Warren Buffet Says Buying Bitcoin is Gambling, Not Investing
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Investment guru Warren Buffet remains unsold on bitcoin and crptocurrencies. He doesnât even consider buying bitcoin as investing and compares it to gambling.
Interviewed during Berkshire Hathawayâs annual shareholder meeting, Buffet explained his ongoing skepticism about bitcoin in an interview with .
âThereâs two kinds of items that people buy and think theyâre investing,â he said. âOne really is investing and the other isnât.â bitcoin, he says, isnât.
âIf you buy something like a farm, an apartment house, or an interest in a business⌠You can do that on a private basis⌠And itâs a perfectly satisfactory investment,â he said. âYou look at the investment itself to deliver the return to you. Now, if you buy something like bitcoin or some cryptocurrency, you donât really have anything that has produced anything. Youâre just hoping the next guy pays more.â
This, according to Buffet, is not investing, but speculating.
There is nothing wrong with speculating, he said. But speculating, in his view, is like gambling. If you want to gamble, someone else might come along and pay more tomorrow. But this is gambling, not investing,
Several years ago, Buffet called cryptocurrency a âmirage,â arguing that it was a âjokeâ to assign a value to something just because it can be used to transmit money. âAre checks worth a whole lot of money just because they can transmit money?,â he asked at the time.
Asked in January about JPMorgan Chase CEO Jamie Dimonâs backpedaling on bitcoin after Morgan expressed regret about calling bitcoin a âfraudâ last year, .
âIn terms of cryptocurrencies, generally, I can almost say with certainty that they will come to a bad ending,â Buffet said. He went on to say heâd bet on âevery one of the cryptocurrenciesâ falling over the next five years. âBut, I would never short a dimeâs worth,â he added.
Probed further, Buffett stressed he wouldnât take a negative position by trading bitcoin futures contracts, stating thereâs âno reasonâ to do so.
âWhy in the world should I take a long or short position of something I donât know anything about?â he quipped, admitting to knowing very little of cryptocurrencies.
âYou canât value bitcoin because itâs not a value-producing asset,â Buffet warned in October, questioning strategists and hedge fund managers who believe Metcalfeâs law â a principle that states the value of a network is proportional to the square of the number of its user base â provides an effective metric for deciphering bitcoinâs value.
Thereâs a âreal bubble in that sort of thing,â he added, echoing comments made by UBS earlier in October.
Not Impressed By ICOs
In December, â which raised more than $3.2 billion in 2017 alone according to ICO tracker CoinSchedule â will not prove beneficial to the investment industry. âPeople get excited from big price movements, and Wall Street accommodates,â Buffet commented.
Binance CEO Zhao Changpeng recently said cryptocurrency . âWarren Buffett is a guy I truly respect from an investment point of view, but I do not think he understands cryptocurrencies at all,â Changpeng said.
âIt is what it is,â Changpeng continued. âI still respect him in other parts of his expertise. But I think on cryptocurrencies heâs making a big mistake.â
The cryptocurrency market is at an all-time high as coins recover from a brief holiday bear season into a bullish New Year. But could this unprecedented growth in value attract cybercriminals?
Currently, there is a huge bullish run by bitcoin and other alternate coins on the cryptocurrency market even with the recent correction that saw bitcoin slightly drop in value over the holidays. However, now that the New Year has kicked off, cryptocurrencies are going up in price. But could this surge in value be open season for cybercriminals?
For instance, the month of December last year saw Coinbase (a leading exchange in the US) temporarily suspended bitcoin Cash trading on its platform amid allegations of . In addition to that, the US Securities and Exchange Commission stopped a fraudulent initial coin offering for the first time. The fraudsters had lured thousands of investors with a promise of doubling their investments within months while the ICO raised $15 million.
Insider trading and fraudulent ICOs aside, the real threat to digital currencies still remains cyber theft. Simply put, hackers and cyber criminals pose a much more frightful menace to investors.
After all, we are living in a sophisticated digital age and since there are widespread digital tools and avenues that a hacker can use, the average person can hardly avoid or stop an attack once it begins.
Frankly, one of the biggest pain points in the world of cryptocurrency is cybercrime. In fact, a report from the US Department of Homeland Security reports that between 2009 to 2015, more than a quarter of bitcoin exchanges were attacked.
Surprisingly, however, such reports have not been enough to keep cryptocurrencies from growing in value. follow the money, however, and at the moment, itâs easy to see that the cryptocurrency market is where the money is as it currently stands at a market capitalization of about 816 billion according to CoinMarketCap.
With the rising price of bitcoin, cyber heists have become even more profitable as it only takes a single attack to potentially make off with millions of dollars.
How to Protect Your Cryptocurrency Holdings
With the cryptocurrency prices on the rise, investors need to be more vigilant than ever when it comes to protecting their digital assets. In most countries, the U.S. included, digital currencies are not recognized as legal tender so investors have little to no recourse when their funds are stolen.
So, how can an individual investor take measures to protect a digital assets account? No measure is absolutely foolproof but there are steps that you can take to minimize your risk of theft:
Installing an antivirus with anti-phishing support
Using a VPN to protect your internet connection
Adding an extra access protection layer with 2FA
Using a hardware wallet to store your cryptocurrencies
Setting up firewall protection
Do you believe that no one including well-funded corporations is 100 percent safe from hackers? What are you doing to protect your cryptocurrencies? Talk to us!
The hard fork is drawing closer by the day. Within little over two weeks after the publication of this article, a group of bitcoin companies and miners plans to double bitcoinâs block weight limit as per .
But it currently seems certain that not everyone will adopt this incompatible protocol change. As such, the SegWit2x fork would result in two different blockchains and two different currencies. For the purpose of this article, these two blockchains will be referred to as the âoriginal chainâ and the âSegWit2x chain,â with their respective coins.
The big question, right now, is which of these two blockchains would be considered the ârealâ bitcoin, with the currency ticker âBTC.â Since no single individual or entity is really in charge of this decision, bitcoin exchanges play a major role: they list the currencies that are traded under specific names.
To find out which coin is likely to earn the ticker âBTC,â hereâs an overview of the 20 largest bitcoin exchanges based on trading volume according to data from , and their stance on this naming issue.
1. Bitfinex: original chain is âBTCâ, SegWit2x chain is âB2Xâ
Hong Kongâbased cryptocurrency exchange is the largest bitcoin exchange in the world by trading volume.
Interestingly, Bitfinex also offers a futures exchange, on which claims on the future versions of the coins on both chains are already traded. These futures are currently labeled as âBT1â for coins on the original chain, and âBT2â for coins on the SegWit2x chain.
In Bitfinexâs of these futures, published on October 5, as well as the accompanying , the exchange also reveals that âthe order books for the BT2 trading pairs will become the order books for the B2X pairs.â Meanwhile, the BT1 futures will be settled into BTC.
In other words, the coins on the original chain will be listed as âBTCâ, while the coins on the SegWit2x chain will be called âB2X.â
2. BitMEX: original chain is âBTCâ
, a cryptocurrency exchange officially based in the Republic of Seychelles, is the second-largest bitcoin exchange in the world based on trading volume.
In a published on October 13, BitMEX announced it would continue to list coins on the original chain as âBTC.â
Moreover, because SegWit2x will not implement strong , BitMEX will not list coins on the SegWit2x chain at all, nor offer any other type of support.
3. Bitstamp: unknown
, which is officially based in the United Kingdom but operates from several European countries, has not yet made any public statements concerning the SegWit2x fork. The exchange also did not respond to inquiries from bitcoin Magazine.
Bitstamp did sign a insisting on consensus and strong replay protection for hard forks earlier this year, though that statement referred to a potential Unlimited
hard fork â not SegWit2x.
4. GDAX: hash power decides which chain is âBTCâ
U.S.-based cryptocurrency exchange is effectively the exchange-arm of Coinbase. And Coinbase is a signatory of the .
Regardless, itâs not certain that Coinbase (and therefore probably also GDAX) will list coins on the SegWit2x chain as âBTC.â In fact, the company could well list the coins on the original chain as âBTCâ â but public statements have been somewhat contradictory.
The company initially put out a saying that the coins on the original chain would be listed as âBTC,â and the coins on the SegWit2x chain as âB2X.â However, this initial statement was effectively withdrawn the very next day, as the company put out a âclarifyingâ that Coinbase will actually list the coins with the most accumulated hash power backing it as âBTC.â And on , company CEO Brian Armstrong suggested that itâs not just hash power but also market cap that will decide which coin will be listed as âBTC.â
bitFlyer is also a signatory of the in support of the SegWit2x hard fork, which suggests that the exchange will at least support the coin on the SegWit2x chain. bitFlyer has not yet made any public statements concerning the naming of the coin(s), however, and did not respond to inquiries from bitcoin Magazine.
6. Kraken: unknown
U.S.-based bitcoin and cryptocurrency exchange has not yet made any public statements concerning the SegWit2x fork, either.
In response to inquiries from bitcoin Magazine, the exchange also refrained from commenting on the naming issue and instead stated:
âKraken makes no promises/guarantees/warranties on the outcome of the fork. We will make our best effort to handle things in a way that benefits the most clients, but clients should manage their own wallets/coins if they want perfect control.â
7. HitBTC: original chain is âBTCâ, SegWit2x chain is âB2Xâ
Like Bitfinex, cryptocurrency exchange is already offering a where the two future coins are traded.
And in an published on October 17, the exchange said it will list the coins on the SegWit2x chain as âB2X.â The coins on the original chain will continue to be listed as âBTC.â
However, HitBTC does note that the âbitcoin community might encourage âBTCâ title being relocated to the SegWit2x token.â They added: âWhatever happens, we will proceed with the decision that will be the most convenient for our traders.â
The German bitcoin exchange .de has not yet made any public statements concerning the SegWit2x fork. The exchange also did not respond to inquiries from bitcoin Magazine.
9. CoinsBank (formerly known as BIT-X): original chain is âBTCâ
United Kingdomâbased cryptocurrency exchange (formerly known as BIT-X) has not made any public statements concerning the SegWit2x fork.
In response to inquiries from bitcoin Magazine, however, the exchange indicated that it will list coins on the original chain as âBTCâ and will not support the SegWit2x chain. They stated:
âWe inform you that we are proponents of the BTC core and not planning to support other branches.â
10. CEX.IO: original chain is âBTCâ, SegWit2x chain is âB2Xâ
United Kingdomâbased bitcoin exchange will list coins on both chains. In a blog post published on October 20, the exchange it will list the coins on the SegWit2x chain as âB2X.â It also states in the announcement that coins on the original chain will continue to be listed as âBTC.â
11. itBit: unknown
U.S.-based bitcoin exchange has not yet made any public statements concerning the SegWit2x fork. The exchange also did not respond to inquiries from bitcoin Magazine.
12. Gemini: hash power decides which chain is âBTCâ
In an October 24 written by Cameron Winklevoss, one âs founders, the U.S.-based bitcoin exchange explained that it âwill be measuring total cumulative computational difficulty of the blockchain to determine what we will call bitcoin and BTC and on the Gemini platform.â
In other words, Gemini will give the name âBTCâ to the coin that has the most hash power attributed to it.
It may also list the coin that does not attract the majority of total hash power, but the exchange has not given any guarantees yet, nor did it mention a name for this coin.
13. Coinfloor: unknown
U.K.-based bitcoin exchange has not yet made any public statements concerning the SegWit2x fork. The exchange also did not respond to inquiries from bitcoin Magazine.
Coinfloor did sign the insisting on consensus and strong replay protection for hard forks, which originally referred to the potential bitcoin Unlimited hard fork.
14. BTCC:Â hash power decides which chain is âBTCâ
Like Bitfinex and HitBTC, Hong Kongâbased bitcoin exchange is already offering a where the two future coins are traded. These coins are currently referred to as â1MBâ for the coin on the original chain, and â2MBâ for the coin on the SegWit2x chain.
And, according to the concerning this futures market, BTCC will after the fork “consider the version of bitcoin that has the most proof-of-work behind it as bitcoin (BTC)”. In other words, BTCC will give the name âBTCâ to the coin that has the most hash power attributed to it.
15. BitMarket: unknown
Polish bitcoin exchange has not yet made any public statements concerning the SegWit2x fork.
The exchange did respond to inquiries from bitcoin Magazine, but it did not reveal which coin will be listed under what name or ticker.
Instead, a BitMarket representative stated:
âWe reserve the right to decide whether to support or not [the] given fork of the bitcoin. Our decision will depend on the stability of the forkâs network and what issues it may cause in the future.â
16. QuadrigaCX: unknown
Canadian bitcoin exchange has not yet made any public statements concerning the SegWit2x fork. The exchange also did not respond to inquiries from bitcoin Magazine.
QuadrigaCX did sign the insisting on consensus and strong replay protection for hard forks, originally referring to the potential bitcoin Unlimited hard fork.
Brazilian bitcoin exchange recently signed a on behalf of the Brazilian and Argentinian bitcoin communities in opposition of SegWit2x.
When asked by bitcoin Magazine, the exchange further explained that it may or may not list the coins on the SegWit2x chain, which will in part depend on whether or not the SegWit2x chain implements strong replay protection. (This currently seems very unlikely.)
If Mercado bitcoin does list this coin, it will use the ticker âB2Xâ because âthe market is converging to this ticker.â They added: âWe also tend to consider the Core version the legitimate one.â
18. Bitso: unknown
Mexican bitcoin exchange is a signatory of the in support of the SegWit2x fork. The company has since also that it will support coins on both chains â even though it did sign the bitcoin Unlimitedâinspired insisting on consensus and strong replay protection for hard forks.
Regarding names and tickers, a Bitso representative told bitcoin Magazine:
âWe have not yet decided on ticker names but hope to make an official statement soon.â
19. The Rock Trading: original chain is âBTCâ
Malta-based bitcoin exchange has not yet made any public statements concerning the SegWit2x fork. It did, however, sign the bitcoin Unlimitedâinspired insisting on consensus and strong replay protection for hard forks.
And, when asked by bitcoin Magazine, The Rock Trading CTO Davide âPaci Barbarossaâ Barbieri said the exchange will list the coins on the SegWit2x chain as âB2Xâ â if the exchange lists that coin at all.
Said Barbieri:
âAs stated publicly, we are generally against any hard forks; we do not currently guarantee that we will handle SegWit2x, or that we will list it; as far as I know replay protection is still a concern.â And: âIf we do [list the coin on the SegWit2x chain] we will probably call it B2X or something like it.â
20. EXMO: unknown
U.K.-based cryptocurrency exchange has not yet made any public statements concerning the SegWit2x fork. The exchange also did not respond to inquiries from bitcoin Magazine.
This article will be updated as the news develops. Did I miss anything? Feel free to let me know at aaron@bitcoinmagazine.com. This article was last updated on October 28th.
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