Bitcoin has always been subject to criticism due to the lack of value in it when it comes to investing. BTC’s adversaries have been emphasizing that there is nothing in the core of bitcoin which should be piled into, whereas its supporters have been claiming it’s the blockchain and the record of all transactions that is a value.
Now it’s the time for the investment guru and one of the wealthiest people in the world – Warren Buffett – to take the floor. Buffett, however, has rather been cautious than friendly concerning bitcoin, and this time he’s come to make a clear statement – why, in his opinion, bitcoin is not an option for investment.
Buffett Battering Bitcoin
Billionaire Buffett appears to be clear: bitcoin, not likewise real estate or securities, is not an asset but speculations. The reason – BTC is not worth anything on its own. In a conversation with Yahoo Finance journalist, the tycoon explained why:
"If you buy something like bitcoin or some cryptocurrency, you don't have anything that is producing anything. You're just hoping the next guy pays more. And you only feel you'll find the next guy to pay more if he thinks he's going to find someone that's going to pay more. You aren't investing when you do that, you're speculating."
So for any item to be an investment, there should be intrinsic value in it, which bitcoin, according to the mogul, cannot boast with.
To provide an example of such value, Buffett named the purchase of a farm or business. When buying them, the investor, first of all, thinks about what they produce – whether there is any return included.
If you buy an apartment, you could rent it and continually get revenues. If you purchase a farm, there will always be grown vegetable products which could be sold and so on. A real investor, according to Buffett, looks into the assets like what can bring returns.
In case of bitcoin, it’s a little different as there’s nothing behind the money that one piles and some fractions on top of that. The value of bitcoin surges only when somebody buys it and vends it. Buffett says its price entirely depends on how much humans are ready to pay for it.
And when it comes to bans, the situation is once again different. If the trading in farms is tabooed, one can still purchase farms, and it will still be an investment, Buffett said. However, if bitcoin is banned, people will start questioning the point of buying it.
A Huge Joke
Buffett has been known for his “buy and hold” investment strategy (in the world of cryptos the relevant phenomenon is called “hodling”), and now his net worth reaches the rate of $82.8 billion. Buffett backs up companies which have substantial value.
In 1996 he wrote investors a letter, saying that if they are not eager to hold a stock for a decade, they should not even think of keeping it for 10 minutes.
"Put together a portfolio of companies whose aggregate earnings march upward over the years, and so also will the portfolio's market value," said Buffett then.
Buffett wrote in his 1996 letter to shareholders. "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."
But the recent Buffett’s claims concerning bitcoin are not novel at all. The tycoon has been saying that BTC is speculation for the past four years. Then he said that cyber assets are, in essence, a “mirage.” Moreover, Buffett called the bitcoin-stuff a “joke”:
"The idea that it has some huge intrinsic value is just a joke in my view.”
And the billionaire kept holding the same view on cryptos. A few months ago he even “certainly” told CNBC that digital money “will come to a bad ending.” However, he didn’t clarify when that may happen, as per his views.
Does Buffett Have A Point?
Buffett is not almighty, and he also gets deluded, especially when it comes to emerging technologies and markets. Once upon a time, he missed an opportunity to add such assets to his portfolio as shares in Amazon and Google. Later Buffett regretted that.
Who knows, maybe one day he will regret his words about cryptos?