Billionaire investor and investment guru, Warren Buffett, is clear about few things on cryptocurrency. He also pointed out that acquiring bitcoin cannot be treated as an investment like bonds or stocks or real estate. There is also no change in his opinion about the cryptocurrencies as he continued to see miserable future for the digital currencies. This line of thinking is adopted mostly by pessimists or those against the virtual currencies. However, bitcoin is getting wider acceptance as the market is also expanding despite skepticisms.
Chain of Expectations
During an interview with Yahoo Finance, Buffett pointed out that whether it is bitcoin or otherwise, they are not producing anything to warrant value. On the other hand, users are only hoping that another person will pay more for his coin and the acquired person will find someone’s with the hope of getting more. This is nothing but a chain of expectations and that there is nothing to produce to warrant valuation. His ‘buy and hold’ investment tactics is popular among the traders in the stock market. The investment guru has created Berkshire Hathaway net worth by backing firms that had the potentials for substantive value, CNBC reported.
In his letter to shareholders in 1996, Buffett advised investors to hold a stock for a minimum period of ten years. If that is not possible, then there is no point in having a stock even for ten minutes. His strategy was to put a portfolio of firms’ average earnings march upward over the years. The billionaire investors believe that an investment should be of worth something. Only then, it could be purchased.
He cited an example saying, “If you buy something [like] a farm, an apartment house or an interest in business and look to the asset itself to determine whether you’ve done something — what the farm produces, what the business earns … it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you.” He is not bothered about trading bans.
For instance, he said that if trading in farms is banned, still investors could buy farms. That is because it could still fall under the decent investment status. On the other hand, the value of bitcoin only increases, i.e., in respect of buying and selling. He stated that the value is derived mainly from what people are ready to pay.
Continues To Have Same Opinion
Since 2014, Buffett has been having the same opinion on cryptocurrencies. He termed it as a mirage basically then. He termed as a joke the idea of bitcoin or any other digital currency having some big intrinsic value. The prices of bitcoin hit nearly $20,000 in December last year compared to below $1,000 level at the start of the year.
This invited everyone, be it Jamie Dimon of JP Morgan Chase, or NFL players, to term it as betting. The investment guru sees a bleak future for the cryptocurrencies. He is certain that the sector will see a bad ending. However, he could not visualize as to when it would come.