Last week, an important person in my life asked me in a cautious tone if they could ask me a question about my new job. (I came to Decrypt on March 1, after spending a decade on older media outlets.) I felt like I knew what question I was facing. The person’s question was, “You didn’t take the job because you believe this stuff – you agree it’s ridiculous and you don’t think it’s real, do you?”
Good,is certainly real. But I understood what the person meant: Am I a true believer, a crypto maniac? Do I think Bitcoin will replace the US dollar? Do I pray in the church of Crypto?
No. And I haven’t joined any cryptocurrency news site to pump coins. (I own less than 1 bitcoin, which I bought as a reporting tool in 2014. I think crypto journalists should have some game because they have to test the exchanges and products they write about.)
I suspect that any journalist who has covered crypto for a few years at least thinks that the technology is interesting, exciting, and potentially transformative. Crypto is cool, even for non-coders. (I still remember the thrill of playing with the 21 Bitcoin Computer, a hand-held mini-mining rig – actually it was just a souped-up Raspberry Pi – from Balaji Srinivasan’s company 21, which he later renamed Earn and which he bought sold.)
I’ve heard the same person say to me, “When I hear the word crypto, my eyes glaze over.” And that’s perfectly fine. Bitcoin skeptics still abound, and I understand their skepticism. Bitcoin did not exist and then also, and 11 years is not that long in the grand scheme of things. It is difficult for many people to see how something that was created out of nowhere in 2009 by a pseudonymous person that cannot be physically touched could be worth $ 60,000. (And who should say what the “right price” is for Bitcoin?)
But I believe something has changed in the last few years, since the madness of late 2017 when many viewers viewed Bitcoin as a punchline: a greater number of people than ever before at least acknowledge that Bitcoin is something that exists and continues to exist exist will exist. You may dismiss it as boring or nerdy or stupid, or avoid it as an investment, but it is clear that Bitcoin is not going to go away or collapse tomorrow.
Fraud, tulips, rat poison, shit
Sure, we all know the most famous negative sound bits. Nouriel Roubini has repeatedly referred to Bitcoin as a Ponzi scheme. Jamie Dimon, CEO of JPMorgan, called Bitcoin a “scam worse than tulip bulbs”. Warren Buffett, CEO of Berkshire Hathaway, said investing bitcoin is “not really investment,” and his respected long-time business partner Charlie Munger has called bitcoin a “rat poison” and a “sucker”. The Saudi prince Al Waleed bin Talal called Bitcoin “another Enron in the making”.
But these sound bits are almost all from a few years ago, mostly in 2017 amid the infamous ICO boom, when crypto startups through “initial coin offerings” of tokens that in most cases served no purpose and had no product behind them, Millions made. Aside from Roubini, none of these people have repeated their feelings at any time recently.
Jamie Dimon has repeatedly taken back his comments, regretting calling Bitcoin a scam in 2018 and saying in 2020 it was “just not my cup of tea” and “very smart people” are investing in Bitcoin. His own bank has just filed an application with the SEC to offer customers a “Cryptocurrency Exposure Basket”. His rival bank, Goldman Sachs, is restarting its Bitcoin futures trading desk this month.
Comparing Prince Al Waleed to Enron, billionaire investor and owner of Dallas Mavericks, Mark Cuban, said the opposite in an interview with Decrypt earlier this month: he raved about when industries like healthcare and insurance start keeping blockchain records . “There would be no Enrons. You wouldn’t have the level of fraud that you have now.”
Cuban isn’t the only prominent businessman who suddenly turned to crypto. Lindsay Lohan, Paris Hilton and Ja Rule have made their markBlockchain-based tokens that represent digital collectibles. Musicians like Kings of Leon, Grimes, Shawn Mendes, Aphex Twin, 3LAU and Deadmau5 have followed suit.
Perhaps this list makes crypto look tricky rather than serious, but if you’re into serious Wall Street investors, pick the following hedge fund names: Bridgewaters Ray Dalio; SkyBridge’s Anthony Scaramucci; Paul Tudor Jones; Stan Druckermiller; Bill Miller; and Cathie Wood from ARK Invest all relied on Bitcoin for a long time last year. Or how about these publicly traded tech companies that bought bitcoin for their balance sheets: Square; Tesla; MicroStrategy; Meitu; and Aker ASA now hold all of them.
The point is, it’s no longer so easy to say they are all false and dump Bitcoin right away.
Musk, Dorsey, Saylor
Sure, you hear some people say that Elon Musk (Tesla), Jack Dorsey (Square), and Michael Saylor (MicroStrategy) were already crypto-oriented and barely representative of the mindset of other CEOs. And some people still cite the crippling 65% price drop in February 2018 as the rationale for why they expect the same thing to happen again.
Another “crypto winter” is absolutely possible. But the next time after this has happened, now that I’ve seen what happened after the first big crash (the price eventually recovered to its previous high of $ 20,000 and then tripled), I’ll bet more people hold on and don’t panic sell.
And it doesn’t go to zero. This has long been another popular soundbite from Bitcoin bears: The world’s first and largest cryptocurrency could “crash to zero”. It has never gone back to zero since it started, and it’s extremely unlikely.
Certainly there are concerns about Bitcoin’s energy consumption that can be pointed outBlockchain is trying to move to a “proof of stake” model that should hypothetically eliminate expensive mining equipment that sucks up energy. And the potential price bubble in the NFT market, as well as new ownership concerns threaten to undermine Bitcoin’s promise. (Some compare the NFT explosion to the ICO boom.)
But Bitcoin will likely stay. A Deutsche Bank report earlier this week crowns Bitcoin “too important to ignore”. I would put it another way: ignore it if you want, but you should also ignore anyone who tells you that Bitcoin is going to collapse.
This is Roberts on Crypto, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Editor-in-Chief Jeff John Roberts. Sign up for the Decrypt email newsletter to receive it in your inbox in the future. And read last weekend’s column: Bitcoin and Uncle Sam: It’s Complicated.