Crypto O.G. Nick Szabo: Crypto Users Leaving Funds on Exchanges is Like Being a Starbucks Investor Not Drinking Their Coffee
Nick Szabo, a recognized crypto figure and cryptographer, wrote a tweet in which he criticized investors that leave their funds in cryptocurrency exchanges. He said that those who do that are like people that invest in Starbucks even when they do not drink their coffee.
As virtual currencies expanded all over the world during the last years, new investors entered the market. Nevertheless, some investors didn’t understand how virtual currencies work and which is their real value.
Szabo went on saying that these investors might make good technical money, but their actual understanding of use cases and value proposition is questionable.
Investors who leave their cryptocurrency in the custody of an exchange are like people who invest in Starbucks even though they don't drink their coffee. They might make good technical money, but their actual understanding of use cases and value propositions is questionable.
— Nick Szabo 🔑 (@NickSzabo4) February 20, 2019
Gabor Gurbacs, director at VanEck, decided to answer Szabo adding some interesting points to the conversation. He said that because something is available, it doesn’t mean that one should invest in it.
He explained that it is very important for investors to use products and services provided by a company they invested in. Finally, he said that some legacy entities are better security holes than crypto exchanges.
Spot on. 1. Because something is available, it doesn’t mean that one should invest in it. 2. Using products/services of an investment (real skin in the game & practical understanding) is essential. 3. Some legacy entities are “better” security holes than some crypto exchanges. :)
— Gabor Gurbacs (@gaborgurbacs) February 20, 2019
Nick Zabo started to share his ideas with Mr. Gurbacs. He said that some investors are not able to understand the value proposition of Bitcoin even if they understand the techniques. As they do not find the main value-add use case valuable, that means that they are confused.
To what Gurbacs answered that investors are not able to see Bitcoin’s main value propositions but find other values attractive as well. He mentioned just a few such as low correlation to other traditional assets, relatively easy access and transferability.
The popular crypto figure Peter McCormack has also entered the discussion. He asked if to invest in a car company it is necessary to own a car from that firm, to what Szabo said that a better analogy would be to invest in a car company having never driven a car.
Another user, BitLatte, said that it is not necessary to like Starbucks coffee to understand that there are other individuals buying it. Szabo has also answered to this comment saying that this makes them a below-average coffee stock investor.
If you don't understand *why* they are buying it — which requires sharing their experiences — then you are ceterus paribus a below-average coffee stock investor
— Nick Szabo 🔑 (@NickSzabo4) February 21, 2019