Warren Buffett on Bitcoin Is the Wrong Source to Seek Out
With Bitcoin (BTC) and cryptocurrencies in general being by far one of the hottest trades going in 2017, everyone has an opinion about this fascinating new industry. Many are positive. Many are also pretty negative. You have all sorts of famous investors, banking executives, financial analysts, and pretty much everyone and their grandmother adding their two cents to the money pile that is Bitcoin commentary.
But that doesn’t mean that all that commentary is equally valuable. Warren Buffett on Bitcoin, for instance, involves one of the most well-known investors in the world commenting on the hottest investment of 2017, so naturally, it has appeal from a media angle. But that doesn’t necessarily mean that everyone should hew so closely to Buffett’s words.
The Warren Buffett Bitcoin investments stance is basically one of doubt and caution.
“Stay away from it. It’s a mirage basically. It’s a method of transmitting money. It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?” Buffett said on CNBC in 2014.
“I hope bitcoin becomes a better way to do it. But you can replicate it a bunch of different ways. The idea that it [bitcoin] has some huge intrinsic value is just a joke in my view.” (Source: “Bitcoin up sevenfold since Warren Buffett warned digital currency was a ‘mirage’,” CNBC, September 7, 2017.)
Those are some strong words straight from the Oracle of Omaha himself. But does that mean that investors ought to listen to Buffett and steer clear of Bitcoin? In my opinion, that’s not necessarily the right move.
The thing about Warren Buffett on Bitcoin is that you’re asking a guy who’s great at basketball to judge a figure-skating contest. Bitcoin is so different than the usual Warren Buffett stock investments that it makes sense as to why he would be wary of BTC. It simply isn’t in his wheelhouse.
Even by taking a cursory glance at Berkshire Hathaway Inc. (NYSE:BRK.A), you’ll find that a lot of the Warren Buffett stock investments are…traditional, to say the least. That’s by no means a criticism of one of the greatest all-time investors. Rather, it’s an explanation as to why Warren Buffett on Bitcoin isn’t the best source to seek.
Among Berkshire Hathaway’s portfolio, you’ll find a lot of banks, retailers, airline companies, food and beverage companies, and some other titans of industry, but what you won’t find is a big presence in tech. Aside from Apple Inc. (NASDAQ:AAPL), Buffett doesn’t seem particularly interested in grabbing tech stocks. And that’s what Bitcoin is at the moment—a tech proposition that is undergoing a long and very profitable proof-of-concept stage. (Source: “Berkshire Hathaway Portfolio Tracker,” CNBC, June 30, 2017.)
Because at the moment, BTC isn’t exactly accepted everywhere, as the Visa card commercials go. You couldn’t pay in Bitcoin at your local grocer, for example, or probably even your local chain store. The fact is that Bitcoin is still being slowly integrated and is prized as much for its potential and the tech behind it (blockchain) as it is for the coin as currency.
So when you see a Warren Buffett Bitcoin investments critique, bear in mind that Buffett, for all his many qualities, is not exactly known as a tech guru.
And that goes for a whole lot of other billionaires, investing whizzes, and business execs who have taken a hardline negative stance on Bitcoin price predictions. These men and women are all successful in their own right and very intelligent people, but with BTC, we’re experiencing something totally new here that includes potentially industry-defining technology and a potentially limitless future in terms of applications. So anyone who claims to know exactly where BTC will end up is at least taking a few liberties. Or at least, is being lax with the definition of the word “exactly.”
Bitcoin Price Predictions
With all that out of the way, what can we reasonably expect from Bitcoin going forward?
Looking at the Bitcoin price chart, we see that BTC has suffered a bit of a tumble lately. That was due to the China ICO block, where the country has banned ICOs within its borders. Obviously, China essentially shutting itself out from the cryptocurrency market is bad news for cryptocurrencies. Having said that, this is not surprising given China’s protectionist monetary policies that strongly favor strict currency control, with very prohibitive laws in place meant to prevent the flight of wealth from the country.
Bitcoin and other cryptocurrencies offered a way for people to get their money out, so China is, of course, looking to crack down on those folks. Still, surprising or not, the move hurt the market and impacted the Bitcoin price.
I do believe that BTC is more than up to the task of recovery. Bitcoin is still flirting with $4,000 at the moment, but I think it’s reasonable to expect that the currency will pass that threshold by the end of the month, and by October at the latest.
The next major milestone for BTC is getting to $4,500 and staying there, without major news derailing it.
To put a final point on it, don’t believe everything you hear right off the bat. Especially when it comes to Bitcoin prices, take your time and come to your own conclusions. All these experts chiming in are ultimately just opinions. Well-respected opinions, but opinions nonetheless. Warren Buffett is an investment genius. But Warren Buffett on Bitcoin is just another voice in the chorus.
The cryptocurrency market cap of Bitcoin continues to remain strong, interest in the coin is growing, and BTC has managed to withstand multiple setbacks and still be one of the best investments of 2017.
Oh, and one more thing: BTC has grown sevenfold since the Warren Buffett Bitcoin investments talk where he called it a mirage. Whether you think he’s right in the long-term or not, what’s for certain is this: Some people who didn’t listen to Warren Buffett in 2014 are now very, very rich.