Barry Silbert, the chief executive officer of the Digital Currency Group, on Wednesday said that while he was extremely optimistic about the long-term prospects of bitcoin, as well as the broader cryptocurrency industry, a huge amount of new entrants seemed headed for zero.
Speaking at CNBC’s Delivering Alpha conference, he said that bitcoin BTCUSD, -0.43% had hit its lows for the year, adding that he had invested more in the world’s largest digital currency last week as prices were hovering near their nadir or 2018.
Still, thus far this year, bitcoin has dropped 45%, and it last traded slightly under $7,400. This follows a year of massive gains in 2017, when it jumped from under $1,000 to nearly $20,000.
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Silbert, who is one of the most widely followed names in the cryptocurrency space, said there were three primary use cases for bitcoin: as a store of value, as a way to move money around the world without the use of a bank or central authority, and for blockchain, the decentralized ledger technology that bitcoin runs on. “You can make a strong case that if any of these are successful, you have the opportunity to receive a lot of alpha,” he said.
Silbert’s New York venture capital group DCG is tied to or backed a number of prominent digital-currency enterprises including Grayscale Investments Inc. and Circle, Coinbase and many others.
Speaking more broadly, he said that “as an asset class, [cryptocurrency] is here to stay,” citing the amount of innovation, investment, awareness, and enthusiasm that exists around the industry.
Despite that, he said that he was “a huge skeptic” of many of the new entrants into the space, predicting that 99% of them were “going to zero.” He said it was “hard to identify value in most of them.”
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Silbert’s views were advocated by Jeremy Allaire, CEO of Circle, who also spoke at the conference. Allaire called blockchain a “fundamental technological breakthrough” and said that his investment thesis is that “we will reconstruct every form of asset class on top of crypto,” with bitcoin currently representing the more secure form of the blockchain ledger. “That’s one reason why it’s grown so much in value.”
Allaire called blockchain “a new infrastructure layer to the internet,” predicting it would replace current aspects of operating-system infrastructure, communications, and other trusted transactions. “This is the most interesting, valuable place to invest,” he said. “This is like investing in HTTP and its adoption 20 years ago.”
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