Charlie Munger: Most Cryptos Are ‘Going to Zero’
In a recent keynote address for Zoom’s 2023 Zoomtopia Conference, Charlie Munger, the vice president of Berkshire Hathaway, criticized Bitcoin and referred to it as the “stupidest investment I ever saw.” He further expressed his belief that most cryptocurrencies will eventually become worthless.
“Don’t get me started on Bitcoins. Most of those investments are going to zero.”
Munger’s statement holds some truth. Historically, many cryptocurrency projects have failed, with approximately 80% of new altcoins failing within a year. Even Brad Garlinghouse, CEO of Ripple, acknowledges that 99% of cryptocurrencies will likely go to zero.
However, it is important to consider these numbers in context. The failure rate for new restaurants and businesses in any industry is similarly high. While many crypto projects fail, the ones that succeed can generate significant profits.
Is Bitcoin Really the Stupidest Investment Munger Ever Saw?
While Munger used hyperbole to label Bitcoin as the stupidest investment he ever saw, there have been worse investments. For example, Berkshire Hathaway lost $4.5 billion in a single day due to its investment in Kraft Heinz.
Considering this, the price volatility of Bitcoin doesn’t seem so foolish when compared to other investments made by experienced investors like Warren Buffett. The digital currency offers unique features such as decentralization and deflationary properties.
Hot Take: Munger’s Criticism Reflects Lack of Understanding
Charlie Munger’s criticism of Bitcoin and cryptocurrencies reflects a lack of understanding about their potential and the underlying technology. While it is true that many crypto projects fail, dismissing the entire industry as stupid overlooks the transformative impact it can have.
Bitcoin and cryptocurrencies have the potential to revolutionize finance, improve financial inclusion, and provide a secure alternative to traditional banking systems. Rather than dismissing them outright, it is important to recognize the innovation and opportunities they bring.
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