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The Bitcoin Revolution: Why Warren Buffett May Be Missing Outby@ssaurel
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The Bitcoin Revolution: Why Warren Buffett May Be Missing Out

by Sylvain SaurelApril 13th, 2023
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Warren Buffett has repeatedly referred to Bitcoin as “Rat Poison Squared” His colleague at Berkshire Hathaway Charlie Munger also never misses an opportunity to criticize Bitcoin and the cryptocurrency industry as a whole. Given his age, there is a good chance that Warren Buffett will not see the mass adoption of Bitcoin happen. The Bitcoin revolution will continue to move forward without him.
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Warren Buffett's dislike, not to say visceral hatred, of Bitcoin, is well known.

As you know, he has repeatedly referred to Bitcoin as “Rat Poison Squared.

His colleague at Berkshire Hathaway, Charlie Munger, also never misses an opportunity to criticize Bitcoin and the cryptocurrency industry as a whole.

Considering their advanced age, they are almost centenarians, it is understandable that they can't question their knowledge acquired in a flawed and not fixable system, but whose unfairness has always benefited them.

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Besides, you can be sure that if Warren Buffett does not invest in Bitcoin, it is above all because he does not understand this unique monetary revolution that gives the world access to a superior monetary system.

As such, you can tell yourself that Warren Buffett is true to his principles. Principles that he already put forward in 2000 during an annual meeting of Berkshire Hathaway:

“We will not go into businesses where technology which is way over my head is crucial to the investment decision.”

He was already saying the same thing a year earlier in 1999 at the previous Berkshire Hathaway annual meeting:

“We don't invest in what we don't understand, and what we don't understand is how people can make money over the long term in various Internet and technology businesses.”

This philosophy then made Warren Buffett and all those who trusted him at Berkshire Hathaway miss the GAFAM wave throughout the 2000s.

Still, the same reason was put forward in 2008:

“We don't know what the world will look like in 10 years, and we don't want to play in a game where we think we're the patsy. We've sat out Internet companies because we don't understand how they can have a sustainable competitive advantage.”

The most despairing thing for Berkshire Hathaway's clients is to think that one of Warren Buffett's life principles is to always invest in his education to further his knowledge.

Warren Buffett would have had time over the past 25 years to challenge his knowledge to further his education and seek to fill in his technology gaps.

But he never did, and neither did Charlie Munger.

Does this mean that Warren Buffett and Charlie Munger have become lazy over time and simply rested on their laurels? Or the little schemes they had managed to set up to take full advantage of the flaws in the current system?

That's the feeling we must end up having.

In 2018, faced with the success of GAFAMs, which have meanwhile become the most capitalized companies in the world, Warren Buffett admitted his mistake:

“I made the wrong decisions on Google and Amazon. We've looked at buying Amazon shares many times. I've always admired Jeff Bezos. I've never bought Amazon. I've been a fan, and I've been an idiot for not buying.”

Berkshire Hathaway did eventually buy Amazon stock, but much later. Blinded by the Oracle of Omaha's past success, his investors at Berkshire Hathaway never held it against him.

Yet they could and should, as he continues to make the same mistakes today with Bitcoin that he has made in the past with GAFAM.

In an interview on CNBC that he just gave on April 12, 2023, Warren Buffett repeats this:

Bitcoin is a gambling token and it doesn't have any intrinsic value. But that doesn't stop people from wanting to play the roulette wheel.”

Always the same refrain about Bitcoin.

If you followed Warren Buffett's blind opposition to all tech companies in the 2000s, you can already draw a parallel with his blind opposition to Bitcoin.

The problem this time is that given his age, there is a good chance that Warren Buffett will not see the mass adoption of Bitcoin happen. So he clearly won't have time to apologize again and say he was wrong again.

Because he is!

So he is trying to convince himself that Bitcoin is just a fad, just like when Bill Gates said that “the Internet is a passing fad.

However, Bitcoin doesn't care what Warren Buffett thinks. The Bitcoin revolution will continue to move forward with or without him. And as you've gathered, it will be without him.

In his April 12, 2023 interview, he compared buying Bitcoin to gambling on a football game and the human desire to make a quick buck to get rich:

“The urge to participate in something that looks like easy money is a human instinct, which has been unleashed; it was always there.”

But Warren Buffett is trying to persuade himself that it will all end badly, so he probably won't have any regrets:

“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.”

While I agree with him that for the vast majority of cryptocurrencies, it will come to a bad ending, as past history has already shown us, for Bitcoin things will be different.

Like many people in the general public, Warren Buffett struggles to understand that Bitcoin != Crypto. Too bad for him, I'd say.

He still believes that buying Bitcoin is all about getting rich. This shows that he doesn't understand the why of Bitcoin. I invite him to read my book “The Truth About Bitcoin” to help him understand it better. The book is over 600 pages long, but that shouldn't scare him, since he claims to read up to 500 pages every day.

Chances are he'll have a real opinion about Bitcoin in two days at the reading pace he claims.

Finally, during the interview, Warren Buffett hints at the real reason he doesn't want to invest in Bitcoin. When you find out, you will be disappointed, because it will show you that Warren Buffett is like a majority of people in the general public: he is not able to leave the past behind to look at the bright future that awaits Bitcoin.

It reminds me of this image I created a few years ago:

Warren Buffett is stuck in the past and he can't help but let two human feelings rob him of Bitcoin:

- Pride

- Jealousy

Warren Buffett is jealous of those who were able to buy Bitcoin in the early 2010s and he has too much pride to admit his mistake today after all the things he has said against Bitcoin in the past.

This sentence he uttered yesterday in the CNBC interview proves it to you:

“I don't know how to turn back the clock on Bitcoin.”

Specifically, Warren Buffett regrets not buying Bitcoin in the early 2010s to take advantage of the phenomenal increase in its price since then.

But where Warren Buffett is mistaken is that he sees Bitcoin only through the prism of a get-rich-quick scheme. Therefore, he believes that the price of Bitcoin cannot continue to rise. Always has this problem of increasing knowledge that has pursued him for over 25 years.

If Warren Buffett would stop looking at Bitcoin only through the prism of easy money, then he would understand why what awaits Bitcoin in the future is even more incredible than what Bitcoin has already accomplished.

He could put the past behind him once and for all and move forward by finally opening his eyes to Bitcoin.

Of course, you can imagine that he won't have the ability to do that.

Too bad, Warren, the Bitcoin revolution will continue to move forward without you and the Berkshire Hathaway clients who will miss out on a unique opportunity.

Also published here.