Berkshire Hathaway CEO Warren Buffett, the legendary value investor, doesn’t see much value in bitcoin. In an exclusive interview last month with Yahoo Finance, he said that when you buy bitcoin or another cryptocurrency, “You don’t really have anything that has produced anything. You’re just hoping the next guy pays more… You aren’t investing when you do that. You’re speculating.”
Buffett’s longtime investment partner, Berkshire Hathaway vice chairman Charlie Munger, likes bitcoin a whole lot less.
At Berkshire’s 2018 annual meeting over the weekend, Munger fielded a question about cryptocurrencies. “It’s just dementia,” he said. “And I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide, ‘I can’t be left out.'”
In an exclusive interview with Yahoo Finance following the shareholder meeting, Munger went even further. His bearish comments about bitcoin go far beyond JP Morgan’s Jamie Dimon calling bitcoin a “fraud” or Prince Alwaleed calling bitcoin “Enron in the making.”
Munger began by saying, “I see an artificially speculative medium that people are buying just because they think they can sell to someone else at a higher price, even though it inherently has no intrinsic value.” That’s the same basic take as Buffett.
But then Munger added: “I regard the whole business as anti-social, stupid, immoral… Suppose you could make a lot of money trading freshly harvested baby brains. You wouldn’t trade them, would you. It’s too awful a concept. To me, bitcoin is almost as bad… I regard the thing as a combination of dementia and immorality. And I think the people pushing it are a disgrace.”
Those “people pushing it” now include a number of legitimate Wall Street types, at places like Nasdaq, CME, Cboe, and soon even Goldman Sachs, reportedly. Munger’s comments are meaningful in light of just how many mainstream banking institutions have rushed to have some sort of involvement with cryptocurrencies.
Munger did manage to hit one positive note about bitcoin: “The computer science behind bitcoin is a great triumph of the human mind,” he said. “That’s what captivates all these people. They’ve actually created a product that’s hard to create more of, but not impossible. Now that is very peculiar. But they’ve managed to do it.”
He’s talking about blockchain, the distributed ledger technology on which bitcoin is built, and the “miners” who create more bitcoin by uploading blocks of bitcoin transaction records. And indeed, many big names in finance have praised blockchain technology while remaining wary of bitcoin.
Munger, clearly, is in that camp; his language on bitcoin is the most virulent we’ve heard from any big finance name yet.
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.