Top South African asset manager shares his views on Bitcoin, and it is not flattering

The idea that fake Internet money is going to replace fiat currencies and the global payments system seems a bit far-fetched.

This is the view of Vestact CEO Paul Theron who discussed cryptocurrencies and Bitcoin in a recent company newsletter.

Bitcoin has had a tremendous run over the past year and broke through levels that surprised even ardent crypto enthusiasts.

So significant was the Bitcoin bull run that Elon Musk got involved, with Tesla buying $1.5-billion worth of Bitcoin last month. That pushed the price up to nearly $60,000.

Tesla also announced that it will start accepting Bitcoin “subject to applicable laws and initially on a limited basis”.

With the cryptocurrency exceeding a market capitalisation of US$1 trillion, many previously sceptical investors are now re-looking Bitcoin as a possible value store like gold.

Bitcoin is now part of the investment discussion on Bloomberg and CNBC, with many people punting it as the future of the financial world.

Not everyone is convinced, however.

Berkshire Hathaway’s Warren Buffett said Bitcoin basically has no value and “you can’t do anything with it except sell it to somebody else”.

“In terms of cryptocurrencies generally, I can say almost with certainty that they will come to a bad ending,” Buffett predicted.

His business partner, Charlie Munger is even more scathing towards Bitcoin. He referred to it as “rat poison” and likening it to “trading turds.”

Billionaire Mark Cuban is equally dismissive of Bitcoin. He said it has no chance of becoming a reliable currency and it is used as “a store of value like gold that is more religion than a solution to any problem”.

Vestact’s Theron shares Buffett, Munger, and Cuban’s cynicism about Bitcoin, saying is not especially interested in cryptocurrencies.

To me, the whole blockchain thing seems like a solution looking for a problem,” he said.

The cryptocurrencies themselves – there are many – are not really an asset class. They are apparently mined using lots of electricity. Their prices have been rising so speculators have been rushing to join in the fun.

He added that the idea that fake Internet money is going to replace fiat currencies and the global payments system seems a bit far-fetched.

I’ll stick with my US Dollar-denominated assets and my Visa and PayPal shares, thanks.”

When I read recently that Bitcoin was trading at a new high of over $50,000 each, my first thought was wow, that must be nice for the people that mined or bought them years ago. They should sell now. I hope that they can still remember the passwords to their digital wallets.

Theron said cryptocurrencies are like digital gold. “When I was younger, people who loved that stuff were called goldbugs. I’ve never been interested in holding gold either. Unproductive, shiny metal that costs money to store safely? No thanks.”

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