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Bitcoin is rat poison… for cash

Photo of: Nathan VDH
by Nathan VDH

Is Bitcoin a poison as Warren Buffet affirmed in 2018? Maybe yes, but only if you consider that the rat is the cash. Bitcoin would thus be a remedy against inflation and the devaluation of fiat currencies.

The position of billionaire Warren Buffet towards Bitcoin is no mystery to anyone. “Bitcoin is ingenious, but Bitcoins have no unique value. It’s an illusion, basically,” he said in 2019.

A year earlier, he even called cryptocurrencies “rat poison” and “tulip bubble”. This qualifier has remained famous in the crypto-sphere. Financial analyst Bill Miller, therefore, takes a malicious pleasure in turning it against its author.

“Warren Buffett called Bitcoin ‘rat poison’. He may well be right. Bitcoin could be rat poison, and the rat could be the cash,” he wrote in an analysis note. Current monetary policies tend to devalue currencies.

Bitcoin is therefore an investment to protect against the loss in value of cash. Bitcoin is “best thought of as digital gold, but it has many advantages over yellow metal,” says Miller.

“If inflation resumes, or even if it doesn’t resume, and more companies decide to diversify a small portion of their cash into Bitcoin rather than cash, then the current relative flow in Bitcoin would become a torrent,” the analyst says.

Not without irony, Miller reminds us that Bitcoin’s market capitalization today supplants those of JPMorgan and Berkshire Hathaway. This choice is no coincidence. The managers of these two companies are not, or at least were not, proponents of crypto-assets.

However, the investment bank and its CEO are gradually revising their position. However, cryptocurrency is still not the “cup of tea” of its boss. For Jamie Dimon, the future of finance is above all the blockchain.

According to his bank’s analysts, Bitcoin’s growth potential is nevertheless “considerable”. And this is particularly due to its interest as an alternative to gold. However, JPMorgan felt this week that volatility could remain an obstacle.

In the meantime, Bitcoin is “the top-performing asset class in 2020 … It has outperformed all major asset classes over the past 1, 3, 5 and 10 years,” notes Bill Miller. At the same time, however, Bitcoin “is still at the very beginning of its adoption cycle. »