Business

Warren Buffett: Bitcoin is a ‘mirage’

Bitcoin is "a very fast money order, anonymously."

Above: Bitcoin is "a very fast money order, anonymously."

Don’t expect Warren Buffett to be buying Bitcoins any time soon.

The financial wizard was crystal-clear Friday about his feelings toward the virtual currency. “Stay away from it,” he told CNBC on Squawk Box. “It’s a mirage, basically.”

Part of the mirage, he indicated, is that Bitcoins are simply a transmittal medium. “It’s a very fast money order, anonymously.”

He elaborated:

“It’s a method of transmitting money. It’s a very effective way of transmitting money, and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? “

Buffett added that “the idea that it has some huge intrinsic value is just a joke in my view.”

His comments got a quick retort from another legendary financier, programmer-turned-venture capitalist Marc Andreessen, who tweeted Friday afternoon: “Warren has gone out of his way for decades to avoid understanding new technology. Not a surprising result.”

David Nelson, the chief strategist for investment firm Belpoint, told VentureBeat that he basically agreed with both financial wizards.

Buffett “has only invested in one tech stock ever, and it was IBM, probably the worst stock in the S&P 500,” he said, echoing Andreessen.

But Nelson also sounded as wary of Bitcoins as Buffett is. “I was kind of getting excited about it,” he said, “but then, when it was clear it was hackable, it became a no-go.”

Nelson said he wouldn’t “put any real money into it” and added that he would “tell investors to stay away.”

All of this raises questions about whether Bitcoin is accurately described as a virtual currency or whether it would be more appropriately labeled as a speculative investment. Nelson described it as “an ultraspeculative currency” that is, in some ways, like gold.

The Bank of England agrees with the gold comparison. In a recent article on “Money in the modern economy,” it said:

“The key difference between [digital currencies like Bitcoin] and local currencies is that the exchange rate between digital currencies and other currencies is not fixed. Digital currencies are not at present widely used as a medium of exchange. Instead, their popularity largely derives from their ability to serve as an asset class. As such they may have more conceptual similarities to commodities, such as gold, than money.”

Perhaps it’s time for a rebranding. Bitgold, anyone?

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