“Avoid Bitcoin Like the Plague,” Berkshire’s Charlie Munger Warns

Billionaire investor Charlie Munger has weighed in on cryptocurrencies, saying they should not be considered for investment. He looks on Bitcoin as a bubble and believes it cannot replace gold.

Berkshire Hathaway vice chairman Charlie Munger has labeled Bitcoin a “crazy bubble” and “total insanity,” urging people to stay away from investing in it. The US billionaire has thus joined his long-time friend and business partner Warren Buffett, who is known to be aBitcoin skeptic.

“I think it is perfectly asinine to even pause to think about them. It's bad people, crazy bubble, bad idea, luring people into the concept of easy wealth without much insight or work. That's the last thing on earth you should think about.”

“There's just a whole lot of things that aren't going to work for you. Figure out what they are and avoid them like the plague. And one of them is bitcoin… It is total insanity,” he said.

The renowned investor went on to explain that Bitcoin could not be a substitute for gold because the latter is a physical asset and its scarcity cannot be manipulated. Bitcoin, on the other hand, is a digital currency and the potential for abuse is there. Munger noted:

“Believe me, man is capable of somehow creating more bitcoin … They tell you there are rules and they can't do it. Don't believe them. When there is enough incentive, bad things will happen.”

On Friday, Bitcoin was hit from all the sides. Besides being criticized by several businessmen, it saw its price drop by 26% to $11,880 – the lowest level since December 6. Perhaps it has to do with investors taking profits before Christmas and New Year, but the reasons behind the price collapse are still unclear.

Elsewhere, investment banker Chris Whalen told CBC that Bitcoin was a “fraud decorated with technology.”

“Fraud is defined as attempting to gain through deception or artifice. Today the trappings of technology and the buzz around the blockchain and all the rest of it with bitcoin has disguised what’s a pretty plain vanilla Ponzi scheme. The only way you can profit is if you sell bitcoin to a greater fool,” Whalen concluded.