Globally recognised investor, business magnate, and philanthropist, Warren Buffett has once again provided his opinion on digital currency, Bitcoin, in a Q&A session in his hometown of Omaha, Nebraska.
Bitcoin is up around 500% in 2017 and recently topped $6,000 for the first time, before settling back to around $5,900. However, the digital currency has its detractors, and the world’s third richest man with a fortune of $81.1 billion, is one of them.
According to Market Watch, Buffett thinks crypto currencies will end badly. “People get excited from big price movements, and Wall Street accommodates,” he said.
“You can’t value Bitcoin because it’s not a value-producing asset,” he said, adding that there’s no telling how far Bitcoin’s price will go, while describing it as a “real bubble in that sort of thing”.
Buffett has in the past professed to know very little about Bitcoin. “I’ll put it this way, of our $49 billion, we haven’t moved any of it to Bitcoin,” he said of his company, Berkshire Hathaway.
JPMorgan Chase CEO Jamie Dimon recently said that Bitcoin is “a fraud” that “won’t end well”.
Dimon told an investor conference in New York that where currencies have legal support, Bitcoin would eventually blow up. “It’s a fraud” and “worse than tulip bulbs,” Bloomberg reported.
Bloomberg reported this week that uncertainty surrounding another possible split in Bitcoin is weighing on the value of the hundreds of other digital tokens that have been issued this year as the price of the biggest cryptocurrency soars.
“Everyone always thinks about going to Bitcoin as a conservative position,” said Stan Miroshnik, chief executive of the Element Group, which helps startups with initial coin offerings.
While bitcoin’s underlying network is slated to go through a major software upgrade in November to increase transaction speed and reduce costs, it could also cause disruptions. Investors are playing it safe and shifting funds from other digital currencies into Bitcoin because it typically offers greater liquidity in times of uncertainty, Bloomberg said.
And there is the bonus of additional coins being issued to owners if developers split the blockchain, the digitized ledger on which the Bitcoin is based. That already happened this week with the creation of Bitcoin gold, which came about three months after Bitcoin cash was created.
As Bitcoin flirts with another record high, prices of many tokens that startups sold to raise capital are crashing. The Bletchley Ethereum Token Index is down nearly 16% in the last month. Around 10% of the money invested in tokens has already flowed out because of the software switch, according to Lucas Nuzzi, a senior analyst at Digital Asset Research.