Warren Buffett has compared Bitcoin and cryptocurrencies to tulips and a bubble. While most successful American entrepreneurs have taken the same road and steered clear of any interest in cryptocurrencies, Warren has referred to Bitcoin as rat poison squared. In an interview with CNBC in the spring of 2018, Warren elaborated his feelings on Bitcoin for six minutes. He compared investing in Bitcoin to investing in gold, which happens to be another asset he dislikes, saying that it is “non-productive” as opposed to buying shares of a “productive” business that creates goods.
Warren points out that gold has only grown “0.1 or 0.2% per year since the time of Christ.”
Across his 40+ shareholder letters, Buffett has consistently advocated a cautious investment strategy. And it is nothing less than surprising that a man of his financial prowess dislikes and criticizes cryptocurrencies. While there is an overall negative sentiment against Bitcoin by the financial elite, finance CEOs and billionaires are divided on this issue.
The question is: What is Bitcoin? Is it an asset? Is it a “store of value” or something more than that? At the moment it is not being used as a currency. There are a few Altcoins being used for faster transactions, but in terms of other real world use cases, cryptocurrencies aren’t being used that often. While vendors do have a pro-bitcoin stance, there aren’t enough exciting examples of bitcoin used at point of sale. Arnhem in Netherlands is believed to be a Bitcoin friendly city. The city’s website offers modest numbers, their most active Bitcoin month translated to under €10,000 worth of transactions. While it is a good number, it hasn’t changed much over the past few months. The question is, is that the best that Bitcoin can do?
For what it’s worth, a few changes/improvements could make bitcoin the first choice as a point-of-sale currency. The current requirements of high computing power, tech involvement in storing and exchanging make it difficult to use it in retail. It could make the cut to being a store of value with increased fungibility, low risk of inflation and quicker transactions.
In present times when overseas transactions take nothing less than days to process and their are high associated costs, if the world’s most renowned financial investor and magnate believes Bitcoin is rat poison, it is not a good indication for the cryptocurrencies future. There are a lot of challenges like scalability and infrastructure requirements to tackle, before it sees mainstream adoption.
– This article was originally posted at CryptoTraderNews
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