A lot of people hate cryptocurrencies… the very idea of them. And they hate them with a passion.
“I think it’s a pyramid scheme,” said Dick Kovacevich, a former CEO of Wells Fargo, a big American bank. Jamie Dimon, the CEO of JP Morgan Chase, said, “If you’re stupid enough to buy it [bitcoin], you’ll pay the price for it one day.” Robert Shiller, Nobel laureate and the namesake of one of the most widely cited stock market valuation measures, thinks bitcoin will “totally collapse”.
My parents taught me a lot of things… one of which was, if you don’t have something nice to say it, don’t say it. Messrs Kovacevich, Dimon and Shiller feel otherwise regarding cryptocurrencies, clearly.
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Trump, Vegemite and cryptos
Cryptocurrencies seem to be uniquely divisive. Investors are either on board… or view cryptocurrencies as a mix of Jack the Ripper, the bubonic plague, and tulip bubbles, all wrapped in one. The high-sodium, yeasty Australian delicacy known as Vegemite (either you hate it, or you love it… and if you’re not Australian, chances are you hate it) is a unifying force compared to cryptocurrencies… and the kaleidoscope of opinions on U.S. President Donald Trump (from pure hatred to adulation) are all more or less on the same side, compared to the ferocity of opinion around cryptocurrencies.
(Full disclosure – until not long ago (though a long time ago, in cryptocurrency lifetime terms) – I didn’t have anything good to say about bitcoin, as you can see here. But then, I learned more about them, and spoke at length with people who are neck-deep in cryptocurrencies, like my colleague Tama Churchouse. And as economist John Maynard Keynes is widely credited with saying, “When my information changes, I alter my conclusions. What do you do, sir?”)
The Internet in 1994
My information has changed and I’ve altered my conclusions. Now, I think that cryptocurrencies are at the stage of the internet in 1994. Some people believed it was something explosively powerful… and others thought it was a waste of space… and most people didn’t really care or notice. Soon thereafter, anything internet related went through a period of massive speculation (see: Pets.com… and the 1999-2000 internet bubble), followed by a massive bust.
And now, a decade and a half later, the internet is an essential fabric that weaves together society and civilisation. It’s found its way into nearly every realm of life. For the most part, it’s made the world a more efficient, smarter, richer place. It wasn’t quick or easy, and vast fortunes were gained and lost along the way. But anyone who poo-poohed the internet in 1994… well, they were wrong.
Where the internet has come today, is how I think the evolution of blockchain will unfold over the next twenty years (or less… since – thanks in no small part to the internet – everything moves so much faster today). Maybe Bitcoin will be a relic of an era, like AOL’s modem buzz and greeting. Or maybe it will be Amazon, a victor that’s redefining entire industries. But in any case, the applications of blockchain will re-script entire sectors, and upend our assumptions about technology and its application in everything from medical care to logistics.
Reasons for hating
That’s what I think. The gentlemen I cited at the top of this article clearly think otherwise. And they’re not alone: Cyrptocurrency skeptics (and haters) are thick on the ground.
So I’ve tried to understand the reasoning behind their thinking…
1. They’ve researched the arena and have come to a reasonable understanding of it, and they don’t believe in it. This is fair enough. I can argue with someone over the merits of a technology, but I can’t argue with someone if, well, we just see things differently.
2. They’ve poked around and realized that it’s pretty difficult to understand. So, well, forget it. It’s easier to reject something you don’t understand, than it is to try to understand it.
3. They want to go “on the record” as saying that it’s not going to work, and/or it’s all a giant bubble. Then, when (if) it doesn’t/the bubble bursts, they can say, see? I told you so! (This is a favourite move of analysts and media hogs of all stripes and nationalities… say and write enough in the public domain, and you’ll eventually be right about something. And you can conveniently ignore all the stuff you were wrong about…)
4. As my kids say, FOMO – that is, fear of missing out. They hear about cryptocurrency millionaires who lucked into fantastic wealth. They kick themselves for not having bought just a takeout pizza-worth of bitcoin a few years ago. And now that (they think… though I don’t believe this) the easy money has been made, they want it to not work out – so that they’ll be proven right for not having bought in earlier. They don’t want to have missed out – so they want it all to collapse in a hot mess so that they will not have missed out.
5. They’re wedded to their view, and don’t want to (or can’t) change their view. For years in the early 2000s, pretty much any stock market analyst in Russia (I was one of them) was convinced that the country, and its stock market, would remain in the dumps indefinitely. That was just before a 5,000 percent rally. But for analysts who had been (correct, up until then) naysayers of the market couldn’t change their outlook – even though the situation had changed.
6. When the cryptocurrency market inevitably corrects they can indulge in schadenfreude, which is “enjoyment obtained from the troubles of others”. It’s an ugly and unpleasant mutant of “I told you so”.
Of these, only #1 makes sense. If you find yourself nodding in agreement to #2-6 (or a number 7, 8 or 9 that I’m overlooking), you owe it to yourself to at least try to achieve #1 – or be convinced otherwise along the way.
How to do this? Browse our articles about cryptocurrencies. Sign up for our Crypto Crash Course and listen to what Tama has to say… I’m biased, but for my money there’s no one better than Tama when it comes to explaining the nuts and bolts of cryptocurrencies in an engaging, entertaining and above all, understandable way.