The past year has been groundbreaking work for Bitcoin. And recently, the cryptocurrency has reached an all-time high: More than $ 61,000 for one unit – let-to-the-party investors complain they missed.
What does the world’s most famous investor think of Bitcoin?
It’s “probably rat poison squared,” Warren Buffett once said.
If you listen to the billionaire, cryptocurrency may not be the biggest financial opportunity you have ever dreamed of, nor is it the only way to get impressive returns if you have cash you want to put in the market. This is what commission-free investment programs are for.
“I have no Bitcoin. “I have no cryptocurrency, and I will never do that,” he said. CNBC in 2020.
Here are three reasons why Buffett will not get there.
1. It has’ no unique value ‘at all’
The billionaire investor does not like Bitcoin because he considers it an unproductive asset.
Buffett has a well-known preference for shares in companies whose value and cash flow are the result of manufacturing things. But cryptocurrencies have no real value, Buffett said in a CNBC maintenance in 2020.
‘They do not reproduce, they can not send you a check by e-mail, they can do nothing, and what you hope is that someone else will pay more money for it later, but then the person has the problem. ”
Although Bitcoin is intended to provide real value as a payment system, its use is still quite limited. As Buffett sees it, the value of Bitcoin comes from the optimism that someone else will pay more for it in the future than you pay today.
2. He does not think crypto money as money
As a tradable asset, Bitcoin has risen. But does it meet the three criteria of money? By the most general definition, money is supposed to be a medium of exchange, a store of value and a unit of account.
But Buffett calls it a ‘mirage’.
“It does not meet the test of a currency,” the billionaire said CNBC in 2014. ‘It’s not a sustainable way to exchange, it’s not a value store.’
He adds that it is a very effective way to send money anonymously. But: ‘a check is also a way to transfer money,’ ‘he said. “Are checks worth a lot of money just because they can transfer money?”
3. He does not understand it
Buffett has become one of the most successful investors in history by sticking to the stocks he understands.
“I get enough problems with things I think I know something about. Why do I have to take a long or short position in something I know nothing about?”
But people like gambling, he said CNBC after an annual meeting in Berkshire Hathaway in 2018, which is another problem with non-productive assets.
‘If you do not understand it, you become much more excited than if you understand it. You can have anything you want to imagine if you just look at something and say, ‘This is magic.’ ‘
How do Buffett chooses winning shares?
The billionaire investor follows the value investment strategy – which focuses on buying undervalued stocks from strong companies and holding them for a long time.
Simple, right?
Berkshire Hathaway is looking for businesses with good profit margins and businesses that deliver unique products that are not easily replaced. As Warren Buffett once said in a letter to his shareholders: “It is much better to buy a great company at a fair price than to buy a fair company at a great price.”
But Buffett’s aversion to cryptocurrencies does not mean you should not buy Bitcoin. Even the billionaire has come into sectors against which he has previously spoken out.
He has notoriously avoided tech stocks, even at the height of the dotcom bubble, and now Apple’s biggest interest.
You can start investing today
Bitcoin has made many people along the way rich. But that does not mean you missed the boat to invest – just listen to Buffett’s words of wisdom.
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You can invest in fractional stocks of stocks, options, exchange traded funds (ETFs), and yes, even cryptocurrencies. There are no fees and no commissions, and when you sign up, you get a free share of your inventory with your account to get started.
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If you are interested but are intimidated, this is normal. Do not be afraid to seek expert advice before reaching the stock market. Today, there are certified financial planners who will work with you online to come up with a personalized investment plan.