A majority of people have little idea about how Bitcoin or any other cryptocurrency works. In fact, many of the cryptocurrency investors can hardly explain the concept of network, nodes, etc. However, that does not mean the technology is inferior or has no value. Furthermore, a basic idea of the advantages, which cryptocurrency has over fiat currencies, is more or less enough to choose an ideal crypto asset for investment. Still, there are big renowned Wall Street investors who are not willing to accept Bitcoin as an outcome of a path breaking innovation. Warren Buffett, the Oracle of Omaha, is one among them.
On May 5, Berkshire Hathaway, the investment firm headed by world renowned investor Warren Buffett, will conduct its annual shareholders meeting. Investors and non-investors can hear the unscripted views of Warren Buffett and his partner Charlie Munger on the economy, company, corporate governance, the markets, etc. In an exclusive interview with Yahoo Finance, which is hosting the event, Buffett gave his latest opinion on cryptocurrencies.
Warren Buffett tried to portray cryptocurrency investors as ignorant people who have no idea about what an investment actually means. Buffett said
“There’s two kinds of items that people buy and think they’re investing. One really is investing and the other isn’t. Bitcoin isn’t. If you buy something like a farm, an apartment house, or an interest in a business… You can do that on a private basis… And it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you. Now, 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.”
According to Buffett, the term investment can be used only when the asset is used to produce something of value. Since Bitcoin is not used to produce anything, Buffett believes that it cannot be construed as an investment.
Buffett further said
“You aren’t investing when you do that. You’re speculating. 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.”
Buffett believes that Bitcoin and other cryptos are more or less like a pyramid scheme where the early entrant gets all the benefits and the last person is doomed. However, investors would certainly wish that tax authorities consider investment in Bitcoin and other cryptocurrencies as gambling. At least, that could save them a lot of cash.