It’s no secret that legendary investors Warren Buffett and Charlie Munger aren’t fans of the growing cryptocurrency movement.Two people who lead a large conglomerate Berkshire Hathaway (BRK.A 3.20%) (BRK.B 3.36%)made many public statements about their disgust and distrust of Bitcoin and other cryptocurrencies.
One of the main reasons Buffett doesn’t like Bitcoin is that it doesn’t produce anything tangible. Buffett also said he wouldn’t buy all the bitcoins in the world for just $25 if given the chance. Munger, meanwhile, took his own rant against Bitcoin and cryptocurrencies, calling them “stupid and evil.” He also said that cryptocurrencies would undermine the Federal Reserve.
Interestingly, however, one of the companies in Berkshire Hathaway’s large stock portfolio recently announced plans to launch its own cryptocurrency, so if Berkshire continues to hold shares, the conglomerate is essentially a cryptocurrency. You will be an indirect investor in the currency. Please let me explain.
Further innovation from this fintech bank
In mid-2021, Berkshire Hathaway made a private investment in Brazilian digital bank New Holdings (new 3.38%), which caused great turmoil in the Latin American banking market. The fintech bank offers low-fee traditional banking products and sophisticated digital experiences to make the banking system easier for Brazilians to access. rapid growthAt the end of the second quarter, Nu had over 65 million customers, serving approximately 36% of Brazil’s adult population.
Nu will go public at the end of 2021 and Berkshire now owns over 107.1 million shares, or about 2.3%. Nu isn’t the only Brazilian company Berkshire has invested in, and the country’s economy appears to have a bright future.
In a recent press release, Nu said it plans to launch its own cryptocurrency called Nucoin in the first half of 2023. polygon It is a blockchain network and is distributed to customers for free. Nucoin’s goal is to “serve as a foundation for creating a ground-breaking rewards program in Brazil”.
“We are opening the door to the future. Nucoin is a new way to recognize customer loyalty and drive further engagement with Nubank products,” said Fernando Czapski, general manager of the project, in a statement. said in “Beyond buying, selling and maintaining cryptocurrencies on the Nu app, this project takes our belief in the transformative potential of blockchain technology and its further democratization one step further.”
Nu has developed a multi-product platform to enhance customer relationships beyond just a bank offering a variety of lending products and bank accounts. Nu currently provides customers with online investment functionality, payment functionality, and an e-commerce marketplace where customers can make purchases. The takeaway here is that the more time customers can spend within the Nu ecosystem, the more likely they are to create Nu. This usually results in more profitable customers who use more products and services at the bank.
Difference between cryptocurrency and blockchain
Clearly, there is a difference between investing in cryptocurrencies, which most investors find difficult to truly evaluate, and blockchain technology, the network on which cryptocurrencies are traded.
We know Buffett is not interested in investing directly. Cryptocurrencybut that doesn’t mean he’s completely against blockchain technology and its potential use in businesses that create something tangible. ” he professes.
Buffett might not be so thrilled if Nu had invested in Bitcoin itself. But when it comes to using crypto to engage with customers, integrate it into the Nu ecosystem, and eventually open a bank account or take out a loan, I don’t know if Buffett has a problem. not.
It’s also entirely possible that Buffett has little to do with Berkshire’s investment in Nu. After all, Buffett is giving his top investment lieutenants the autonomy to invest as they please. I think there is a distinct difference that Mr. Buffett sees.
Bram Berkowitz The Motley Fool has positions in and recommends Berkshire Hathaway (B shares), Bitcoin and Polygon. The Motley Fool made a long $200 call on Berkshire Hathaway (B shares) in January 2023, a short put (B shares) on Berkshire Hathaway in January 2023 at $200, and a short put (B shares) on Berkshire Hathaway in January 2023. We recommend a $265 short call (B shares). The Motley Fool has Disclosure policy.
