In a recent wave of commentary on the state of cryptocurrencies, Charlie Munger, Vice Chairman of Berkshire Hathaway, has once again voiced his concerns regarding the rise of Bitcoin.
Munger’s remarks come at a time when Bitcoin and other cryptocurrencies have seen a tumultuous increase in value, prompting a mix of investor enthusiasm and financial scrutiny. The nonagenarian’s analogy drew a stark picture of his stance on the matter, suggesting that cryptocurrencies are an unwelcome addition to a long-standing economic formula that has proven effective for many.
Munger’s traditionalist view on currency is rooted in the teachings of Adam Smith, the father of modern economics. He believes that for Smith’s principles to yield results, a stable currency is essential to facilitate trade. The respect garnered by a currency, according to Munger, comes from its sovereign issuance.
Throughout history, the transition from hunter-gatherer societies to civilized ones has been marked by the use of robust currencies, whether in the form of shells, grains, or precious metals. Munger points to the strength of the banking systems in the United States and the United Kingdom as examples of this success.
The introduction of what Munger calls a “synthetic currency” into this well-established system is, in his view, problematic. He argues that Bitcoin and its counterparts disrupt a financial ecosystem that has served the populace effectively for a considerable time.
Munger’s criticism of cryptocurrencies is not new. He has consistently expressed skepticism towards Bitcoin, labeling it as one of the dumbest investments he has encountered.
His concerns are not just limited to the investment risks but extend to the societal impact of cryptocurrencies. In February, he expressed dismay at the widespread belief in what he considers a nonsensical asset, questioning the government’s decision to allow such transactions to occur.
In a bold statement, Munger has called for the federal government to step in and ban the crypto industry entirely, mirroring actions taken by other countries like China. His stance is clear: cryptocurrencies, in his opinion, should never have been invented. He views their development as disgusting and counterproductive to the interests of civilization.
While Munger’s comments have resonated with some market participants, the crypto industry continues to grow, with many investors and technologists seeing digital currencies as the future of money.
The debate over the role of cryptocurrencies in the global financial system remains heated, with strong opinions on both sides.