Tag: finance

Points to discuss:

• Charlie Munger, vice chairman of Berkshire Hathaway, called on the American government to outlaw cryptocurrencies, just as China has done.

• In an opinion piece that appeared in The Wall Street Journal on Thursday, 99-year-old Munger argued that cryptocurrencies are neither money nor a commodity nor a security.

• Long-time opponents of cryptocurrencies, Munger and his business colleague Warren Buffett maintain that cryptocurrencies are neither real assets nor productive ones.

Charlie Munger, vice chairman of Berkshire Hathaway, urged the United States government to outlaw cryptocurrencies, as China has done. He claimed that a lack of regulation allowed for disgusting excess and a gambling mindset.

In an opinion piece that appeared in The Wall Street Journal on Thursday, 99-year-old Munger argued that cryptocurrencies are neither money nor a commodity nor a security.

As opposed to that, Munger observed, “it’s a gambling contract with a nearly 100% edge for the house, engaged into in a nation where gambling contracts are usually only governed by states that compete in laxness.” Clearly, the United States needs to pass a new federal law to stop this from happening.

Long-time opponents of cryptocurrencies, Munger and his business colleague Warren Buffett maintain that cryptocurrencies are neither real assets nor productive ones. Munger’s most recent remarks come at a time when the cryptocurrency sector was struggling with issues including failed projects and a lack of liquidity, which were made worse by the collapse of FTX, once one of the biggest exchanges in the world.

Over $2 trillion was lost from the bitcoin market’s value in 2017. According to Coin Metrics, the price of bitcoin, the biggest cryptocurrency in the world, fell 65% in 2022 before rising nearly 40% to trade at about $23,824.

The prominent investor claimed that thousands of new cryptocurrencies were recently released by privately held corporations and listed on exchanges without prior authorisation from the government. Some have been given away to promoters for practically nothing, Munger claimed, and then the general public invests at much higher prices without fully realising the “pre-dilution in favour of the promoter.”

He mentioned two “interesting examples” that might help the United States take wise decisions. First, trading, order matching, token issuance, and derivatives for virtual currencies are expressly forbidden in China. Second, Munger noted that the English Parliament outlawed any public trading in newly issued common stocks beginning in the early 1700s and maintained this outlaw for almost 100 years.

“What should the United States do now that a cryptocurrency prohibition is in effect? Another course of action would be to express gratitude to the Chinese communist leader for his excellent display of extrasensory perception, Munger suggested. Read More Here.

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