Synopsis: Warren Buffett (Berkshire Hathaway) & Jamie Dimon (JP Morgan) have been vocal in their criticism of Bitcoin. Perhaps we shouldn’t be surprised that two figures representing the status quo financial system have such strong Bitcoin criticism arguments to air. This article evaluates whether or not they have a valid case.
Not everyone is optimistic about the future of Bitcoin. Sharp, biting Bitcoin criticism has made its way to the airwaves, warning people that a cryptocurrency bubble is inflating.
Warren Buffett, the legendary investor at the helm of Berkshire Hathaway, is adamant that Bitcoin is a terrible investment. Speaking on CNBC in 2014 Buffett said “Stay away from it. It’s a mirage basically… the idea that it has some intrinsic value is just a joke in my view.” Another high-profile critic of Bitcoin and cryptocurrency is JP Morgan CEO Jamie Dimon. He said: “Governments are going to crush it one day. Governments like to know where the money is, who has it, and what you’re doing with it.”
Some pretty sharp Bitcoin criticism there from two well-respected figures in finance. But given the disruption that Bitcoin and other crypto could cause, are these the words of men with a self-interest in preserving the status quo?
Even if these beliefs are honestly held, it is worth bearing in mind that although Buffett is one of the world’s richest men and Dimon heads one of the world’s largest banks, these two men don’t have a perfect window into the future. We should take their predictions, and by extension, their Bitcoin criticism, with a large pinch of salt.
Should We Listen To “Expert” Bitcoin Criticism?
A brief look into the track record of so-called experts reveals that we should look deeper, no matter how certain they believe they are in their predictions:
- Telephones. “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication.” – William Orton, President of Western Union (1876)
- Cinema. “The cinema is little more than a fad. It’s canned drama. What audiences really want to see is flesh and blood on the stage” – Charlie Chaplin, actor (1916)
- Television. “People will soon get tired of staring at a plywood box every night” – Darryl Zanuck, 20th century Fox (1946).
- Computers. “There is no reason anyone would want a computer in their home.” – Ken Olson, President of Digital Equipment Corp (1977)
- Smartphones. “There’s no chance that the iPhone is going to get any significant market share.” – Steve Ballmer, CEO of Microsoft (2007)
These were not predictions from laypeople – these confident claims were all made by leaders who intimately knew their industry (or, thought they did). It will be interesting to revise the list in ten or twenty years to see if Buffet and Dimon and their Bitcoin criticism gets added to this list of spectacularly-wrong prognostications.
Andreas Antonopoulos, speaking in response to Dimon’s criticisms, laid out the case for why cryptocurrency will be a force to be reckoned with: “The world’s banks have never faced competition from the Internet. They need to learn really quickly that when the Internet comes for your industry, it doesn’t end well. Look at all the other industries that faced intense competition from the Internet. Well, the Internet is now coming for banking.”
The Internet has already decimated bookstores, record stores, newspapers, video rental, travel agents, physical encyclopedias, television advertising revenue… are banks next?
Perhaps the final word should go to Jeff Garzik (one of the core developers of Bitcoin): “Bitcoin is comparable to the pre-web browser 1992-era Internet. This is still the very early days of bitcoin’s life.”
What this means is – Bitcoin criticism may be valid now, but it may not always be. Like the laughably incorrect predictions about all those other inventions, maybe it’s just too early to tell.