Warren Buffet of Berkshire Hathaway recently bashed Bitcoin (BTC) on CNBC’s “Squawk Box” to precede his firm’s world-renowned shareholders meeting. The so-called “Oracle of Omaha,” who is reported to still own a flip phone that might make many reminisce about the turn of the millennium, explained that while blockchain technologies have “importance,” Bitcoin has no “unique value at all.” Buffett’s quip, which comes after he infamously called the flagship cryptocurrency “rat poison squared,” is likely in reference to common Joes and Jills’ belief that nothing tangible is backing the value of BTC, as it is ‘printed’ out of ‘thin air’. Buffett referenced this, but in a clear misunderstanding of the way Proof of Work-based blockchains operate, when he stated:
“It doesn’t produce anything. You stare at it all day and the little Bitcoins come out or something like that. It is a delusion, basically.”
The world-renowned investor noted that he feels sorry for Bitcoin holders, explaining that investors in this nascent asset class actively get their hopes up that cryptocurrencies will change their lives. But, Buffett concluded that when you boil BTC down, the capped supply and difficulty system may be “genius,” but the cryptocurrency doesn’t have much of a value and attracts charlatans.
Maybe This Isn’t A Bad Thing For Crypto
While many cryptocurrency diehards took offense, some argue that Buffett’s aversion to Bitcoin is somewhat of a positive sign. Avichal Garg, the managing partner of Electric Capital, recently broke down his thoughts on the subject matter in an extensive thread.
In a tweet that garnered some traction Crypto Twitter, Garg argued that Buffett’s investment thesis is to stick to companies he knows, which don’t include venture-funded startups built in the heart of the Bay Area. This means that by extension, the well-recognized value investor wouldn’t be the best at allocating funds to digital currencies either.
Backing his noticing, Garg went on to break down the States-based Berkshire’s history of involvement with technology companies, both established and nascent. Citing transcripts from 2018’s Berkshire annual meeting, the commentator noted that Buffett openly admitted that he made a mistake back when Amazon and Google, two Silicon Valley darlings, were early-stage firms, as he decided not to make capital allocations.
It is tough though, to knock a technology that you do not know anything about. Whether it is people that you have around you or you personally, investing comes down to people doing due diligence and investigating a technology. With a flip phone, it’s tough to say that you’ve investigated any type of technology. It might actually be quite laughable to state that you stare at little bitcoins come out or something like that. While it is impossible to know about everything, it appears as if the “oracle” has done little to no work on actually finding out what this technology is, who is interested in it and what kinds of deals are already in place.