Warren Buffett, the legendary US investor and an outspoken critic of cryptocurrencies, recently launched another attack on bitcoin, this time labeling it a “gambling token.” He emphasized that people invest in it in the hope of making easy money, ignoring the risks.
Buffett’s Negative Stance on Bitcoin Persists
Despite bitcoin having soared over 80% YTD amid the ongoing financial uncertainty, some individuals remain unconvinced. Warren Buffett, the American business magnate, philanthropist, and Chairman of Berkshire Hathaway, remains deeply pessimistic about cryptocurrencies. In a recent interview with CNBC, he argued that most people buy BTC simply to speculate on its potential price increase, saying:
“Bitcoin is a gambling token, and it doesn’t have any intrinsic value. But that doesn’t stop people from wanting to play the roulette wheel.”
This negative stance on cryptocurrencies dates back to 2018 when Warren Buffett called bitcoin “rat poison” and made a prediction that cryptocurrencies “will come to a bad ending.” Nevertheless, bitcoin is still thriving and has made significant progress since then. Its valuation has surged by over 215% since Buffett’s statements.
Furthermore, bitcoin has become legal tender in some countries, specifically El Salvador and the Central African Republic. It has gained significant popularity among the masses, particularly during periods of financial turbulence when fiat currencies are devalued. Moreover, some people believe bitcoin can serve as a better alternative to the shaky banking system.
The US witnessed the closure of some financial institutions, including Silicon Valley Bank (SVB), Signature Bank, and Silvergate Capital, due to operational difficulties, in March around the same time when more regulation was being discussed. At the same time, Buffett has always been a strong proponent of the US banking system.
Bitcoin’s distinct advantage stems from its decentralized nature, without a central authority or an inherent risk of failure. It also has a fixed maximum supply of 21 million coins. On the other hand, central banks can print an unlimited amount of cash and therefore trigger inflation. Paper money also remains the most common payment method used in criminal activities like drug trafficking, prostitution, terrorist financing, and more.
Buffett’s Vice Chairman Shares a Similar View
Charlie Munger, the Vice Chairman of Berkshire Hathaway, is another vocal opponent of the cryptocurrency industry. The 99-year-old American wished in 2021 that cryptocurrencies “had never been invented.” He also advised people to stay away from crypto, calling it “an open sewer, full of malicious organisms,” and claiming that bitcoin stimulates child prostitution, kidnappings, and other crimes.
Some people believe that Buffett and Munger launch such scathing attacks simply because they do not understand the cryptocurrency industry, or they are at a point in their careers when it is too late for them to change their views. This perspective was supported by Anthony Scaramucci, founder of SkyBridge Capital, last year:
“These sorts of traditional finance people have made a decision not to do the homework, or maybe they’ve done the homework, and they have decided that it’s just too big of a change for them at this stage in their career.”