Is Warren Buffet Bitcoin criticism real? Has he been unsparing in his criticism of the number one cryptocurrency in the world? Yes, Warren Buffet Bitcoin criticism is well in the news. In fact, he has been an unsparing critic of all cryptocurrencies. But why wouldn’t Warren Buffet buy Bitcoin even for $25? Let’s dive deep to find out why.
Warren Buffet Bitcoin criticism
Despite the steady rise in popularity of cryptocurrencies in general and Bitcoin in particular, there are numerous critics. Warren Buffet is one of the cryptocurrency critics and he has been quite unsparing in this regard. However, the question is why Warren Buffet criticizes Bitcoin – the largest cryptocurrency in the world. Here are the key reasons.
1. Bitcoin cannot produce anything
Warren Buffet Bitcoin criticism is for one obvious reason – Bitcoin doesn’t and cannot produce anything. He told his reason for not buying Bitcoin at Berkshire’s annual meeting. He stated,
“Whether it goes up or down in the next year, or five or ten years, I don’t know. But one thing I am pretty sure of is that it doesn’t produce anything.”
Warren Buffet believes that assets are things that have value and must be productive. It must produce something for someone. However, cryptocurrencies and Bitcoin don’t do so. They don’t produce anything for anyone.
2. Bitcoin isn’t a currency
Warren Buffet Bitcoin criticism is also based on another fact – Bitcoin and other cryptocurrencies aren’t currencies at all. The veteran investor believes that Bitcoin isn’t a currency in the first place. Buffet insists that there is only one currency acceptable in the US and that is the dollar. He also says that the US government will never allow any other currency to replace the dollar, let alone cryptocurrency.
Despite the fact that a lot of online stores and various companies have started cryptocurrency transactions, cryptocurrencies are not currencies. They are not widely accepted and therefore, cannot be granted the status of a currency. However, it is important to note that cryptocurrencies will stay and we can anticipate huge utilities. But staying in the present, we have to agree with the legendary Warren Buffet.
3. Bitcoin valuation is complicated
Warren Buffet Bitcoin criticism has another obvious reason and that is the veteran doesn’t understand Bitcoin. He doesn’t understand the working mechanism of Bitcoin and how to assess its value. As you know, Buffet is popular for his unique investment strategies. He suggests never investing in businesses you don’t understand. Buffet says,
“I get into enough trouble with the things I think I know something about. Why in the world should I take a long or short position in something I don’t know about?”
Buffett’s suggestion doesn’t imply that you cannot understand new businesses. Everyone can understand new businesses over time. Rather he means to say that you must be able to precisely estimate the value of a business or an asset you are about to invest in. Therefore, Buffet isn’t a cryptocurrency enthusiast because he doesn’t understand how they work. This is a common scenario as there are hundreds of expert investors who failed to understand the mechanism of cryptocurrencies.
Warren Buffet Bitcoin criticism is based on facts. He is right about the fact that Bitcoin doesn’t produce anything like rental apartments that produce rent, farms that produce products, etc. Buffet is also right that cryptocurrencies aren’t currencies. However, lots of companies nowadays are encouraging consumers to use cryptocurrencies for routine transactions. Finally, Buffet isn’t a Bitcoin enthusiast because he doesn’t understand it and he doesn’t invest in anything he doesn’t understand.
Do we need to agree with the legendary investor? It is up to each one of us. As things stand, the world is expecting cryptocurrencies to spread rapidly. However, if we look at the present only, we have to agree with Buffet.