Warren Buffett Can Afford to Miss Out Bitcoin Revolution — You May Not
Warren Buffett once again reiterated his total opposition to Bitcoin.
With an estimated fortune of just over $85 billion, Warren Buffett is one of the five richest people in the world. This is remarkable considering that his wealth is due simply to his outstanding investment skills.
For many, Warren Buffett is one of the greatest investors of all time. His success at the helm of his investment company Berkshire Hathaway is admirable.
Even more remarkable is the fact that Warren Buffett has been able to sustain that success for so long.
With the rise of Bitcoin, the great media game is to question the Oracle of Omaha to ask what he thinks of the cryptocurrency king.
This is clearly no coincidence since his fierce stance on Bitcoin, which he considers being “probably rat poison squared”, is common knowledge.
For the media, it is all about attacking Bitcoin by making headlines in order to broaden their audience.
Warren Buffet is an investor in the industries of the past, and I think he just doesn’t understand a technology as disruptive as Bitcoin. My feeling is that he can afford to miss out Bitcoin revolution given the wealth he’s already amassed and his age.
As far as you’re concerned, I’m not sure you can do the same as I’m going to explain in this story.
It All Started by a Dinner With Justin Sun
Although his opposition to Bitcoin, and cryptocurrencies in general, is well known, Warren Buffett remains a highly respected person in the cryptocurrency industry.
His consistent success in the world of financial investment for over 60 years naturally commands respect.
When a dinner with Warren Buffett was auctioned off in mid 2019, it was too good an opportunity for Justin Sun to finally meet the Oracle of Omaha and discuss about Bitcoin and cryptocurrencies with him.
Justin Sun is a very charismatic figure in the cryptocurrency industry who founded the Blockchain TRON, which recently acquired the decentralized content platform Steem.
Justin Sun decided to spend 4.5 million dollars, donated to a charity, to win this meal with Warren Buffett during which he could invite 7 guests of his choice.
The identity of the winner of this rather peculiar auction had led to strong media coverage by major media such as Bloomberg, the Wall Street Journal and CNBC.
After various postponements to match the busy agendas of the various participants, this long-awaited meal finally took place on January 23rd, 2020 in Omaha, which is the city where Warren Buffett lives.
Justin Sun clearly enjoyed his meal with Warren Buffett as he explains:
“ It was really an honor and I’m grateful for Mr. Buffett’s dinner, wisdom, and vision. I’ll always remember his kindness and support, and will take Mr. Buffett’s advice and guidance to make TRON a better ecosystem, business with all the partners in the blockchain space and beyond.”
— Justin Sun
At the end of this meal, Justin Sun took the initiative to give Warren Buffett a Samsung smartphone containing one Bitcoin and nearly 2 million TRX tokens from his TRON Blockchain.
This declaration made a lot of noise in the press since Warren Buffett became the owner of a famous Bitcoin.
Warren Buffett Doesn’t Invest in What He Doesn’t Understand
As the month of February 2020 draws to a close, CNBC took advantage of an interview with Warren Buffett to look back on that dinner, and asked him again his opinion on Bitcoin and cryptocurrencies.
Not surprisingly, Warren Buffett’s reaction was not long in coming:
“I don’t own any cryptocurrency. I don’t have any Bitcoin. I never will.”
— Warren Buffett
So it seems that Warren Buffett didn’t bother using the Samsung smartphone that Justin Sun gave him, which contained one precious Bitcoin.
This new statement of Warren Buffett towards Bitcoin made many people react on social networks in particular.
I totally understand this, but it’s not surprising to hear Warren Buffett take such a stand. In fact, there’s no reason to be offended by that if you’re a Bitcoiner.
Warren Buffett has always had a golden rule when it comes to investing:
“Don’t Invest in Something You Don’t Understand.”
— Warren Buffett
If you take a quick look at the portfolio of shares held by Berkshire Hathaway, you will quickly understand that Warren Buffett is a man of industries of the past.
His value-oriented investment philosophy works well with companies such as Coca-Cola, Kraft Heinz, Goldman Sachs, JPMorgan Chase and Delta Air Lines.
On the other hand, Warren Buffett’s philosophy does not go well with technological disruptions.
Warren Buffett thus missed the technological turnaround of the late 1990s. He did not invest in Google, Amazon or Facebook.
For Amazon, he was able to catch up in the early 2010s, but only because his company has huge financial means that the common man doesn’t have.
Warren Buffett’s Criticisms of Bitcoin Show a Total Lack of Understanding
As you listen to the rest of Warren Buffett’s interview on CNBC, you will also see that his critics show a complete lack of understanding of what Bitcoin really is.
All of the fallacious arguments used by Bitcoin’s fiercest opponents have passed.
Warren Buffett first of all brought out the famous argument that Bitcoin is used for illegal purposes first:
“Bitcoin has been used a fat amount to move money illegally.”
— Warren Buffett
This argument is totally false, as I have already explained in a story in the past. Bitcoin is used even less than the U.S. Dollar for illicit purposes.
The Oracle of Omaha went on to say that “Bitcoin has no instrinsic value”.
Finally, Warren Buffett ended with a company comparison when he said:
“Bitcoin doesn’t deliver, it can’t mail you a check, it can’t do anything.”
— Warren Buffett
Bitcoin would not be a good investment because it cannot pay its employees at the end of the month with checks. Bitcoin cannot send mail to employees either.
If you have ever taken any interest in Bitcoin, you must be totally flabbergasted by this comparison which clearly makes no sense.
Warren Buffett’s comparison would be like saying that the Coca-Cola company he owns has no value because it produces cans that can’t fly.
You quickly see the heresy of Warren Buffett’s critics, who show a total ignorance of Bitcoin and of the revolution he wants to build for the future of the world.
Warren Buffett simply doesn’t understand the purpose of Bitcoin, or he doesn’t want to make the intellectual effort to question himself in order to understand it.
Warren Buffett Can Afford to Miss Out on the Bitcoin Revolution
If you put yourself in Warren Buffett’s shoes for a few minutes, you’ll easily understand why you don’t find Bitcoin interesting.
Bitcoin proposes a total paradigm shift from the current monetary and financial system that allowed Warren Buffett to make his fortune.
Warren Buffett is a master of all the codes of the current system, and he has been able to take full advantage of it. So he has no interest in seeing a new system come and challenge everything.
In addition, Warren Buffett is turning 90 this year. If you were his age, you wouldn’t want to totally question yourself either.
It would be even more unthinkable given that you weren’t able to do that in the early 2000s when you were “only” 70.
Bitcoin has a chance to be widely adopted by the general public by becoming a unit of account in the future. Nevertheless, it will take time no matter what happens.
It is likely that Warren Buffett will no longer be around to see this, and maybe even you and I will not be around to see it anymore. So Warren Buffett prefers to focus on things that he can control in the years ahead.
Warren Buffett is willingly choosing to miss the opportunity that Bitcoin represents.
Given his age and wealth, he can afford to miss out the Bitcoin opportunity even if its price exceeds $100K one day.
The Big Question Is Whether You Can Also Afford to Miss Out on the Bitcoin Revolution
Now that I’ve asked you to put yourself in Warren Buffett’s shoes, I’m going to ask you to take your place. For what follows, I’ll assume you’re not part of the very exclusive club of billionaires in the U.S. Dollar.
Warren Buffett says Bitcoin has no intrinsic value.
Reading the Bitcoin white paper, and then doing some in-depth research will help you understand the essential advantages of Bitcoin:
- Offer limited to 21 million units
- Monetary creation policy with inflation reducing over time
- Greater respect for privacy
- Total independence
- No leader
- Resistance to censorship
- Network security
- Immediate cross-border payments around the world with low fees
The list is far from being exhaustive, but it already gives an answer to Warren Buffett when he says that Bitcoin has no intrinsic value.
All these characteristics of Bitcoin are making more and more people trust the revolution it embodies. In fact, they are buying Bitcoin, and making it a little more valuable every day.
As an individual, I feel that it is riskier not to buy Bitcoin than to buy it.
Once you understand how Bitcoin works, and what it aims to do, buying Bitcoin with fiat money you can afford to lose greatly limits your risk.
If Bitcoin were to fail, you would have lost money that you can afford to lose. It would clearly not be the end of the world.
On the other hand, if Bitcoin becomes a huge success by becoming a credible alternative to the current system, then your support for its revolution will allow you to be part of the club of the richest people in the future.
Money is not everything in life, but Bitcoin may be a once-in-a-lifetime opportunity.
If Warren Buffett can afford to miss out on the Bitcoin opportunity, I clearly cannot.
For your part, I’ll leave you to think about this question in order to make the best decision for your future.