What are Charlie Munger's reasons for opposing cryptocurrency?

Charlie Munger's opposition to cryptocurrency is exceptionally stark and consistent. He has used extreme terms like "rat poison squared" and "venereal disease" to describe it. His objections are deeply rooted in his philosophy of value investing, his understanding of social responsibility, and his insights into human behavior. The main reasons can be summarized as follows:

1. Lack of Intrinsic Value, a Product "Created Out of Thin Air"

Core Argument: The essence of value investing is buying assets with intrinsic value, typically derived from a company's future cash flows, profitability, or productive assets.
Munger's View: Munger sees cryptocurrencies as generating nothing. They don't represent ownership in a company like stocks, a debt claim like bonds, or generate rent like real estate. They are a "non-productive asset," whose price depends entirely on what the next buyer is willing to pay – a classic case of the "Greater Fool Theory."
Famous Analogy: He believes investing in cryptocurrency is like trading a pile of "financial products created out of thin air," lacking any foundation in the real economy.

2. Enabling Criminal Activity, Harming Societal Interests

Core Argument: The anonymity and decentralized nature of cryptocurrencies make them a breeding ground for illegal activities.
Munger's View: He has repeatedly stated publicly that cryptocurrency is the tool of choice for criminals involved in kidnapping, ransom, money laundering, tax evasion, and terrorist financing. He argues that anything beneficial to kidnappers is detrimental to civilized society.
Moral Stance: From a social responsibility perspective, he considers promoting and investing in a system whose primary function is aiding crime to be highly immoral and antisocial. He once said, "I'm ashamed of my country that so many people believe in this stuff... It's just insane."

3. Essence is Speculative Gambling, Not Value Investing

Core Argument: Investing is based on analyzing an asset's value and reasonable expectations of future returns; gambling is betting on future price fluctuations.
Munger's View: He sees the cryptocurrency market as rife with frenzied speculative bubbles. People buy it not because they understand its value, but hoping to sell it to someone else at a higher price. This behavior is no different from placing bets in a casino.
Contrast with Traditional Investment: He emphasizes that great investing involves buying a wonderful business and holding it long-term to share in the value created by its growth. In contrast, the "holder" community culture around cryptocurrency seems to him more like a fanatical cult than a group of rational investors.

4. Threat to the Existing Financial System and National Stability

Core Argument: A nation's sovereign currency is the cornerstone of its economic stability and effective government operation.
Munger's View: He believes widespread adoption of cryptocurrency would challenge or even undermine sovereign-controlled monetary systems (like the US dollar). This would weaken central banks' ability to regulate the economy, potentially leading to financial chaos.
Support for Government Regulation: Consequently, he strongly advocates for governments to crack down hard on or even ban cryptocurrency. He has repeatedly praised the Chinese government's decision to completely ban cryptocurrency trading, calling it wise, while criticizing the US approach of allowing its development as mistaken.

5. Stupid and Anti-Social

Core Argument: Munger champions rationality and despises actions that exploit human psychological weaknesses (like greed) for profit.
Munger's View: He unapologetically calls the entire cryptocurrency craze "stupid," "crazy," and "disgusting." He sees it as encouraging a bad ethos where people seek to get rich through speculation and trickery rather than creating value, offering no benefit to society. He stated: "It's both stupid and bad, and it strikes me in some way as dangerous... It teaches people all the wrong lessons."

Summary

In conclusion, Charlie Munger's opposition to cryptocurrency is not merely an investment preference but a systematic critique based on his worldview and values. He views cryptocurrency as economically a valueless bubble, morally a tool that enables crime, and socially a threat to civilized order. This stands in complete opposition to the investment philosophy he has championed throughout his life: one based on rationality, common sense, patience, and creating real value.