Billionaire investor Warren Buffett recently gave an ominous warning to those who hope to make a fortune from buying cryptocurrencies like bitcoin. "In terms of cryptocurrencies generally," Buffett told CNBC "I can say with almost certainty that it will come to a bad ending." In fact, he said that if it were possible to buy a five-year put option -- which makes money as an investment loses value -- he'd do so "on every one of the cryptocurrencies."

In many ways, Buffett's sharp words against cryptocurrencies match those he's spoken against gold. That's not all that surprising, since the two share eerily similar characteristics.

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Betting on hope

While Buffett has a well-documented hatred for gold, some of his most critical comments on the shiny metal came in his 2011 letter to shareholders of Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B). In that letter, he detailed three basic choices investors have to grow their wealth. One of the categories he described in detail are "assets that will never produce anything, but that are purchased in the buyer's hope that someone else -- who also knows that the assets will be forever unproductive -- will pay more for them in the future." He pointed out that "tulips, of all things, briefly became a favorite of such buyers in the 17th century" and that gold was "the major asset in this category" because "if you own one ounce of gold for an eternity, you will still own one ounce at its end."

The point is that these assets don't produce anything of value. They don't throw off a spendable income stream like commercial real estate or even a bond, they don't grow food like a farm, and they don't make goods or provide services like a business.

In short, these investments don't create wealth for investors by producing it. Instead, Buffett noted: "This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce -- it will remain lifeless forever -- but rather by the belief that others will desire it even more avidly in the future."

That sounds an awful lot like the current craze over cryptocurrencies.

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