Richard Thaler, Nobel Winner, Plans to Stay Away from Bitcoin, Under Advisement of Warren Buffet
There is absolutely no way to know the future of the cryptocurrency market, or when we will see another financial bubble. However, Richard Thaler plans to stay far away from bitcoin, which he told Freakonomics Radio podcast host Stephen Dubner.
In the interview with Dubner, Thaler voiced his support and intention to follow Warren Buffet’s advice in this industry. He said, “Warren Buffett says a lot of smart things, and one of the things he says is, don’t make investments in things you don’t understand. And I have no clue [when it comes to bitcoin].”
Bitcoin is far from the only token in the crypto industry, though it has paved the way for others. Bitcoin is probably the most widely accepted cryptocurrency in the industry, though it has yet to be classified as legal tender, due to the regulatory measures being established. It is also the most valuable in the industry, priced at over $6,700 right now.
Even with his disdain for cryptocurrency, Thaler still gives credit to the major banks in the United States, which have been working to make the financial world more stable. However, with this stability, he does not see any reason for consumers to decide to get involved with Bitcoin. He does not agree “that the intrinsic value of bitcoin is worth thousands of dollars.” He said his best advice is to “stay away.”
This is not the first time Thaler has warned investors to steer clear. In 2014, he said, “It's a method of transmitting money. It is a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money, too.
Are checks worth a whole lot of money just because they can transmit money? Are money orders? You can transmit money by money orders. People do it. I hope bitcoin becomes a better way of doing it, but you can replicate it a bunch of different ways and it will be. The idea that it has some huge intrinsic value is just a joke in my view.”
Buffet has never wavered on his opinion of Bitcoin or any other crypto. He eventually referred to Bitcoin as “rat poison squared,” also saying, “In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.” His opinions are also followed by Robert Shiller and Joseph Stiglitz, who both believe that the rising prices of crypto is an early sign of a financial bubble.
Many billionaires have benefited from the investments in Bitcoin, there are other celebrities that still take caution before leading others to the market. Thaler has said, “I don’t know why anyone engaged in strictly legal activities would want to use a currency that is so volatile.”