Warren Buffett is Wrong on Bitcoin and Cryptocurrencies, Here is Why

Warren Buffett has said with certainty that cryptocurrency will come to a bad ending. However, the recent craze over Bitcoin and other cryptocurrencies will not end well and he would not take a short position on Bitcoin futures. Warren Buffet also promoted, Gregory Abel and Ajit Jain, added them to its board.

Bitcoin has recently declined from the $20,000 level to $13,000 level but still it is up more than 1,500 percent in the past 12 months.

Warren Buffett invests through its company Berkshire Hathaway. Buffett, at the age of 87, remains the chairman and CEO of its approximately $500 billion conglomerate, which he is running since 1965. Bitcoin is considered the riskier investment which has no intrinsic value, therefore at this age it is not advisable to invest. Further, investing in Bitcoin is against Buffett’s style of investment who believes in the intrinsic value of the investment based on its future earnings.

Warren Buffett’s Successors Emerge

Warren Buffet has promoted two of its top executives, Gregory Abel and Ajit Jain, added them to its board and are the front runners to succeed Warren Buffett atop the conglomerate. Gregory Abel, at the age of 55, who was the chief executive officer of Berkshire Hathaway Energy, has been made Berkshire’s vice chairman for non-insurance business operations, while Ajit Jain, 66, Berkshire’s top insurance executive, is made the vice chairman for insurance operations.

Charlie Munger, 94, remains as the vice chairman. Both Buffett and Munger will continue to handle the major capital allocation and investment decisions, including acquisitions, for Omaha, Nebraska-based Berkshire. They have though reduced their responsibilities in recent years with their increasing age.

Trading Bitcoin Futures Contracts on NASDAQ

If the investment in Bitcoin would have been so bad, then the world’s second largest stock exchange, NASDAQ would have not planned to launch futures contracts for Bitcoin by 2018. Trading in NASDAQ is expected to bring more liquidity and Nasdaq can handle big size transactions and reduce the outages at online exchanges, which have earlier led to selloffs in cryptocurrencies.

Warren Buffet’s Conclusion on Cryptocurrency

As human make mistakes, Mr. Buffett had earlier made mistakes in investments or took decisions, which were contrary to his view. For example, Warren Buffett had previously said about its preference to avoid investing in technology stocks, but began building a stake in Apple in 2016. After investment he said that Apple has struck as a sticky product, and an enormously useful product to people that use it. During the third quarter 2017, Berkshire Hathaway also upped its stake in Apple Inc by 3 percent to 134.1 million shares.

It seems that Mr. Buffett this time again is making mistake regarding cryptocurrency. He himself admitted that he does not know much about cryptocurrency so he cannot fall into conclusion about the cryptocurrency to die.