It’s an unsurprising uppercut, but it comes from a power source and will undoubtedly harm the cryptocurrency business.
And the timing is awful for the market since cryptocurrencies have been riding high for several weeks.
The 99-year-old billionaire Charlie Munger again criticized cryptocurrencies, to which he attributes no benefit. He urges the United States to follow China’s lead and ban them.
“In recent years, private enterprises in the US issued thousands of new cryptocurrencies in different amounts.” Munger wrote in an opinion piece published on February 2 in The Wall Street Journal. “These have become publicly traded without prior government clearance.
“In other instances, a large block of cryptocurrency was sold to a promoter for nearly nothing. Then the public bought in at much higher prices without fully comprehending the pre-dilution in favor of the promoter,” says the prominent investor.
He refers to it as “wild capitalism.” And he references a quote attributed to Mark Twain: “A mine is a hole in the earth topped by a liar.”
Crypto Is ‘a Gambling Contract’: Munger.
The vice chairman of Berkshire Hathaway, the holding firm he co-leads with CEO Warren Buffett, then deals a fatal blow to cryptocurrencies.
He argues, “A cryptocurrency is neither a currency, commodity, or security.” “Instead, it’s a gaming contract with a nearly 100 percent house edge, entered into in a nation where gambling contracts are usually governed only by states competing in laxity.”
So, what then? According to Munger, the United States should immediately pass a new federal law to prevent this from happening.
To do this, he suggests that American authorities consider “Two interesting precedents.”
The billionaire stated, “In the first precedent, the communist government of China recently banned cryptocurrencies after concluding that they would create more harm than good.”
“In the early 1700s, England reacted to a terrible slump. It was caused by the failure of a scheme to trade with poor people on the other side of the globe using slow-moving sailing ships to make enormous profits.”
“What the English Parliament did in its grief when this mad promotion blew up was plain and simple: It outlawed all public dealing in new common stocks and kept this ban in place for almost 100 years.”
The White House and Congress are now formulating regulations for the industry following the overnight collapse of the FTX cryptocurrency exchange. Munger seems to imply that there is no alternative solution. In February 2022, it was valued at $32 billion before imploding a few months later.
“What should the United States do once a ban on cryptocurrency has been implemented? Well, one more step may be warranted. Thanking the Chinese communist leader for his superb example of uncommon sense, “The millionaire commented.
Bitcoin “Is Dumb”
Even though it generated much debate, the famed investor’s op-ed did not stop the surge in cryptocurrency prices. At the time of writing, the market was up 6.1% to $1.1 trillion, according to statistics firm CoinGecko.
The most popular cryptocurrency, Bitcoin, increased by 4.3% to $24,062.63 over the past twenty-four hours.
Buffett and Munger are ardent opponents of cryptocurrencies. At Berkshire Hathaway’s annual shareholder meeting a year ago, bitcoin and other cryptocurrencies were slammed.
Munger stated at the time, “I tend to avoid things that are dumb, evil, and make me seem terrible, and bitcoin does all three.” “It is foolish and could reach zero.”
Buffett, 92, also did not mince words.
“You told me you own all the bitcoin in the world and offered it to me for $25. I wouldn’t take it because what would I do with it? It will do anything, “The Oracle of Omaha spoke sternly. Why should I purchase bitcoin if I intend to dispose of it?
Once, he stated that the first cryptocurrency was “probably rat poison squared.”
“I do not know if it will rise and fall in the next year, five or ten years. However, I am certain it does not create anything, “Buffett said last April. It has a magical quality, and people have attributed magic to numerous things.