Warren Buffett certainly knows a thing or two about investing. As the chairman and CEO of Berkshire Hathaway, he’s often regarded as one of the most knowledgeable, successful investors of all time. And with a net worth of over $100 billion, it’s fair to say he’s earned that title.
But while Buffett is a firm believer in growing wealth by investing in stocks, he’s made it clear that he’s not at all a fan of cryptocurrency — and that extends to Bitcoin, one of the more well-known digital coins in circulation. In fact, Buffett maintains that Bitcoin is apt to come crashing down at some point, and that it’s a speculative investment the average person should stay away from.
Buffett has even been quoted as saying that cryptocurrency pretty much has no value because it doesn’t actually produce anything. Stocks, on the other hand, work differently.
The companies behind stocks are providing some type of product or service, so it’s easy to see how those companies make money. The value of Bitcoin, however, is harder to determine, says Buffett, because much of it hinges on hype and demand.
If you’ve been thinking about buying Bitcoin, you may want to at least consider Buffett’s advice before diving in. Otherwise, you could end up regretting your decision big time.
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Should you stay away from Bitcoin?
Just because Warren Buffett isn’t a fan of Bitcoin, or other types of cryptocurrency for that matter, that doesn’t mean it’s the wrong investment for you. But remember, Buffett has a long history of investing success, so when he dishes out advice, it’s coming from years of experience and a place of knowledge.
Buffett’s primary problem with Bitcoin is what makes it such a risky prospect — it’s extremely speculative. We don’t know if Bitcoin and other cryptocurrencies will gain value over time, and we don’t even know if they’ll be around in the future.
For Bitcoin to ultimately become a viable long-term investment, it needs to become increasingly accepted as a form of payment. And it’s too soon to know if that will happen.
Also, Bitcoin and other cryptocurrencies can be very volatile. Granted, so can stocks, but whereas stocks have been around for many decades, Bitcoin is barely more than 10 years old. And that’s reason enough to proceed with caution, or at least make sure to not invest all of your money in it.
Of course, there’s no rule stating the typical investor has to listen to Warren Buffett. But if you’d rather load up on an investment he does endorse, open a brokerage account and choose a diverse mix of stocks. Buffett is also a big fan of index funds, which are funds that follow existing market indexes and effectively allow you to purchase a whole bunch of different stocks with a single investment.
It could be that there’s a lot of money to be made in Bitcoin. But Warren Buffett certainly isn’t convinced, and when he talks, it generally pays to listen.
View more information: https://www.fool.com/the-ascent/cryptocurrency/articles/warren-buffett-hates-bitcoin-should-you-buy-it/