Warren Buffett’s investment record has made him a legend on Wall Street and beyond. For decades, his sage advice and value investing philosophy have guided countless investors to financial success.
It’s no doubt — Warren Buffet is an investment genius. However, he’s not right about everything.
When it comes to Bitcoin and cryptocurrencies, the Oracle of Omaha’s skepticism reveals a blind spot in his otherwise prescient vision.
In an interview, Mr Buffett was quoted as saying, “If you buy something, a farm, an apartment house, or an interest in a business, and look to the asset itself to determine whether you’ve done something, what the farm produces, what the business earns, and so on, you don’t really care what the stock market’s doing or if it’s open. You can do that on a private basis, in fact you do that on a private basis, you can buy a farm or an apartment house generally, and it’s a perfectly satisfactory investment. You look at the investment itself to deliver the return to you. Now if you buy something like bitcoin or some cryptocurrency, you don’t really have any interest in producing anything: you’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find somebody that’s going to pay more. Now If you ban trading in farms, you can still buy farms and have a perfectly decent investment.”
His criticism stems in part from his complete misunderstanding of what blockchain is and what it is created to achieve.
He’s looking at it from a stock market perspective, which is not the right comparison at all. When Bitcoin was invented, yield generation and dividends were not the core consideration, but that is the core consideration when investing in stocks.
Instead, Bitcoin is a system of communicating value, more similar to a currency or gold than stocks (though still not that similar to those, more on this here).
This is often called a “medium of exchange.” A better comparison is this: when buying a stock, you have to hand over fiat, and when selling the stock you receive fiat. Yet no one would ever accuse you of transacting in fiat because “You’re just hoping the next guy pays more,” even though that’s exactly what you’re doing!
You only sold your stock to get fiat and used that to buy eggs because you valued the fiat at more than you valued the stock and the eggs at more than you valued the fiat. The fiat communicated the value that was passed on to acquire the next item. That’s just rational marketplace behavior, not speculation or ponzi-finance.
By clinging to outdated notions of intrinsic value and productive assets, Buffett risks missing out on one of the most transformative technologies of our time — just as he initially dismissed internet companies in the 1990s. While his caution is understandable, it’s time for investors to look beyond Buffett’s outdated ideas and Bitcoin blindness and recognize the paradigm shift that cryptocurrencies represent.
The future of money and finance is being written in code, whether Warren Buffett chooses to read it or not.
While Bitcoin may not produce tangible goods or yields like a farm or a business right now, it produces something equally valuable in the digital age: financial ownership, inclusion, security, and efficiency. Its value comes from its network effects, its security guaranteed by cryptography and decentralized consensus, and its potential to reshape our financial systems. Bitcoin isn’t merely a speculative asset dependent on “line-go-higher,” it’s a revolutionary technology that serves as a decentralized, censorship-resistant store of value and medium of exchange. Unlike traditional assets, Bitcoin’s value doesn’t come from producing goods or services, but from its unique properties as a digital, borderless, and scarce asset.
Bitcoin provides protection against financial abuse and manipulation. In an era where central banks can print money at will, potentially leading to inflation and devaluation of fiat currencies, and financial behemoths and central banks can — and do — buy and sell equities to achieve their own ends. Bitcoin offers a hedge against these risks. Its fixed supply of 21 million coins makes it inherently deflationary and resistant to the kind of monetary policy decisions that can erode the value of traditional currencies.
Moreover, Bitcoin empowers individuals by giving them full control over their wealth. Unlike traditional banking systems where your assets can be frozen or confiscated, Bitcoin allows for true ownership and financial sovereignty. This is particularly valuable in countries with unstable governments or unreliable financial institutions. Mr Buffet’s coziness with the government shields him from this sort of risk, rendering his views on the matter as irrelevant.
Bitcoin also serves as a global, borderless payment system. It enables fast, low-cost transactions across the world, without the need for intermediaries. Anyone with asset managers and teams of private bankers at their disposal to manage their finances, and enough accumulated wealth not to notice the costs won’t see the value of this, but the other six billion of us do. This has enormous potential for remittances, international trade, and financial inclusion for the unbanked population. Again, Mr Buffet’s situation puts him in a place where he cannot even begin to understand this.
At Zulu Network, we’re building on these fundamental strengths of Bitcoin. Our Layer 2 solution aims to enhance Bitcoin’s utility, enabling smart contracts and decentralized applications while maintaining Bitcoin’s core principles of security and decentralization. This isn’t about finding a greater fool, but about creating real-world use cases and value on top of the Bitcoin network. In fact, it directly refutes his criticism about cash flows. By bringing EVM compatibility to BTC and Bitcoin native assets, they can be put to productive uses in a decentralized economy, such as in lending or staking. More so, it does this in a completely transparent way, unlike Buffet’s farms and “apartment houses” where the rents and harvests are only disclosed to a certain authorized participants or those who pay hefty subscription fees to the holders of those data.
While Buffett’s concerns about speculative bubbles and unproductive assets are well-founded, they fail to grasp the revolutionary potential of Bitcoin as both a technology and a new form of money. His dismissal of Bitcoin as “rat poison squared” overlooks its unique properties as a decentralized, censorship-resistant store of value and medium of exchange. In an era of unprecedented money printing and erosion of financial privacy, Bitcoin offers a much-needed alternative to the traditional financial system that Buffett has mastered. While Mr. Buffet’s investment philosophy is great, we believe it’s crucial to recognize that value in the 21st century isn’t limited to traditional productive assets. Bitcoin and the ecosystem we’re building around it at Zulu Network represent a new paradigm of value creation and preservation in the digital age. Not only does he not get what Bitcoin and blockchain actually are an represent, he doesn’t even have the facts straight about yield.
Warren Buffett’s critique of Bitcoin reflects a misunderstanding of its value and yield potential. Unlike traditional investments, where yield is derived from tangible outputs like farm produce or business earnings, Bitcoin’s value comes from its decentralized, digital nature, offering financial sovereignty, security, and inclusion. His assertion that Bitcoin lacks yield overlooks the innovations in blockchain technology, such as the development of smart contracts and decentralized applications, which enable productive use cases like lending and staking. These mechanisms generate yield in a transparent, decentralized manner, challenging Buffett’s outdated notions of value creation.
Bitcoin and Zulu are moving the financial system forward, whether Mr Buffett gets it or not.
About Zulu Network
Zulu Network is a new class of Bitcoin Layer 2 to move the Bitcoin economy forward, empowering the Bitcoin ecosystem through exciting innovations. Zulu is the first Bitcoin Layer 2 to achieve Bitcoin-level security using BitVM2, enabling developers to seamlessly deploy dApps on both EVM & UTXO layers.
Zulu is a recognized key contributor to BitVM, poised to launch the first trust-minimized Bitcoin bridge. Join their 765k+ users and start earning and shaping the future on Bitcoin with Zulu.
