How Warren Buffet convinced me not to invest in crypto

Chloé Garnham
2 min readMay 15, 2022

Warren Buffet once said, “Be fearful when others are greedy, and greedy when others are fearful.” But what does that have to do with cryptocurrencies?

Austin Distel

Nobody wants to get rich slowly

Warren Buffet is known as the world’s greatest investor. Few follow his principles, but if they did, they’d see that investing successfully is quite straightforward. Though his “buy and hold” principle requires something that most people don’t have: patience.

Jeff Bezos once asked Buffet, “your style of investing is so simple. Why doesn’t everyone just copy you?”

He replied, “because nobody wants to get rich slowly.”

This could be why cryptocurrencies are of great interest to many. They offer the promise of getting you rich quick.

But is buying them such a good idea?

Warren Buffet hates crypto

To say that Buffet hates crypto isn’t an exaggeration. Buffett once said that bitcoin is “probably rat poison squared.”

He also said, “Whether [bitcoin] goes up or down in the next year, or five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything.”

Buffet used the example of investing in farmland or housing –– both of which are tangible assets –– to illustrate that they can produce income through food or rent. Crypto, on the other hand, offers no inherent value.

Is crypto rat poison?

When you invest in crypto, you invest in something that isn’t tangible. Making money requires not a literal value add, but simply selling your currency to an optimistic (arguably misguided) person. When people are no longer optimistic, therein lies the problem.

That’s not the only issue though. Buffet believes that crypto isn’t a true currency. “There’s no reason in the world,” he said, that the US government would replace the dollar.

Ultimately, when you buy crypto you exchange real, valuable money for a product that could one day be worthless.

Understanding something that doesn’t exist

Most people investing in cryptocurrencies don’t truly understand what crypto is. And that’s cause for concern for Buffet.

One of Buffet’s key investing rules is to only invest in companies he understands. It’s the reason that some of his key investments include Apple, Bank of America, Coca-Cola, American Express, and Kraft Heinz –– simple easy-to-understand companies with measurable value.

If you don’t understand what a company does, it’s not an investment, it’s a gamble. And Buffet isn’t a gambler.

What’s tricky when it comes to crypto is understanding its value or lack thereof.

To invest like Buffet, consider this: crypto is making people greedy. Perhaps that should make you fearful.

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Chloé Garnham

Personal development, philosophy, books, & mindfulness. An imperfect person on a journey to a more peaceful life. wisewordsbychloe.substack.com/