Why Warren Buffett Has No Interest in Bitcoin

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The Oracle of Omaha has strong feelings about the value of Bitcoin.


the main points

  • Bitcoin inspires an emotional response, even from those who consider it foolish.
  • Buffett views Bitcoin as speculative and with no real value.

Bitcoin, the digital currency that operates without oversight from banks and governments, tends to inspire passion. Some strongly believe that digital currency is the wave of the future and an excellent way to get rich. There are others, such as businessman Warren Buffett, who generally distrust cryptocurrency.

Buffett’s position

Last month at Berkshire Hathaway’s annual shareholder meeting, Buffett made it clear that he had no interest in making Bitcoin part of his portfolio.

According to the Oracle of Omaha, “Whether it goes up or down next year, or five or 10 years, I don’t know. But the one thing I’m absolutely sure of is that it doesn’t produce anything. It has magic, and people have associated magic with a lot of things” .

Where the road diverges

Bitcoin offers different functions in different parts of the world. For example, both El Salvador and Panama have adopted bitcoin as their currency. In the case of El Salvador, the adoption of Bitcoin did not work out as expected. According to the National Bureau of Economic Research, once Salvadorans used their $30 reward, 60% of the government’s Bitcoin wallet was disposed of. And while the government hoped that citizens would use bitcoin to pay their taxes, 99% of Salvadorans chose not to.

Although big names like Elon Musk see potential in cryptocurrency, Buffett stands his ground. The self-made billionaire considers Bitcoin dangerously speculative and has no real value. Buffett went so far as to call bitcoin, “maybe squaring rat poison.”

For Buffett, it’s all about value generation

According to CNBC, Buffett summed it up by comparing bitcoin to an asset that generates value.

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“If I say 1% interest in all farmland in the United States, pay $25 billion to our group, I’ll write you a check this afternoon. (For) $25 billion I now own 1% of farmland. (If) you offer me 1 % of all residential homes in the country, and you want another $25 billion, I’ll write you a check, it’s very simple. Now, if you tell me you own every bitcoin in the world and offer it to me for $25, I won’t take it because what am I going to do with it? I’m going to have to resell it Yours one way or another. I won’t do anything. The apartments will go to produce rent, and the farms will produce food.”

Buffett believes that investing in Bitcoin is a gamble, not an investment. “If you want to gamble and someone else will come and pay more money tomorrow, this is kind of a game. This is not an investment.”

Interest dip?

While it is difficult to gauge the general enthusiasm for Bitcoin, the recent dip in buying tells us so. Since hitting an all-time high in November 2021, bitcoin purchases have fallen by 43%. New data from Google suggests that individual investors may be losing interest as cryptocurrency prices drop.

Google data also indicates that internet searches for Bitcoin have declined since May 2021, when it was at its peak.

At age 91, it’s fair to say that Warren Buffett has seen enough to form assertive opinions. The time will come if he is right about the future of Bitcoin.

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