Warren Buffett Reinforces Bitcoin Doubt

Warren Buffett Reinforces Bitcoin Doubt

Bitcoin is one of the hottest investor topics in financial news today. The cryptocurrency has created several millionaires out of thin air and has spawned numerous, dubious competitors. But celebrity investor Warren Buffett believes that the exciting time of growth and success for Bitcoin may soon be coming to an end.

At a recent question-and-answer session in Omaha, Buffett declared that the cryptocurrency was not a “value-producing asset”. He continued by disparaging recent reports that Wall Street companies had started working with and investing in Bitcoin. Attention by Wall Street companies has helped lead to greater validation for the new cryptocurrency and a subsequent rise in prices.

But Buffett argued that this was a false veneer of quality. Instead, Buffett noted that Wall Street companies often chase any investment that is undergoing rising prices. This mentality means that investments will sometimes rise and prices will expand based on a bubble mentality more than on valuation.

Buffett’s comments are part of a long line of criticism from the “Oracle of Omaha” towards Bitcoin. Earlier in 2014, he argued that Bitcoin was a mirage. Bitcoin has tripled in value since then, but it has never been able to shake concerns about its validity as an investment source. Stories continue to emerge about Bitcoin’s poor reputation for money laundering and illicit purchases.

Often, ransomware attacks force hospitals and other institutions to pay in Bitcoin. This negative press helped to fuel Buffett’s remarks and his opinion on the development of the currency. Negative press has also pushed several countries to take concrete actions against Bitcoin. Russia is considering banning the currency while China already has. Leaders of both countries have cited criticisms similar to those of

Will Buffett’s comments cause Bitcoin to decline? Might it even collapse and fall off the map, invalidating the many competitors and imitators that have arisen in the field of cryptocurrency in recent years? The answer is, of course, no. Buffett may be a powerful investor, but cryptocurrency is not in his specific fields of expertise and he has been wrong before. His word does not have considerable impact on the growth of cryptocurrencies and other cutting-edge technologies.

In addition, other prominent voices have come out in favor of the cryptocurrency. This group includes New York University’s “Dean of Valuation,” Aswath Damodaran, who argues that Bitcoin is a legitimate form of currency and not a fraud. While Damodaran and Buffett certainly have different approaches to the issue, market forces and popularity will power Bitcoin much more than the words of wise investors.

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