New technologies and new business opportunities are coming online almost every day, but not all of them are rainbows with gold pots at the other end.
And if you take the word of Warren Buffett, Bitcoin is not a good business opportunity or a viable investment asset.
Buffett is a value investor who prefers to invest in good businesses. He prefers buying good companies when they are trading around or below their fair price.
But he doesn’t go after every undervalued business. It shows that he doesn’t chase opportunities.
This is perhaps the chief reason Buffett has claimed that he’d never own Bitcoin.
Unlike other businesses and companies that are backed by assets and have some inherent value, Bitcoin doesn’t have intrinsic value.
A highly speculative market decides what Bitcoin’s price is. This makes it highly volatile and even unpredictable.
Buffett doesn’t even like gold that much (especially as a long-term investment), because gold doesn’t have a lot of utility, even though it has an intrinsic value that holds steady universally.
Right now, Bitcoin is trading at above US$34,000. While not its all-time high, this still represents over 10,000% growth in five years.
It can be a highly profitable investment if you buy and sell at the right time and if you are willing to risk investing in something that can go up in smokes as soon as investor attention and trust in Bitcoin ends.
Buffett practically detests Bitcoin, but he admits that the underlying technology — i.e., blockchain — shows potential.