Remembering Charlie Munger: Navigating the Cryptocurrency Conundrum

In the wake of the legendary Charlie Munger’s passing on November 28, 2023, at the age of 99, we reflect not only on his profound impact on the investment world but also on his unyielding stance against the emerging realm of cryptocurrency. Munger, the revered right-hand man of Warren Buffett and Vice Chairman of Berkshire Hathaway, was known for his sharp wit and unwavering principles, especially in the field of value investing. Yet, when it came to cryptocurrencies, his opinions were far from conventional. This article revisits and explores Munger’s vehement criticisms of the cryptocurrency domain.

Remembering Charlie Munger: Navigating the Cryptocurrency Conundrum

Charlie Munger’s Skepticism Towards Cryptocurrencies

Cryptocurrencies: A Gamble Rigged in Favor of the House!
In February of this year, Munger penned an op-ed in The Wall Street Journal, asserting that cryptocurrencies possess attributes more akin to a “gambling contract” where the house holds all the advantages. He went further to applaud China’s strict cryptocurrency ban, considering it a prudent decision.

Cryptocurrencies: Venereal Diseases of the Financial World!
In another instance from February, Munger dubbed Bitcoin as the “most asinine investment” and predicted that the majority of cryptocurrencies would ultimately end up worthless. In a Forbes report from February 2022, he likened cryptocurrencies to “venereal diseases,” dismissing their relevance. He suggested that people adopted cryptocurrencies because of their utility in illegal activities such as extortion, kidnapping, and tax evasion.

Cryptocurrencies: A Tool for Criminal Activity!
In May 2021, Munger expressed his disdain for the success of Bitcoin, believing it to be disproportionately advantageous to kidnappers and fraudsters, causing harm to civilized society. When it came to discussing cryptocurrencies, Munger’s tone grew increasingly firm:

“I will never buy cryptocurrencies. I wish they had never been invented.
I think the Chinese made the right decision, which is to outright ban cryptocurrencies,
and my country (the United States) made the wrong decision.”

Charlie Munger's Skepticism Towards Cryptocurrencies

Bitcoin: A Poison Gas Attack on Traditional Finance!
In early November 2023, Munger viewed cryptocurrencies as a disruptive and non-productive invention, tossing the metaphor of Bitcoin as a “poison gas attack” on traditional finance. As early as the end of 2021, he expressed his hope that cryptocurrencies had never been invented.

Bitcoin’s Assault on Financial Systems!
Simultaneously, he acknowledged the role of traditional currencies (such as shells and gold coins) in the development of civilization but pointed out that Bitcoin, as an artificial currency, disrupted long-standing effective financial systems.

Bitcoin: Unlikely to Replace Fiat Currency!
In 2021, Munger believed that due to its high volatility, Bitcoin was unsuitable as a medium of exchange for the world.

Bitcoin: Synthetic Gold!
In 2021, Munger considered Bitcoin as a “synthetic” substitute for gold. However, due to his aversion to investing in gold, he refrained from investing in Bitcoin as well. Additionally, he described Bitcoin as “inedible.”

R.I.P. Charlie Munger: 10 Mindsets for Perfect Investment

Conclusion: Farewell to Charlie Munger

In summary, Charlie Munger’s critiques and conservative stance on cryptocurrencies were robust. He saw cryptocurrencies more as gambling contracts, vehemently opposing their adoption. His disdain for their potential use in criminal activities and disruption of traditional financial values was evident. Munger’s skepticism towards emerging financial technologies reflected his commitment to traditional financial values.

As we bid farewell to this investment luminary, let us navigate the complex world of cryptocurrencies with a lens shaped by Charlie Munger’s unwavering principles, reminding us to approach innovation with caution and a discerning eye.

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