Warren Buffett quotes on Bitcoins, cryptocurrencies: Oracle of Omaha lessons for investors

May 01, 2018, 11:42 AM IST

Ace investor Warren Buffett has held forth on how to invest in equities and other assets though the years, burnishing his reputation even further. He has not hesitated to say what is on his mind about a number of new 'investing' opportunities that have become trends. The newest one is on cryptocurrencies and here is what he had to say about it, especially Bitcoins. He was speaking to Yahoo Finance.


Not very long ago, Warren Buffett clearly stated that Bitcoins will come to a bad end. On Monday, he added how investing in Bitcoins is pure gambling. 


The Berkshire Hathaway CEO urged investors to not confuse speculation with investment. "There’s two kinds of items that people buy and think they’re investing. One really is investing and the other isn’t." 


Warren Buffett explained why Bitcoin is not an investment. He said, "If you buy something like a farm, an apartment house, or an interest in a business… You can do that on a private basis… And it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you. Now, if you buy something like Bitcoin or some cryptocurrency, you don’t really have anything that has produced anything. You’re just hoping the next guy pays more."


He banged the final nail in the Bitcoin coffin by saying, “You aren't investing when you do that. You’re speculating. There's nothing wrong with it. If you wanna gamble somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.” 


The Warren Buffett lesson to be drawn here is that he wants investors to understand the difference between speculation and investment in order to protect their capital. Or at least be aware of the fact that they are virtually 'gambling' and that they should be mindful of the extent of risk. 


Despite Bitcoins and other currencies shooting up in value over recent months and then crashing, Warren Buffett has not changed his mind about them. In 2014, he famously called Bitcoins a 'mirage' and suggested buyers to stay away from it. In January this year, he said he will never invest in cryptocurrencies.