Buffett buys Bitcoin as traditional finance and cryptocurrencies find convergence

Source: W3C DAO

Previously, Buffett had indirectly invested in Bitcoin and cryptocurrencies through New Bank, a digital bank, which undoubtedly improved Berkshire Hathaway. Thavey's financial status. And New Bank’s success also shows that traditional finance and cryptocurrency can find common ground.

New Bank shares rise as Bitcoin rises With gains of more than 200% since last year, New Bank's market performance has outperformed other heavyweight stocks in Buffett's portfolio, including giants such as Amazon, Apple, Coca-Cola, Bank of America and Kraft Heinz.

Recently, Nubank (New Bank parent company) founder and CEO David said:

“We will achieve more than $8 billion in revenue and $1 billion in net profit by 2023. As we work hard to Beyond the milestone of 100 million customers, we are investing heavily in new growth avenues to continue to convert potential into profits."

What kind of company is Nubank that can make Buffett "increase his position"? Let me explain.

Crypto-friendly bank New Bank

New Bank is an American commercial bank founded in 2006. Started by a group of successful Korean American businessmen, community leaders and professionals. The bank currently has three full-service retail branches in New York and New Jersey.

New Bank is also a neobank, a financial technology company focused on cryptocurrency.

Neobanks are typically not banks themselves, but partner with banks to offer mobile-first (and sometimes mobile-only) bank accounts with deposit insurance. The advantage of neobanks is that they can offer lower fees, higher interest rates, better user experience, and more innovative products.

New Bank’s cryptocurrency layout mainly includes the following aspects:

Cooperation with Nubank: New Bank’s parent company is Nubank, a company headquartered in Brazil ’s private digital bank and a new type of bank focused on cryptocurrencies. With more than 40 million customers, Nubank is the largest digital bank in Latin America and one of the largest neobanks in the world.

Providing Cryptocurrency Services: New Bank provides a range of cryptocurrency services, including cryptocurrency storage, trading, payments, lending, and insurance. New Bank leverages its banking license and compliance capabilities to provide customers with secure, convenient, and innovative cryptocurrency solutions. New Bank has also partnered with some well-known cryptocurrency platforms, such as Coinbase, Stripe, and Affirm, to provide banking infrastructure and payment services.

Following cryptocurrency trends: New Bank keeps up with the development trends of cryptocurrency and constantly adjusts and optimizes its cryptocurrency strategy. For example, New Bank responded to a request from the Basel Committee on Banking Supervision in 2023 to disclose its cryptocurrency exposure and disclosure requirements. New Bank is also launching its own cryptocurrency, New Coin, in 2024 to meet customer demand for more cryptocurrency options.

Tokenization: Currently, Nubank is still exploring the field of cryptocurrency. It is planning to launch its own digital currency Nucoin and gradually add new cryptocurrency options such as Polkadot and Avalanche.

Buffett’s transformation

Buffett is a legendary investor, and his company Berk Berkshire Hathaway has a stock portfolio of more than $323 billion. Buffett has long been interested in bank stocks, and Berkshire Hathaway has about a fifth of its portfolio invested in the sector.

But before that, he was a Bit Coin "haters".

Previously, Buffett said that Bitcoin is a "gambling token." His Buffett partner Charlie Munger even published a commentary article "Why the United States Should Ban Cryptocurrency" in the Wall Street Journal. He called on the United States to follow China's footsteps and introduce relevant regulatory policies to ban cryptocurrency.

Charlie Munger stated in the article, “There is a gap in the United States in terms of encryption supervision. Cryptocurrency is not a currency, a commodity, or a security. On the contrary, it is a gambling contract with a casino edge close to 100%. Obviously, the United States should now enact a new federal law to prevent this from happening."

Charlie Munger has also previously stated that he will never participate in the cryptocurrency market and that China's encryption ban is the right choice .

However, Buffett's attitude has changed in recent years.

In June 2021, Berkshire Hathaway invested US$500 million in Nubank, the parent company of New Bank. Nubank is a private digital bank based in Brazil and a new bank focused on cryptocurrency. Nubank, founded in 2013, is one of the companies to appear on CNBC’s Disruptor 50 list for the first time this year. With more than 40 million customers, Nubank is the largest digital bank in Latin America and one of the largest neobanks in the world.

November 2022, Burke Hill Hathaway invested another $1 billion in Nubank and purchased 30 million shares of Nubank. This is Berkshire Hathaway’s second investment in Nubank and Buffett’s first public investment in a cryptocurrency-friendly company. The investment signals a possible shift in Buffett's attitude toward cryptocurrencies and his confidence in new types of banks.

Written at the end

Buffett is a legendary investor, but he was also a Bitcoin "hater" before. ". He has said that Bitcoin is a "gambling token."

However, it can also be said that it is ironic that Buffett indirectly entered the field of cryptocurrency through New Bank amid the turmoil in global financial markets.

The investment boosts Berkshire Hathaway’s finances in a potential $17.7 trillion financial battle, demonstrating how traditional investors interact with the cryptocurrency industry subtle changes.