Warren Buffett's business partner Charlie Munger warrns savvy investors that the controversial digital currency bitcoin is "total insanity," and to avoid it "like the plague."
Munger made the comments on cryptocurrencies at a University of Michigan's Ross School of Business event.
"I think it is perfectly asinine to even pause to think about them," he said. "It's bad people, crazy bubble, bad idea, luring people into the concept of easy wealth without much insight or work," he said. That's the last thing on earth you should think about," he said.
"There's just a whole lot of things that aren't going to work for you. Figure out what they are and avoid them like the plague. And one of them is bitcoin. … It is total insanity," the investor added.
Bitcoin plunged below $13,000 on Friday after losing around a third of its value in just five days, with the digital currency on track for its worst week since 2013 after a blistering ascent to a peak close to $20,000 on Sunday, Reuters reported.
The biggest and best-known cryptocurrency had seen a staggering twentyfold increase since the start of the year, climbing from less than $1,000 to as high as $19,666 on the Luxembourg-based Bitstamp exchange on Sunday and to over $20,000 on other exchanges.
But bitcoin has fallen each day since then, with losses accelerating on Friday. It fell to as low as $12,560 on Bitstamp, marking a fall of almost 20 percent on the day. At 0850 GMT it was trading down 15 percent on the day at $13,320 and was heading for its worst day in more than three months.
Meanwhile, Munger also explained why bitcoin is not a replacement for gold:
"You know it is one thing to think gold has some marvelous store of value because man has no way of inventing more gold or getting it very easily, so it has the advantage of rarity. Believe me, man is capable of somehow creating more bitcoin … They tell you there are rules and they can't do it. Don't believe them. When there is enough incentive, bad things will happen."
(Newsmax wire services contributed to this report).
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