Warren Buffett on (why) Bitcoin (is terrible) in seven minutes – video and informal transcript below
When you're just looking at the price of something you're not you're not investing I mean it's if you buy something bitcoin for example or some crypto currency you're not looking to the asset itself to produce anything. If you buy an apartment house you're looking at the apartment house of your biopharmaceuticals farmed. If you buy a whole business you're looking at how the business does. If you buy a part of a business why shouldn't you look at how the businesses are going to do it.
People get charmed by buy lots of action and the fact that things are liquid and all of that and it does have repercussions back into the market when you get something like 80 an arrangement on the supercharges on the VIX. I mean where you can lose 90 percent of your money in one day. I mean that really doesn't belong with the word investment. I mean it's just it's gambling in terms of crypto currencies. I can say almost with certainty that they will come to a bad ending. Now when it happens or how or anything else.
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I don't know but I know this. I could buy a five year put out every one of the crypto currencies. I'd be glad to do it but I would never short a dime's worth I do think. I think what's going on definitely will come to. And we don't own any we're not sure that they will ever have a position in them. It's out of currency. I mean it does not meet the test of a currency. I wouldn't be surprised if it's not around in 10 or 20 years.
People say well I'll show you goods and the coins but they change the price of those every the price of the dollar changes in relation because they're pricing off the dollar. They could say well I'll sell it to you in barrels of oil but if they every time the price of oil changes they change the number of barrels you have to have that's your oil is not the currency. Well generally non-productive assets remain. If you bought gold at the time of Christ and you figure the compound rate on it you know in maybe a couple of tenths of one percent. The it's essentially is not going to deliver anything other than supposing scarcity because only you can only mine so many but so what. I mean what is what does it produces self. You know the check is a wonderful idea.
Just imagine what it will be without being able to write checks or have wire transfer funds. But it doesn't make the check intrinsically itself worth a lot of money. And if you said you can use something called check with a little piece of paper you do something else to transfer money. I think that any time you buy a non-productive asset you are counting on somebody else later on to buy a non-productive asset because they think they can sell it to somebody for more money. And it's been tried with tulips and it's been it's been tried with various things over time and it does come to a bad ending.
I mean having you have a hard time you can you can think of the good Rawle and I mean the Louisiana Purchase was say 15 million dollars for eight hundred thousand or so square miles of lighting them back. You're sitting on land that came with the Louisiana Purchase. And and so what we pay we paid 20 bucks a square mile and you know six hundred forty acres and a square mile and you're down to three cents or something. So that was a pretty good purchase of and what was then a nonproductive property but it did depend. But it's very hard. You can buy stamps.
Bill Gross got a wonderful stamp collection and sold for more money in the end. But it depended on somebody else wanting to buy hoping they will sell it for more money and so on. And in the end you make your money out of productive assets if you buy a farm you.
You try to estimate what the crops what amount per acre of soybeans or corn or whatever may be raised and how much you have to pay the farmer farms it for you and what your taxes will be various things and you make a conclusion based on what the asset itself will produce over time.
And that's an investment when you buy something because you're hoping tomorrow morning you're going to wake up you know the price will be higher. It's going to be you know you need more people coming into the interleaving and and they and you can get that and that will feed off for a while and some time for a long while and sometimes do extraordinary numbers.
But in the end they come to bad endings and crypto currencies will come the bad endings and along with the fact that there are nothing being produced in the way of value from the asset. You also have the problem that it draws in a lot of charlatans and that sort of thing who are trying to create various sorts of exchanges or whatever it may be it. You know it's something where where people who are of less than stellar character see an opportunity to clip people who are trying to get rich because their neighbors are getting rich buying the stuff that neither one of them understands. It will come to a bad ending Charlie. Well I like your broker currencies a lot less than you do. And so to me it's just dementia. And I think if people were professional traders they'd go into trading crypto currencies.
It's it's just disgusting. It's like somebody else is trading turds and you decide I can't be left out. To the extent that this writing were being webcast around the world I hope some of our stuff doesn't translate very well. We see your thoughts stay away from a day away from the Mirage. Basically I made that. It's a method of transmitting money. It's very effective way of transmitting money and do it anonymously and all that a check is a way of transmitting money to Chechnya or the whole thing because they can transmit money orders transmit money money order people do it. I hope Bitcoin becomes a better way of doing it but you could replicate it a bunch of different ways and it will be and the idea that it has something huge intrinsic value is just a joke in my view. Checks are actually drawn. You're drawing upon something that's not there.
You're transferring the money dollars on both and the to which is a very fast money order. Anonymous.