Warren Buffett, the billionaire investor behind Berkshire Hathaway, is still not sold on bitcoin.
In an interview with CNBC Wednesday, Buffett predicted the demise of cryptocurrencies, saying:
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending … When it happens or how or anything else I don't know.”
He continued to say he would bet on their price declining over the next five years if he could.
The noted investor further conceded he did not know a lot about bitcoin futures, but added that Berkshire Hathaway did not own any and would "never have a position in them."
I give him credit for that. His opinion on Bitcoin is negative, but he fully accepts his lack of expertise and won't put his money where his mouth is. That's fair enough. He's profited quite well in his time; no need to catch every investment opportunity.
Bitcoiners give Buffett a lot of shit, but he's not wrong here:
investors would not be able to value the world’s largest cryptocurrency by market cap because bitcoin did not inherently produce value.
It's a lot easier to game market capitalization with cryptocurrencies. There are no securities filings. Highly concentrated supply can be obfuscated.
But more to the point, money (including Bitcoin) is generally backed by
faith -- faith that it will continue to have widespread acceptance and will hold value. Predicting whether people's faith shifts in favor of one cryptocurrency or another is a risky game.
Buffett is correct that value is not being created when the Bitcoin market cap increases. It's merely shifting value from one asset class to another. He's focused on value investing, which necessarily does not apply to Bitcoin. Fair enough.
