On May 3, BTC, criticized by Munger and Buffett, did not fall. Instead, it rose again and wanted to break the $60,000 mark again. To be honest, the price of BTC is so strong, it is indeed beyond the expectations of many people, but it is reasonable. Because BTC has invested a lot of capital in the process of speculation, these capitals will not be easily withdrawn without making money. If the price of BTC now drops, the capital invested in the previous period will be in vain, which is obviously not in the interest of capital. Of course, what will happen to BTC in the end, whether it will run away after harvesting, or put a long line to catch a big fish, is unknown.
However, it can be heard from Buffett and Munger that neither of them holds BTC and criticizes BTC as a financial product that emerged out of thin air. These two are both representatives of value investing, one is called a generation stock god, and the other is called an investment master. They expressed that they are very optimistic about the future of technology stocks, but not optimistic about BTC, which shows that the success of BTC does not depend on technological innovation. Of course, the views of these two value investment masters cannot be said to be right, at least BTC is designed based on blockchain technology.
BTC is a competitor of the U.S. dollar or a friend of the U.S. dollar
The remarks made by these two value investment gurus on BTC have naturally become one of the hot spots of online discussion, and many people have begun to reveal why they hate BTC. I took a look at the trend of comments on the Internet, and netizens put forward two views, namely the bubble theory and the interest theory. The mainstream view is because Buffett once said that BTC is a kind of "tulip bubble", no matter how it rises or falls, it depends entirely on the wishes of investors. BTC is a speculative "Buck Rogers" phenomenon, which obviously does not conform to Buffett's concept of value investment.
Another view is that Buffett is worried that the development of BTC will threaten their seigniorage revenue. I have not found evidence to verify this. Chen Weixing, founder of Pan-City Capital and Kuaidi Taxi, said that Buffett and Munger’s companies are one of the companies that benefit the most from seigniorage in the world. Although I don't know who is the biggest beneficiary of the seigniorage of the US dollar, the rise of BTC will indeed have an impact on the seigniorage of the US dollar. You must know that the seigniorage of the US dollar is a huge gain.
Regarding this point, it is also one of the biggest disputes among netizens about BTC. What is the relationship between BTC and the United States? Those who support BTC believe that BTC is a decentralized monetary system that will impact the status of the US dollar in the world. Many people who oppose BTC think that the relationship between BTC and the United States is very ambiguous, and they even say that BTC is a tool for the United States to harvest world wealth. Regarding this issue, in fact, we still need to see to what extent BTC eventually develops and whether it can truly get rid of its dependence on the US dollar.
Buffett and Munger oppose BTC because it does not conform to the concept of value investment
Although it seems that BTC is a decentralized currency system, BTC was mainly developed with the support of American capital giants. If the U.S.'s attitude towards BTC now changes, and BTC is completely banned, BTC will definitely be frustrated. Although BTC will affect the seigniorage tax of the U.S. dollar, the issue of over-issued U.S. dollars needs to be considered. There are data showing that 20% of the U.S. dollar is printed by the United States in 2020. This data is very scary.
Therefore, compared with the amount of over-issued U.S. dollars, the current loss in seigniorage can be said to be negligible. On the contrary, the launch of BTC and the growth of the US stock market effectively digested the additional issuance of US dollars, thereby substantially resolving the negative impact of over-issuance of the US dollar. Therefore, the current relationship between the United States and BTC is not what people say. BTC does not really threaten the status of the US dollar. The reason why Buffett and Munger oppose BTC is also unlikely to be because, as Chen Weixing said, they worry that BTC will affect their seigniorage.
As two legendary value investors, Munger and Buffett are not optimistic about BTC. I think the main reason is that they are not optimistic about the future of BTC. BTC is more like a financial tool that is hyped up out of thin air, rather than a real technological innovation. It does not conform to the value investment philosophy of Munger and Buffett.
