On November 28, 2023, the world of finance lost one of its most venerable and formidable figures, Charlie Munger. At the age of 99, the Vice Chairman of Berkshire Hathaway and Warren Buffett's right-hand man passed away, leaving behind a legacy of investment strategy, sharp wit, and a harshly critical stance on Bitcoin and crypto.

Charlie Munger's critique of Bitcoin

Charlie Munger's views on Bitcoin and crypto are not just opinions, but they are strong criticisms that he deliberately echoes in finance. The tone of his “Hate” for Bitcoin is the same as that of his close friend Warren Buffett, unequivocal and stems from deep skepticism about the fundamentals of the digital currency. Charlie Munger famously once called Bitcoin “disgusting and inimical to the interests of civilization,” a statement that reflected his deep concerns about the nature and impact of crypto. Meanwhile, Buffett once called Bitcoin "rat poison".

Even though Berkshire Hathaway, the company he founded with Buffett, has succeeded in making profits from the crypto-friendly company from Brazil, Nu Holdings aka Nu Bank thanks to its mini share ownership. Since joining the company in 2021, as of 2023, he has pocketed profits of US$130 million or the equivalent of IDR 2 trillion at the current exchange rate.

Munger's criticism is actually multifaceted. He invited the public to immediately wake up and be aware of the extreme volatility of Bitcoin prices, which he said was shaking its viability as a global medium of exchange. The lack of regulation in the crypto market is a major concern for Munger. He sees it as a breeding ground for criminal activity, making it a “useful” tool for kidnappers and fraudsters, given its decentralized and anonymous nature.

In an interview with the media in 2021, Munger's words were sharp and unstoppable: “I do not welcome a currency that is very useful for kidnappers and fraudsters and so on, nor do I like throwing out billions of dollars just to someone who has just created a financial product new from nothing.” This statement is not only a criticism of Bitcoin but also a broader condemnation of the rise in crypto assets in general, which he considers to be detrimental to the interests of civilization.

Even in February 2023, he again approached Bitcoin and other cryptocurrencies with the same sentence, that Bitcoin and cryptocurrencies should be totally banned like in China. He referred to the Chinese government's policy in 2021 which eradicated and banned Bitcoin and crypto mining throughout the country. However, in recent developments, this activity still exists and even crypto trading in Hong Kong has even received the green light.

Munger and the Success of Bitcoin

Despite Bitcoin's success and widespread adoption, Munger remains a harsh critic. During a question and answer session at Berkshire Hathaway's annual shareholder meeting in 2021, he openly stated, “Of course I hate Bitcoin's success.” Munger considers Bitcoin an “artificial substitute for gold,” often using the metaphor to express his skepticism about the intrinsic value of Bitcoin (BTC) compared to traditional assets such as gold. This is in contrast to the stance of other financial tycoons, for example Robert Kiyosaki, who supports both gold and Bitcoin.

The Impact of Munger's Criticism

Munger's criticism of Bitcoin is not just a random comment. This sentence was influential, at least in forming a special discourse about crypto. His opinion certainly sparked debate and discussion, forcing investors and enthusiasts to confront the potential downsides and risks associated with digital currencies or at least help introduce cryptocurrencies to more people. Munger's perspective provides a necessary balance to the often overly optimistic narrative about crypto, emphasizing the need for caution and regulation from the perspective of an older generation like Munger.

Reflecting on Munger's Legacy

When we reflect on Munger's legacy, it is clear that his criticism of Bitcoin was part of a broader philosophy that guided his approach to investing and business. Munger never shied away from stating his views, no matter how controversial or opposing those of the other party. What is clear is that his critical stance towards Bitcoin is in line with his investment principles, which prioritize long-term stability, intrinsic value and regulatory compliance. Maybe this is also what causes the generation below, for example BlackRock to be aware of the advantages of this asset, and more and more are adopting it, such as Michael Saylor from MicroStrategy.

Charlie Munger's passing marks the end of an era in finance for his generation. His insights, wisdom, and criticism, especially regarding Bitcoin and cryptocurrencies, will continue to resonate in the world of finance. As the debate over digital currencies grows, Munger's views serve as an important reminder of the challenges and controversies that accompany innovation in the financial sector.

Charlie Munger and His Smart Investment Strategy

Charlie Munger, born on January 1, 1924 in Omaha, Nebraska, is known as an American entrepreneur, investor, and philanthropist. He is known as Vice Chairman of Berkshire Hathaway, the conglomerate led by Warren Buffett. Munger's early life included working at a grocery store owned by Buffett's grandfather and his lawyer father. He graduated with a bachelor's degree in mathematics at the University of Michigan, served as a second lieutenant in the US Army Air Corps, and then graduated with honors from Harvard Law School.

Munger's professional journey began in California, where he joined a law firm before founding Munger, Tolles & Olson LLP. He then shifted his focus to investment management, partnering with Otis Booth in real estate development, and founding Wheeler, Munger, and Company, an investment firm. Munger ran an independent investment partnership from 1962 to 1975, achieving significant success

He is also known for his contributions to the book Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, which summarizes Munger’s investment philosophy and ethical standards. Munger emphasized the importance of ethics in business, stating that businesses that depend on deception are doomed to failure.

Philanthropically, Munger was a major donor to the University of Michigan and other educational institutions. His net worth is estimated at US$2.7 billion as of September 2023. Additionally, he is involved in architecture, donating to universities on the condition that they follow his designs.

Munger was married twice and had a total of seven children. Politically, he identifies as a Republican, but holds some divergent views, such as supporting a single-payer healthcare program. In his 50s, Munger experienced severe eye problems, which resulted in his left eye having to be removed.

Charlie Munger died on November 28, 2023, at the age of 99 in Santa Barbara, California. Warren Buffett considers it an important part of Berkshire Hathaway's success.

Charlie Munger's legacy extends far beyond his criticism of Bitcoin. He was a titan in the world of finance, a mentor to many, and a voice of thought in an often tumultuous economic world. His passing leaves a void, but his wisdom and principles will continue to guide investors and business leaders for generations to come. Goodbye, Grandpa Munger #BinanceTournament #BTC #safu #Web3Wallet