Bitcoin is “disgusting and contrary to the interests of civilisation” and stock-trading apps like Robinhood are taking advantage of people’s “gambling instincts”, according to business tycoons Warren Buffett and Charlie Munger.
The Berkshire Hathaway chair and vice chair made the explosive remarks during a Q&A at the holding company’s annual shareholder meeting after cryptocurrencies surged to record levels in the past year.
Bitcoin, ether and even the joke cryptocurrency dogecoin have more than tripled in value over the course of the pandemic. The digital currency bull run has been fuelled by growing interest from the public, investors and companies like Tesla, which invested $1.5bn in bitcoin in February. More companies – such as Uber and eBay – are also exploring accepting crypto as payment. The public listings of companies like crypto exchange Coinbase have also contributed to the bitcoin boom.
During the annual meeting, Buffet was asked if he still considered cryptos as worthless artificial gold. The investment magnate dodged the question, saying he’d like to avoid upsetting the hundreds of thousands of bitcoin owners listening in on the conversation.
“We’ve got a choice of making 400,000 people mad at us and unhappy and/or making two people happy. That’s just a dumb equation,” he said, according to a transcription of the call.
Munger made no such consideration, instead joking that “those who know me well are just waving the red flag at the bull.”
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“Of course,” the Berkshire Hathaway vice chair said, “I hate the bitcoin success and I don’t welcome a currency that’s so useful [for] kidnappers in our stores and so forth, nor do I like just shuffling out a few extra billions and billions and billions of dollars to somebody who just invented a new financial product out of thin air.
“I think, I should say, modestly, that I think the whole damn development is disgusting and contrary to the interests of civilisation, and I’ll leave the criticism to others.”
While Buffett held back when it came to cryptos, he did no such thing when the topic of Robinhood came up, essentially accusing the fintech of leveraging people’s gambling problems. “I hope we don’t have more of it. I’ll put it that way,” he said.
The commission-free stockbroking app recently filed a confidential Form S-1 to list on the Nasdaq. This means Robinhood’s financial health will only become public knowledge once it and the Securities and Exchange Commission decide to go ahead with the float.
Buffett said he was eagerly awaiting a chance to get a look at the S-1 form. “I’m concerned about how they handle the source of income when they say that they don’t charge the customer anything. It’ll just be interesting to watch how they describe it,” he said.
Robinhood has recently run into trouble with lawmakers and regulators as the platform played a central role in the GameStop trading chaos earlier this year.
Private investors were spurred on by members of the r/WallStreetBets subreddit to invest in GameStop and other stocks like BlackBerry, betting against traditional investment firms. As momentum grew Robinhood suddenly froze trading in those stocks. Several lawmakers subsequently called for an inquiry into the actions of Robinhood. At the hearing, CEO Vlad Tenev claimed that it had stopped processing trades because it couldn’t afford them. The $33bn unicorn has since topped up its coffers with two cash injections to the total tune of $3.4bn “to make sure this won’t happen again.”
This has seemingly failed to ease Buffett’s concerns. He accused the app of taking advantage of people’s “gambling instincts” by enabling them to bet their hard-earned money on different stocks in this way.
“There’s nothing illegal about it,” he said. “There’s nothing immoral, but I don’t think you would build a society around people doing it.”
Buffett added: “I think the degree to which a very rich society can reward people who know how to take advantage, essentially, of the gambling instincts of, not only [the] American public, [but also of the] worldwide public, it’s not the most admirable part of the accomplishment.”
Munger proved more blunt and lashed out against Robinhood’s investors – such as Andreessen Horowitz, Sequoia and Ribbit Capital – that have injected billions of dollars into the fintech.
“I think it’s just god awful that something like that would draw investment from civilised men and decent citizens,” he said. “It’s deeply wrong. We don’t want to make our money selling things that are bad for people.”