In the latest episode of The Pomp Podcast, host Anthony “Pomp” Pompliano had Chamath Palihapitiya, the CEO of Social Capital as a guest who talked about Bitcoin’s path in the current macro backdrop.
The currency situation is exactly “the set up” for Bitcoin, said Palihapitiya, which means, “Bitcoin needed a moment like this for it to be relevant.”
“Right now, I think what you're seeing is that it's still a speculative instrument and it's too speculative for it to be reliable so if you're going to make the case that it should replace fiat currency, well one thing you have to look at is the volatility of the US dollar and you can't replace it with something that's 9 sigma more volatile.”
And that’s the reason it doesn't work. The extreme volatility means “you can't effectively use it and so what it does is it pushes it into this ghetto of day traders and speculators and right now that's where we are. We're in that ghetto and you need to get out and the way that it gets out is that you need to flush the speculators and day traders out and you need to have still some basis of interest from long-term holders and then you need to have it slowly look like the traditional infrastructure could really implode.”
Not gold but gold 2.0
Currently, Bitcoin is “driving slowly but we are driving towards a top of a cliff and then we're going to drive much much faster down that cliff, tore down that hill and at the end of it is a huge brick wall, the way we avoid it is by pivoting to a resilient economy where we introduced in efficiency and cost and inflate our way out of it or debasement.”
The path of dependence for Bitcoin he said is “if it looks like path two is likely when the world's leading cryptocurrency will really emerge as a flight to safety and over the next ten years where this trajectory is going to take shape and it is a ten-year trajectory you'll have a lot of time to vector into it, to protect yourself and to hedge yourself.”
The Chairman of Virgin Galactic shared that he first bought “a lot” of Bitcoin in 2013 and at one point he had “almost 5% of all the bitcoin.”
He “never” bought any more BTC and now they sit with a company where they are being used for trading purposes and other strategies. The move was “mostly for safety and security and peace of mind, I didn't want to deal with it,” said Palihapitiya.
A minority stakeholder of the NBA's Golden State Warriors Palihapitiya sees Bitcoin as a very binary investment, and it doesn't matter if it swings wildly because “this is either zero or it's millions because what it will do is it will create a quasi gold standard.” However, instead of central banks owning gold, Bitcoin
“is an instrument that has value, that's determined by in between its participants and it's owned by everybody.”
So, it's not gold but gold 2.0 which “replaces the method of value transfer that you need for fiat money to be valuable but that only happens if the US dollar looks like it's going to careen into this wall so I think that's the bet.”
You can listen to the full interview here:
No matter what I'm doing, whenever @chamath talks – I stop and listen.
— Anil Lulla (@anildelphi) April 2, 2020