(4-minute read) When Charlie Munger was asked about bitcoin, his criticism agitated me. So, let me clear up a few misconceptions.

May 03, 2021 Charlie Munger Is Wrong: 3 Misconceptions About Bitcoin By Ian King, Editor, Strategic Fortunes Follow Ian    Dear Smart Investor, I tuned into Berkshire Hathaway’s annual Zoom meeting over the weekend to hear some pearls of investing wisdom from Warren Buffett and Charlie Munger. The two nonagenarians have been running the investing conglomerate for over half a century.  When Munger was asked about bitcoin, his criticism agitated me. It’s not that bitcoin is devoid of problems. For one, its value is only what everyone believes it should be valued, similar to gold.    It was Munger’s reasoning that I found to be a complete misconception. The 97-year-old has always been a bitcoin critic due to its extreme volatility and lack of regulation. (The volatility is still there, but the regulation is no longer lacking.) Charlie answered, “I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air. I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.” There’s a lot of misplaced criticism about cryptocurrencies. The majority of it comes from investors who either don’t own cryptocurrencies or aren’t interested in learning about them.  So, let me clear up the three biggest misconceptions about bitcoin… Crypto’s on Fire — How to 12X Your Money in 12 Months Bitcoin shot up 45% in one month — and just hit a new record price. Some experts say it could hit $400,000 over the next 10 years … and another predicts it could soar to $1 million — and become bigger than gold! In his newest presentation, crypto expert Ian King says those predictions are just the beginning … because he’ll be sharing specific cryptos that could hand you profits even bigger than bitcoin. Ian says these specific opportunities could make you 12X your money in 12 months… And you can see Ian King’s special cryptocurrency presentation right here … right now. Misconception No. 1: Bitcoin Is Useful to Criminals Munger said “kidnappers and extortionists” are using bitcoin for nefarious purposes. Here’s why that’s completely misplaced: Every cryptocurrency transaction is encoded on the blockchain for everyone else to see. The misconception here is that cryptocurrency is anonymous. It’s not — it’s pseudonymous. We can see the transaction; the wallets are public record. We just can’t see who owns the wallet. However, a criminal’s IP address can be found. Or if they ever try to spend the cryptocurrency (or move it), there will also be a record of that transaction. That’s why criming with bitcoin is not a good idea. Cash is way more anonymous. Misconception No. 2: Bitcoin Uses Too Much Energy In a paper in Nature Communications, a group of academics examined bitcoin’s energy use in China. They concluded that bitcoin could become a barrier to China’s efforts to decarbonize its economy by 2024.  It’s no secret that the bitcoin network uses a lot of energy. In order to validate and process transactions, millions of computers must run the global network.  It’s estimated that the network uses as much energy annually as the state of Texas.  This is how the bitcoin network comes to a consensus. It’s called “proof of work.” It takes a ton of computers and is only as fast as the slowest link. It was the original method used to secure data on a blockchain, but it won’t be the last.  There are new types of consensus mechanisms that don’t require heavy computational power. For instance, Ethereum is moving to a “proof of stake,” which requires “staking” tokens to validate transactions and earn yield.  There’s also Solana’s “proof of history,” which uses a cryptographic clock to create a historical record to prove that a transaction occurred.  These solutions won’t require any additional energy at all other than what we already use to power our devices.  Bitcoin will still require mining, but there are several ongoing projects to create a lighter, faster chain.  There’s also talk of requiring bitcoin miners to get their energy from renewable sources, which could positively impact the environment by creating renewable demand.  Misconception No. 3: Bitcoin Is Too Expensive This is a common issue I hear frequently. “I don’t have $58,000 for a bitcoin.” You don’t need to buy a full bitcoin, though. You don’t even need to buy a half, a quarter or even an eighth.  Bitcoin and all other cryptocurrencies are divisible by 100 million. The smallest possible fraction of a bitcoin is called a satoshi (or sat, for short). This name is an homage to bitcoin’s creator, Satoshi Nakamoto. You Can Always Expand Your Knowledge Base These are just a few misconceptions about cryptocurrency.  Perhaps Munger misspoke, or the nonagenarian doesn’t care to invest in new technologies. One principle that Berkshire Hathaway has always stressed is, “Invest in what you know.” To that, I would add, you can always expand your knowledge base to open up more opportunities.  Regards, Ian King Editor, Strategic Fortunes The Biggest, Fastest Tech Boom in History "It's the End of the Dow" Finance Professors Are Wrong About Investing The Real Reason Stocks Should Rally in 2021     Privacy Policy Smart Profits Daily, P.O. Box 8378, Delray Beach, FL 33482. To unsubscribe from Smart Profits Daily emails, click here. 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