Michelle Jones
A significant trend we’ve seen developing over the last year or two is professionals in the finance and Big Tech spaces defecting to crypto firms. Clearly, the consensus view is that crypto firms are not only here to stay but also offer at least some level of job security.
However, not everyone agrees. It’s no secret that bitcoin and other cryptocurrencies are polarizing investments. Additionally, many famous investors have made public their views on digital currencies. Here’s a round-up of what experts and famous investors say about cryptocurrencies.
Bitcoin Investing is “Gambling in a Rigged Game”
One of the more recent comments came from cybersecurity expert Bob Seeman of CyberCurb. At the 2020 Virtual Value Investing Conference hosted by Ivey Business School’s Ben Graham Centre for Value Investing, he declared that bitcoin is “not investing” but rather “gambling in a rigged game.”
Seeman said the blockchain technology that backs bitcoin is merely a “distraction” like a magician’s sleight of hand. He also argued that bitcoin isn’t a currency, store of value, or even an asset. Seeman also said it isn’t an inflation hedge because the bitcoin price has plunged as inflation has soared.
He thinks the cryptocurrency has almost no value and argues that it is a form of gambling because people buy it just because of how much they think others will buy it from them in the future. Seeman compared bitcoin investing to betting on a point spread in football because the latter is determined by what others think about how the game will end.
Based on his conclusion, he looked at U.S. gambling laws and concluded that bitcoin is an unlawful game subject to chance. Interestingly, all 50 state attorneys general, who regulate gambling in their states, did not disagree with his conclusion. Seeman ended his presentation by declaring bitcoin to be “the world’s largest unlicensed gambling casino.”
Warren Buffett on Bitcoin
Speaking of gambling, the “Oracle of Omaha” Warren Buffett has compared other forms of investing to gambling, warning that many people were treating the stock market like a casino. Like Seeman, he has also come out firmly against bitcoin, declaring it to be “rat poison squared.”
We should also point out that many enthusiasts see bitcoin as a sort of digital gold because they believe it to be a store of value. However, Buffett doesn’t invest in gold either because he sees it as unproductive.
Of note, Buffett’s Berkshire Hathaway recently invested in Nubank, a neobank that operates differently from traditional banks by not depending on brick-and-mortar branches. Instead, Nubank and other neobanks focus primarily on digital services, and Berkshire’s investment in it raised a lot of eyebrows due to its connection to cryptocurrencies.
However, it’s important to point out that Nubank merely offers a bitcoin exchange-traded fund to customers, so its crypto connections are greatly exaggerated.
Peter Thiel Targets Buffett on Bitcoin
On the other hand, many famous investors have happily taken up positions in cryptocurrencies. In fact, Peter Thiel has such a strong opinion on bitcoin that he has taken aim at Buffett, JPMorgan CEO Jamie Dimon, and BlackRock CEO Larry Fink over their views of cryptocurrencies, saying that they’re trying to halt bitcoin adoption.
Thiel’s remarks on Buffett at a recent bitcoin conference were especially provocative, as he referred to the Berkshire chief as a “sociopathic grandpa from Omaha” and bitcoin’s “Enemy Number One.” Thiel has been bullish on bitcoin for years, having reportedly amassed hundreds of millions of dollars worth of bitcoin by 2018 through his venture capital Founders Fund.
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Hedge Fund Managers are Changing their Minds on Crypto
In recent years, more and more hedge fund managers have come around to the idea of holding bitcoin and other cryptocurrencies. Paul Tudor Jones changed his mind on cryptocurrencies a couple of years ago, and he convinced Stanley Druckenmiller to change his mind on a phone call.
Specifically, both fund managers began to see bitcoin and other cryptocurrencies as potential hedges against inflation. The Wall Street Journal reported last month that Jones and billionaire investor Alan Howard were upping their bets on cryptocurrencies.
More recently, hedge fund billionaire Ken Griffin of Citadel Securities changed his view of cryptocurrencies, saying his fund could get involved in digital assets in the coming months. He said he hasn’t been right on his dismissal of cryptocurrencies as a “jihadist call” against the U.S. dollar.
Now Griffin believes cryptocurrencies have been “one of the greatest stories in finance over the course of the last 15 years.”
Final Thoughts
Bitcoin and other cryptocurrencies are sure to remain polarizing investments for years to come, but it’s no secret that millions have been made by investing in the digital asset space. It’s difficult to imagine what would make Buffett or any other crypto bear change their mind on the space.
It’s also particularly interesting that a cybersecurity expert would dismiss the blockchain technology that backs cryptocurrencies. Seeman’s argument is that blockchain technology isn’t some great, new thing because it has been around since the 1980s when he was working as an electrical engineer. He described blockchain technology as “like a big Google spreadsheet.”
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What do you think about bitcoin as an investment option, and what do you think about blockchain technology? Share your thoughts in the comments section below.
