As one of the world’s most successful investors, Warren Buffett commands much respect in the financial sector. He isn’t infallible, despite what commentators in traditional finance may suggest. However, his opinion, understandably, carries an incredible amount of weight. Buffett has a turbulent relationship with cryptocurrency and Bitcoin, and he often finds himself voicing views on the matter despite admittedly not understanding how it works.
Buffett is renowned for his excellent long-term investments in Apple, Coca-Cola, Bank of America, and Chevron. As far as traditional investing goes, there is no better, he is an oracle of the sector, and if you had a time machine, you’d probably make the same investments he did all those decades ago.
Buffett & Bitcoin
There’s no love lost when the Berkshire Hathaway CEO discusses cryptocurrency, particularly Bitcoin. Most recently, he has called Bitcoin a gambling token. But, while you can play games like online Bitcoin slots, or crypto poker, it isn’t a gambling token in the slightest. Instead, it highlights common misconceptions and ignorance surrounding the immense technology that underpins one of the most significant disruptive innovations of all time.
For those who don’t understand Bitcoin or mirror some of Buffett’s concerns, it can be easy to be drawn into this opinion. After all, the man is worth over $100 billion, has survived multiple recessions, and has invested successfully in some of the biggest corporations. However, digital assets are not his forte, and this is clear whenever he is asked questions concerning the intricacies of blockchain technology and the security of the public ledger.
Ultimately, Buffett’s stance is engrossed in time. Not many of us will make it to 92; never mind, still investing or working. It is simply a technology he doesn’t understand, and there’s no shame in that. At its fiercest, Bitcoin directly opposes the traditional banking system that has been so kind to Buffett for over half a Century. So why would he oppose it now in the twilight of his years?
Is Bitcoin A “Scam”?
This is a complicated question for many. The market is unregulated and susceptible to volatile price swings and manipulation, so people can conflate it as a scam. However, Bitcoin, cryptography, and the blockchain that acts as a foundation are not scams. Furthermore, it is difficult to understand just how innovative Bitcoin is if you are completely shut off from a new world of finance in the way that traditional investors are.
Of course, fraud exists to some extent in cryptocurrency as it does in the traditional world of finance. There’s no avoiding those rogue criminal elements operating in every facet of society and acting with no morals or concern for others. Unfortunately, this is unavoidable; these people will often follow suit wherever the money goes.
Comparing it with gambling isn’t entirely false, but you could say the same about any investment. Nobody knows how an asset will move; you can make predictions based on several variables. However, ultimately, nobody has a guarantee, and with this in mind, it can draw some similarities to gambling.
So, Is Buffett’s Opinion Worthless?
A man in the top five wealthiest individuals on Earth certainly doesn’t have worthless opinions on anything financial. So his overall opinion on Bitcoin isn’t entirely wrong. Still, it is also flawed and misinformed, given that Bitcoin continues to provide such an excellent return for investors worldwide.
Bitcoin is also marked as an inflation hedge due to the deflationary components embedded in the initial coding; there will never be more than 21 million Bitcoin. However, some lofty price predictions put the innovative asset in the 6-figure region by the end of this decade, and for some analysts, that is a conservative estimate.
If Bitcoin were a scam, cryptocurrency wouldn’t have become a trillion-dollar asset class. Some of the projects that are below Bitcoin, known as altcoins, are highly innovative. Projects such as Ethereum have tremendous utility. It is also a numbers game. Goldman Sachs reported that Bitcoin is not only the best-performing asset in 2023 but also the best investment of the Century – Buffett cannot ignore this fact as a top investor.
The Bottom Line
While his opinion on cryptocurrency is slightly misguided, there’s no disputing he is one of the most significant global authorities regarding traditional investment in stocks. It is unlikely that he will change his opinion on digital assets, as somebody who has worked their whole life investing in companies with tangible and practical use cases; Sometimes it can be difficult even for Gen Z to get their heads around. The time will show how attitudes change and what will the future of cryptocurrencies look like.