Bitcoin is not only the top digital currency on the market today; it's an incredibly volatile investment. In recent remarks, he made his opinion on the cryptocurrency very clear, and he did not mince words. Several times a year, Buffett holds a casual event in his hometown of Omaha, Neb. In the latest salon, he apparently received one about the famous cryptocurrency. Of it, he said, "You can't value bitcoin, because it's not a value-producing asset. According to him, there's "a real bubble in that sort of thing.
This is a doubling-down of Buffett's position on bitcoin specifically, and cryptocurrencies in general. He's gone on the record previously with his criticisms of these instruments. His answer was blunt: Elaborating on his remarks, Buffett said bitcoin is "a very effective way of transmitting money, and you can do it anonymously and all that.
Are checks worth a whole lot of money just because they can transmit money? He capped his criticism by saying that "[t]he idea that [bitcoin] has some huge intrinsic value is just a joke, in my view. Are there any bitcoin stocks worth buying? For anyone who's followed Buffett's career to any extent, that stance shouldn't come as a surprise.
The concept of intrinsic value is fundamental to the celebrated investor, and thus central to the investing strategy of Berkshire Hathaway.
To quote the famous man himself: Also, for him and Berkshire, the concept of a "moat" -- a unique and hard-to-surmount business advantage -- is critical. Yes, there are many credit cards on the market, but few if any boast the cachet and prestige of AmEx plastic. In spite of its runaway popularity at the moment, bitcoin has no moat. It's one of a great many cryptocurrencies -- nearly 2, by a recent count -- flooding the market these days. Its prominence and fame mean little; a better and more appealing rival could take its place.
Things move fast in the digital world, and there are plenty of competitors fighting for success in the digital-coin segment. We should keep firmly in mind that Buffett, a disciple of legendary value investor Benjamin Graham, is a financier of the old school.
Fundamental worth is important to him; a business needs to have a solid foundation for him to consider it viable. He's also taken his time to come around to investments in sectors out of his comfort zone.
For instance, it's only been a few years since Berkshire finally, finally took a dive into tech stocks. Init revealed it had amassed a stake in IBMa company that wasn't and isn't exactly on the technological cutting edge. So we shouldn't expect a quick embrace of emerging tech like cryptocurrencies from the old master. For every Buffett, however, there's at least one other deep-pocketed investor who believes that bitcoin and its ilk are the world's economic destiny.
Those inclined to that side of the argument might just be proved right. However, they should be aware that at this early stage, cryptocurrencies are extremely speculative investments. As ever, what goes sharply up in the investment world can come crashing down just as fast. Eric Volkman has no position in any of the stocks mentioned.
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