Bitcoin haters why don’t like

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“Disgusting and contrary to the interests of civilization”

“Of course, I hate the success of bitcoin. I don’t appreciate a currency that is so useful to kidnappers and extortionists and so on. I think I should modestly say that all this damn development is disgusting and against the interests of civilization. – Charlie Munger of Berkshire Hathaway.

These were the words of Charlie Munger, ninety-seven, vice chairman of investment giant Berkshire Hathaway and second in command of Warren Buffett.

Charlie Munger cgtn.com

Naturally, Munger and Buffett have amassed huge fortunes by investing in companies, by selecting stocks. That they don’t need to buy cryptocurrency is understandable. It is also to be expected that they will not even understand them clearly. But, “contrary to the interests of civilization? Munger does not provide any clarification as to what he means by that. And to the point that bitcoin is being used by drug dealers and other criminals, yes it is. Cash too. In fact, in 2020 only around 0.34% of all cryptocurrency transactions involved illicit activity. In addition, criminal activity carried out through the traditional banking system accounted for 2-4% of global GDP, far more than with cryptocurrencies.

Another point made by Munger is that bitcoin is used as a substitute for gold, and it doesn’t buy gold either, so why would it buy bitcoin? Fair enough, Berkshire focuses on companies that make profits and pay dividends. However, this does not really make this new digital technology “contrary to the interests of civilization”. Ouch.

“It’s probably squared rat poison.” – Warren Buffett, on Bitcoin.

Buffett, with Liz Claman youtube.com

This was Buffett’s response to Fox Business host Liz Claman when asked about bitcoin. Buffett’s sidekick Munger previously called bitcoin “rat poison.” Buffett’s opposition to bitcoin can probably be summed up in three points. First, he says bitcoin does not have unique value on its own. (Sounds like paper money, right?) He thinks bitcoin’s only value is the hope that someone will be willing to pay you more in the future. (Looks like stocks, a bit.)

Second, the “Oracle of Omaha” believes that bitcoin has none of the properties of money and is not a store of value. As with any new technology, Bitcoin is gradually gaining ground, both as a medium of exchange and is already accepted by thousands of traders around the world. Plus, it is quickly replacing Western Union as the fastest and cheapest money transmitter on the market. As for a store of value, bitcoin has appreciated on average 200% per year for 12 years. It’s quite a store of value, albeit with a bit of volatility. So, admittedly, it’s not for everyone.

Third, Buffett probably doesn’t fully understand bitcoin. To his credit, he doesn’t invest in things he doesn’t understand. It focuses on stocks and buying large companies and as such surely hasn’t gone down the bitcoin rabbit hole like many of us have. That’s good, he’s without a doubt one of the greatest investors the world has ever known; his record speaks for itself. “I don’t own any cryptocurrency and I never will,” Buffett said.

Paul krugman

Paul Krugman is a Nobel Prize winning economist and he happened to be the author of a 2013 editorial in the New York Times titled “Bitcoin is Evil”. Since then, he has been shooting Bitcoin.

Krugman believes that bitcoin does not yet play a role in normal economic activity after twelve years. He, like other enemies of Bitcoin, thinks it is the currency of drug dealers. “Because Bitcoin and its loved ones have failed to play a significant economic role, what happens to their value is fundamentally irrelevant to those of us who don’t play the crypto game,” Krugman said in a recent New York Times article.

He’s also on the hunt for gold, for most of the same reasons, so Bitcoiners don’t need to feel hassled. He believes that gold cannot be used for monetary transactions and has not been a stable store of value.

But, so early in Bitcoin’s existence, should you take Krugman’s words as gospel? Has he ever been wrong before? Here is a quote from Paul Krugman, circa 1998. You be the judge:

“The growth of the Internet will slow down considerably. By 2005, it will become clear that the impact of the Internet on the economy has not been greater than that of the fax machine. -Paul Krugman, 1998.

Paul Krugman Politics photo

Peter Schiff

Ah, Peter Schiff, the bitcoin bear and gold supporter that Bitcoiners love to hate. Schiff is the Chief Economist and Strategist at Euro Pacific Capital and in his role he also manages Schiff Gold, the precious metals trader. It is not surprising that he is not a fan of bitcoin, as many believe that bitcoin is akin to gold 2.0 and will become the main store of value. Most Bitcoiners believe that bitcoin is actually better at gold than gold is. I do like his take on the economy, inflation and money printing, however.

Peter Schiff hard-money.net

Schiff, after years of battling Bitcoin maximalists on Twitter, has recently appeared on numerous podcasts, debating Bitcoiners like Peter McCormack, Anthony Pompliano, Greg Foss, and Anthony Scaramucci. Interviewed on Fox Business by Charles Payne, Schiff said of Bitcoin: “All bitcoin is the latest iteration of fool’s gold and whoever buys it is ultimately a fool.” Schiff believes that bitcoin will never be used as a store of value. He goes on to tell Payne:

“It will never be money. It does not meet the very definition of money. Money must be a commodity. It must have real value in itself, not just the uses and means of exchange.

Thus, Schiff believes that bitcoin has no value on its own and is not backed by anything. It looks a lot like paper, fiat money.

I agree with Schiff that gold has its place in some portfolios. I also believe that dumping on Peter Schiff is not the best thing Bitcoiners can do to promote the mass adoption of cryptocurrencies. Also, I understand that he has the motivation to put bitcoin in the shade, since his company sells gold and silver.

It must really infuriate him, however, that his son Spenser Schiff is a very public and vocal bitcoin holder. Spencer went all in, recently putting 100% of his wallet in bitcoin.

Ginsbergonomics: “Bitcoin will suffer a vicious and painful death”

Single-name writer Ginsberg, posting on Medium, made it the title of one of his recent articles just a few weeks ago. Looks like he’s not a bitcoin fan.

Ginsberg’s arguments against bitcoin are not based on fundamentals and in some cases are just plain wrong. Oh, his words are controversial, and it attracts readers, I guess. His first point of view is that bitcoin is not just an asset, but rather a “religion”. He thinks this leaves Bitcoiners blind to criticism. He might be right, but that doesn’t diminish the technology or uses of Bitcoin. It is purely a secondary note.

Ginsberg says the biggest holders, the “whales,” sell their bitcoin. This statement is too general, and the data shows otherwise. As the number of whales has declined, their aggregate holdings have increased. Thanks to Will Clemente III and Glassnode for this map. The green line indicates the increase in whale numbers:

Glassnode / @WClementeIII

Ginsberg is also trying to argue that institutional interest in bitcoin is “dead.” He describes as “pitiful” the amounts of money paid into bitcoins by institutions. It may depend on how you define “institution”. (Or how you define “pitiful.”) He says big companies rarely buy bitcoin directly, so I guess that’s a definition, big business. Public company MicroStrategy (MSTR) has been buying bitcoin in massive numbers for the past year and now owns 0.5% of all existing bitcoin. Tesla also bought a substantial amount of bitcoin, worth over $ 2 billion. Square also holds Bitcoin on its balance sheet.

Fidelity Investments has been mining bitcoin since 2015 and has created a whole division of digital assets, and JP Morgan is creating products to provide clients with access to bitcoin. Mass Mutual Life Insurance bought $ 100 million worth of bitcoins. Ark Investing has invested in GBTC and Coinbase stocks. Adoption is happening, albeit gradually. In addition to buying bitcoin directly, there are over a dozen applications filed with the SEC for approval to start a Bitcoin ETF. It seems that the institutional sector is launching, slowly, but with significant capital.

Note – Ginsberg puts his money where his mouth is. He has “the skin in the game”, as he puts it. He opened a short position of $ 1,000 in Bitcoin with 10x leverage. You have to give it credit. And to keep a healthy discussion about Bitcoin alive.

This is a guest article by Rick Mulvey. The opinions expressed are entirely theirs and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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