are talking about someone with a great track record and experience behind him, which makes him someone very qualified to talk about financial issues.
But why he says what he says regarding Bitcoin and cryptocurrencies, we must understand well. Basically, it must be added that Buffett has never said anything about bitcoin that he has not sufficiently argued, at least from his own vision and knowledge of things. So while he's a debunker of Bitcoin and cryptocurrency, he's not a fanatical debunker; which means he's someone who says, "I don't like Bitcoin because of this reason, this reason, and this reason," and not just "I don't like Bitcoin because I just don't like it, period."
But the reason why Buffett opposes the idea of Bitcoin and cryptocurrencies is due to ignorance of what they really are, as technology, as a means of payment, as future value, and also ignores all the potential that this will have in the long term for humanity.
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To say that Bitcoin and alts do not add value, and do not produce anything, is to ignore the fact that Bitcoin and most of the major cryptocurrencies in the market have large and important projects behind them. Bitcoin has marked a milestone, a before and after in the management and understanding of finances by most people in the World, and that is something very difficult to understand for someone like Buffett, who is part of the old guard of Wall Street, someone who certainly has a lot of knowledge about economics and investments and who has a lot of merit and track record behind him, but who does not understand anything about what Bitcoin represents for the world of finance and technology in general.
Do not invest in something that you do not understand
But although we oppose what Warren Buffett says regarding Bitcoin and cryptocurrencies, his position of not investing in assets or things that he does not really understand is respectable. As far as is known, Buffett always prefers to invest in shares of companies whose activity he understands very well how it works, and that has been what has allowed him to be so successful through his investments over the years.
That means that not really understanding what Bitcoin is on a deep level, Buffett prefers to stay out of it. Let's remember that Buffett invests in the stock market under normal precepts, he invests for the long term in companies that generate value that can be measured through financial statements and other reports, and he will certainly not find that with Bitcoin and cryptocurrencies; because we are talking here from two very different worlds.
Because a lot of money moves between stocks and cryptocurrencies, but in very different ways, and that must be understood very well. So I think that when Buffett says that he doesn't invest in Bitcoin because he doesn't produce anything; and that he would not pay any amount of money for Bitcoin even if they gave him all the Bitcoin in the world, it means that he does not invest in it because he simply does not understand it, he does not understand the utility or what generates money in the business and by not understanding it, he prefers to stay out of it, simple as that.
And if we start to analyze it, it has all the World's sense, because, that does not mean that buying Bitcoin is a bad investment, far from it; because as we well know, Bitcoin (and most of the cryptocurrencies with the highest market capitalization) are investments that, although risky and volatile, They can become very profitable over time.
Quite simply, Warren Buffett is known for preferring to buy shares of solid companies, which do not give him big scares over time, and which have goods support them; (goods that can be sold to recover money when the market price get adverse). He just always plays it safe, and certainly, he is not going to find that in Bitcoin or any other cryptocurrency on the market, because we're talking about a paradigm shift here.
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We can see Bitcoin as a means of value and an asset, but its price is highly volatile, and that is something that no serious old school Wall Street investor likes it, that's why Buffett doesn't like Bitcoin or any cryptocurrency. And the reason why he does not recommend investing in Bitcoin is because he cannot recommend investing in something that he himself does not believe in, does not understand and does not invest in, it is simply an ethical, practical and functional point of view.
The truth is that while I disagree with Buffett about what he says about Bitcoin, I think we should emulate his reluctance to invest in something we just don't understand, because if we did, we would save ourselves a lot of loss and disappointment in the markets. So extrapolating from his attitude towards the world of cryptocurrencies, I don't invest in any cryptocurrency whose potential and usefulness I don't really understand, and that, my friends, it is a great lesson to follow in every way.
So I personally invest in Bitcoin, HIVE and Ethereum (among many other cryptocurrencies), because I understand its potential, I analyze its growth; I understand its usefulness and because I have reasons to think that its face value and its price will go up progressively in the future. Any cryptocurrency that I can't say the same about it, I don't even look it at, I mean, I don't even consider buying nor adding it into my crypto investment portfolio.
As I already said, although I do not share Buffett's opinion on Bitcoin, I think that deep down, his way of deciding what to invest in and what not, based on our own tastes and knowledge of things, should be emulated, because it is a wise, prudent and recommendable attitude in every way. Because we must always feel comfortable with all of that what we decide to invest in.
What do you think about the topic discussed? Please comment.
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