{"id":13794,"date":"2021-10-17T19:00:00","date_gmt":"2021-10-17T19:00:00","guid":{"rendered":"http:\/\/ci028fca7ab00025e7"},"modified":"2025-01-29T14:00:23","modified_gmt":"2025-01-29T14:00:23","slug":"the-bitcoin-haters-why-dislike","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/the-bitcoin-haters-why-dislike","title":{"rendered":"The Bitcoin Haters And Their Bitcoin Beef"},"content":{"rendered":"
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\u201cDisgusting and contrary to the interests of civilization\u201d<\/p>\n<\/blockquote>\n

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\u201cOf course I hate the bitcoin success. I don\u2019t welcome a currency that\u2019s so useful to kidnappers and extortionists and so forth. I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.\u201d <\/em>– Charlie Munger of Berkshire Hathaway.<\/p>\n<\/blockquote>\n

Those were the words of ninety-seven year-old Charlie Munger, the vice-chairman of the investing giant Berkshire Hathaway, and the second-in-command to Warren Buffett.<\/p>\n

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Understandably, Munger and Buffett have amassed huge fortunes by investing in companies, by picking stocks. That they would have no need to buy cryptocurrencies is understandable. That they may not even clearly understand them is to be expected as well. But, \u201ccontrary to the interests of civilization?\u201d Munger offers no clarification on what he means by that. And to the point that bitcoin is used by drug dealers and other criminals, yes it is. So is cash. In fact, in 2020 only an estimated 0.34%<\/a> of all cryptocurrency transactions involved illicit activities. Also, criminal activities<\/a> conducted through the traditional banking system amounted to 2-4% of global GDP, significantly more than with cryptocurrencies.<\/p>\n

Another point Munger makes is that bitcoin is being used as a substitute for gold, and he doesn\u2019t buy gold either, so why would he buy bitcoin? Fair enough, Berkshire is focused on companies that make profits and pay dividends. It really doesn\u2019t, however, make this new digital technology \u201ccontrary to the interests of civilization.\u201d Ouch.<\/p>\n

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\u201cIt\u2019s probably rat poison squared.\u201d<\/em> – Warren Buffett, on Bitcoin.<\/p>\n<\/blockquote>\n

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That was Buffett\u2019s response to Fox Business host Liz Claman when asked about bitcoin. Buffett\u2019s sidekick Munger had previously referred to bitcoin as \u201crat poison.\u201d Buffett\u2019s opposition to bitcoin can probably be summed up in three points. First, he says that bitcoin has no unique value on its own. (Sounds like paper money, right?) He feels the only value in bitcoin is the hope that someone will be willing to pay you more for it in the future. (Sounds like stocks, a little bit.)<\/p>\n

Next, the \u201cOracle of Omaha\u201d feels that bitcoin has none of the properties of money<\/a> and is not a store of value. As with any new technology, Bitcoin is gradually gaining traction, both as a means of exchange and is already accepted by thousands of merchants around the world. In addition, it is fast replacing<\/a> Western Union as the fastest and cheapest money transmitter out there. As for a store of value, bitcoin has appreciated <\/a>an average of 200% per year for 12 years. That\u2019s quite a store of value, albeit with quite a bit of volatility. So, admittedly, it\u2019s not for everyone.<\/p>\n

Third, Buffett probably doesn\u2019t fully understand bitcoin. To his credit, he doesn\u2019t invest in things he doesn\u2019t understand. He is focused on stocks and buying great companies and as such surely hasn\u2019t gone down the Bitcoin rabbit hole like many of us have. That\u2019s fine, he\u2019s undoubtedly one of the greatest investors the world has ever known; his track record speaks for itself. \u201cI don\u2019t own any cryptocurrency and I never will,\u201d Buffett has said<\/a>.<\/p>\n

Paul Krugman<\/h2>\n

Paul Krugman is a Nobel prize-winning economist and just happens to be the author of a 2013 op-ed in the New York Times entitled \u201cBitcoin is Evil<\/a>.\u201d He\u2019s been taking shots at Bitcoin ever since.<\/p>\n

Krugman feels that bitcoin doesn\u2019t yet, after twelve years, play any role in normal economic activity. He, like other Bitcoin haters, feels that it\u2019s the currency of drug dealers. \u201cBecause Bitcoin and its relatives haven\u2019t managed to achieve any meaningful economic role, what happens to their value is basically irrelevant to those of us not playing the crypto game,\u201d said Krugman in a recent<\/a> New York Times piece.<\/p>\n

He\u2019s also down on gold, for many of the same reasons, so Bitcoiners needn\u2019t feel picked on. He feels gold can\u2019t be used for monetary transactions and hasn\u2019t been a stable store of value.<\/p>\n

But, this early in Bitcoin\u2019s existence, should you take Krugman\u2019s words as gospel? Has he ever been wrong before? Here\u2019s a quote from Paul Krugman, circa 1998. You be the judge:<\/p>\n

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\u201cThe growth of the Internet will slow drastically. By 2005, it will become clear that the Internet\u2019s impact on the economy has been no greater than the fax machine\u2019s.\u201d – Paul Krugman, 1998.<\/em><\/p>\n<\/blockquote>\n

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Peter Schiff<\/h2>\n

Ah, Peter Schiff, the bitcoin bear and gold proponent that Bitcoiners love to hate. Schiff is the chief economist and strategist at Euro Pacific Capital<\/a> and in his role he also manages Schiff Gold, the precious metals dealer. It\u2019s no surprise that he is no fan of bitcoin, as many believe that bitcoin is akin to gold 2.0, and will become the leading store of value. Most Bitcoiners believe that bitcoin is actually better at being gold than gold is. I do like his views on the economy, inflation and money printing, however.<\/p>\n

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Schiff, after years of battling with Bitcoin maximalists<\/a> on Twitter, has recently appeared on a lot of podcasts, debating Bitcoiners like Peter McCormack, Anthony Pompliano, Greg Foss, and Anthony Scaramucci. Interviewed on Fox Business by Charles Payne, Schiff said of Bitcoin<\/a>, \u201cAll bitcoin is is the latest iteration of fool\u2019s gold and anybody buying it is ultimately a fool.\u201d Schiff feels that bitcoin will never be used as a store of value. He goes on to tell Payne:<\/p>\n

\u201cIt\u2019s never going to be money. It doesn\u2019t fit the very definition of money. Money needs to be a commodity. It needs to have actual value unto itself, not just the uses and means of exchange.\u201d<\/p>\n

So Schiff feels bitcoin has no value unto itself and is backed by nothing. Sounds an awful lot like paper, fiat money.<\/p>\n

I agree with Schiff in that gold has a place in certain portfolios. I also believe that dumping on Peter Schiff is not the best thing that Bitcoiners can do to promote mass adoption of cryptocurrencies. Further, I understand that he has motivation to throw shade on bitcoin, since his firm sells gold and silver.<\/p>\n

It must really infuriate him, though, that his son Spenser Schiff is a very public and vocal bitcoin holder. Spencer went all in, putting 100% of his portfolio<\/a> into bitcoin recently.<\/p>\n

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#Bitcoin<\/a> beating #gold<\/a> over the past ten years doesn't prove it's better than gold. Bitcoin has beaten every traditional asset class over that time period. Does that prove Bitcoin is better than stocks or real estate? #Ethereum<\/a> beat Bitcoin over the past six years. Is it better?<\/p>\n

— Peter Schiff (@PeterSchiff) September 2, 2021<\/a><\/p><\/blockquote>\n