Buffet Doubles Down on Bitcoin Having No Unique Value


Warren Buffet has a particular investment philosophy that’s worked well for him over these years. One area that he tends not to touch is technology, and cryptocurrencies are an area that the value investor has expressed doubts about in the past. Following the release of his much anticipated annual letter to Berkshire Hathaway shareholders, Warren Buffet said on CNBC that Bitcoin, along with other cryptocurrencies, has no unique value at all, going so far as to call it a “delusion.”

“Bitcoin has no unique value at all. It is a delusion, basically. It attracts charlatans. If you do something phony by going out and selling yo-yos or something, there’s no money in it – but when you get into Wall Street, there’s huge money,” Buffet said on Monday in an interview.   “I’m really sorry it happens because people get there hopes up that something like that is going to change their lives, and it’s a very ingenious thing to figure out how to have a limited supply and make it harder and more expensive to create them as you go along and all that sort of thing but it doesn’t matter. I’m sympathetic to people that own it.”

Most crypto enthusiasts on a technological or speculative level are likely already familiar with Buffet’s scorn for cyber currencies. The Oracle of Omaha has expressed multiple times his dislike for them, calling the “probably rat poison squared,” ahead of the 2018 Berkshire Hathaway annual shareholder meeting. On other occasions, he would refer to bitcoin as a “mirage,” a “tulip,” or “not a currency.”

On the interview with CNBC, Buffet did concede that the underlying blockchain technology behind bitcoin was important but added that its success had nothing to do with cryptocurrencies themselves. Other investment legends such as Ray Dalio of Bridgwater have expressed similar sentiments, alongside Bill Gates and J.P. Morgan CEO Jamie Dimon. Ironically, J.P. Morgan Chase is launching its own dollar-pegged cryptocurrency called the JPM Coin.

As a value investor, Buffet favors investments that yield a tangible product or service coupled with strong dividends all at an undervalued price. While the strategy works well, many crypto enthusiasts argue that such a methodology doesn’t apply to bitcoin and other cryptocurrencies. Even as far back as in 2014 when the price of bitcoin was around a couple hundred dollars, Buffet’s opinion on the token remained the same, saying at the time that “Stay away from it. It’s a mirage, basically. The idea that it has some huge intrinsic value is just a joke, in my view.”

On the other hand, Bitcoin’s proponents dismiss the opinion of Buffet as an old-time investor that doesn’t realize the potential of the decentralized currency and are unlikely to be dissuaded by his concerns. Other investment figureheads, such as Doug Casey from Casey Research, expressed in an interview last year that bitcoin was better than fiat currencies such as the USD but not as good as gold.

Bitcoin has had a volatile 48 hours, rising to a two-month high before the flagship cryptocurrency fell over 10 percent on Sunday, marking the second largest daily drop in 2019 so far.