Investor and entrepreneur, John Pfeffer, recently wrote a report on Medium titled, “An (Institutional) Investor’s Take on Cryptoassets.” In his report, he sets aside the risks that a given cryptoasset could fail and instead assumes that cryptocurrency develops successfully with widespread adoption.
He makes a firm distinction between cryptoassets that are used as a means of payment much like Visa or Apple/Google Pay and cryptoassets that actually hold a monetary store of value such as Bitcoin.
When looking at long term investment attraction, Pfeffer asserts that cryptocurrencies used as blockchain payments will have fragmented value and would be “generally insufficient in relation to current valuations to offer a long term investor attractive returns relative to the inherent risks.”
However, his one exception is the potential for a cryptoasset to emerge as a monetary store of value, which he believes could be worth many trillions of dollars. “While also risky, this potential value and probability that it might develop for the current leading candidate (Bitcoin) would appear to be sufficiently high to make it rational for many investors to allocate a small portion of their assets to Bitcoin with a long term investment horizon.”
As the value of digital currencies continue to surge, consumers are taking note. At the core of any currency is trust. The more companies use cryptocurrency such as Kodak which recently announced plans to launch a photo-centric cryptocurrency called KODAKCoin (and saw as much as a 125 percent stock surge), the more people will trust cryptocurrency and the more likely a bitcoin ETF will emerge. And with a fixed supply of bitcoin, when the demand increases- so will the price.
Many of Buffett’s market predictions have been correct but certainly not all (Google and Amazon most notably). In September, Jamie Dimon, JPMorgan Chase & Co. chief executive, told an investment conference in New York that bitcoin was “worse than tulip bulbs” and threatened to fire any trader who bought or sold them for being “stupid.”
The price of bitcoin has more than tripled since these comments were made just a few months ago and in a recent interview with Fox Business, Dimon said he regrets saying that bitcoin is a “fraud.” Will Buffett also regret saying that cryptocurrencies will come to a bad end? It’s hard to say.
If you want to learn more about the cryptocurrency market and the bitcoin ETF, consider attending the North American Bitcoin Conference happening January 18-19 in Miami, Florida.
Speakers include Patrick Byrne, CEO at Overstock.com, Halsey Minor, founder/co-founder of CNET and Salesforce.com, Craig Sellers, co-founder of Tether, and Brock Pierce, chairman of the Bitcoin Foundation.
For more information on the cryptocurrency market, visit our Bitcoin category.