Author, Amir Ness

We all know who Warren Buffet is, but why does he hate bitcoin so much? For those of you who aren’t familiar with Warren’s actual opinion on bitcoin, here’s a pretty self-explanatory quote:

“I never considered for one second having anything to do with bitcoin, I detested it the minute it had been raised. The more popular it got, the more I hated it. It’s just disgusting that people have been taken in by this” – W.B.

With all due respect to Warren, I personally think that there is a much deeper rooted psychological dynamic going on here. Namely, people like Warren Buffet are the captains of a paradigm that is in its twilight. Simply said, bitcoin and the blockchain represent a new economic system that people like Warren have no clue about.  What do I mean when I say these guys have no clue about bitcoin, and more specifically the blockchain?

Take a step back for a moment. What problem does the blockchain solve? You need to understand that first in order to know what value the blockchain provides. The blockchain solves a computer science problem known as the double spend problem and The Byzantine generals problem.  The double spend problem a problem that exists in all databases hitherto; what is it? Well, basically any transaction that ever occurs on a database- think of a simple purchase with your Visa card- cannot be 100% guaranteed that there is not a duplicate of that transaction somewhere. That is why the nature of our database(s) have until now been Centralized databases. We needed Visa to assure us that our transactions were safe and not duplicated by keeping all the data in a centralized location of which they would control and keep secure. Now comes the blockchain with its pier-to-pier technology and basically solves the double-spend problem, makes transaction way more secure, and consequently, relieves us of the need for centralization. Wow, that’s a lot. Yes, beyond the scope of this simple article. However, I needed to address this because our friend Warren seems to have overlooked all this. Rightfully so, why would a person who has so much to lose want to advertise how great bitcoin or the blockchain is? People like Warren Buffet, Charlie Munger, Jamie Dimon, these are the leaders of the ‘centralized world’. They represent the concentration of power via a monetary system that has allowed them to control so much wealth that they de facto became the same guys who told you how to make money, how to invest money, and why they are right.

Those days are numbered, and in this new system of economic prosperity, we should be careful to not take the advice of the Warren Buffet’s of the world. People like Warren have a vested interest in the old system, they do not have any incentive to see Bitcoin succeed, and in fact, they have a lot to lose. So to me, it’s clear why Warren hates bitcoin; I think he hates it because it has everything a fiat currency has and more. Furthermore, Bitcoin is a currency that cannot be controlled by a banking system, it does not need a central bank to choose interest rates for it, and it is a currency that cannot be inflated. Keep in mind, inflation is a tool for central bankers to reduce the debt burden of a government by making the value of the currency worthless.

I think of guys like Warren and I say to myself, “yes, they were smart and they knew how to invest. But their time is coming to an end. The rules and metrics by which these investors made money in the past are no longer applicable to the world of blockchain”.  I am not here to disparage Mr. Buffet, but I am here to say that one should not speak so disparagingly about a technology that has proven itself when one knows so little about it. It would have been much more applicable if people like him would say “you know, I just don’t really know much about it so I stay away from it.” Fine, that is totally acceptable. But for them to come out and literally scare people away from a technology that has the potential to change the world for the better in so many ways is just another form of social irresponsibility.

Oh and let’s not forget that this is the same Warren Buffet that admittedly did not invest in Microsoft because he didn’t understand technology, so how is that now he feels comfortable enough to make these remarks about bitcoin? Beware of those with power who speak ill of the blockchain, that is the message of this article. A new paradigm has arrived, economic opportunities are available to those who hitherto did not have them, and we are now given an opportunity to improve our economic status in ways that will seem “absurd” to guys like Warren Buffet.

Founder of and Senior Editor at CoinDaily