Whether you think Bitcoin is fools gold or a revolutionary internet ledger, when the ‘Oracle of Omaha’ gives you his 2 cents worth (of his $84.1 billion), you take a pew and listen.
And for the ‘hodlers‘ (people who ‘hold on for dear life’ to their bitcoin) and wannabe crypto-capitalists, there’s bad news: bitcoin is a gamble, not an investment. Although it’s old news that Warren Buffet—the Berkshire Hathaway CEO (and the world’s third-wealthiest person, according to Forbes)—is skeptical of crypto currencies, this weekend he elaborated on the subject, telling Yahoo Finance, “If you buy something like bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more.”
He went on to say:
“There’s nothing wrong with it. If you wanna gamble somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.”
So whilst he’s not saying you can’t make money out of crypto, he is saying your crypto-dork mates shouldn’t call themselves investors. As Buffett’s financial success came from buying sturdy firms with business models that are easy to understand and hard to disrupt, it’s hardly a surprise he’s skeptical of the opaque technology sector (and of bitcoin), which he called a “mirage” in March 2014.
He says that this is because, “its value is too dependent on trading” (Coin Desk), giving the following comparison.
“Now if you ban trading in farms, you can still buy farms and have a perfectly decent investment… but if trading in bitcoin was banned, people would have no reason to invest.”
However, Australians are crazier about crypto than ever. Crypto Briefing reckons this is because Australian culture has always celebrated the underdog, saying that, “These Australian attributes very much mirror the cryptocurrency movement. Cryptocurrencies and blockchain technology are underdogs in the larger financial trillion dollar industry run by big powerful incumbents and rule makers.”
One thing is for certain though: Whether or not the “powerful incumbents” like Mr Buffett are just insecure, or if they are dead-right about the crypto movement, your self-proclaimed crypto-investor mate who still lives in his parents’ basement is probably still a kook.