It has been a difficult year for Bitcoin and its supporters.
And even in 2018, the Oracle of Omaha predicted that it and other cryptocurrencies were headed for trouble.
“They’re going to end up very badly,” Warren Buffett told CNBC at the time.
After hitting an all-time high of around $69,000 per unit on November 10, 2021, the world’s leading digital currency has since shed around 76% of its value and was just under $16,000 as of 4:30pm on Wednesday has been
Investors who once thought they were missing out on the opportunity of a lifetime are now breathing a sigh of relief; meanwhile, peak shoppers try not to think about their losses.
What does the world’s most famous investor have to say to those who are thinking of launching investment programs and buying cheap Bitcoin?
“If you … had all the bitcoins in the world and you offered it to me at $25, I wouldn’t take it,” Buffett told CNBC earlier this year.
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Aside from Bitcoin’s disappointing record, there are three other reasons why Buffett won’t go near it.
1. “It has no unique value”
The billionaire investor doesn’t like Bitcoin because he considers it an inefficient asset.
Buffett has a popular preference for the stocks of corporations that come from their value and cash flow – production. But cryptocurrencies have no real value, Buffett a CNBC Interview in 2020.
“They don’t reproduce, they can’t send you a check, they can’t do anything, and what you’re hoping for is that somebody else comes along and pays you more for them later, but that person has a problem. .”
Bitcoin though does designed to provide real value as a payment system, its use is still quite limited. As Buffett sees it, Bitcoin’s value comes from the optimism that someone else will be willing to pay more in the future than you are paying today.
2. He doesn’t think cryptocurrency counts as money
Over the years, Buffett has been extremely vocal about bitcoin and cryptocurrency: “I don’t own any Bitcoin. I don’t own any cryptocurrencies, never will,” he said CNBC back in 2020.
As a tradable asset, Bitcoin has soared. But does it meet the three criteria of money? By its most general definition, money is meant to be a medium of exchange, a store of value, and a unit of account.
But Buffett calls it an “illusion.”
“It doesn’t meet the test of currency,” the billionaire said CNBC In 2014. “It’s not a sustainable medium of exchange, it’s not a store of value.”
It’s a very effective way to transfer money anonymously, he adds. But: “A check is also a way of transferring money,” he said. “Are checks worth a lot of money because they can transfer money?”
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3. He doesn’t get it
Buffett became one of the most successful investors in history by sticking to the stocks he understood.
“I have enough trouble with things I think I know something about. Why in the world should I be long or short something I know nothing about?”
But people like to gamble, he said CNBC after the 2018 Berkshire Hathaway annual meeting, another problem with non-performing assets.
“If you don’t understand, you’re more excited than understanding.” “If you look at something and say, ‘This is magic,’ you can have anything you want to imagine.”
How does Does Buffett Pick Winning Stocks?
The billionaire investor follows a value investing strategy – one that focuses on buying undervalued stocks of strong companies and holding them for the long term.
Berkshire Hathaway looks for companies that produce unique products that have good profit margins and are not easily substitutable. As Warren Buffett once said in a letter to his shareholders, “It’s better to buy a great company at a fair price than a fair company at a great price.”
But just because Buffett hates crypto stocks doesn’t mean you shouldn’t buy Bitcoin. Even the billionaire came in the sectors he was opposed to before.
Even at the height of the dot-com bubble, he avoided tech stocks, and now his company’s largest holding is Apple.
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