Charlie Munger want American to ban Cypto. He's FOS.
Like many new technologies, cryptocurrency is in its infancy and there's plenty of IMP details that have yet to be worked out. It needs to provide better protection for users and more stable platforms that provide consistency for transactions. Also true, bad actors often use crypto to move money around.
But crypto has one big advantage to conventional currency. It's not tied to a particular government's fortunes. Ergo, when properly developed (which could take many years) it allows you to transact global business without taking currency risk. Whether buying in dollars, yen or one of a number of global currencies, these all can involve fairly substantial swings in value.
Now it's also true that Crypto has swung wildly in value depending on the currency. That's another phenom that will likely get ironed out as the technology grows "up".
Factoid: It's true that Bitcoin, for example, fell considerably in value last year. However, suppose you bought one Bitcoin at the end of 2020. You'd have paid and all-time high of $4,106 for it. What's that worth today? $16,000. Four times your money. BTW had you invested $4,000 in the SP 500 back then, it would be worth about $4,040 today.
BTW, Charlie Munger, Berkshire Hathaway's Vice Chairman, was born in 1924. Yep, he's 99 years old.
Why America Should Ban Crypto
It isn’t currency. It’s a gambling contract with a nearly 100% edge for the house.
By Charlie Munger, WSJ
Feb. 1, 2023 6:16 pm ET
In the U.S. in recent years, privately owned companies have issued thousands of new cryptocurrencies, large and small. These have later become publicly traded without any governmental pre-approval of disclosures.
In some cases, a big block of cryptocurrency has been sold to a promoter for almost nothing, after which the public buys in at much higher prices without fully understanding the pre-dilution in favor of the promoter.
All this wild and wooly capitalism is much like that described in a remark often attributed to Mark Twain, who was thought to have said that “a mine is a hole in the ground with a liar on top.”
Such wretched excess has gone on because there is a gap in regulation. A cryptocurrency is not a currency, not a commodity, and not a security. Instead, it’s a gambling contract with a nearly 100% edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity. Obviously the U.S. should now enact a new federal law that prevents this from happening.
Two interesting precedents may guide us into sound action. In the first precedent, the communist government of China recently banned cryptocurrencies because it wisely concluded that they would provide more harm than benefit. And, in the second precedent, from the early 1700s, England reacted to a horrible depression that followed the blow up of a promotional plan to get vast profits by using slow-moving sailing ships to trade with very poor people halfway around the world.
What the English Parliament did in its anguish when this crazy promotion blew up, was direct and simple: It banned all public trading in new common stocks and kept this ban in place for about 100 years. And, in that 100 years, England made by far the biggest national contribution to the march of civilization as it led strongly in both the Enlightenment and the Industrial Revolution and, to boot, spawned off a promising little country called the United States.
What should the U.S. do after a ban of cryptocurrencies is in place? Well, one more action might make sense: Thank the Chinese communist leader for his splendid example of uncommon sense.
Mr. Munger is vice chairman of Berkshire Hathaway.