In previous interviews, Buffett has said in public that bitcoin is a bubble with no investment value. He argues that cryptocurrencies have no intrinsic value, nor book value, because they do not participate in the production and have no earnings or dividends.
For Buffett, bitcoin is a rat race. The cryptocurrency game is like a Ponzi scheme. You can only hope that more and more people will join in this unproductive game. The money made by the people before is only the investment of the people who join later. If no more people join, no one will make money. The false profit point of this investment is just the trading itself and the constant absorption of new players.
Buffett thinks it’s speculation, not investment.
“You need to think about the return on the investment itself before you invest,” he says. For example, when buying an interest in a farm, an apartment, or a business, you need to consider what the farm produces and how much the business earns in order to qualify it as a satisfactory investment. The value of bitcoin comes from the price people are willing to pay for it. If bitcoin transaction is banned and no one knows what it is, why should people hold it? “
Many people think bitcoin trading is impossible to ban, but it’s a virtual game compared to real investment. We can’t restrict the investment behavior of real estate investment, futures investment, food, and drug industry chain, because, without these industries, human beings would not be able to survive. And for a virtual currency game, the ban on it, not only will not cause any negative impact on the development of human society but also can attract the surplus capital to the real production and creation links.
Although many application fields have recognized blockchain technology due to the development of bitcoin, Buffett still said that he sees the value of the underlying technology of blockchain. However, bitcoin does not reflect the value of blockchain. It is just a product of speculation, not suitable for long-term investors to hold.
Our Take On it
We do not recommend anyone to invest in it as it is not backed by any asset and as of now while writing this post, the RBI has ruled any kind of Bitcoin sale and purchase in India through the Indian banks.
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