Crypto Twitter Reacts to Buffett's Recent Criticism of Bitcoin

Warren Buffett, an American business tycoon and one of the most successful investors in modern history - with a net worth of approximately $90 billion, has argued that Bitcoin (BTC), the flagship cryptocurrency, is a “gambling device.”

Buffett, who has previously compared cryptocurrencies to “rat poison,” recently told reporters (prior to attending Berkshire Hathaway’s annual meeting): “There’s been a lot of fraud connected with [Bitcoin]; there have been disappearances. So there has been a lot lost on it. The bitcoins haven’t produced anything."

Bitcoin “Just Sits There”

Buffett, who’s a notable philanthropist as he’s reportedly pledged 99% of his wealth to charity, mainly through the Bill & Melinda Gates Foundation, thinks that Bitcoin “doesn’t do anything.” He claims the world’s most dominant cryptocurrency “just sits there.” Moreover, the prominent speaker compared Bitcoin to a seashell which has no meaningful purpose.

Buffett also noted he doesn’t consider Bitcoin to be an investment. He remarked: “I’ll tear off a button here. What I’ll have here is a little token...I’ll offer it to you for $1,000, and I’ll see if I can get the price up to $2,000 by the end of the day... But the button has one use and it’s a very limited use.”

Bigger Question Is If You Can Do Payments On Top Of Bitcoin, A “Gambling Device”

In response to Buffett’s comments, Twitter user JP Koning (jpkoning) acknowledged that Buffett was right in saying that Bitcoin is used frequently to engage in speculative trading or gambling. However, Koning, an economist and active blogger, mentioned that “the bigger question is whether you can build a payments system on top of a gambling device.”

Koning, who writes frequently about stablecoins and various other topics related to tokenomics, questioned whether the developers of the Bitcoin protocol will be able build a payments system that “will be used by everyone, or just hobbyists and outsiders.”

Koning further noted:

The features that make bitcoin such a popular gamble interfere with its functionality as a payments system. Only die-hard fans or folks who lack access to regular money will ever be willing to ignore this awkwardness [and] use it for payments.

Responding to Koning and Buffett’s statements, Arthur Breitman, the Chief Technology Officer at Dynamic Ledger Solutions, a company that’s focused on the ongoing development of Tezos, asked:

How many stores of values do you know that don't represent anyone's obligation towards you, that can be self-custodied and moved around easily?

Bitcoin Is "Gold 2.0"

Meanwhile, Vijay Boyapati, a former Google engineer and widely-followed commentator on Bitcoin, remarked

Bitcoin is not PayPal 2.0, it's Gold 2.0. Not unsurprisingly Buffett has a poor history of understanding gold's value proposition.

Notably, Buffett's most recent criticism of Bitcoin as an ineffective medium of exchange (MoE) or store of value (SoV) has come right after Grayscale Investments, a subsidiary of the Digital Currency Group,launched a campaign called #DropGold. Grayscale's campaign has been aggressively promoting Bitcoin as a better form of investment. Meanwhile, Grayscale's management claims it's time to move away from the gold bullion as a form of investment because "it just sits there." 

In response to Grayscale's campaign, the World Gold Council published a blog post in which it argued that Bitcoin is too volatile and it may not be considered an effective replacement for gold, which is a time-tested and established asset.  

Bitcoin Hashrate Hits New Record as New ASIC Miners Brought Online

Neil Dennis

Bitcoin's hashrate - the computing power dedicated to mining the world's biggest cryptocurrency by market capitalization - hit another record high as thousands of new miners came online in the last few months.

Data from bitcoin mining pool BTC.com showed another milestone level passed. At block height 594,720 , the average hashrate jumped to 85.08 exahashes per second (EH/s), smashing the previous record rate of 77.08 EH/s on September 1.

Mining Difficulty

As ever more powerful mining rigs come online and compete for bitcoin rewards, the hashrate increases as the network's blockchain adjusts its mining difficulty to ensure the time to produce a single block remains the same - around 10 minutes.

On Friday September 13, the difficulty rate also hit a new record high of 11.89 trillion, up from the previous 10.77 trillion as measured on September 1.

Powerful new application-specific integrated circuit (ASIC) miners have an average hash power of about 55 terahashes per second (TH/s). Given that 1 EH/s is equal to 1 million TH/s it can be estimated that since June 14, when the hashrate stood at 53.03, the extra 33 EH/s may be accounted to around 600,000 new ASICs added to the total bitcoin mining pool in those three months.

Just last week, two new Bitmain ASIC models hit the market only to be sold out instantly.

 

Featured Image Credit: Picture Courtesy of Bitmain