Berkshire Hathawayâ€™s vice chairman and Warren Buffettâ€™s long-time business partner, Charlie Munger, has advised investors not to buy bitcoin or gold. He believes the cryptocurrency is too volatile to serve well as a medium of exchange. Munger also says he doesnâ€™t know which is worse between Elon Muskâ€™s Tesla reaching $1 trillion in market cap or bitcoin hitting $50,000.
Billionaire Investor Charlie Munger Thinks Bitcoin Is Too Volatile to Be a Good Medium of Exchange
Legendary investor Charlie Munger answered some questions about bitcoin at the annual meeting of shareholders of the Daily Journal Corporation in Los Angeles on Wednesday. The Berkshire Hathaway vice-chairman and Warren Buffettâ€™s long-standing business partner is also chairman of the Daily Journal. He is often known as Warren Buffettâ€™s right-hand man.
During Wednesdayâ€™s meeting, Munger began by explaining why he does not see bitcoin as a future medium of exchange. â€œI donâ€™t think I know exactly what the future of banking is, and I donâ€™t think I know how the payment system will evolve. I do think that a properly run bank is a great contributor to civilization and that the central banks of the world like controlling their own banking system and their own money supplies,â€ he described, elaborating:
â€œBitcoin reminds me of what Oscar Wilde said about fox hunting. He said itâ€™s the pursuit of the uneatable by the unspeakable,â€ Munger further opined.
Munger Talks About Tesla vs. Bitcoin
When asked about which he thought was crazier, the price of bitcoin hitting $50,000 or Elon Muskâ€™s electric car company, Tesla, reaching $1 trillion in market cap, Munger referenced a quote by famous English writer Samuel Johnson. One of his well-known quotes was â€œSir, there is no settling the point of precedency between a louse and a flea.â€
Munger replied, â€œWell I have the same difficulty that Samuel Johnson once had when he got a similar question,â€ emphasizing:
Teslaâ€™s market cap currently stands at $655 billion after its stock fell sharply since last Friday. Bitcoinâ€™s price fell from the all-time high of above $58K on Sunday to $46,073 at the time of writing. Still, the cryptocurrency is up more than 43% since the beginning of the year based on data from markets.Bitcoin.com.
Moreover, some shareholders asked Munger whether his opinion on cryptocurrencies and bitcoin has remained the same and would the Daily Journal consider bitcoin or any other cryptocurrency as an asset on its balance sheet similar to what Tesla recently did. Elon Muskâ€™s electric car company invested $1.5 billion in bitcoin in January, prompting many people to ask which other companies will be following its example and keep some cash reserves in bitcoin.
Responding to this question, Munger affirmed, â€œNo, we will not be following Tesla into bitcoin.â€
Mungerâ€™s Advice: Donâ€™t Buy Bitcoin or Gold
The Berkshire Hathaway vice chairman proceeded to offer some advice regarding bitcoin and gold investing. He said:
The crypto community was quick to comment on Mungerâ€™s remarks about bitcoin. Morgan Creek Digital partner Anthony Pompliano opined: â€œCharlie Munger and Warren Buffett havenâ€™t beat the S&P 500 in over a decade. Stop asking them about technology.â€
Tahinis, the restaurant chain that was among the first companies to convert all of its cash into bitcoin, commented: â€œCharlie Munger in his latest interview calls bitcoin a gold-like asset. He is wrong again. Bitcoin is rat poison to all fiat-based instruments.â€
What do you think about Charlie Mungerâ€™s view on bitcoin? Let us know in the comments section below.
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