Bitcoin Is Not ‘A Hedge Against Doomsday Scenarios,’ Mark Cuban Says | The Paper Source University

Bitcoin (BTC) has posted a standout year. The asset recently broke its all-time price high set in 2017, continuing upward past the $23,000 mark. A number of mainstream financial players have picked up big stacks of bitcoin this year as well, including business intelligence outfit MicroStrategy

MSTR
, who allocated $425 million toward the asset. Mark Cuban, the Dallas Mavericks’ billionaire owner, however, has not changed his opinion on bitcoin since he referred to the asset as a collectible in 2019, giving it “no chance” of becoming a reliable currency.

“My thoughts haven’t changed,” Cuban told me in a December 8 email when asked of his thoughts on bitcoin at present. “It’s a store of value like gold that is more religion than solution to any problem,” he added.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Bitcoin has seen its fair share of comparisons to gold over the years. Both are scarce assets often touted as vehicles for value storage. The U.S. Commodity Futures Trading Commission (CFTC) even classifies BTC as a commodity, the same as gold.

Several key differences remain though. Bitcoin holds a set 21 million supply, as per its code, giving it a clear-cut, limited supply. Users can also quickly send bitcoin virtually anywhere in the world. Additionally, storage remains comparatively easier when compared to large piles of gold.

“That said, unlike gold, because of the finite number of BTC that will be available and the nature of HODLing, when demand outstrips supply, the price will go up and vice -versa,” Cuban added. A common crypto industry term, “HODLing” refers to holding an asset, usually for a relatively lengthy period of time.

“I think the whole conversation about BTC or any crypto replacing fiat currency is counterproductive,” the Mavericks owner said.

“No matter how much BTC fans want to pretend that it’s a hedge against doomsday scenarios, it is not. Countries will take steps to protect their currencies and their ability to tax, so the more people believe this is anything more than a store of value, the more risk of government intervention they face.”

Over the course of 2020, a number of countries have heavily discussed creating digital national digital currencies, called central bank digital currencies (CBDCs). China has blazed a trail in the CBDC race this year, developing and testing its digital yuan. “As we see in China and elsewhere, countries are more than capable of creating their own alternatives,” Cuban noted.

“BTC is what it is, something that enough people have agreed upon is an investable asset. A banana has more utility, potassium is a valuable nutrient to every person on the planet :), but as long as people accept BTC as a digital version of gold, its investable.” 

Cuban’s banana reference comes in relation to separate comments he expressed in a September 2019 video from Wired, in which he compared bitcoin to other collectibles, saying he preferred a banana to gold or BTC because he could at least eat a banana.

Disclaimer: I actively trade cryptocurrencies, as well as hold a small amount of BTC, ETH, LTC, ZEC, BCH and LINK.